When you cannot make money under the American flag, then those who persist in operating ships instead of giving up will have to find other flags to operate under. In his 1994 book, Ship Management , John Spruyt writes that while open registries tend to have lower fees and taxes than traditional registries, the serious savings come in crew costs. Spruyt offers as an example a vessel with a 24-member crew. By definition, Panama and other flags of convenience lack such restrictions. You have more flexibility.
Foreign traders are, at times, outraged by U.S. flag citizenship laws . . .
Even the bureaucracy charged with administering the flag can appear confused, battling with itself and unclear as to the future. One can often tell a U.S. flag company by the large number of lawyers, veteran Washington lobbyists or ex-Congressional aides on staff. It's not surprising, then, that even large shipping companies with strong ties to the U.S. flag have jumped to open registries. American President Lines Ltd. of Oakland, Calif., for example, now has six container ships registered in the Marshall Islands. APL still operates seven U.S.-flag ships, but that could change.