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6. Continuing a trend that could already be observed during the 1980s, 1992 saw a further concentration of fleet ownership. Shipowners in five countries --Greece, Japan, the U.S.A., Norway, and Hong Kong--controlled over 50 percent of the world merchant fleet. But the present pattern of ship registration and 'flags flown' does not reflect the true state of ownership. Almost half of all merchant ships which were registered in 1992 flew so-called 'Flags of Convenience' (FOCs) of countries which provide shipowners with substantial benefits. '. hese benefits entail tax allowances or holidays, freedom to crew ships with low-wage labor, regardless of nationality and without the involvement of labor unions, and frequently also less stringent vessel classification and inspection rules. Table 2 on page 12 provides details.

7. The principal countries that offered FOCs in 1992 were Liberia, Panama, Cyprus, and the Bahamas, a situation which remained largely unchanged from earlier years. Some European countries-notably Germany and Norway--have established 'second national flags' which provide for essentially the same benefits as FOCs, but they are primarily chosen by shipowners which are resident in these countries. On the other hand, there was some new development during 1992 which led to a growing importance of formerly less visible FOCs, like Malta. One factor behind these occurrences was the rapid outflagging of vessels from the republics of the former Soviet Union (FSU).

8. Developing countries, as a group, could double their share of the world fleet during the ten years preceding 1992, and now account for roughly 25 percent of ownership. However the majority of this share-almost two-third--represents ships owned by parties in Asia. In addition, it is important to note that in those developing countries which have instituted liberal maritime regulations, shipowners in growing numbers resorted to FOCs. China, Indonesia, and South Korea are examples. Industry statistics for the first three years of the 1990s indicate that this trend continues unabatedly.

9. While outflagging is one phenomenon that points to a fundamental change in the organization of international ocean transport, another one relates to ship management. Developments during 1992 demonstrate that more shipowners have passed the responsibility for asset marketing and operations to professional ship management organizations. These are usually private companies that are not involved in ownership but engage in managing vessels on a contractual basis to secure the best rates of return on their clients'-the shipowners--investments. A very substantial portion of the international tanker and dry bulk fleets were managed under such arrangements, basically continuing a trend which has set in during the 1980s. But these arrangements are not limited to the bulk sector. As in preceding years, also in 1992 there was a growing number of general cargo and container vessel owners who resorted to asset management by professional organizations. Most of these organizations are located in the world's principal shipping centers, like London, Hong Kong, New York, and Singapore. The users of these vessel management services come from all country groups, which also include developing nations and--as the latest development--the FSU republics.

10. It has thus become difficult to identify the true ownership of, and for that matter the accountability for many vessels engaged in seatrading. The flag flown and the port of registration do not any longer reveal conclusively. In addition to management by third parties, there are usually mortgage banks involved that have proprietary rights, and ships' officers and ratings may be citizen of a variety of countries. It is therefore not unusual to identify several parties of different nationalities that are associated with one ship. If anything, ocean transport in the 1990s has become a very complex industry.