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Flagging out debate simmers as Swiss deep-sea fleet struggles to stay afloat

25 September 2020

Switzerland has announced a controversial decision to allow Swiss deep-sea shipowners to flag out and register in Flags of Convenience (FOC) countries.

The move is as strongly opposed by Nautilus International.

Commercial maritime shipping under the Swiss flag is operated by Swiss companies. The flag state authority is the Swiss Maritime Navigation Office (SMNO). The SMNO, based in Basel, also maintains the register of all Swiss ocean-going yachts and small boats.

Despite being a landlocked country, Switzerland has a seagoing fleet of about 20 vessels, found in all the world's seas, and the fleet is traditionally considered to represent a vital plank in Switzerland's defence planning in the case of global crises. They are owned by Swiss private-sector firms and operated by Swiss shipping companies. In times of conflict or crisis, the federal government can requisition Swiss-flagged merchant ships to serve the country's economic needs.

Switzerland also enjoys freedom of navigation on the Rhine and its tributaries and, thus, duty-free access to the sea.

Switzerland will now allow flagging out when a company is threatened with ending up on a vessel blacklist. The flagging out means that the Swiss government guarantees granted to those ships will remain, but the government will still have requisition rights for the national interest.

While the Swiss flag is not on the Paris MOU blacklist, Nautilus Swiss national organiser Holger Schatz said: 'The reputation of the Swiss flag has been tarnished over the past years. The Swiss flag has a bad reputation and is in danger of being blacklisted. This means that larger commercial companies can suffer from that and not receive orders.'

The loss of credibility of the Swiss flag began four years ago, when a Swiss shipping company operating 10 vessels went bankrupt. Earlier this year a CEO was sentenced to five years jail because of corruption and another company failed to pay wages regularly and to maintain the vessels, Mr Schatz said.

Switzerland is a signatory to the Maritime Labour Convention which entered into force there in 2017. The Swiss government has a collective agreement of employment (CAE) concluded on 5 December 2016, between the Swiss Shipowners Association and Nautilus International. The Swiss government indicated to the International Labour Organisation at the time that this agreement is binding upon all Swiss shipowners.

Mr Schatz explained: 'The Swiss federal government is apparently reacting to payment difficulties by one Swiss shipowner with two ships, and threats of blacklisting for other Swiss shipowners. This small company has been in trouble since 2018. They do not provide the maintenance of their ships, and, they do not pay wages regularly.

'We cannot foresee whether, and to what extent, flagging out will actually be used. We can only reaffirm that from the seafarers' point of view, working under the Swiss flag has many advantages.'

Mr Schatz pointed out: 'We have very good collective labour agreements with the companies operating under the Swiss flag, which actually work.'

Contracts on Swiss deep-sea vessels provide internationally competitive monthly salaries of 4,000 to 5,000 Swiss Francs for officers. 'The collective labour agreements with companies operating under the Swiss flag are working. The cooperation with the Swiss Maritime Authority is also good. The latter is clearly committed to compliance with international standards,' Mr Schatz said.

'That is why the Swiss flag plays an important role in the highly competitive market of ocean shipping. In a small but noticeable way, it ensures the protection of workers. And as a link in the chain of serious flag states, it also has a role model part to play.'