Home truths about international defence

Following their presentation, Mr Dickinson and Mr Marcus pledged to commission a detailed study showing the current state of the Merchant Navy in several NATO member states and the way this affects defence capabilities.

The findings of this study have now been published in a report titled NATO Member States’ National Merchant Fleet and Seafarers, and the report is summarised below.

The strategic importance of merchant fleets

Merchant fleets are the lifeblood of global trade, with approximately 90% of goods transported by sea. Beyond their economic significance, these fleets play a pivotal role in national security. During wartime or emergencies, civilian merchant vessels are indispensable for military logistics, troop transport, and humanitarian missions. Their versatility allows them to be repurposed as hospital ships, munitions carriers, or even aircraft transporters.

However, NATO's merchant fleet is shrinking. As of 2023, NATO member states collectively owned 16,916 propelled seagoing merchant vessels of 100 gross tonnes and above, representing a mere fraction of the global fleet. This decline is compounded by the widespread use of flags of convenience (FOCs), which enable shipowners to register vessels in countries offering lax regulations, tax benefits, and cheaper labour. While economically attractive, this practice erodes the strength of national registers, weakens flag-state responsibilities, and increases reliance on foreign crews.

Flags of convenience: a threat to maritime sovereignty

FOCs pose significant risks to NATO's maritime security. By allowing shipowners to obscure vessel ownership and accountability, FOCs facilitate illegal activities such as smuggling, human trafficking, and environmental violations. They also dilute regulatory authority, making it difficult for flag states to enforce safety, labour, and environmental standards.

The case of the Eagle S, a vessel linked to Russia's 'dark fleet' and accused of severing undersea cables between Finland and Estonia, highlights the vulnerabilities inherent in FOC practices. The ship's opaque ownership and frequent reflagging allowed it to evade scrutiny, underscoring the systemic risks posed by FOCs. Such incidents demonstrate how FOCs can be exploited for hybrid warfare, threatening NATO's infrastructure and collective security.

The decline of national seafarers

The shortage of qualified seafarers is another pressing concern. NATO member states collectively account for only 22.24% of the world's seafarers, with many nations experiencing a steady decline in their maritime workforce. For instance, the United Kingdom saw its pool of British seafarers employed on UK-registered ships plummet from 108,723 in 1975 to just 15,666 by 2000. Similarly, Norway and Greece have witnessed significant reductions in their maritime workforce, with foreign crews increasingly filling the gap.

This reliance on international labour poses challenges during crises. In wartime, ships with crew members from adversarial nations may face restrictions or be denied access to NATO ports. The logistical complexities of replacing foreign crews, especially during airspace closures, further exacerbate the problem. Without a robust pool of national seafarers, NATO's ability to crew its merchant fleet and sustain operations during emergencies is severely compromised.

Economic incentives and policy failures

Despite the critical role of merchant fleets, existing policies and subsidies have largely failed to reverse their decline. Maritime incentives such as tonnage tax schemes have had limited success in retaining national flags and boosting seafarer employment. In the UK, the tonnage tax introduced in the year 2000 initially increased the number of UK-registered ships but failed to deliver long-term growth or significantly improve employment prospects for British seafarers.

Similarly, Greece's pioneering tonnage tax system, designed to reduce flagging out, has struggled to compete with the fiscal advantages offered by rival shipping centres. As a result, over 87% of Greece's fleet capacity is registered under foreign flags, primarily FOCs. Norway's creation of the Norwegian International Ship Register (NIS) in 1987 helped retain its shipping industry but also led to a reliance on foreign labour, with most positions on NIS-registered ships now held by non-Norwegians.

These examples highlight the need for a strategic overhaul of maritime policies. State aid must be directly linked to national policy objectives such as growing the national fleet and ensuring a minimum share of national seafarers on subsidised ships. Without such reforms, subsidies risk perpetuating the status quo rather than fostering resilience and competitiveness.

Recommendations for NATO member states

To address these challenges and strengthen NATO's maritime backbone, the report proposes several recommendations:

Policy reforms and coordinated governance

NATO member states should enhance targeted state aid to incentivise shipowners to support national policy objectives. This includes linking subsidies to training and employment outcomes, restricting eligibility to vessels under national registries, and developing a coordinated governance framework to ensure sustainable maritime employment and competitiveness.

Strengthening the 'genuine link'

The principle of a genuine link between ships and their flag states must be reaffirmed and enforced, aligning with the United Nations Convention on the Law of the Sea. Efforts should be made to combat fraudulent ship registrations and close gaps exploited by FOCs.

Investment in maritime capabilities

Member states must increase investment in their merchant fleets and maritime professionals. This includes boosting the number of qualified national seafarers, enhancing maritime education and training, and developing strategies to retain and attract talent in the sector.

Enhancing data collection and analysis

Improved data collection methods are essential to address fragmentation in ship ownership and registration. Comprehensive data will enable informed policy decisions and strategies for the maritime sector.

Strengthening NATO's maritime resilience

Contingency plans should be developed to overcome reliance on foreign-flagged ships and FOCs for military logistics and supply chains. Enhanced cooperation among member states can pool maritime resources and capabilities, ensuring readiness during crises.

A call to action

The shrinking NATO merchant fleet and declining pool of national seafarers represent a significant threat to the alliance's operational readiness and maritime security. By investing in their merchant fleets, curbing the use of FOCs, and implementing the recommendations outlined in this report, NATO member states can reverse these trends and build a secure, resilient maritime sector.

Nautilus is working to ensure this call to action is heard as widely as possible by placing the report before decision-makers at national and international levels. For example, the findings have been reported to the European Commission, as 23 of the 27 EU countries are in the NATO alliance. The EU Sectoral Social Dialogue Committee for Maritime Transport was alerted to the study at its meeting in May this year, and Nautilus is working to ensure this is a full agenda item at the group's next session in October.

Copies of the report have been shared with the NATO Shipping Centre (NSC) and Allied Maritime Command, based in London. NSC is the primary point of contact for the exchange of merchant shipping information between NATO's military authorities and the international shipping community.

In addition, Nautilus Federation affiliate unions based in NATO member states are sharing the report with their national administrations and contact networks. As part of this effort, Nautilus International is working to ensure the British and Dutch governments see and act on the report, as well as sharing the document with industry bodies such as the UK Chamber of Shipping and Maritime UK.

• The Nautilus/MM&P report NATO Member States’ National Merchant Fleet and Seafarers is available for download free of charge here on the Nautilus International website