A new Nautilus policy report explores how maritime cabotage could revitalise the UK Merchant Navy, safeguard strategic capabilities, and create quality jobs for British seafarers. Helen Kelly highlights the main points
The United Kingdom faces a stark choice. Continue presiding over the managed decline of our Merchant Navy or take decisive action to rebuild sovereign maritime capability through modern cabotage legislation.
More than 100 nations now protect their domestic shipping industries with cabotage laws. The United States, Canada, Australia, Japan and China all reserve coastal trading for nationally-registered vessels employing local seafarers. These countries recognise what Britain has forgotten: maritime capability is fundamental to national security, economic resilience and strategic independence.
The UK remains one of the few maritime nations without substantial cabotage protection. Our failure to create a legal framework safeguarding domestic maritime jobs has set us apart from our allies and competitors alike. The consequences are stark: historic lows in both UK-resident seafarers and UK-registered vessels, leaving the UK dangerously exposed in an increasingly uncertain world.
If Britain is serious about protecting national security, economic resilience and maritime heritage, we must act decisively to rebuild sovereign maritime capability.
The decline stems directly from the rise of flags of convenience (FOCs), which provide deregulated regimes with little capacity for effective control or enforcement of regulatory requirements. Whilst the UK is not alone in facing the consequences of FOC proliferation, our failure to protect our domestic maritime industry through legislation has left us uniquely vulnerable.
The Merchant Navy must not be viewed simply as an industrial sector in decline, but as a pillar of national security threatened by our dependence on foreign merchant fleets and seafarers to keep the UK supplied.
Why cabotage matters
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 and resilience. During wartime or emergencies, civilian merchant vessels are indispensable for military logistics, troop transport and humanitarian missions.
FOCs pose significant risks to maritime security. By allowing shipowners to obscure vessel ownership and accountability, FOCs facilitate illegal activities including smuggling, human trafficking and environmental violations. They dilute regulatory authority, making it difficult for flag states to enforce safety, labour and environmental standards.
The use of FOCs to evade regulation has been prominently deployed by Russian interests following Russia’s invasion of Ukraine in February 2022. Despite extensive sanctions from European countries and the US targeting Russia’s economy, it has established a ‘shadow fleet’ to evade restrictions.
According to the European Parliament, the Russian shadow fleet uses FOCs and intricate ownership structures whilst employing various tactics to conceal cargo origins: ship-to-ship transfers, automatic identification system blackouts, falsified positions, transmission of false data, and other deceptive or illegal techniques.
The case of the Eagle S, a vessel linked to Russia’s shadow 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, demonstrating how FOCs can be exploited for hybrid warfare, threatening national infrastructure and collective security.
Britain’s strategic vulnerability
The UK’s history of warfare testifies to our reliance on the Merchant Navy. Some 54,000 merchant seafarers have paid the ultimate sacrifice across two world wars and other conflicts to defend and support the nation.
During the 1982 Falklands War, the Ministry of Defence (MoD) chartered 30 vessels and requisitioned 22 UK merchant ships. The civilian-crewed tonnage in the Falklands task force played a crucial, yet largely unsung, role. Merchant seafarers performed duties from minesweeping to aircraft carrying, amphibious operations, logistic landings and supply of troops, equipment and fuel.
Even then, some foreign-owned ships had to be chartered at a huge premium due to a shortfall in suitable UK-flagged tonnage.
What we’re asking the government to do
Implement UK cabotage legislation with the express intention of growing the UK Ship Register and number of UK-resident seafarers.
Introduce a licensing scheme to allow foreign-flagged vessels to apply for a temporary licence to engage in UK coastal trading.
Introduce a crewing requirement for vessels operating under the UK flag within UK waters.
Reform Tonnage Tax laws and increase the Support for Maritime Training (SMarT) funding scheme.
Prioritise public contracts for companies committed to the UK flag and UK resident crew.
Stipulate that public contracts are only awarded to employers that negotiate with trade unions and whose workers are covered by collective agreements.
Image: Paul Macallen/Pixabay
During the 1990-1991 Gulf War, the MoD chartered 143 ships, but only eight flew the British Red Ensign. The MoD was again forced to pay exorbitant vessel charter fees, and experienced delays in military operations due to its reliance on foreign-flagged vessels.
In 2002, Nautilus’s predecessor union NUMAST highlighted that Britain lacked the ships to repeat the Gulf War or Falklands task force operation. The situation is even more dire now.
The lack of protection for the UK’s domestic industry, leaving us vulnerable to unfair competition, is responsible for the decline in UK-registered vessels and an overreliance on foreign-flagged vessels to deliver consumer goods, energy and medical supplies. This liability will be exposed in any crisis, seriously inhibiting the UK’s national resilience.
A system of cabotage that allows the UK to steadily grow both our maritime skills base and strategic assets is critical to strengthening our nation’s security and resilience.
The RFA: a vital resource under pressure
The severe decline of both the UK merchant fleet and UK seafarer employment has increased the value of the role played by the Royal Fleet Auxiliary (RFA), a civilian-crewed fleet owned and operated by the MoD.
Traditionally, the RFA's prime role was supplying Royal Navy warships with fuel, food, stores and ammunition, as well as providing aviation and amphibious support. In recent years, the RFA's role has become increasingly diversified, with ships involved in troop and tank transport, forward repair duties, hospital ship services, and relief, rescue and humanitarian operations.
The RFA is a vital defence resource for the UK. Crewed by highly skilled and committed British Merchant Navy seafarers, it provides a cost-effective, efficient and economic operation. With the decline in the UK merchant fleet and the ever-growing likelihood of specialised operations and conflicts, the RFA has an ever-increasing role.
As the single biggest employer of British merchant seafarers, it is essential that the RFA is given the resources to consolidate its increasingly important role in recruitment and training.
A cabotage regime that includes a licensing scheme for international carriers could introduce a new revenue stream for the UK government which could be used to bolster the RFA and other defence services at a time when NATO member states are being urged to spend more on national security.
Lessons from the pandemic
During the Covid-19 pandemic, the true nature of the ship registration business and the predominant practice of registering vessels in FOCs was revealed.
FOCs were shown to be powerless when transportation hubs and port states locked down. With no one enforcing their rights under international law, including the Maritime Labour Convention, seafarers were denied repatriation at the expiry of their contracts, tantamount to forced labour.
Seafarers were denied medical care ashore, even for non-Covid-related illnesses such as strokes, broken bones, tumours and dental care. Deceased seafarers were kept in the ship’s cold storage alongside food because port authorities refused to allow their bodies to be repatriated for burial.
Shipowners using FOCs turned to their home countries demanding bailouts, state subsidies and diplomatic interventions. When the open market failed them, they relied on the largesse of the state, with taxpayer funds being used to support foreign-flagged vessels and overseas crews.
To ensure seafarers are not left exposed like this again, the UK must enforce a genuine link between flag and shipowner and ensure that flag states effectively exercise jurisdiction and control over their ships.
Nautilus recommendations for UK cabotage
Nautilus is campaigning for a UK cabotage system that grows the UK Ship Register (UKSR) and the number of UK-resident seafarers, thereby boosting our domestic shipping industry and protecting our strategic national maritime assets and capabilities.
We recognise that introducing maritime cabotage would be a significant change to the UK shipping industry, which is currently heavily reliant on foreign-flagged vessels. For that reason, we do not believe that a complete ban on all foreign-flagged vessels from engaging in coastal trading would be in the UK’s interests – at least initially.
However, the status quo that allows foreign-flagged vessels to engage in coastal trading without any restrictions, undermining the UKSR and jobs of UK seafarers, cannot continue.
We propose a licensing scheme that would allow foreign-flagged vessels to apply for a temporary licence to engage in UK coastal trading. This licence would require shipowners to comply with UK conditions and be granted by the Department for Transport (DfT) and the Maritime & Coastguard Agency (MCA) wherever there is clear demonstrable evidence that trading cannot be conducted by UK-flagged vessels with UK-resident crew.
This licence would allow the DfT and MCA to retain data on the number of foreign-flagged vessels involved in UK coastal trading, which currently does not exist. The DfT and MCA would thus be able to track the exact areas where the UK remains vulnerable and allow for targeted support to grow the UKSR and UK maritime skills.
The DfT and MCA could also introduce a levy for the application of a temporary licence, which could support additional resources required to implement this system and provide revenue for the Exchequer.
While a cabotage system is being established, we believe the UK government should change public procurement rules to prioritise public contracts for companies committed to the UK flag and UK-resident crew, particularly for the offshore energy and renewables sector. This would ensure public investment to grow our renewable energy capabilities will support jobs for UK seafarers and build our strategic maritime assets.
We would also recommend that the government legislate to introduce a crewing requirement for vessels operating under the UK flag within UK waters, to ensure the UK Ship Register supports jobs for UK-resident seafarers.
These measures could be achieved as part of a wider review and modernisation of the Merchant Shipping Act, which has not been updated since 1995.
The government should also ensure that public contracts are only awarded to employers that negotiate with trade unions and whose workers are covered by collective agreements. Respect and promotion of these key conditions must be an integral part of any public procurement process, from planning to award and performance of contracts.
A significant mandatory award criterion connected with collective bargaining must be included, giving an advantage to tenderers whose workers are covered by collective agreements. Economic operators that have violated workers’ and trade union rights should be excluded from public procurement processes.
It is essential to ensure the full respect of the ILO Freedom of Association and the Protection of the Right to Organise Convention No 87 (1948) and the ILO Right to Organise and Collective Bargaining Convention No 98 (1949) in public procurement processes.
These measures could be achieved through modernisation of the UK’s Procurement Act 2023.
Comprehensive maritime strategy
We must be clear that a mandatory seafarers’ charter alone will not reverse Merchant Navy decline in the UK, but it can be the foundation of a coherent and transformative maritime strategy including cabotage and bilateral arrangements to tackle social dumping – the practice where companies gain an unfair competitive advantage by exploiting differences in labour standards, often by moving operations to places with lower wages and weaker regulations.
A review of the UK Tonnage Tax, coupled with increases to the government’s Support for Maritime Training funding (SMarT) scheme, is urgently required to encourage growth in Merchant Navy capacity. This can and should be linked to a transformative maritime strategy that includes maritime cabotage for UK coastal shipping and improved fiscal support for the nation’s internationally trading fleet.
The last great innovation in UK maritime policy was in 2000, with the introduction of the Tonnage Tax regime, a package of measures to help reverse the decline in the UK shipping industry. While the Tonnage Tax has had some success, evidence shows these measures have not halted the decline in national-flagged ships or protected our jobs and maritime skills base.
A transformative opportunity
Maritime cabotage could be a revelation for the UK shipping industry. With the right interventions from government, we can return our industry to supporting coastal communities and providing quality jobs and employment, whilst protecting our national interests and supporting our resilience and security.
A cabotage system would ensure that critical maritime infrastructure and skills remain under British control rather than being outsourced to foreign-flagged vessels. This matters for national security. In a crisis, nations want assured access to ships, crews and maritime expertise.
The choice now facing government is stark: continue to preside over managed decline, or take the strategic decisions required to restore a strong, skilled and nationally-anchored Merchant Navy fit for an uncertain world.
Join the campaign for cabotage
The case for UK maritime cabotage is compelling, but it will only become reality if maritime professionals unite to make our voices heard. We are launching a comprehensive campaign to secure cabotage legislation that protects British maritime jobs and strengthens our national security.
Get involved! We can all help to make cabotage happen by writing to our local MPs – explaining why cabotage matters for our jobs, our community and the nation's security.
Nautilus will provide template letters and briefing materials to help you make the case effectively. To access these, look out for the campaign emails that will be coming round to all UK members in March and April 2026. Show your MP that seafarers aren't 'out of sight, out of mind,' and your actions will make a real difference.
- Download the full Nautilus cabotage policy report free of charge here
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