An improved methodology to measure flag performance for the shipping industry

The subject of measuring the performance of registries has been a topic of policy discussions in recent years at the regional level due to the recasting of the European Union (EU) port state control (PSC) directive which introduces incentives for flags which perform better. Since the current method used in the EU region entails some shortcomings, it has therefore been the subject of substantial scrutiny. Furthermore, the International Maritime Organization (IMO) developed a set of performance indicators which however lacks the ability to measure compliance as set out in one of its strategic directions towards fostering global compliance. This article develops a methodology to measure flag state performance which can be applied on the regional or global level and to other areas of legislative interest (e.g. recognized organizations, Document of Compliance Companies). The proposed methodology overcomes some of the shortcomings of the present method and presents a more refined, less biased approach of measuring performance. To demonstrate its usefulness, it is applied to a sample of 207,821 observations for a 3-year time frame and compared to the current method.