UK P&I Club highlights consequences of flouting maritime cabotage regulations

UK P&I Club, one of the leading providers of protection and indemnity insurance, has published a legal briefing on the main global cabotage regimes, highlighting the restrictions, exceptions, and penalties for shipowners who violate these regulations.

Maritime cabotage is the sea transport of passengers and goods between two sea ports located in the same country. Coastal trade, particularly in archipelagic countries and countries with long coast lines are an important and lucrative trade. It is therefore unsurprising that countries try to restrict the commercial transportation of goods and services between their ports and islands to nationally owned vessels.

Although the protection of cabotage trade remains a high priority for most countries, not all countries are able to develop sufficient shipping capacity to service their coastal shipping trades. It is also recognised that improved marine transport connectivity, particularly in containerised liner shipping, increases competition which can lead to reductions in trade cost and growth in trade volumes.

Most countries have therefore relaxed restrictions in their cabotage regimes by entering into trade agreements with other countries incorporating exceptions and waivers into their regimes for foreign flagged vessels to participate in their cabotage trades. For example, there are special regulations on domestic transport for services across the Taiwan Strait, between mainland China and Hong Kong or Macau.

The UK P&I Club say: “Though they have been softened in recent times, regulations governing cabotage regimes can vary greatly from region to region and it is important for shipowners to be informed. Those who fail to comply with cabotage regulations can receive heavy fines, have their vessel refused entry to port, and in severe cases, have their international liner operation license cancelled, making this legal briefing a valuable document for all shipowners and operators.”