Why are "effective US-controlled" ships licensed under foreign flags?

The reason "effective US-controlled" ships are often licensed under foreign flags primarily relates to the desire to escape high insurance and wage costs associated with operating under the American flag. By registering under a foreign flag, these vessels can take advantage of lower labor costs and more favorable insurance rates that may not be available domestically. This practice allows operators to remain competitive in the global shipping market, where operational efficiency is crucial, and maintaining lower overheads can significantly enhance profitability.

While reducing operational costs could also be a valid consideration, the specific focus on insurance and wage costs highlights a targeted strategy employed by shipping companies to optimize their financial performance. Licensing under foreign flags is a common practice among many shipping lines, enabling them to circumvent certain U.S. regulations and associated costs, ultimately benefiting their operational models.