Do Port State Control Inspections Influence Flag- and Class-hopping Phenomena in Shipping?

The flag of registry and classification society are an integral part of the target factors used by Port State Control (PSC) authorities when deciding on vessels to select for inspection. A shipowner may then have an interest in changing the flag of registry (flag-hopping) and classification society (class-hopping) to avoid future controls. Using data on PSCs collected over six years from 7,500 vessels, we study the relevance of this assumption using bivariate Probit models. Our estimates show that vessels in relatively bad condition are more likely to be subject to flag- and class-hopping and that these phenomena are more likely among vessels which have changed flag and class in the past.