Transshipment Hubs for Flags of Convenience Vessels

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Illegal, unreported, and unregulated (IUU) fishing is a major environmental crime that threatens marine life and disrupts conservation efforts. If this illegal fishing continues at its current pace, global fisheries could collapse by 2048 (Worm et al., 2009). This collapse would severely impact not just the fish populations but also the millions of coastal communities that rely on fishing for their livelihoods. This collapse would directly or indirectly affect over 57% of the global population, not including those employed in the fishing industry (Petrossian et al., 2015).

Several factors contribute to IUU fishing. One is the use of "flags of convenience" (FOC), where ship owners register their vessels in countries with lax regulations. This practice helps them avoid stricter laws and penalties, allowing illegal activities to continue unchecked (Alderton & Winchester, 2002; Petrossian et al., 2020). Another factor is the existence of "ports of convenience," which have minimal or no regulations to inspect and monitor offloaded fish, making it easy for illegally caught fish to enter the market (Palma, 2010; Long et al., 2020). Additionally, illegally caught fish can enter legal markets via transshipment, where fish are transferred from one vessel to another at sea, allowing illegal fishing ships to avoid port inspections and reducing the costs related to returning to ports (Sellen, 1996; Miller et al., 2018).

Using FOC to offload catches at ports of convenience or using transshipment vessels to launder illegal fish creates ideal conditions for illegal fishing to thrive. Since a significant amount of fish is offloaded at ports using carrier vessels, it's crucial to understand the behaviors and characteristics of these carriers to address and mitigate IUU fishing effectively.

1. Mapping Hotspots of Potential Illegal Activities: This is the first study to map out where FOC-flagged carrier vessels operate across the global oceans. Identifying these hotspots is crucial for creating targeted interventions to stop potential illegal activities. This information can help regional fisheries management organizations make better policy and management decisions.
2. Analyzing Risky Ports: Using a crime science framework, specifically the concept of "risky facilities" (Clarke & Eck, 2007), this study is the first to analyze the characteristics of ports (and their countries) used by high-risk FOC-flagged carrier vessels to offload their catches. One new aspect of this study is the focus on ports affiliated with China. Given that China has the highest IUU Fishing Index Score (Hosch et al., 2023), is the top producer of fisheries products, and controls 38% of the world's distant water fleets (Pedrozo, 2022; Piesse, 2020), it's crucial to understand how a port's connection to China affects its likelihood of being visited by these risky vessels.
3. Multilevel Analysis of Ports and Countries: This study uses a detailed analysis to understand how both port- and country-level factors contribute to high-risk transshipment and illegal fishing landings. Understanding these factors will help develop targeted strategies to ensure that international, regional, and national fisheries management regulations are followed.

There is a lot of research showing that "ports of convenience" play a key role in illegal fishing (IUU) activities (e.g., Kuemlangan et al., 2010; Long et al., 2020; Marteache et al., 2015; Petrossian et al., 2020). However, there isn't much empirical research on what makes these ports attractive to illegal activities, especially when it comes to offloading fish from FOC-flagged carrier vessels.

Despite some research gaps regarding port attractiveness, previous studies have shown the importance of considering both country and port factors when assessing the risk of ports receiving illegally-caught fish. Country-level factors such as corruption, PSMA ratification, income, rule of law, and the effectiveness of monitoring and control measures are significant predictors of port risk. Port-level characteristics like size, overall traffic, and status as a free port are also important. However, few studies have empirically tested these port-level characteristics, and those that did not control for other factors (Petrossian et al., 2015). Moreover, no study has examined how China’s ownership or investment in ports relates to the risk of IUU fishing or offloading.

This review shows that while there has been research on port-level risks related to visits from IUU fishing vessels, there hasn't been much focus on the risks associated with FOC-flagged carrier vessels. Transshipment plays a crucial role in illegal fishing operations. Therefore, it's important to fill this gap by shifting the focus from fishing vessels to carrier vessels and examining if the same risk factors influence where these carriers offload their cargo.

This study will also look at additional port risk factors specific to transshipment, such as communication, availability of supplies, and distance from known IUU hotspots. Additionally, it will be the first to investigate how China’s ownership or investment in ports around the world increases the risk of these ports receiving fish from FOC-flagged carriers.

Clarke and Eck (2007) describe facilities as places with specific functions, like stores, bus stops, or ports. 'Risky' facilities are those where a few places experience most of the crime, while most experience little or none. The risks at these facilities depend on factors such as size (larger facilities have higher risk), the availability of valuable items, location, design, and management effectiveness. For ports used by FOC-flagged carriers, this framework helps in predicting risks. If supported by data, these risks can be managed to make ports less attractive for illegal offloading, thereby reducing the likelihood of illicit fish landings.

Data on all transshipment activities between August 2015 and August 2022 were collected from the Global Fishing Watch (GFW) carrier vessel portal. GFW is a leading organization for ocean monitoring, providing open-access data on vessel activities. They define a potential encounter between fishing and carrier vessels as when they are within 500 meters of each other for at least two hours, moving at less than two knots, and at least 10 kilometers from an anchorage. These encounters can involve transferring crew, supplies, or fish.

During this period, 53,580 transshipment activities were identified. However, Russia-to-Russia transshipments (23,948) were excluded because they occur within a self-contained system, do not involve other countries, and the Russian flag is not considered a flag of convenience.

To understand why some ports are more at risk of receiving landings by risky carriers, the total number of ports visited by FOC-flagged carriers (117) was combined with those visited by non-FOC carriers (130), resulting in an initial sample of 247 ports. The World Index port databases were then searched for data on all predictor variables. Ports without data or with significant missing data were removed, leaving a final sample of 139 ports. Of these, 70 were visited by FOC-flagged carriers and 69 were not.

The main focus of this study is to understand how many times FOC-flagged carrier vessels visit each port. To do this, we looked at two types of factors: country-level and port-level.

Country-level factors include:

• Corruption levels
• Compliance with Regional Fisheries Management Organizations (RFMO)
• Membership in the Port States Measures Agreement (PSMA)
• Scores for Monitoring, Control, and Surveillance (MCS)

Port-level factors include:

• Overall port traffic
• Traffic by fishing vessels
• Composite scores for port accessibility, communications, and supplies
• Mandated entry inspections
• Proximity to the nearest transshipment hotspot involving FOC-flagged carriers
• Whether the port is invested in, operated by, or owned (partially or fully) by Chinese state-owned or backed companies

The original paper's appendix may be referenced for greater detail on the variables and their sources.

Modeling Approach Our dependent variable, the number of FOC-flagged carrier vessel visits, required us to use count models. We used a generalized linear negative binomial mixed model because of the large number of zeros and skewed data. This model was better than other count models, as confirmed by likelihood ratio tests, and it can handle both fixed and random effects.

To better understand where carrier vessels operate on the high seas and their connection to specific ports, this research used a tool called ArcGIS Pro to conduct a Hot Spot Analysis (Getis-Ord Gi*). Using 8 years of data, this analysis looked at the activity of both FOC-flagged carriers (8,821 activities) and non-FOC-flagged carriers (9,767 activities) using a method that considers the activity of 8 neighboring grid cells. The analysis divided the world into ½° by ½° latitude and longitude grid cells, counting the number of transactions in each cell.

Findings from Hot Spot Analysis:

• Consistent Hot Spots: Significant hotspots, marked in red cells in the above Figure, were found off the coasts of Argentina and Peru, the northwest coast and southeastern tip of Africa, the Arabian Sea, near the northeast coast of Japan, and in Micronesia, Polynesia, and the central Pacific Ocean. These areas were hotspots for both FOC and non-FOC-flagged carrier transactions.
• Differences in Hot Spots: Non-FOC-flagged hotspots were more concentrated off the coast of Alaska, the southeastern tip of Africa, near Japan, and in northern Europe and the Mediterranean Sea. FOC-flagged hotspots had larger concentrations off the coast of Peru and west of the Galapagos Islands. More than half of the FOC-flagged carrier transactions occurred within two of the five Tuna Regional Fisheries Management Organizations (RFMOs): IATTC and WCPCF.

Port Landings Analysis:

• The hotspots for FOC-flagged carrier transactions were mapped along with where these vessels offloaded their catches. While these ports are spread worldwide, they are heavily concentrated in a few locations.
• Top Ports: Four of the top five ports with the highest number of landings are in East or Southeast Asia (Busan, Zhoushan, Kaohsiung, and Singapore). The fifth is on the island of Mauritius. These five ports, out of the 139 studied, account for 36% of all landings.
• Smaller Island Ports: Other concentrations are found in smaller island ports throughout the Central and South Pacific Ocean, often near or within a hotspot. For example, the port of Pohnpei in the Federated States of Micronesia is located in a hotspot and had 23 unique landings by FOC carriers.

Findings from the Statistical Analysis of Risky Ports:

• FOC-flagged carrier vessels are significantly more likely to visit ports that:
• experience higher volumes of fishing vessel traffic
• are near high-seas transshipment activities
• are designated ports of entry for foreign vessels
• are Chinese-affiliated
• and are in countries that have low monitoring, control, and surveillance capacity

The goal of this study was twofold: first, to understand where FOC-flagged (risky) carrier vessels operate in the high seas and where they offload their catches globally, and second, to test the characteristics of the ports used by these vessels for offloading. Although some research has looked into IUU fishing vessels and the ports they use (often called ports of convenience), there hasn't been much focus on the role ports play in transshipment activities. Transshipment, which involves transferring fish from fishing vessels to carrier vessels, is a key part of IUU fishing operations. This study aimed to determine if the patterns found with IUU fishing vessels and the ports they frequently visit apply to FOC-flagged carrier vessels as well.

This study makes three main contributions:

1. Mapping Carrier Activity: It is the first study to map the spatial distribution of FOC-flagged carrier vessel activity compared to non-FOC-flagged carrier activity, and to quantify the number of landings by each FOC-flagged carrier vessel.
2. Testing Port Characteristics: Using the criminological model of risky facilities (Clarke & Eck, 2007), it is the first to empirically test why some ports see a lot of carrier landings while others see very few or none.
3. Comprehensive Analysis: It considers all relevant country- and port-level factors that could influence where carrier vessel operators choose to offload their catches, using a multivariate model to control for other variables. Previous studies on IUU fishing either didn't focus on the port level, used simple statistical tests, or didn't account for all relevant factors.

Ports where FOC-flagged carriers offload their catches are not randomly chosen. The top 5 ports, which make up about 4% of the sample, accounted for 36% of all landings, mostly in Southeast Asia. This pattern is consistent with other studies on risky facilities in both criminology and IUU fishing. For instance, top ports like Singapore and Busan, identified in this study, are also frequently visited by IUU fishing vessels.

Regression analysis showed a strong link between hotspots and carrier landings at ports. Ports near hotspots of transshipment activity were more likely to experience landings. Carrier vessel operators prefer closer ports to offload potentially illegal fish because it reduces fuel costs and time spent at sea. This behavior aligns with the "least effort principle," where offenders choose locations closer to their activity sites. Similar patterns are observed in other crimes, where offenders do not travel far to commit crimes. Studies have shown that proximity to viable landing ports is linked to IUU fishing activity at sea and that wildlife poaching often happens near roads.

Interestingly, ports requiring additional scrutiny (e.g., quarantine clearance) were more likely to be visited by FOC-flagged carriers, suggesting such scrutiny doesn't deter potential illegal activities. At the country level, ports in countries with lower PSMA compliance were more likely to have FOC-flagged carrier landings, supporting previous findings (Hosch et al., 2019; Hosch et al., 2023; Huntington et al., 2015). However, nationwide corruption levels didn't correlate with port landings when controlling for other factors, implying corruption at the national level might not reflect port-specific activities.

Chinese-owned, invested, or operated ports show a positive relationship with port landings. This is the first time this relationship has been tested in the IUU fishing literature. Given that over one-third of distant water fleets are Chinese (Pedrozo, 2022; Piesse, 2020) and China is known for IUU fishing issues (Hosch et al., 2023), it’s not surprising that Chinese-affiliated ports are more likely to have landings by FOC-flagged carriers. The reasons for this association are not clear. It might be because these ports are in countries with weak governance and monitoring, often underdeveloped, which is why China invests in them through its Belt and Road Initiative (McBride et al., 2023). These ports might have more landings due to governance issues rather than Chinese company influence.

Alternatively, Chinese-affiliated ports might be strategically chosen based on market demands, proximity to fishing hotspots, and the need for development aid. This suggests that landings at these ports by FOC-flagged carriers might be intentional, with lax inspections to avoid interfering with IUU fishing practices. For instance, Cape Verde's Porto Grande, a Chinese-affiliated port near a FOC-flagged carrier hotspot, had 34 landings, ranking 12th in the sample.

Finally, ports with more compliance issues (MCS measure) experienced more landings by risky carriers. This suggests that carrier vessel operators know which ports have fewer regulations and choose them accordingly. This implies that certain ports are considered more "friendly" to illegal activities.

Future research should further explore this relationship and see if it holds globally, considering all port- and country-level factors. Besides 'Chinese Affiliated' and 'Hotspot' port-level variables, the study also found that ports with more vessel traffic and required customs inspections were more likely to have FOC-flagged carrier landings. High vessel traffic might reduce the likelihood of inspections, aligning with previous studies (Marteache et al., 2015; Petrossian et al., 2015).

A lot has been written about how to combat illegal, unreported, and unregulated (IUU) fishing through local, national, and international interventions that make it harder and less rewarding for offenders (Spencer et al., 2021; Weekers et al., 2021; Marteache et al., 2020; Petrossian et al., 2015). For the problem of transshipment, several interventions can be applied at the port and sea levels.

Port-Level Interventions:

• Prioritize High-Risk Ports: Ports that frequently receive landings from FOC-flagged carriers should be targeted for interventions to reduce risky offloading.
• Adopt the PSMA: These ports and their nations should adopt the Port State Measures Agreement (PSMA), which allows countries to deny port access to foreign vessels suspected of IUU fishing and to prevent them from offloading their catches (Hosch et al., 2023).
• Increase Inspections and Monitoring: Increasing inspections, requiring pre-entry notifications, and verifying vessel monitoring systems before allowing offloading can raise the risk for IUU fishing activities (Petrossian & Marteache, 2022).

Sea-Level Interventions:

• Strengthen Surveillance: Enhanced surveillance of transshipment hotspots involving high-risk FOC-flagged vessels can deter illegal activities. This is crucial for Regional Fisheries Management Organizations (RFMOs) overseeing areas with significant FOC-flagged carrier activity, like the IATTC and WCPFC.
• Enhance RFMO Governance and Enforcement: RFMOs should strengthen their capacity to monitor and enforce regulations against IUU fishing and related transshipment activities. Creating blacklists for FOC-flagged carriers interacting with FOC-flagged fishing vessels can help in this effort.

Despite some limitations, this study makes a significant contribution to the literature on IUU fishing by focusing on risky carrier activities and the vulnerabilities of ports that receive them. Our findings highlight potential policy interventions and regulatory measures to combat IUU fishing and promote sustainable practices in the maritime industry.