Code letters or ship's call sign (or callsign) were a method of identifying ships before the introduction of modern navigation aids and today also. Later, with the introduction of radio, code letters were also used as radio call signs.
In 1857, the United Kingdom sponsored the Commercial Code of Signals for the Use of All Nations at Sea, which introduced four letter flag signal codes to identify individual ships. The Commercial Code of Signals, c. 1900, was modified to become the International Code of Signals. By the 1860s, individual ships were being allocated code letters in the United States and Europe. From 1874, code letters were recorded in Lloyd's Register as part of each individual vessel's entry in the register. Generally, code letters allocated to a ship remained with that ship, although there are known cases where new code letters have been allocated following a change of port of registry or owner. Code Letters were sometimes reallocated once a ship had been struck from the register, but no two ships bore the same code letters at the same time. With the introduction of radio for communications, code letters were used also as radio call signs.
Code letters used the twenty-six flags that represent the letters of the alphabet, plus the ten flags that represent the digits 0 - 9 also have been used. The substitute flags have not been used for call signs.
Each flag has own name. If the ship's call sign is "3EJH2" (Panama Flag) the seamen never say "Three E J H Two". They say "Three Echo Juliet Hotel Two" to avoid misunderstanding as every country seamen have own pronunciation of letters and during speech over radio letters can be inaudible.