But tax changes pushing shipowners to leave the country are a long-term threat
Paul Berrill London
A government team set up to implement initiatives proposed by last September’s Maritime Growth Study is getting down to business just as another report into the future of the UK’s shipping industry lands on everyone’s desks.
The latest report highlights £4.4bn gross value added (GVA) to the UK economy by maritime services – led by marine insurance – but also shows the country remains the global leader in shipbroking, shipping law and education.
The UK lays claim to a 35% share of global marine-insurance premiums, 26% of world shipbroking revenue and 25% of its maritime legal partners, according to “The UK’s Global Maritime Professional Services: Contribution and Trends” report compiled by consultant firm PwC.
PwC partner Christopher Temple, at a briefing in London last week, said the shipping sector employed some 10,000 people and that 80% to 85% of the revenues earned by UK outfits in it came from outside the country.
PwC assistant director David Smith claims the cluster effect means “the whole was more than the sum of the parts”, with maritime insurance contributing 65% of the total GVA and the value of education being an important underpinning factor.
However, Smith warns there are challenges, with shipfinance being a major area that has declined in value, particularly losing market share to Asian banks.
“It’s not a fatal challenge to the UK that we do not have a big domestic shipping industry but it certainly would not hurt to have a broader base of business,” Smith said.
But he adds that it is “crucial” important shipping institutions such as the International Maritime Organization (IMO) and Baltic Exchange stay in London.
However, Lambros Varnavides, vice-chairman at the Baltic Exchange, said: “The Achilles heel is that, without a shipowning base in London, we will gradually wither away. Owing to the change in tax legislation we have already seen, some very prominent names have left. Without that base, gradually all the services will suffer.”
Harry Theochari, global head of transport at Norton Rose Fulbright, warned that some economists predict the world’s biggest trading corridor will be between advanced and emerging countries in Asia by 2030. He also cites figures showing that in the seven years to 2014, capital available to shipping dropped from $120bn to $88bn – in large part due to UK banks stopping lending to the industry.
Dr Grahaeme Henderson, vice-president of shipping and maritime at Shell and president of the UK Chamber of Shipping, asked what action is being taken to prevent a continued decline of the UK’s shipping hub.
Doug Barrow, chief executive of Maritime London, said the UK government expects the industry to respond to the 18 recommendations of last year’s growth study.
A meeting between the industry and government to discuss progress on the points made on skills and training was hosted by the UK Department for Transport last week.
An implementation team set up by the department has been headed by new deputy director of maritime growth Rod Paterson for the past seven weeks.
“We have to drive forward the process,” Paterson said. “Ministers will be expecting all of us collectively to come together and deliver.”
Paterson tells TradeWinds that the team is looking at ways to grow the UK shipping register, after an 8% expansion in the past year. The first deadline to consider progress will be this autumn.
Guy Platten, chief executive of the UK Chamber of Shipping, said the industry should champion its successes.
He claims shipowning companies have moved in and new ones have been set up in the UK, also pointing to a 98% success rate of newly qualified officers securing employment.