As Scandinavian companies continue to report record results from recently booming markets, all would seem set fair on the north European shipping barometer. The region is home to some of the world’s largest shipowning groups, there is a thriving shipping services sector and a number of R&D initiatives are steadily pushing at the very forefront of maritime technology.
There are, however, a range of strategic policy issues which pose significant challenges. The principal concern throughout this high-cost region is the competitive position of shipowners relative to their counterparts elsewhere in Europe.
In Norway, for example, currently the world’s fifth largest shipping nation, recent warnings that the maritime cluster is failing to hold its own are of deep concern. According to Norwegian Shipowners’ Association (NSA) boss Marianne Lie, owners have been moving out because of the ‘negative fiscal framework’ at home.
This embraces both the tonnage tax and other taxation issues. But it is not surprising that owners feel hard done by. Norwegian tonnage tax works differently to most other European regimes, is not as favourable and has been changed more than 20 times since it was introduced nine years ago.
Norwegian fleet declining
According to the NSA, the Norwegian foreign-going fleet continued to decline through 2004, down by more than 5% in tonnage terms. About 57% of this fleet flies the Norwegian ensign but this too fell by 2% over the year, continuing a trend set over several years.
Speaking at a New York conference in February, NSA’s Lie emphasised the significance of a Government commission set up to review shipping taxes, which is due to report by December. But the NSA has been critical of the commission’s timeframe, claiming that the deadline was much too late to reverse the present trend.
Certainly the early weeks of this year bear out this warning. NSA statistics reveal that the country’s second register, NIS, which had held its own during the second half of 2004, lost 34 ships representing around 5% of its fleet in the first two months of this year. “January and February were the worst months in the history of NIS,” an NSA report on economic trends and shipping declared gloomily. However, the NSA is working on initiatives to restore the competitiveness of the NIS and to expand its trading area.
Swedes demand own regime
Tonnage tax is causing consternation elsewhere. In Gothenburg, Swedish shipowners have been demanding their own regime for ages. Now, Brostrom’s boss Lennart Simonsson reckons that the senior civil servant appointed by the Government recently to review other European regimes appears to understand the issues very clearly.
“His task now is to produce the rules,” Simonsson told Seatrade. “And I will be very disappointed if it is not in place this year.” Swedish Shipowners’ Association (SSA) md Håkan Friberg sits on the commission which is assessing other tonnage tax regimes. “The level has to be competitive with others,” he says, “and the timetable is crucial. We must have it this year.”
The SSA is striving to raise the country’s competitive position and aims to make Sweden one of the world’s top ten shipping nations within ten years. It is making considerable progress. By employing a certain number of non-EU seafarers on Swedish flag vessels, owners have been able to cut costs whilst measures to save them paying social security costs for seamen have also helped.
EU’s attention not welcome in Denmark
Denmark’s competitive position is also causing concern. As home to some of the world’s largest bulk shipping pools developed over time to maximise the level of service to customers, the European Union’s attention to industrial co-operation in bulk shipping is not particularly welcome. As Jan Fritz Hansen of the Danish Shipowners’ Association points out, if the rules on pool arrangements are tougher in Europe than they are elsewhere, European shipowners will be placed at a disadvantage in a global context. His organisation is currently seeking appropriate guidance from the Commission.
A major concern for both Sweden and Denmark is a result of the dramatic growth in Russian oil exports through the Baltic, which has recently been declared a Particularly Sensitive Sea Area by the IMO. All countries bordering the Sea, with the exception of Russia, supported this move and, with traffic rising so fast and operation in ice a requirement for a number of months each year, the safe passage of tankers through the Baltic is a key concern.
The cargo volumes are dramatic. Oil exports from Primorsk, for example, are forecast to rise from about 12m tonnes in 2001 to more than 65m in 2006. And a range of new export terminals and capacity expansion has been commissioned at products terminals in Vysotsk, Batareynava and St Petersburg. Plenty of safety regulation exists but enforcement remains the problem. “Unfortunately, port state control does not work that well in some countries,” says Friberg.
Reprinted by permission from the June 2005 issue of Seatrade magazine
Date: 2005-06-09