The outcome of the recent British referendum is anticipated to affect numerous industries; the shipping industry can be no exception. Analyses foreseeing either a detrimental or beneficial impact for the shipping industry before and after the referendum have contributed to a blurry environment prevailing today.
Dr Martin Stopford, the president of Clarkson Research, called the news “an exciting prospect because, as every Greek shipowner knows, change creates opportunity”. The process of leaving the EU is an extension of what the maritime industry has been doing for years, Stopford told Splash. “Shipping started its ‘Sexit’ in the 1980s when even the German shipping companies flagged out – today over 70% of the world fleet is trading under international flags (i.e. not the owner’s national flag),” he said. “The resulting economic roller coaster has been exciting for investors; a problem for regulators like the IMO and port state control; and a great deal for consumers – today’s freight rates are no higher than they were 50 years ago!”
Clive Richardson, president and CEO of V. Group, thinks the Brexit’s impact on the shipping industry will be more or less neutral. “Of course, any event that causes regional economic uncertainty is going to add to the instability that the shipping market is currently dealing with. However, absent a major economic ripple effect from the UK’s decision, global trading patterns should be unaffected,” Richardson told Splash.
Tim Huxley, the CEO of Wah Kwong, was similarly sanguine: “People need to be realistic. It’s not going to change the fundamental problems we already have in the industry. In the short term, it’s probably good for UK-based shipping service companies as the dollars they earn will buy a lot more pounds. “As usual, the only immediate winners will be the lawyers, but out of change will come opportunities, and shipowners have been pretty good at seizing opportunity out of changing times” Huxley told Splash.
The UK Chamber of Shipping says the shipping industry is resilient by its nature, but the UK government needs to act quickly and strategically if it really wants to go alone. “The rest of the world beyond Europe has experienced significant economic growth, and a key argument by the ‘Vote Leave’ campaign was that the UK would be able to quickly sign free trade deals with trading partners around the world. Government now has to act quickly to ensure that happens,” the Chamber said in a statement. “We believe that Government should establish a new Free Trade Commission, working across the Department for Business and the Foreign Office, to train trade negotiators and begin the process of establishing new trading ties around the world and be ready for the negotiations with the remaining members of the EU,” it continued.
Lars T Ugland of LT Ugland Shipping thinks a Brexit will only affect the shipping industry if “dramatic changes in price of oil and other commodities directly affect the cost of vessels”. “The EU need to listen and take a hard look at themselves in order to keep Europe together. We must hope something good comes out of Brexit,” Ugland told Splash.
However, even in a post-Brexit era ports in the UK could still be bound by a European Union regulation they have strongly opposed in recent years.
A spokesperson for Associated British Ports told Lloyd’s List that the Port Services Regulation remained a concern for the company, adding: “We’re still in the EU and PSR’s application or not over the long term will depend on whatever is agreed to govern our new relationship [with the EU].”
The comment adds to those of UK shipping minister Robert Goodwill, who said at a British Ports Association event earlier this year that PSR would still apply under an arrangement that granted the UK access to the European Economic Area.
Furthermore, Brexit result could see UK facing an exodus of maritime talent. A survey issued by industry recruitment group Faststream shows that over 39% of employees who wouldn’t previously have looked at a move away from the UK would now consider roles overseas, with a further 23% undecided. “It’s a leave vote for the UK and a leave vote for UK maritime employees” comments Mark Charman, Faststream Group CEO. “Global mobility has always been a positive aspect of working in the maritime industry. 66% of respondents to our survey would have considered a role outside the UK prior today’s Brexit results, which shows just how flexible the maritime workforce is. The uncertainty that a leave vote brings just adds fuel to the fire.” The UK, like many other global maritime hubs, already faces a serious shortage of talent in shore-based operations. The opportunity for UK employees to secure jobs away from its shores will be possible for many, but not all. “The shock factor created by the reality of the UK leaving the EU will create immediate uncertainty for many UK maritime employees. However, wanting to move away from the UK doesn’t mean that employees can or should. It’s a big decision, both personally and professionally, and not one to take lightly.”
Lastly, Clay Maitland, author at Splash, believes Brexit could lead to a paradox: a more diminished Britain, except at IMO, where it will have more freedom, more influence, and more support for its views on maritime policy than it has in recent years.
The UK has a more or less automatic elected seat on the council, which is in no real danger of losing. But now that it is free of the formal need to consult, and certainly obey, Brussels, there will be a subtle but big change in how decisions are reached, and what those decisions might be.
The second consequence is the reverse: Brussels (or rather Paris-Berlin) will no longer be obliged to consult, and often conform, to the views of Whitehall and the City of London. No doubt the EU shipping policy directorate will be going over what pages to tear out of their briefing books.
Then there’s Greece, and particularly the influential Union of Greek Shipowners and its friend and neighbour, the London Greek Shipping Cooperation Committee. The Greek shipping community, and successive Greek governments, have always chafed under the policy whip of Brussels, which to most Greeks translates as ‘Berlin’. While Greece remains a member of the EU, the departure of the UK will be a powerful incentive to reject Brussels’ maritime diktats, at least those it doesn’t like.
Overall, there will be a paradox: Brussels’ control of a one-size-fits-all policy on maritime policy, at least at IMO, will be considerably diminished, within the bloc itself. Countries like the Netherlands and Denmark, though still charter signatories of the Rome and Maastricht treaties, have powerful maritime, banking and insurance interests. They, along with Greece, are likely to form an influential counterweight to Brussels. And they, after all, are still inside the tent.