The International Transport Forum 2019 Summit on ‘Transport Connectivity for Regional Integration’ took place from 22 to 24 May 2019 in Leipzig, Germany. As the forum said, maritime transport has undergone major changes over the last decade, with overcapacity, environmental issues and employment, presenting new challenges.
Maritime transport has experienced many changes the last ten years, with many shipping companies not recovering from the 2008 crisis yet. Namely, overcapacity has put freight rates and profitability under pressure, while environmental issues, such as the 2020 sulphur cap have become more prominent.
[smlsubform prepend=”GET THE SAFETY4SEA IN YOUR INBOX!” showname=false emailtxt=”” emailholder=”Enter your email address” showsubmit=true submittxt=”Submit” jsthanks=false thankyou=”Thank you for subscribing to our mailing list”]
What is more, shipbuilding activity in the main ship types moved to Asia, while construction of complex ships has remained in Europe, but under growing competition from Asian manufacturers.
As far as employment is concerned, the number of European seafarers has fallen and more seafarers are now coming from developing countries. Regarding ports, major developments regard the ship size, varying from container ships to car carriers and cruise ships.
In the environment sector, government support has had mixed impacts. Specifically, in the EU, a strategic choice was made to support the shipping sector through state aid, but not the shipbuilding sector.
In Asia both sectors are supported and the result of subsidised shipbuilding has been overcapacity in shipbuilding and low costs for new builds. In the meantime, maritime subsidies provided shipping companies with the means to acquire these.
Maritime subsidies have distorted and are still heavily distorting competition and have contributed to the current overcapacity in merchant shipbuilding
said Christophe Tytgat (Sea Europe).
These subsidies come in various forms, from expenditures to favourable tax treatment in the form of tonnage taxes that replace the regular corporate income tax, according to the International Transport Forum.
Commenting on this, Philippe Alfonso (ETF) says that thee subsidies can be explained by the emergence of flags of convenience. However, he highlighted the fact that most of the subsidies in Europe have not helped to maintain seafarer jobs for Europeans.
Meanwhile, the emergence of China has impacted maritime transport, as in one decade, China’s control of container terminal operations in Europe has increased from zero to 10%. For the port of Vancouver, trade with China represents now a third of total cargo volume. In fact, several speakers note that the EU has become more proactive in its dealings with China and aspire that the reciprocity principle that it has announced will eventually apply.
What is more, different ways were discussed in which maritime subsidies could be conditioned. According to Mr. Alfonso:
It would make sense to make maritime subsidies, such as tonnage taxes, conditional on creation of European seafarer jobs
For his part, Christophe Tytgat envisions a system in which local content requirements will be added to subsidies for short sea shipping, while Katherine Bamford underlined how federal priorities are often translated into support programmes at the port level. Furthermore, she added that the need for evidence-based policies and collaborative approaches to policy-making.
