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01 December 2021 The on-line newspaper devoted to the world of transports 15:32 GMT+1



Danish Shipping - Index

DANISH SHIPPING 2001

Danish Shipping

The steady progress recorded by Danish shipowners generally has enabled continued consolidation of the industry. Last year the industry increased its earnings by 70 per cent, resulting in a foreign-currency turnover of more than 10 billion USD. About one-half of revenue derives from vessel operations under national flag while the remainder is generated by vessels chartered from abroad. Today, shipping is Denmark's second largest export industry, with the combined Danish shipping industry ranking among the ten largest in the world. It is estimated that Danish shipowners and their overseas affiliates together operate a fleet of 20-25 million tonnes deadweight.

The 600 vessels registered under Danish flag, with a record deadweight tonnage totalling 8 million tonnes, rank among the most technologically advanced in the world. The ongoing newbuilding programme of 70 vessels, valued at almost 3 billion USD, means the average age of the Danish merchant fleet is as low as seven years. Compared to an international average of 13 years, this makes the Danish fleet also one of the most modem merchant fleets in the world.

More than 95 per cent of the worldwide shipping activities of Danish shipping companies consists of cross-trade operations between foreign ports. The USA continues to be the single most important market for Danish shipping, closely followed by Japan and, increasingly, China. The EU as a block is also an important market for Danish shipping companies, although 75 per cent of the turnover stems from activities that do not include calls at European ports. Danish owners operate in practically all ports the world over, servicing local industry and shippers' interests.

Danish owners operate a full-scale container fleet whose operations are based mainly on door-to-door logistics. However, their services encompass almost every aspect of maritime activities: ro-ro and passenger operations, specialized product carrier services, cable- laying vessels, salvage and offshore supply services, traditional bulk, tanker trade, general cargo and reefer activities. Danish owners are also engaged in related activities such as shipbuilding, offshore drilling and production, warehousing, storage, container port operations, rail transport, inland distribution logistics and buying and selling ships.

The Danish shipping industry has generally maintained its competitive edge by investing in technologically advanced vessels, employing highly skilled personnel and utilizing the know-how acquired due to Denmark's longstanding maritime traditions. Over the last decade, the key figures for tonnage, turnover and employment have all increased, matched by a corresponding reduction in the average age of the Danish merchant f1eet. Shipping operations have been the mainstay of the entire maritime industry, upholding the role of Danish shipping companies and maritime authorities as important players in national and international shipping arenas.


INTERNATIONAL TRADE

Freedom of the seas and unimpeded access to maritime trade lanes are crucial to maritime service providers and to international trade in general. In recent years, most governments and maritime authorities have become more aware of the advantages of such liberal principles. The industrialized countries of the OECD have traditionally pursued the principle of free market access, and other regions of the world such as South America and the Far East are now increasingly realizing the benefits for their economies of allowing their overseas trade to be serviced by the most efficient shipping companies.





Despite the general trend towards liberalization in world trade, evidenced by the recent Chinese and Russian negotiations about WTO membership, it is desirable to continue working for the overall liberalization of international shipping through the WTO in order to secure a better legislative framework for what is already a fairly liberal environment. It is important to sustain efforts to create effective conditions for free and fair competition in the maritime industry. Surprisingly, the US government seems reluctant to include maritime services in a WTO agreement despite largely granting free and unrestricted access to the all-important US shipping markets.

Some parts of the world still pose many obstacles to efficient maritime operations, primarily West Africa and a few countries in the Far East. It is imperative that international organizations such as the WTO, OECD and IMF/World Bank regularly address the issue and that the EU enters into a closer dialogue with these countries in order to promote sea-borne trade. Danish shipowners will support any general initiative to ensure that external maritime relations remain on the international agenda.

Although there is free market access to most international trade lanes, vast potential exists in several regions to further liberalize coastal trade, port services and inland transport services. Even though WTO negotiations are largely confined to international deep-sea trade, governments should stilI address the coastal and inland service issues, at least bilaterally, and agree on measures to optimize operations such as feeder and inland trucking services. Efficient and competitive port services are another important factor in this context.

Port policy-makers must recognize that, since ships are not the only beneficiaries of port services, certain port-related costs should be borne by cargo-owners and the local community. Today, port charges are a substantial shipping cost, and shipowners' contributions should not exceed the cost of the port services actually provided. The recent European Commission initiative to improve auxiliary services in ports will hopefully provide a yardstick for port operations and thus promote sea transport in general.

Efficiency in the international transport service system can also be enhanced in other areas. Customs operations must not unnecessarily hamper the efficient, free and rapid flow of trade. International solutions must be found to enable shipowners to disembark stowaways exploiting the international transport system to leave their native country. Pirate attacks on merchant vessels still occur in a few regions of the world. More international pressure must be exerted on governments, particularly those responsible for the areas in which these often wel1-organized pirate operations are based, in order to combat such practices.


REGULATORY POLICY

Apart from artificial barriers to free market access, direct subsidies have a negative impact on the international shipping industry in that they distort competition. It is vital that the international Col11lnunity is seen to combat the problem of subsidies, particularly in relation to shipbuilding. Heavy shipbuilding subsidization will undermine the shipping industry if new tonnage is ordered and put into service without sufficient economic justification. A subsidy race in this sector must be avoided and the current problem of subsidies to South Korean yards must be resolved without reintroducing subsidies in other countries.

Direct subsidies to shipowners are likewise a potential threat to the viability of the shipping sector and must be avoided. The EU has adopted a balanced policy of banning direct subsidies but allowing alleviating of the public burdens imposed on the shipping industry .Public taxes have been reduced for shipping personnel, and the revenue taxes levied on shipping companies stabilized through so-called tonnage tax systems. Today, most European countries have introduced tonnage tax systems and it is hoped that Denmark too will follow suit in the foreseeable future. Such a policy should, moreover, be a benchmark for international standards to prevent direct subsidies being granted to the shipping sector while providing a framework for an internationally competitive industry.

The competition rules applying to the international shipping industry must respect the need for international comity. The main issue is therefore to maintain general anti-trust immunity for cooperation agreements in the shipping sector. This principle is being pursued in all major international trading centres in recognition ofthe capital-intensive, international nature of shipping. In a huge worldwide market, maritime transport can only be rationalized and optimized if unhindered cooperation is assured by adherence to well-defined competition rules. This concept seems to be accepted in the USA, the EU and Japan where a balanced approach to maritime competition rules has prevailed. A clear legal framework in this area is a prerequisite if shipowners are to avoid inadvertently infringing competition law, and fines should not be levied on the shipping industry on the basis of a retroactive "reading" of hitherto unclear competition rules.

All policy relating to maritime regulations must be considered in an international context. This applies to a most any regulatory measure -economic, social or technical -anywhere in the world, in any international shipping marketplace. National and regional initiatives must respect the global nature of shipping. Shipping-policy decisions should be made by the international community through the WTO, safety-policy decisions by the United Nations' International Maritime Organization (IMO), and decisions on social matters in the maritime sector by the United Nations' Labour Organization (ILO ).

In its decisions on social matters, the ILO should aim to set meaningful, enforceable standards for the basic conditions of employment contracts. Such guidelines should particularly address the rights of seafarers based on internationally applicable standards.


SAFETY AND ENVIRONMENT

The IMO is the vehicle for promoting safety at sea and environmental protection. Numerous conventions, codes and recommendations covering all aspects of safety and environmental protection have been adopted at international level.

Nevertheless, one of the most significant problems in relation to safety at sea is the lack of compliance with the comprehensive body of international regulations. In a number of countries, the f1ag state control carried out by national maritime authorities or appointed classification societies needs to be further enhanced. More efficient port state control might be achieved if authorities strengthened their systems for detainment of substandard vessels. Finally, for shipping companies, the implementation of the International Safety Management Code (ISM) has clearly been an important step towards further enhancing safety at sea.

It is important to ensure that existing regulations are properly adhered to rather than establish new regulations that through f1ag state or port state control impose additional burdens on shipowners already complying with existing regulations. Efforts should also focus on increasing awareness, not only among national maritime authorities and shipowners, but also among customers and port operators who often are behind unwarranted demands for substandard shipping.

Recent oil spills in European waters have increased political pressure on governments to introduce stricter regulations to prevent the recurrence of such disasters. While it seems worth pursuing the EU initiatives to strengthen port state control in compliance with international regulations and speed up the phasing-out of single-hulled tankers through the IMO, it is of paramount importance to avoid regional measures which may not reflect international priorities. The IMO is to be commended on its efforts to seek international solutions, also in such complex matters as the current proposal to phase out single-hulled tankers. European Commission proposals to establish burdensome reporting systems and an EU maritime agency will not necessarily result m better safety but merely lead to more bureaucracy and regionalization. Any changes in the overall international liability and compensation system must respect the principle of shared liability of ship- and cargo-owners. A balanced assessment of this complex issue based on mutual international understanding is a vital precondition sine qua non.

Shipping is basically an environmentally friendly mode of transport, but the combined international regulations on safety and environmental protection must be more strictly enforced to guarantee the seaworthiness of fleets and their compliance with environmental regulations. The recruitment of well-qualified seafarers and an internationally approved system for an all-round shipping education are other important issues. Providing the best conditions for health and safety at sea that respect the unique nature of the work will also enhance safety at sea and environmental protection.

This publication closed for
contributions on 3 May 2001
J. Fritz Hansen
M. Lund

Danish Shipping - Index







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