EUROPEAN SHIPPING IN A GLOBAL MARKET
WORLD SHIPPING DEVELOPMENTS
» I N D E X «
The year 2000 was a particularly good one for the tanker market and strong improvements were also experienced in the dry bulk market. Other shipping markets experienced less positive and rather mixed developments.
While starting slowly, yearly average rates for crude carriers increased significantly while product carriers also enjoyed a healthy improvement. The year also witnessed solid improvements in the dry bulk market. In the container market rates rose in the first part of the year but eased off towards the end. The LPG carrier market experienced substantial rate increases particularly for the large vessels.
The world fleet increased by 2.4% in 2000 compared to 0.9% in 1999. Deliveries of new tonnage amounted to 6.2% and deletions to 3.8% of the existing fleet at the start of 2000.
World seaborne trade in 2000 increased by some 4.1% in shipments of crude oil, from 1548mt in the previous year to 1612mt. For the five main dry bulk commodities there was a solid increase of 7.4%, from 1196mt in 1999 to 1285mt in 2000.
On the basis of OECD figures, world trade generally increased from 5.7% in 1999 to 13.3% in 2000. While showing signs of a slowdown, the US economy continued to be the main engine of global economic growth, with the solid performance of Asian economies also being a contributing factor.
After a period of significant growth in the world economy, economic forecasts have been revised downwards significantly. The issue of a soft or hard landing in the US and its repercussions on other economies is a particular matter of concern and debate. Moreover, the potential implications of he recent terrorist attacks on the WTC building in New York add to the high degree of uncertainty on how developments will unfold.
Notwithstanding such considerable uncertainties, estimates would indicate that the world seaborne crude oil trade will, in terms of volume, increase over the next couple of years by between 2-3%, with the tonne mile increase estimated to be up to 3.5% over the same period. The total tanker fleet is expected to rise this year by 2.5% and by 3.8% in 2002. The dry bulk market after a period of strong demand is estimated to show modest tonne mile increases of around 2% in 2001/02. While fleet growth could be as much as 5% this year, a level of 1.5% is forecast for 2002. Prospects for the container market have deteriorated. The negative trend in time charter rates seen in 2001 could well continue due to reduced economic growth to which trade volumes are closely linked as well as to a spate of new buildings recently ordered.
Important contribution to the European Economy
The EEA registered trading fleet (EU plus Norway and Iceland) as at 1st April 2001 amounted to over 6900 vessels with a total of 92 mgt, an increase of some 6% over the previous year. This represents some 17.2% of the world fleet. To realistically assess the overall importance of European shipping it should be noted that the fleet controlled by EEA shipowners under both EEA and third country flags amounted to 221 mgt, representing over 40% of the world fleet, a small increase compared to the previous year.
The importance of shipping to the European Union is demonstrated by the fact that over 90% of its external trade and up to 41 % of the trade between Member States is carried by sea. The recent oil crisis highlighted the dependence of the EU on ships for the transportation of its oil trade and for the continuity of its energy supply.
Moreover, due to its extensive cross-trading activities, European shipping provides valuable resources for sustainable economic development through invisible earnings and therefore contributes greatly to the national product of individual European countries. In addition, European shipping enhances the strategic position of the EU as well as its negotiating positioning the framework of international organisations.
The contribution of shipping to national economies is illustrated by the following examples: In Greece, the net receipts from the shipping sector amounted to € 4.2bn in 2000 representing 38% of the value of total exports of goods: In Denmark, the shipping industry is the second most important export earner with foreign gross earnings of € 11.5bn in 2000. Like other countries, shipping is at the core of the Danish maritime cluster that has a total turnover of € 18bn and employs more than 50,000 people. Shipping is Norway's largest exporter of services and the second largest export industry after oil and gas. In 2000 the sector accounted for more than half the country's exports of services and the fleet contributed € 8.9bn in freight earnings, or 10% gross Norwegian foreign exchange revenues. In the UK the shipping industry had global earnings of € 8.3bn and made a net direct contribution to the balance of payments of € 2.3bn and an overall contribution of €5.3bn (including import savings).
The European flag fleet covers the whole range of vessel types, dry bulk accounting for some 17%, tankers and gas carriers 41%, other dry cargo vessels 39% and passenger ships 3%. European shipping is particularly strong in the global context in relation to container vessels, having over 24% of the world container tonnage. Moreover, in the ro-ro category, the share of world tonnage is over 55% in terms of ro-ro passenger ships and some 39% in relation to ro-ro cargo vessels. The ongoing renewal of the European fleet is reflected in the average age of the total fleet which in April 2001 stood at 12.3 years compared with the world average of 13.8 years.
There are more than 180.000 seafarers currently employed on EEA Flag vessels, some 70 % of EEA nationality. In addition many thousands of EEA seafarers are employed on vessels operated by EEA shipowners under third country flags. Employment in the wider maritime sector in the EU is estimated to be around 2 million people. ECSA is formally recognised as social partner by the Commission and is active in the Sectoral Dialogue Committee in this context.
An attractive and durable investment climate essential
The application of the 1997 State Aid Guidelines is getting more and more support and the results are promising. Measures to improve the structural competitive position of the shipping sector, including a tonnage tax regime, are now applicable in the Netherlands, Norway, Germany, the UK and Greece (since 1938), and have been placed before the Parliament in Finland. Denmark has recently notified a tonnage tax regime. Other and/or similar measures have been taken in Sweden, Italy and Spain where a tonnage tax regime is also being discussed.
Discussions on the further application of the measures as recommended by the Guidelines are currently taking place in Belgium, Portugal, France and Ireland.
Though the supportive regimes are still rather new, the first results are encouraging. The decline of the EU registered fleet could be stopped and gradually an increase can be noted. The position in the Netherlands, Norway, Italy and Germany is evidence of this positive development.
To maintain and further stimulate this positive evolution an attractive and durable regime is however essential. ECSA welcomed the statement of the Commission's Vice President Loyola de Palacio made on the occasion of the March Board meeting in Brussels that the State Aid Guidelines should be maintained and that the tonnage tax regime could be considered as best practice. State Aid Guidelines being crucial for European shipping such a long term approach is the basis for safeguarding maritime know how in Europe.