UK shipping industry
Bob Sanguinetti, Chief Executive of the UK Chamber of Shipping, says Britain’s shipping industry is well placed to rise to the challenge
The United Kingdom is one of the world’s foremost maritime nations. There is no dispute about that, but let’s unpack what it means.
Pressure is building as never before on the UK to maintain its position as a world-leading maritime centre. Independent analysis by consultancies such as Menon continue to rate London as the world’s top city for maritime law and services, but other international maritime hubs around the world are coming for the crown. Meanwhile, London’s rankings as a centre for technological innovation, ports and logistics services, and attractiveness and competitiveness (Menon’s own categories) have slipped.
The UK has also lost ground in maritime technological development, as a string of recent deals illustrates. Rolls-Royce, which is headquartered here, is selling its commercial marine business to Norway’s Kongsberg, for instance. The acquisition includes Rolls- Royce’s ship intelligence activities, which have been developing technologies to enable remote and autonomous operation of commercial vessels.
Closing the gap
It’s time to analyse the gap between our potential and our performance. One of the main things holding us back, I would say, is complacency. We can be proud of the fact that the UK has been a principal architect of the way the world’s current maritime industry works, but that does not mean we should have any automatic right to play the same role in the future.
We must seek to be the globe’s foremost centre for shipowning, services, equipment and technology. But these are all areas in which the UK either has lost ground through being outcompeted or is under pressure from its international rivals.
How can we fight back? In the most basic sense, we need to make it even easier to do business in the UK. It goes without saying that we need to nurture and support home-grown maritime business, encouraging people to apply their entrepreneurial zeal to the shipping industry. But in order to increase the number of maritime companies operating here, we also need to make it easier for foreign companies to establish a UK base. To do that, we must ensure the UK’s high international profile translates into meaningful economic activity.
Fulfilling the potential
Consider this symptom. There are many high-net-worth shipowners from abroad who keep homes in London. Yes, buying bricks and mortar in the capital will always be a sound investment for the super-rich, but there’s more to the story.
Although international shipowners enjoy having London as a base for their personal lives, only a small number have gone so far as to set up offices and businesses here, providing employment for UK nationals and contributing to our maritime sector and the economy as a whole. Confidence is being shown in one aspect of the UK, but it is not translating into meaningful economic activity.
We also need to find a way to encourage investment into the wider shipping clusters – there’s a great deal more to our maritime industry than what lies within the M25. Liverpool, Hull, Southampton, Teesport and countless other port towns have huge potential. We must help them fulfil it.
Delivering transformational change
It should be clear by now that to solve these various problems we need the government’s help – and before we can get that, we need to put good ideas before our politicians, backed up with evidence, statistics and costings. That’s where the Chamber of Shipping comes in. It’s our job to put proposals in front of government and put together a persuasive and carefully researched case as to why each respective idea should be put into policy.
This is all easier said than done. What sets us back is the same obstacle that I believe hampers most of the world’s shipping industry, from individual companies to regional maritime organisations, right up to the various international trade bodies: shipping needs to improve its ability to identify, as well as articulate, what it needs.
It is not a problem unique to this country – other maritime nations have similar issues. But the difference is that the shipping industry in the UK, as the nation negotiates its exit from the European Union, is being handed a gift of an opportunity to demonstrate its economic value and leverage.
The payoff for having a clear vision for the future of the industry would be huge. As part of its industrial strategy, the government has challenged sectors to come forward with proposals that will help the UK build competitive advantage over its international rivals, enhance productivity, address shortfalls in skills and advance developments in technology. The government has said it will work with sectors that organise themselves behind ‘strong leadership’ – including universities and regional leaders – to help deliver ‘transformational’ change across the country.
The UK’s maritime sector is working on its own proposal for a specialist sector deal, work that is being coordinated by industry promotional body Maritime UK with the University of Southampton. It is hoped the finished proposal will be submitted to government in early 2019.
We have already begun laying the groundwork to make our case undeniable. Economics consultancy CEBR last year undertook a study of the economic value of the UK’s shipping industry on behalf of Maritime UK. The study found that the direct economic contribution of the maritime sector exceeds those of other comparable industries like aviation. So we already have the evidence to show how much maritime matters. Now we need to come up with good policy ideas that will change the face of our industry in much the same way that tonnage tax has.
Tonnage tax is a stunning example of how innovative policy can not only work but also have a multiplying economic effect throughout the sector – a reward for developing new policy ideas and lobbying for them effectively. The CEBR study estimated that without the tonnage tax regime the UK shipping industry would have directly contributed 73% less in gross value added (GVA) during 2015 – equivalent to around £3.1 billion. Without tonnage tax, there would be 37,000 fewer jobs, £410 million less in tax contributions and £3.7 billion less in exports of seaborne transport services, the study found.
It’s true that the Brexit negotiations have created uncertainty, but the government is also asking industry for direction – we have a real opportunity here to make our voice heard. As the country experiences a radical shift, this is precisely the time we should be putting forward innovative policy ideas.
A global problem solver
From where can we draw inspiration? Can UK maritime become the problem solver for the global industry? Let’s apply British ingenuity and expertise to resolve some of global shipping’s biggest headaches.
One of these challenges could be decarbonisation, which class society DNV-GL recently designated a ‘megatrend’ that will change the face of the shipping industry. The International Maritime Organization has determined that the maritime community must drastically reduce its carbon emissions – and countries are now racing to be the first to meet the technological challenge that comes with this. Our policy ideas should combine our world-class research, development and innovation capabilities to come up with commercially viable solutions that will not only benefit our maritime industry and our global offer, but will boost UK plc too.
One such pathway could be the lobbying for government funding for the development of batteries for vessel propulsion. We already have a nationwide infrastructure for tech innovation – but this is not yet being applied to maritime. The government has allotted some £250 million for research and development work into batteries that could be used to power road vehicles, and a similar programme could be funded for decarbonisation technology for shipping. With government support and the coordinated efforts of industry and research bodies, we could see the UK leading shipping to a carbon-free future.
This is just one example. All of us who care about the future of the industry must find more. I have no doubt that we can beat the competition from around the world and once again be the architect of the world’s maritime future. But if we are to achieve that then we need an ambitious vision, innovative policy development and robust lobbying. I am confident that the UK Chamber of Shipping can help to provide all three.
For more information on the UK Chamber of Shipping, see www.ukchamberofshipping.com.
Bob Sanguinetti served for almost three decades in the Royal Navy, rising to the rank of Commodore, before coming Chief Executive of the Port of Gibraltar in 2014. He was appointed Chief Executive of the UK Chamber of Shipping in July 2018.