This is why Brexit is attractive for shipping

Malcolm Latarche
Malcolm Latarche

13 September 2017

At the beginning of this week as London International Shipping Week (LISW) got underway, the UK’s Shipping Minister John Hayes announced plans to double the size of the fleet sailing under the UK flag from 16m gross tons to 30m gross tons. That may sound ambitious but there are many good reasons to suggest that with Brexit, sailing under a quality European but non-EU flag has its attractions. The UK is not alone in wanting to increase the number of ships sailing under its flag. At the beginning of September, Denmark announced plans to scrap registration fees for newly purchased second hand vessels joining its national and international registers. As ShipInsight pointed out when commenting on that announcement, saving $17,000 fees for a five-year old Handymax not be a big incentive given the EU’s history of imposing onerous regulation on member states flagged vessels. There are many such impositions but the two most recent are the requirement to comply with EU MRV rules and the prohibition on disposing of end of life ships at non-approved recycling facilities. Most of the flags of current EU members – including the UK – are counted as being among the most respected and the targeting regimes for PSC inspections may give them an advantage over some other flags including the three largest of Panama, Liberia and the Marshal Islands. Few owners would want to give that up but outside of the EU, the UK flag would become attractive because it would remain a quality flag but the UK authorities will be able to decide which if any of the EU’s imposed requirements would remain. It is doubtful if the UK would want its flag to grow by attracting undesirable vessels of dubious quality and it has already proved attractive enough for almost 500 vessels mostly owned or operated by European companies to be registered under it. Included in that number are ships belonging to the likes of DFDS, CMA CGM, Wilhelmsen and Stolt Tankers.

Ports also benefit from BREXIT

As well as the UK flag possibly benefitting from Brexit, so too might the ports of Felixstowe and London Gateway. Both can take the world’s largest ships and calling at them rather than Rotterdam or Hamburg would mean that operators of non-EU flagged vessels would be able to avoid the EU’s MRV requirements and possible contributions to an emission trading scheme if such is implemented in the future. The boxes could then be feedered to EU destinations on smaller vessels. Since the boxes and their contents are already coming from outside the EU and need customs reporting, there will be no change in procedures when they reach their ultimate destination. For shipping lines, there is the advantage of a shorter deep-sea voyage and fewer port calls in Europe for their largest vessels. Both are cost saving elements and in addition will help maintain schedule reliability.