No Ships No Problem. A lesson to be learned

Malcolm Latarche

Malcolm Latarche · 24 January 2019

ShipInsight


Anyone following the saga of Brexit – the UK’s exit from the EU – will have recognised that the process has been far from straightforward.

As far as shipping goes, there are implications that some see as positive and others negative. It is pretty clear that whatever differences governments and regional groupings may have, it is individual consumers and businesses that drive trade. If there are tariffs imposed by the UK and the EU on goods traded, this may add a little to end prices but few really expect that trade volumes in either direction will diminish to any great extent.

One thing that may cause some initial disruption will be any new customs procedures that are put in place. With regards to port calls of ships, the formalities will be little changed from what is current although whether the UK will link with the EU Maritime Single Window or still be passing information on to EMSA after Brexit is not known.

Most UK ports – and EU ones for that matter – handle traffic that is both international and EU regional so even if the lighter touch regulation that applies to ships involved in the latter is replaced, all ports and the port agents and other service companies within them will be perfectly familiar with procedures. What will take place will either be for all ships to be treated as international so that the same rules will apply to every ship, or those coming with EU cargoes will have the procedures currently in use tweaked to some extent.

Most port agents will know that since the UK became part of the EU (or EEC as it was known earlier) there have been regular changes to the rules applying to ship reporting and clearance. Some of those changes have had more to do with UK Customs internal changes than with anything to do with the EU.

Only around 30% of container traffic to and from UK ports is with the EU meaning 70% is with non-EU countries. The figures for ro-ro traffic are a mirror image. The biggest problem as far as the UK Government and some businesses is concerned is how quickly goods arriving from the EU on trucks can be cleared at the main Channel port of Dover.

It could be argued that this is an issue that the UK could resolve very easily because it and it alone will be in control of import procedures. It could for example establish inland clearing depots or so-called dry ports at suitable locations around the country where trucks could go to and undergo any formalities necessary rather than queuing at the port of arrival.

The government’s immediate solution was not to do that but to try instead to establish alternative services for ro-ro services. One part of that included the granting of a contract to a recently established company called Seaborne Freight.

Seaborne Freight was formed by a small group of people all with previous experience in the maritime sphere and some of them having previously been in executive positions in the MyFerry Link operation established by the owners of Eurotunnel after the collapse of ferry operator SeaFrance. The company set out plans in 2017 to begin a new service between Ramsgate in the UK and Ostend in Belgium. The UK government has apparently agreed a £13.8Mn contract once the service begins operation.

There has been much criticism of the government’s decision in the UK media, not least because Seaborne Freight does not actually own any ships. Furthermore some have said that the ports of Ramsgate and Ostend are not ready to accommodate such a service without some new infrastructure and dredging. However, it is the idea that a shipping company that does not own ships that has been described as laughable.

Whether the Seaborne Freight operation will ever take off or be successful if it does, is something that only time will tell. But the reaction of the UK media tells us more about their ignorance of our industry than it does about Seaborne Freight.

Probably more than half the shipping companies in the world do not own any or all of their fleets. Time chartering vessels is a perfectly respectable way for a prospective operator to acquire the capacity for their intended services. Furthermore, some of the organisation entrusted with transporting the goods of major industrial companies are not shipowners in the true sense but NVOCCs who exist by virtue of leasing a portion of space on other operators’ ships.

For those ignorant of shipping practices that do find the Seaborne Freight idea hilarious, perhaps they should research the history of some of today’s major operators. For example, this week it was reported that French container ship operator CMA CGM had placed a $1.1bn order for 10 new 15,000teu ships.

Look at the CMA CGM website and read the section about the company’s history. It says that the founder Jacques Saadé was inspired after seeing the early containers on a visit to the US in the late 1950s. Then in 1978, with four others he launched his first shipping line between Beirut, Latakia, Livorno and Marseille.

It was a bold move. The company owned no ships itself, which is why Jacques Saadé changed the name to the Compagnie Maritime d’Affrètement (Meridional Freight Company). The idea was simply to enable trade between the Western and Eastern Mediterranean using containers alone, but few were convinced: “The ports aren’t ready”, “The customers aren’t prepared”, “It’s too early… Everyone thought it was impossible. After much discussion, Jacques Saadé just said: "We’re doing it". He trusted his intuition. Containers were the future. They encapsulated his long-term vision of transport: secure, efficient, flexible and high quality. His entrepreneurial spirit won the day.

Today CMA CGM is among the leading liner operators on a global scale and its beginnings – if they were being reported by mainstream media – would be highlighted as what can be achieved by people of vision and not be derided or scorned.

We may live at the beginning of the era of big data, but success in business will always be more dependent on big ideas and determination than anything else.

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