UK’s position as maritime services hub being eroded, says PwC report

The UK’s current position as a top hub for maritime services is being eroded by competition, a loss of shipping finance business and the removal of tycoon-friendly tax breaks, according to a report from consultancy PwC, commissioned by trade association Maritime London and launched at the start of London International Shipping Week.

Catching the Wave was authored by consultancy PwC in support of the UK Government’s Maritime 2050 Strategy. It provides a roadmap of industry and government actions needed to strengthen the UK’s position in the maritime professional business sector. Maritime London Chairman Lord Mountevans said that “this detailed report should inspire industry and government to build on the strengths of the UK maritime cluster and seize new opportunities. The global market for professional maritime services is worth $20bn and is growing. We must work together to enhance the UK’s leading position as the world’s top maritime services cluster. Changing trade patterns, new vessel types, digital technologies and green solutions all offer us the opportunity to grow our market share, expand our businesses and increase our contribution to the UK economy.”

The report’s initiatives were grouped under six headings:

          1. Strengthen the core of ship owners and charterers.

Recommendations include the appointment of a government ‘shipping czar’ to drive a campaign to attract more ship owners and charterers to the UK.

          2. Deepen the UK lead in specialist segments.

The UK has a significant lead in maritime disputes and insurance. Recommendations include the development of legal frameworks for AI, autonomous vessels and carbon emissions to strengthen this position.

          3. Rebuild the UK’s position in ship finance. 

The UK has a marginal presence in ship financing following the exit of RBS and Lloyds from the market. Recommendations to revive ship finance include achieving dual listings of large shipping companies on the London Stock Exchange; developing London as the leading offshore centre for RMB based ship leasing and greater sector outreach to the deep pool of UK based institutional investors.

          4. Extend the UK’s lead in technology.

Measures to improve the adoption of digital technologies by the maritime sector including the creation of a government and industry backed fund focused on supporting innovation and the designation of maritime as a priority sector within existing government schemes.

          5. Increase the talent pool.

The availability of skilled staff is a key driver of success for the maritime cluster. Ensure that post-Brexit visa and immigration rules mean that UK firms can recruit the best international staff as well as measures to increase the number of merchant officers, increase diversity and further internationalise the UK’s maritime colleges.

          6. Enhance cluster effect benefits.

The positive effect of having multiple maritime service providers in one location needs to be further enhanced. Recommendations include working more closely with other European clusters, proactively engaging with developing economies and virtual clustering initiatives.

The report’s authors say that delivering the recommendations will require both government and authors to work closely together to implement them through a combination of work with the Department of Transport, the Treasury, the Department for International Trade and maritime associations.

Marine insurance, ship broking, shipping finance and other maritime services contribute $5.6bn a year to the UK economy and provide employment for more than 10,000 people in highly skilled jobs, the report found.

However, a shift in global shipping trade to Asia and tougher competition have added to pressures on this niche sector, the report said.

“We estimate that if the UK had maintained its market share over the last two years, this would have resulted in an additional $700m pa in (gross value added) for the UK economy,” said the report.

Harry Theochari, chair of the separate Maritime UK body, said that “significant ground has been lost to international competitors in recent years. Competitors such as the US, China, Norway and particularly Singapore, are all challenging in key areas of development and we must react”.

The departure from shipping finance by many Royal Bank of Scotland and Lloyds Bank had affected London’s position as a money destination for international shipping firms, the report said.

In addition the UK’s decision to scrap tax breaks for long-term residents who claim “non-domicile” status had led to the departure from London of several Greek players in recent years.

“The UK needs to be more active in courting ship owners and other industry participants to come here,” the report said, adding that it was “also vital that post-Brexit, the UK remains open and welcoming to foreign talent.”

The report said the UK maintained 25% of the maritime services market. It recommended more efforts to bring dual listings to the London Stock Exchange to boost capital markets activity for shipping, as well as taking a lead in developing environmental finance products, while providing tax incentives.