Could shipowners depart the UK after Brexit?
Reports suggest that the Greek Government wants to persuade shipowners and shipping insurance companies based in London to move their European headquarters to Greece, as the UK prepares to leave the European Union. Is this pure speculation, or something more concrete?
The Brexit vote has stirred many emotions, plenty of head scratching, and that which is feared most of all by business: uncertainty. That is true for a whole host of sectors and UK maritime is no different.
As negotiations between representatives of the UK Government and the European Union (EU) continue, it impossible to prevent speculation spreading like wildfire; in the absence of fact come half-truths, and the back and forth of indecision.
Among this, the idea of businesses uprooting their headquarters away from Britain has filled plenty of column inches. For maritime, it could be in the form of shipowners and shipping insurance companies relocating to the EU.
Luring shipowners across the English Channel?
In late May, a report emerged that the Greek Government was eager to encourage companies away from the UK. The country’s shipping minister, Panagiotis Kouroumblis, told reporters that Greece – the world’s largest ship-owning nation, followed by Japan and China – was in contact with ship insurance brokers, “who are considering various EU member countries for the transfer of their headquarters.”
Kouroumblis did not name the companies involved or put any timescale on his ambitions. However, the news has not created any real concern among the powers that be in the UK. “I haven't heard those rumours,” says UK Chamber of Shipping CEO Guy Platten. “I expect that everyone is trying to steal business. Regardless of Brexit, people would like more investment in their countries so it's difficult to counter that one.”
Platten, who in his position represents and lobbies on behalf the sector, naturally points to the ‘aura’ of the UK’s maritime offering. “I don't particularly see why companies would have to move, lock, stock and barrel, to a new country. I really don't.” However, he is “loath to speculate” on the potential consequences of relocation, keeping his cards close to his chest, as there is “no concrete evidence on what will happen around that,” adding “there are opportunities for people to base their businesses here and there is an awful lot that would need to change to stop the momentum.”
Such a stance is unsurprising. The Chamber – and Platten as its public voice – has taken the Brexit vote as a chance to play up the importance of shipping to the economy. Platten agrees that for maritime, a ‘soft’ Brexit is preferable – “we want a transition period and the ability for our businesses to keep growing and thriving.”
He continues: “I think we are shouting very loudly, and people are listening to us, too. I really do believe that. We have, in the UK, that gravity and size. We have shipowners, training centres, universities, lawyers, and so on; they all make up the maritime cluster. That is very hard to replicate quickly."
Nevertheless, the option of moving is being discussed. In February, Reuters reported that UK-regulated ship insurers were considering creating new bases in places such as Luxembourg and Cyprus. The news agency quoted Anthony Jones, director at London Club, a protection and indemnity insurer, as saying it was “actively exploring our options for a post-hard Brexit operating scenario.”
Moreover, on 5 July the 4th Greek-British Shipping Forum was held in Athens, featuring ministers of both governments, including Kouroumblis, and industry representatives. The message was, if condensed: trust in the UK, for it will remain the pre-eminent place to do business.
What kind of Brexit? Wait and see
As mentioned, ‘hard’ Brexit, also known as a ‘clean’ break, is generally accepted as quitting EU institutions without an agreement at the end of negotiations. The UK maritime view on this is, ‘let’s avoid that if possible’, but what about EU shipowners?
The European Community Shipowners’ Associations (ECSA), which represents national shipowners’ associations of the EU and Norway, outlines in a policy document three priorities: frictionless traffic by sea between the UK and the EU; free movement of seafarers, onshore staff and passengers; and continued market access to domestic trades and the offshore sector.
Predictably, ECSA’s director of shipping and trade policy Lieselot Marinus says “there are a few concerns,” while on the point of shipowners relocating, she notes “we have read too in the newspapers [the Greece rumours], and it is something that happens nowadays – to and from all parts of the world and is mainly driven by commercial considerations.”
She adds: “This might indeed happen after Brexit but all will depend on the outcome of the deal and what the UK and the EU create in terms of a framework for shipping and whether there are huge differences.”
Interestingly, the ECSA policy document also makes note of how EU shipowners could go the other way, to post-Brexit UK. It states: “With a possible new, attractive shipping centre just across the Channel, there is ever more reason to look at the EU’s shipping policy and ensure the EU remains a competitive location for shipping companies to do business.”
On the issue of free movement, Marinus explains that for things to run smoothly “you need to be able to quickly move your seafarers.” Therefore, any “additional burden is to be avoided,” in terms of “visas or difficulties in [letting] staff get onboard or to fly home or to join the vessel.”
This is also applicable to vessels and the cargo onboard. The seamless movement, for example, of lorries though ferry terminals is, according to the ECSA, “vital both to the capacity of UK and EU ports to handle their current volumes of trade.”
Yes, positions and statements are being formulated, but they can only go so far during these early days of EU-UK negotiations. Analysing the respective conditions of the EU and UK maritime sectors post Brexit is undoubtedly sensible, yet so much is out of the hands of the likes of the UK Chamber of Shipping and ECSA.
Whatever happens, it is unlikely that the UK will suddenly lose all of its magnetism. “Quite frankly,” says Platten, “I think this country is a great place to do maritime business. I genuinely believe that. Brexit or no Brexit, it will remain a great place. Most shipping contracts are written with English law as the default option. We were [after all] a great maritime nation before we joined the EU.”