A renaissance of the UK flag?
“…do not be carried away by success into demanding more than is right or prudent.”
Winston Churchill 1919
On the 15th of November the UK Ship Register announced that the UK flag was, by gross tonnage, now the 14th largest in the world with its tonnage having increased by more than 6 per cent in the year to that date to over 16 million GT.
Perhaps even more encouraging was the evident quality of the ships on the register with 85% of internationally trading vessels over 500GT less than 10 years old.
So, what is the reason for this improved picture? The registry itself mentions, as perhaps it would, its improved service levels and flexibility to customer requirements. This is an area on which WQW have commented before and a clear acknowledgement by the registry of its need to be “fit for purpose” in terms of service levels is very welcome. In this context, the announcement by the UK Ship Register on 8 November that it would begin accepting certain registration documents online (on a 24/7 basis) is a notable change and part of the register’s wider programme to revamp its processes.
It can also be speculated that there may be other reasons including:
An improvement during the last year in certain shipping markets leading to a greater relevance of the UK tonnage tax regime in terms of sheltering profits from corporation tax; or
A flight to safety by tonnage on other Red Ensign group registers like IoM and Gibraltar due to concerns on their status post Brexit (it would useful to see statistics on which flags second-hand vessels might have been moving from).
It is also the case of course that gross tonnage statistics can be flattered by the addition of a small number of very large vessels, which might not constitute much of a trend.
The government has referenced UK consular support and the protection of the Royal Navy as reasons for the attractiveness of the UK flag. The latter claim does not however seem to fit with the fact that the state hosting by far the largest shipping register in the world, Panama, has no blue seas navy at all (just some rather ageing patrol boats and coast guard cutters).
Furthermore, the government has set a target of increasing the UK Ship Register to 30m GT post Brexit – a very ambitious target which, if met, would lead to the UK Ship Register being a top ten register with a ranking perhaps more consonant with the nation’s GDP ranking. The problem with this target is that the prime leverage to be able to achieve this is by making the UK tonnage tax regime more attractive and, as the European Commission has made clear in other contexts, attempts to sculpt a UK tax regime significantly outside EU norms will hinder the all important trade deal that the UK seeks with the EU post Brexit. So, room for manoeuvre may be limited and the government’s ambitions may need to be more realistic.
Nonetheless the buoyant state of the UK Ship Register is a cause for some satisfaction and will feed through into a larger “shipping cluster” in the UK.
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It would of course also be useful to see any fabled “Brexit Impact Paper” relating to the shipping industry and what that may say about the future of UK flag shipping. However, we have to leave the select committee with the struggle to see that!
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