Thursday, September 23, 2010

The Importance of Shipping

As some of you may know, my first proper job back in the 1980s, was in the ports industry and it’s an area I have retained an interest in ever since. Indeed, if I had ever been an MP I’d love to have been Shipping Minister! So I was intrigued to learn that last night, Maritime UK, an organisation made up of 65 of the biggest names in the industry held a dinner where discussions were held about how the industry should ramp up its lobbying in the coming weeks over the Strategic Defence & Security Review. There is concern in the sector that, amidst the talk of the cost of Trident and carriers, one of the most important functions of the Navy – ie protecting UK trade – is being forgotten. Energy and trade security are almost as important as national security.

1) Everything from the energy that lights and heats our homes, to the food and goods we buy on the high street, is imported by sea.
2) Liquefied Natural Gas (LNG), imported by sea, provides a rapidly increasing proportion of our energy supply – 35% by 2030
3) The UK flag fleet has grown by 530% since 2000
4) The growth in the UK commercial fleet contrasts starkly with the shrinking global footprint of the Royal Navy, whose primary purpose is to safeguard our trade and security.
5) British ships carrying our energy supplies, medical supplies, food and other goods, regularly pass through treacherous stretches of water, such as the Gulf of Aden. A strong and viable navy is vital to protect them and ensure those goods reach the UK

If this sounds like a lobbying pitch for British shipping, that’s because it is. And I hope Maritime UK, the Chamber of Shipping and the UK’s port’s sector get their lobbying efforts together to ensure that the sector is fully plugged into whatever consultations are being held during the SDSR. Because if they don’t, and the threats to our merchant shipping are ignored, it won’t just be the shipping and ports sector that will suffer. It will be the entire economy.

25 comments:

IvorBiggun said...

Iain: "3) The UK flag fleet has grown by 530% since 2000"

Am curious as to why there is such an increase - can anyone better informed about UK shipping suggest why please?

Wycked Hors said...

Around 90% of world trade travels by ship - follow this link to see the International Maritime Bureau Piracy map for 2010 to see the degree to which trade is affected globally.

http://www.icc-ccs.org/index.php?option=com_fabrik&view=visualization&controller=visualization.googlemap&Itemid=219


And we're about to downsize our navy some more...?

Sean Haffey said...

Hmmmm.

Some good points here, but also some dodgy ones. Everything we use is imported by sea? So what happens to all the food we grow? What about the various manufacturing and processing plants in the country? Are our houses imported?

And I'd be interested in the origin of that 530% growth in the UK flag fleet. Is that number correct, and if so, why? Our ports aren't suddenly handling five times the traffic and our imports/exports haven't gone up fivefold so there's some explaining to do here. Why would so many ships change their flag so quickly?

Alex said...

Get your facts right and people might take you more seriously. The oil that we do not take from the North Sea comes here by ship, as does most f the coal burnt in our power stations, but the gas that doesn't come here from our side of the North Sea gets here by pipeleine from Norway or Siberia.

All of the planned gas pipelines into the UK have a capacity of 75 bcm/year whereas all the LNG terminals have a capaity of around 35 bcm/year.

The number of vessels operating under the British flag is a Labour tax scam with no obvious purpose, and many of the ships operating under the British flag have no obvious commercial nexus with the
UK.

The Labour government enacted a Tonnage Tax which meant that shipping companies operating in the UK would be deemed to have a minimal taxable income based on the tonnage of their vessels rather than the commercial profits of the shipping company. Because the tax was so low, this meant that international shipping companies found it attractive to own ships through brassplate UK companies and route all their business and profits through those companies rather than some offshore tax haven. Because the business was in the UK it could benefit from UK tax treaties and avoid being attacked by the foreign group's home tax authorities because the UK is not generally treated as a tax haven. Better still the Labour government even allowed a special leasing exemption for ships costing less than £40 million so that they could be leased at cheap rates from UK banks, with capital allowances funded by the tax payer, but with no obvious benefit to this country or the UK tax payer.

WCH said...

Penalty for skim-reading:

"So I was intrigued to learn that last night, Marmite UK,... held a dinner about how the industry should ramp up its lobbying"

Love it or hate it...
Sticky mess.

Julian said...

This is another argument like the case for Trident - it's protection from a threat that hardly exists and it's cost can't be justified any more.

The biggest threat to our shipping is from pirates and I don't recall the Navy being much help there. Plus, piracy is a threat to shipping of all nations, so perhaps some kind of global maritime force is the answer.

Sainty said...

Bugger! That's another thing I've got to worry about. :o(

Sceptical Steve said...

I'm afraid that someone needs to contribute some original thinking to this particular debate.

The MOD and Royal Navy want to retain their existing toys regardless of their actual utility. Unfortunately, sophisticated anti-submarine warfare vessels aren't suitable for taking on Somali pirates armed with RPGs, particularly when the rules of engagement seem to prevent the escorts from opening fire.

(Twas ever thus. The UK entered WW2 with a pitiful force of escort vessels because the Admiralty's rearmamment programme concentrated on Battleships, Carriers, Cruisers and Destroyers. In the event, the Battle of the Atlantic had to be won by Corvettes and Frigates which were largely turned out by mercantile shipyards.)

I desperately hope that there will be a genuine strategic defence review and that the MOD is told to spend its money on equipment that actually meets its needs, e.g. to protect the merchant fleet.

Unsworth said...

It's also often forgotten that we rely heavily on our merchant fleet to support the Royal Navy. Remember the Falklands? A very large number of merchant ships were directly involved. See:

http://en.wikipedia.org/wiki/British_naval_forces_in_the_Falklands_War

starfish said...

Unfortunately the population of this country is completely unaware of these facts

They are like members of a cargo cult - they think everything in the shops originates in a lorry. They have no idea that 98% of virtually everything we import comes by sea - probably via one of half a dozen chokepoints that are hugely vulnerable

Also is the fact that the the oceans of the world outside territorial seas are completely free to all - which is not true of the land mass where you are subject to national laws, diplomacy, revenue etc

It is often said that this nation is 'seablind'. Which for a nation that depends on free global maritime trade is rather dangerous

trevorsden said...

Thank you to 'Alex' - I hope all the loony tunes will take due note of the irrational claims about our supposed merchant marine.
Its interesting to note that the labour government were encouraging foreign companies to avoid paying tax in their home countries yet complaining about British companies avoiding paying tax here.

We are part of a transatlantic alliance called NATO. The purpose of which is to deter any aggression and to support us in a major strategic way. We are connected to mainland Europe by something called the Channel Tunnel.

Our navy should be configured accordingly. Its time we stopped using 18th and 19th century values tactics and geopolitics to justify strategic decisions.
Which means we do not need 2 giant aircraft carriers.

Barnacle Bill said...

Alex is so right with the fact that most of the tonnage under the Red Duster is there because of NuLabor's tonnage scam.
There was a recent case of a UK flagged containership involved in a collision in the Far East where the OoW could not communicate with the helmsman - even in pigeon English!
More recently a very known Danish shipping operator who has a large UK flagged fleet sacked all it's UK cadets (another part of the tonnage tax fiddle) to replace them with cheaper Eastern European officers.
As for the Falkland Islands we could never mount another campaign like that because the majority of the officers on our UK flagged ships would probably come from the enemy state!
So yes I do hope we could see a renaissance in true British shipping but from the bridge I normally command it's getting bleaker everyday.

Mirtha Tidville said...

Indigenous British Shipping these days is limited to a few coasters and some Cross Channel Ferries and not much else.Long gone are the world wide trading fleets of Elder Dempster, Bank and Clan Lines et al. There has been a disproportionate number of vessels flying the `Red Ensign` but they dont come anywhere near here, dont employ our Sailors and dont pay any tax....Another New Liebour scam..

Think the Royal Navy should leave these carpetbaggers to their own devices no matter which part of the world armpit they find themselves in...

Brian said...

@Sceptical Steve: It was precisely because convoy escorts could be built relatively quickly in numbers by merchant shipyards that the RN concentrated on the longbuild capital ships before the war began. If Graf Spee or Bismarck had been able to steam amongst the Atlantic convoys protected solely by corvettes with 4" guns, the war would have been over sooner, though not with the preferred result. With hindsight the RN should have built more carriers with proper aeroplanes.

Wrinkled Weasel said...

According to the Port of London Authority,

"95% of the UK’s imports arrive by sea".

Span Ows said...

Alex, 1:53, great info. Anyone know why this was done? Any New Labour skeletons residing in shipping company closets?

trevorsden said...

Mr Weasel-

Are we at war? Do we need to protect our shores from U-boats?
Russia is in the G8.

We are in a military alliance with the 2 continental nations we fought in 39-40. The Berlin Wall fell down years ago.

So - Does it matter that 95% of our imports come by sea - especially when a good chuck probably comes from as close as Rotterdam?

Our sea lanes are not under threat (not that we can in any way do much about it anyway) and we are in a whole mix of alliances whose whole existence is to deter major aggression against us.

Its 2010 not 1910.

Alex said...

"Span Ows said...
Alex, 1:53, great info. Anyone know why this was done? Any New Labour skeletons residing in shipping company closets?"

Prescott, allegedly. There is a requirement to train young UK merchant officers, but the shipping companies can buy their way out of that obligation for about £10k per year.

Alex said...

Wrinkled Weasel said...
According to the Port of London Authority, "95% of the UK’s imports arrive by sea"


By volume, but I think that excludes the imported gas because the rest of our imports don't amount to any thing like a billion tonnes/ cubic metres, and the volume of imported gas is measured in 10's of billions of cubic metres.

A common figure is actually 93% of freight moving through ports, so what it is really saying is that shipping imports 93 tonnes for every 7 tons of airfreight.

Wrinkled Weasel said...

Trevorsden

The fact that Russia is in the G8 is meaningless. Russia is run by bandits and extortionists and is about as democratic as Tower Hamlets.

But, you correctly say that there is not a lot we can do about it.

Our defenses are best hedged with the world economy: if we make the UK a haven for the global economy, the real power will always be there to protect their interests, and by association, ours. Don't build battleships, build alliances and reduce corporate taxes.

Its time that Brittania waived the rules.

Lizzy said...

The issue is this: Maritime UK et al are useless and reactive when it comes to lobbying. To be discussing the industry's position and the fact that the argument has not been made forceably across DfT and beyond - shock horror - is of concern! When you talk to no one... well, you reap what you sow!

A silent, underfunded and ineffective lobbying force is always going to lose out when it comes to the crunch! We need better people at the helm!

Look at John Vidal's piece in today's Guardian as a good case-in-point on another high profile matter...

Shipping moves 95% of the UK's trade, and in charge of 0.000000000000000000001% of political thought....

trevorsden said...

A nice pun Mr Weasel.

We do indeed need a successful economy before we can do anything and we need also something like a successful society (but the rest of the world are in the same boat as us on that one).

I believe there are 4 ex labour MPs in the dock. Very few countries in the world have even our level of accountability.

But you must surely see my point. Shipping is important - but this is not 1860. The world is totally different.
Militarily and politically we (including the US) cannot even stop Somali pirates in motor boats.

But for sure what we do not need are 2 giant aircraft carriers which have no role to play tactically strategically or geopolitically.
We need a navy predicated on practicality.

starfish said...

Given the levels of complacency on this thread I suppose we should just get rid of the RN completely

Our allies will see us right

And no-one anywhere bears us any ill-will whatsoever - or ever will

BTW energy pipelines are totally reliable and invulnerable - right?

neil craig said...

I generally agree about the importance of encouraging shipping though, if we went for nuclear power the amount of fuel needed could be brought in by dinghies (indeed in extremis it could be extracted from seawater in more than sufficient quantities). However rather than spending the money on an ocean going navy I would spend it on improving port facilities. In particualr Hunterston & Scapa Flo have the capacity to be developed as port facilities efficient enough to be commercial transhipping points for all of Europe. Plans for doing so have been around for many years, indeed in the British government fashion, for very many years.

Barnacle Bill said...

@ neil craig
Unfortunately Scapa Flow and Hunterston do not have the connections to the European hinterland that the likes of the Dutch do with Eurpoort/Maasvlatke complex.
Peter de Savery had the best of developing Falmouth as a deepwater port.
That was years ago, we are now that far behind our competitors in the ANTHAM range, we could never catch up.
As for those two carriers a political sop thrown to both NuLabor voters and the Senior Service in an attempt to keep them on side.
Far better if the money was put into more smaller craft.
As for our nuclear submarines - who do we think we are the world's policeman?