STRATEGIC REVIEW OF IRISH MARITIME TRANSPORT SECTOR
STRATEGIC REVIEW OF IRISH
MARITIME TRANSPORT SECTOR
THE IRISH MARITIME DEVELOPMENT OFFICE (IMDO) 3
Strategic Review Conclusions 4
Objectives 5
Scope and Methodology 5
Scope of the Report 5
SECTION 1 THE GLOBAL ECONOMY & MARITIME TRANSPORT 6
Introduction 6
Global Shipping Markets 6
Impact of Globalisation on Shipping 7
Market Growth 8
Ship Registration 11
Maritime Clusters 12
Singapore 12
Maritime Commerce 13
London 13
Seafarer Employment 14
Shipping and Logistics 14
Port Trends 15
Port Integration 15
Container Traffi c Demand 15
Maritime Safety & Regulation 16
Corporate Responsibility & Risk Management Areas 17
Conclusions 18
SECTION 2 KEEPING EUROPEAN SHIPPING AFLOAT 19
Economic Profi le of Shipping in Europe 19
The Fall and Rise of European Shipping 20
European State Aid Guidelines to Maritime Transport 21
Fiscal Treatment of Ship-Owning Companies – Tonnage Tax 22
Labour-Related Costs 22
On-Board Training 22
Short Sea Shipping (SSS) 22
Motorways of the Sea (MWS) 22
Marco Polo 22
Current Status of EU Policy 23
EU Green Paper On Maritime Transport 23
Mid Term Review of White Paper 23
The Commission Communication on Freight Logistics 23
Conclusions 24
TABLE OF CONTENTS
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR & POLICY 1996 – 2005
SECTION 3 THE IRISH MARKET 25
Introduction 25
Economic Overview 25
Industry Profi le 26
The Irish Maritime Cluster 27
Core Services 29
Ship-owning 29
Port Sector 30
Liner and Short Sea Shipping Services 32
Vital Stats: Liner Routes 33
Support and Agency Services 34
Vital Stats: Agency Services 34
Maritime Commerce 35
Banking & Finance 35
Vital Stats: Ship Finance 35
Insurance 36
Legal 36
Taxation & Accounting 36
Shipbroking 36
Freight and Logistics Operators 36
Knowledge and Innovation Services 37
Government & Regulators 38
Professional Bodies 39
New Horizons 40
Conclusions 41
APPENDICES 42
Strategic Review of the Maritime Transport Sector 43
Bibliography 43
Comparison of Leading International Maritime Clusters 45
The International Safety Management (ISM) Code 47
The International Ship and Port Facility Security Code (ISPS Code) 48
Professional Associations 48
PAGE 3
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
AUTHORS
This Report was prepared by Glenn Murphy, Director of the Irish
Maritime Development Offi ce (the IMDO), in conjunction with
Brian Richardson BE MIEI, an independent consultant.
The authors were assisted by the research and operational team
of the IMDO, Rory McGuire, Kate McHugh, Conor Mowlds,
Rachael Taylor, Victoria Vogel and Meloth Krishnan.
THE IRISH MARITIME DEVELOPMENT
OFFICE (IMDO)
The Irish Maritime Development Offi ce (IMDO) was established
by statute in December 1999. The offi ce is Ireland’s dedicated
development, marketing, and promotional agency for the shipping
and shipping service sectors. The offi ce also has an additional
mandate in relation to seafarer training.
The IMDO has a legislative mandate that includes the following
functions:
To advise the Minister on the development and the ■
co-ordination of policy in the shipping and shipping
services sectors, so as to protect and create employment.
To promote and assist the development of Irish shipping ■
and the Irish shipping services and seafarer training.
To support and market the shipping and shipping ■
services sectors.
To promote registration of ships in the State. ■
To carry out policy as may be specifi ed by the Minister ■
relating to the shipping and shipping services sectors and
seafarer training.
In this context “shipping services” is deemed to include:
Ship Management ■
Technical Management ■
Commercial Management ■
Crew Management ■
Port Activities & Logistics ■
Ship Finance and Mortgages ■
Marine Insurance ■
Maritime Legal Services ■
Ship Broking ■
Ship Chartering ■
PAGE 4
STRATEGIC REVIEW CONCLUSIONS
Previous Government strategies have brought about signifi cant
growth in all areas of the Irish maritime transport sector – in line
with overall economic performance. The performance of the Irish
economy will continue to affect the maritime transport sector.
In 2008, the Irish Maritime Development Offi ce (IMDO)
submitted a strategic review of the Irish maritime transport sector
(1995-2005) to the Department of Transport. A summary
of the report is outlined in this document. Over the course of
the year, the IMDO engaged with the Department to review a
number of key conclusions and recommendations.
During this period, the state of the domestic and global economies
deteriorated signifi cantly. In response to the key fi ndings of the
report, it has been agreed that the following three priority actions
will be advanced by the IMDO within the parameters of available
resources with the support and cooperation of the Department
of Transport.
1. CLUSTER DEVELOPMENT
Over the past 5 years, a Government supported initiative
to promote shipping services has led to new investment and
employment creation in the services sector. This growth has
been created through both new foreign inward investment
and expansion by indigenous companies. There has also been
an emergence during this period of a prominent number of
dynamic commercial support and service providers in banking,
legal, maritime commerce, ship fi nance and insurance.
This growth has been catalysed by proactive Government policy
and high-level visibility in supporting shipping and maritime
related developments. The current global economic downturn
is likely to see international shipping groups continuing to
consolidate and seek locations that provide a stable and cost
effi cient operating base. Indications are that Ireland is well
positioned to capitalise on the opportunities that the current
market conditions present.
As well as continuing to support indigenous companies, the IMDO
will pursue a strategy of securing further foreign investment with
the support and endorsement of the Department. Additional
resources will be allocated to the specifi c level of business
development activity that will be undertaken by the IMDO.
The IMDO is optimistic that with an appropriately resourced
program and through an assertive targeted development
strategy, approximately 200 new direct jobs could be created in
international shipping services in Ireland over the next 3 years.
2. PORTS PRODUCTIVITY
The IMDO strategic review highlighted the fact that ports are
a critical mode in the total Irish supply chain that enables fi rms
to compete and reach global export markets. The ability of Irish
ports to behave effi ciently and effectively in all aspects and
functions of their work, in facilitating the import and export of
trade, is directly proportional, in part, to the effi ciency of the
total Irish supply chain and a relative indicator of a country’s
economic performance. Performance measurement is an
important tool not only for the port sector but also for applicable
trade organisations, associations and government interests.
Measuring Irish ports productivity should, therefore, be a key
focus in continuing efforts to maximise the effi ciency and
competitiveness of our ports. The IMDO on behalf of the
Department will pursue a programme with the ports and relevant
stakeholders that will lead to a clear picture of how individual
ports perform against agreed measured criteria.
3. RESEARCH & DEVELOPMENT
The IMDO review noted a signifi cant defi cit in the extent of
third level research being undertaken in a coordinated or planned
manner in the transport area. Nonetheless, the review identifi ed
strong pockets of latent research capacity that, if properly funded
and structured, could generate important future research that
would add value to long-term transport policy planning while
also supporting industrial innovation.
A more proactive approach to applied research in the transport
sector will be pursued, initially by the IMDO with the support of
the Department. Future research should include consideration
of how the use of ICT within the supply chain, coupled with
greater effi ciency and transparency of road, rail, maritime and air
transport networks, can provide Ireland with a long term strategic
advantage in competing in globally connected industries.
PAGE 5
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
OBJECTIVES
The IMDO was requested by the Minister for Transport to
undertake a strategic review of the Irish Shipping Services
Sector between 1996 and 2005. The Offi ce believes that this
will provide the basis for a strategic platform for the long-term
development of the industry.
Therefore, the objectives of this report are:
To undertake a strategic review of developments in the ■
Irish shipping and maritime transport industry.
Identify trends and drivers globally and in Europe that ■
have had an impact on the Irish shipping industry.
Outline current revised EU state aid policy and the ■
strategies to develop shipping and intermodal transport
in Europe.
Defi ne the structure of the Irish maritime transport ■
cluster and undertake a broad assessment of the relative
performance and growth of this cluster over the last
decade. Identify emerging sectors and how they might
be supported and developed.
SCOPE AND METHODOLOGY
Scope of the Report
This report has been prepared using both primary and secondary
research sources. One of the major diffi culties of writing a report
addressing such a broad and varied range of areas is striking
a balance between covering a topic suffi ciently to inform a
stakeholder and maintaining a report to a certain size. This report
ranges from across an analysis of global, European and local
industrial sectors and their drivers, each area of which may have
required the review of a multitude of corporate plans, industry
reports and cluster research. We have, therefore, employed
a ‘report committee’ structure to decide on the relevance of
information and the level of salient detail required to achieve
this balance. Certain aspects of the report may require a greater
level of detail depending on the topic’s importance to the reader.
However, we refer to appendices and our extensive bibliography
for further in-depth information.
PAGE 6
SECTION 1 THE GLOBAL ECONOMY
& MARITIME TRANSPORT
INTRODUCTION
In section one of this memo we will provide an overview of the
global business environment insofar as it impacts on the world’s
maritime transport industry. Given the size, sophistication, and
range of sectors encompassing the industry, it is obviously beyond
the scope of this section to discuss, in detail, the dynamics that
affect the shipping markets. However, the section will examine
the most salient issues which are set out in the following sub-
sections:
World shipping markets ■
Impact of globalisation on shipping ■
Market growth ■
Ship Registration ■
Maritime clusters ■
Maritime commerce ■
Seafaring ■
Shipping and logistics ■
Port trends ■
Maritime safety & regulation ■
While the focus of this section is on the global shipping industry
it is important to note the size and signifi cance of the European
contribution in the overall global marketplace. This section,
importantly, also places into context the drivers behind recent
national and European Union maritime policy that are examined
in section two.
Many economists generally cite shipping as an industry that
displays the characteristics of a nearly perfectly competitive
marketplace. The ease of incorporation as well as the mobility
of its assets allow a shipping company to maintain competitive
advantage in a way that land-based industries cannot, in
particular given the high costs of relocation.
While centres such as London and Singapore are key international
shipping centres, most economies, island economies in
particular, have a high dependence on the performance and
competitiveness of their shipping, or maritime cluster, and its
contribution to the wider economy. As an island economy this is
particularly important for Ireland.
GLOBAL SHIPPING MARKETS
The world shipping market is a multibillion-dollar industry.
In 2007 it was estimated that the value of the entire freight
market was $450 billion. In addition $80 billion was spent on
new vessels in that year and $15 billion spent on second hand
ships. The top 168 publicly listed shipping companies had a
combined total market capitalisation of $268 billion in 2006.
While the shipping industry has experienced exponential growth
and continues to break all previous profi t, investment, earnings
and growth records, the boom of the past four to fi ve years
comes after a twenty-year period of recession. The table below
shows the increase in seaborne trade for specifi c commodities
over the last 10 years.
WORLD SEABORNE TRADE
Data Source: Clarkson’s world output fi gures(2006)
1200
1400
1600
1800
2000
800
1000
0
Annual Increase
Tonnes
(Million)
600
400
200
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005 (
f)
2006 (
f)
Crude Containers Other Dry Trade Oil Products
Coal Iron Grain Gas
PAGE 7
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
Shipping is a diverse industry with numerous market segments.
Clarkson Research separate “shipping” into 3 different classes
of shipping markets (see chart) with each of these market
segments further broken down by ship specialisation and further
still by the ship size. For bulk carriers, as an example, these range
from “Capesize” through “Panamax”, “Handymax” to “Handysize”,
all the way down to a 500gt bulk coastal vessel. At every level
in each segment there are shipping specialists who act as charter
or sale and purchase brokers, fi nanciers, shippers, charterers,
builders, stevedores etc. The various sectors are illustrated in the
chart above.
The industry is constantly evolving. The recent boom has led
to a notable change in the corporate structures used in the
industry. While private companies still dominate the international
marketplace in terms of fl eet size, publicly listed shipping
corporations have grown worldwide over the past four years.
The migration from private to public corporations has also
led to a greater sophistication in the shipping marketplace.
Company shareholders and those who seek to protect them
demand greater levels of transparency and information, while
the shareholder demands a return on investment that often
is achieved through investment in technology, cost reduction,
divestment and/or consolidation, which is what we are now
seeing in the marketplace. The growth in public companies in
the shipping industry is therefore increasing the sophistication
in the marketplace. Many of the contractual and regulatory
issues that the private ship owner can avoid, bind those acting
within a public corporate structure i.e. administrators, lawyers
and fi nanciers.
Maritime transport is the motor that drives other maritimeindustries,
signifi cant in their own right, which ultimately form “Maritime
Clusters”. These service and manufacturing industries range from
shipbroking to ship fi nance, from port operations to shipbuilding.
They form clusters with relative strengths that vary depending on
the competitive advantages present in a jurisdiction or location.
Ireland, as a highly developed service based economy, has much
to offer this increasingly sophisticated market and can benefi t
from leveraging from this global growth.
THE IMPACT OF GLOBALISATION ON SHIPPING
The term “globalization” describes the increased mobility of goods,
services, labour, technology and capital throughout the world.
Globalisation’s effect on shipping and increased world economic
production has resulted in stiff competition, low freight rates,
and a rethink of business strategies by many corporations. This
has made way for the new generation of large vessels coping
with greater journeys across the globe. Many shipping lines have
even reorganised their long-standing consortia associations
(conferences/pools) and embraced mergers and acquisitions.
A typical but restrictive defi nition of “Globalisation” can be
taken from the International Monetary Fund2, which stresses
the growing economic interdependence of countries worldwide
through increasing volume of trade and variety of cross-border
transactions in goods and services, free international capital fl ows,
and more rapid and widespread diffusion of technology. Over
90% of all global trade is transported via the sea and the maritime
industry is intrinsically linked to global trading patterns. While global
production has grown by approximately 6-7 times since 1950,
global merchandise trade has grown by over 100 times and global
manufacturing trade by 200 times with a correlating growth in
the international maritime transport industry.
World output grew by approximately 4% in 2005 and, for the
fi rst time since the 1970’s, the global economy has sustained
a year-on-year growth level of 4% or above for a consecutive
four-year period. In addition, in 2005, and for the fi rst time, the
output of the world’s emerging economies accounted for more
than 50% of world GDP – the rich countries no longer dominate
the global economy.3
2 Alex MacGillivary, “A brief history of Globalisation: the Untold Story of our incredible Shrinking Planet”. Carrol & Graf 2006.
3 “The New Titans”, The Economist, 16 Sept. 2006
TABLE 1: SHIPPING MARKET SEGMENTS BY VESSEL TYPE
1. Bulk Transport 2. Specialised Transport 3. Liner Transport
Bulk Carriers
Crude Oil Tankers
Product Tankers
Combos
Forest Product Carriers
Vegoil Tankers
Chemical Carriers
Gass Carriers
LPG Carriers
LNG Carriers
Reefers
Car/Vehicle Carriers
Ro Ro Carriers
Containerships
Multipurpose Ships
Ro Ro Carriers
Ro Ro Freight Carriers
Ro Ro Trailer Carriers
Source: Clarkson’s Research Services
PAGE 8
Likewise, as shown in the chart below, with the world seaborne
trade growth during this period reaching 7.11 billion tons in
2005, subsequent increase in tonne miles is evident.
WORLD SEABORNE TRADE 1994 – 2004
Data Source: Fearnley’s Review2004: Annual Report
The entry of China into the World Trade Organisation in
December 2001 has had an important impact on the global
economy. Current trends see the boom in trade driven by these
rapidly emerging economies, principally China and India. Low
cost locations for manufacturing continue to drift eastwards.
The opportunities for maritime transport are obvious, delivering
the bulk of raw materials and basic commodities eastwards and
unitised cargoes of fi nished goods travelling westwards. China’s
demand for raw materials and energy to feed its domestic and
export industries has grown exponentially. Developments in China
are now considered to be one of the most important stimuli to
growth for the tanker, chemical, bulk and container trades. China
has doubled its oil consumption in the past decade. In 2004
Chinese steel imports declined but exports doubled – by 2006
China produced 30% of the world’s steel. It has also become a
global power in shipbuilding. This growth is refl ected in the strong
performances across all the segments of the shipping industry.
It is unsurprising that there is a correlation between world economic
output peaks and troughs and those of the shipping industry.
Ireland, similarly, has experienced the extremes of globalisation
through a combination of economic environment, policy and
timing. Just as the country benefi ted from offering service solutions
to globally trading companies we are also feeling the effects of
competition from jurisdictions that can offer those companies the
same low-cost benefi ts that Ireland can no longer provide. The
recent trend to outsourcing, and relocation of outsourcing, is likely
to continue as costs rise in Ireland.
Ireland can be regarded as a microcosm of the effects of
globalisation in every sense; the development of the Irish
economy will continue to dictate the role of the maritime
transport industry here. Strong growth in the economy will see
a continuation of the impressive demand for maritime transport
services, in return our trading requirements also highlight the
increasingly crucial role the industry will play in maintaining and
enhancing national competitiveness.
MARKET GROWTH
The charts below illustrate the phenomenal rise in earnings
and price of vessels globally. The general trend across all of the
following charts is growth at a signifi cant level. The earnings charts
show the extent to which global Ship-owners are enjoying a
boom with average daily earnings doubling or even trebling since
1996. The charts depict the changes that the shipping sector
has witnessed over the last 35 years. With a major downturn in
the sector during the 80’s, which showed major vessel lay-ups,
the sector has since then seen unprecedented growth. The crude
tanker market took a ten year cycle to recover from the slump.
15000
17500
20000
22500
25000
27500
30000
32500
10000
12500
0
Annual Increase
DW
T (
Millions)
7500
5000
2500
1970
1975
1980
1985
1990
2000
2001
2002
2003
2004
2005 e
st
PAGE 9
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
CRUDE TANKER MARKET CYCLES
DRY CARGO MARKET CYCLES
Source: Clarkson Research Services.
The same trend is noticeable in the dry cargo market. The
chart below shows the repetition of the cycle but a noticeable
difference is the sudden increase of lay-ups in late 90’s before
regaining employment. This trend was caused by the slowdown
in Asian economies and global demand for goods.
0
DW
T (
Millions)
$/D
AY
20
40
60
80
100
120
140
160
180
200
220
240
0
10
20
30
40
50
60
70
80
Jan: 70
Jan: 72
Jan: 74
Jan: 76
Jan: 78
Jan: 80
Jan: 82
Jan: 84
Jan: 86
Jan: 88
Jan: 90
Jan: 92
Jan: 94
Jan: 96
Jan: 98
Jan: 00
Jan: 02
Jan: 04
Jan: 06
Tanker Lay-Up
Freight Rates
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
0
5
10
15
20
25
30
Jan: 70
Jan: 72
Jan: 74
Jan: 76
Jan: 78
Jan: 80
Jan: 82
Jan: 84
Jan: 86
Jan: 88
Jan: 90
Jan: 92
Jan: 94
Jan: 96
Jan: 98
Jan: 00
Jan: 02
Jan: 04
Jan: 06
Bulk Lay-Up Capesize Bulker
Panamax 1 Year t/c
Capesize 1 Year t/c
120K 150K
DW
T (
Millions)
$/D
AY
PAGE 10
The charts below show a similar increase to the previous charts.
The weighted average of daily earnings in terms of freight
coincides with the cyclical nature of the sector. The rates have
seen growth and dips through the late ‘90’s to early ‘00’s. If a
base index line is drawn through the peaks, it shows a steady
global growth in demand and supply of commodities and
increase in the shipping sectors.
WEIGHTED AVERAGE EARNINGS ALL TANKERS $/DAY
WEIGHTED AVERAGE EARNINGS ALL BUNKERS $/DAY
As would be expected during a boom for ship-owners, there has
been an increased demand for vessels and a growth in prices.
The following charts relate to the increase in global trade, which
has witnessed increase of demand for ships in the sector.
AVERAGE NEWBUILDING PRICES $/DWT
WORLD ORDERBOOK NUMBER
44,160
49,160
34,160
39.160
9,160
96 97 98
Year
$/D
ay
99 00 01 02 03 04 05 06
29,160
24,160
19,160
14,160
27,240
27,740
22,240
24,740
4,740
7,240
9,740
96 97 98
Year
$/D
ay
99 00 01 02 03 04 05 06
19,740
17,240
14,740
12,240
1,220.00
1,320.00
1,020.00
1,120.00
620.00
$/D
WT
920.00
820.00
720.00
Mar: 9
6
Sep: 97
Mar: 9
9
Sep: 00
Mar: 0
2
Sep: 03
Mar: 0
5
Sep: 06
4,920
5,420
3,920
4,420
1,420
96 97 98
Year
Num
ber
99 00 01 02 03 04 05 06
3,420
2,920
2,420
1,920
PAGE 11
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
SHIP REGISTRATION
Shipping, by its nature, is the most mobile industry in the world
today. The desire for lower costs, low regulation and pro-business
jurisdictions led to a market where low or no tax jurisdictions
dominated and still dominate in terms of registered ownership. A
major factor for the industry in its drive to save costs, in particular
tax, and also avoid the cost burden of regulatory compliance in
traditional registries, was the opportunity to relocate. A strategy
where companies shifted the registration of their vessels from
their country of origin gave rise to the colloquial expression
‘fl ags of convenience’ or more accurately ‘open registries’. It
also opened up the possibility that company operations and
management would migrate also.
These countries have been defi ned as follows by the OECD:
“Flags of convenience countries are countries with
favourable tax rules and other regulations attracting part
or whole companies whose main business (originally
shipping, now often production or services) is outside the
country.”4
Today, the most well known open registries are in Panama,
Bahamas, Liberia, Malta, Cyprus (both now in the EU) and
Bermuda.
This paradigm shift in Ship-owning strategy had a major impact
on European and OECD shipping. In 1970, 32% of the world’s
fl eet was under European Flags, but by 1995 this had dropped
to 14%. The drive offshore forced many owners, who would
otherwise have remained in Europe, to follow suit in order to
maintain competitiveness. The movement of the management
structure followed the re-registering of vessels offshore and
many economic blocs were losing the latent expertise of their
industry. As a direct result of this brain drain, many other service
providers, dependant on these shipping companies, also started
to shift their operations to offshore centres to be closer to their
customers. The chart below shows the location of the benefi cial
owners, and their choice of jurisdiction for registration of their
vessels. Greece still leads the global shipping ownership in terms
of deadweight whereas Panama remains the fi rst choice for
fl agging. The Panama registry remains the most competitive in
terms of service and benefi ts to owners.
4 OECD Website: Glossary of Statistical Terms.
WORLD SHIPPING BY BENEFICIAL OWNERSHIP
WORLD SHIPPING BY COUNTRY OF REGISTRATION
Review of Maritime Transport, 2006 UNCTAD
During the 1970s and on into the 1980s, offshore centres
operating benign or zero tax regimes boomed and signifi cant
clusters formed in places like Cyprus, Monaco, the Isle of Man,
Hong Kong and Singapore. In order to protect its ship-owning
base and its maritime expertise, Europe was forced to react
with measures refl ecting the competitive issues in the industry
and the unique problems faced by its complete mobility. These
measures will be discussed in detail in the next Section 3.
18.5
14
6.9
6.8
5.5
5.2
4.9
3.3
3.1
2.8
2.7
2
1.8
1.6
1.5
1.4
1.3
1.2
1.1
Italy
China
Japan
India
Russian Federation
Denmark
Singapore
Taiwan Province of China
United Kingdom
Republic of Korea
Hong Kong (China)
Norway
United States
Germany
Greece
Switerland
Saudi Arabia
Malaysia
Iran, Islamic Republic of
0 5
10
15
20
146
63
41
31
31
31
30
23
23
20
19
14
13
12
12
12
9
9
8
United Kingdom
Singapore
Liberia
Italy
Japan
Norway (NIS)
Cyprus
United States
China
Malta
Hong Kong (China)
Marshall Islands
Greece
Bahamas
Panama
Germany
Korea (South)
Russian Federation
Isle of Man
0
50
25
100
75
125
150
PAGE 12
MARITIME CLUSTERS
Clusters are ‘Geographic concentrations of interconnected
companies, specialised suppliers, service providers, and
associated institutions in a particular fi eld that are present in a
nation or region’. 5 Shipping Clusters, or Maritime Clusters, fi t this
defi nition extremely well. A ship operator, for example, requires a
multiplicity of ancillary services – specialised fi nance (to fi nance
the vessel), marine insurance (to insure it), staffi ng agencies (to
crew it), technical services, e.g. surveyors (to verify it conforms
to required standards), port facilities (to berth the vessel), ships
agents (to handle the various requirements in port), logistics
operators (for onward handling of cargo), and so on.
These services then have a mutual inter-dependence, the ship’s
agent must liaise with the logistics operators for smooth cargo
throughput, if there is damage, he too will require insurance
services, which will in turn need appropriate technical, surveying
expertise, etc. The various elements that make up a maritime
cluster are interlinked, and once critical mass has been established,
a cluster will (given favourable conditions) generate organic
growth of its own, and this is currently the case in Ireland.
Recognised international maritime centres today include London,
Hong Kong, Singapore, Rotterdam, and Hamburg. Maritime
clusters will include some or all of the following activities: port
operations, logistics, ship owning, shipbuilding and repair and
maritime commerce. These have established themselves for
a variety of reasons, some historical and some as a result of
government development policy and investment. Maritime
Clusters and the structure of their cluster can differ broadly but all
will have had some level of local maritime transport requirement.
All apart from Singapore above are regarded as historical
centres of international trade. The trading expertise, experience,
knowledge, administration and legislation in all services linked
to trade is therefore high and these have, to a greater or lesser
extent, allowed the maritime cluster to develop.
A maritime cluster should be viewed, in the fi rst instance, as
a part of an economic architecture that delivers additional
competitiveness to a national economy and thereafter as
a centre that can add additional value in its own right to the
economy, either from inward maritime investment or outward
expansion. In this situation, Ireland’s maritime cluster rates quite
favourably.
The continuous growth of the global shipping sector and its
appetite for capital presents major opportunities for maritime
clusters seeking to exploit their competitive advantage. In 2005
the Marine Institute undertook a Global Market Analysis. This
estimated that Western Europe accounted for 38% of the world
market with Asia at 24%, as shown in the pie chart above.
5 http://www.isc.hbs.edu/
MARINE COMMERCE – REGIONAL SEGMENTATION 2005 - 2009
Source: Douglas-Westwood, Global Market Analysis March 2005
The role played by government and legislators can have a critical
role in the development of an industrial cluster, as occurred in
Ireland with the development of the fi nancial services sector.
Singapore represents perhaps the most impressive example of
government establishing a specialist environment for maritime
development.
In the appendix, we summarize and compare a number of the
leading maritime clusters globally based on cluster competition
criteria.
Singapore
Singapore provides an excellent example of a modern maritime
cluster. In the early 1960s, the Singaporean government decided
to develop the country as a maritime centre, and made its fi rst
signifi cant move in 1966 with the establishment of its Registry
of Ships.
It can now be compared favourably with countries such as
Norway for the comprehensiveness of its cluster and even with
London for the provision of maritime services. The Singaporean
government has managed the development of the maritime
cluster through various generations, from the days when the
country competed with Hong Kong, Thailand, and China as a
location for low-cost manufacturing of cheap consumer products,
textiles, electronics, etc, to its presence as a world leading fi nancial
services, ICT, and R&D location. The government has encouraged
integrated thinking by ensuring that its own private and public
sector operators are housed together, i.e. the Port of Singapore
Authority, MSA (private), and the Maritime and Port Authority,
MPA (public). It also ensures that communication lines between
its development agency and legislators are short. The Singapore
Trade Development Board is responsible for attracting FDI as well
as encouraging Singapore-based businesses to export overseas
in much the same way as the IDA and Enterprise Ireland. A key
difference is the ability of the Singaporean government to pass
Africa Australasia Latin America North America
Asia Europe/FSU Middle East Western Europe
2%
24%
3%
5%
4%4%
20%
38%
PAGE 13
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
positive legislation quickly to counter overseas competitive
threats or take advantage of opportunities communicated to
them through the Trade Development Board.
The following provides a brief overview of Singapore’s maritime
development:
1966 Establishment of Singapore Registry of Ships.
Today, SRS is the largest in Asia and 4th largest in
the world with some 33 million gross tons (GT)
on its register of more than 3,200 vessels.
1980’s The development of an integrated manufacturing
centre resulting in a signifi cant migration
of manufacturing fi rms to Singapore.
2000 Driving a services hub: Liberalisation of service
sectors both at home and in the markets of Free
Trade Agreement partners spurred the growth
of services and other creative industries.
2006 By 2006 Singapore has achieved the
following maritime development:
International hub port ■
Singapore Registry of Ships ■
Base for international ship owners and operators ■
Ship management and agency ■
Maritime training ■
Maritime ancillary services ■
Maritime R&D ■
Ship building & repairs ■
International cruise centre ■
Centre for international conferences & events ■
The maritime cluster in Singapore now accounts for the following:
100,000 jobs ■ 6
Contributes 6% to GDP ■ 7
Directly contributes some US$4.7 billion to the local ■
economy8
Over 3500 maritime related companies. ■
To revert to the Irish situation, the IMDO has undertaken signifi cant
research into the dynamic profi le of global and European maritime
clusters. Some of the initial key summary outputs of this research
are captured in this memo (see Appendix P77). Singapore,
given its similarities to Ireland, the open island economy, small
population, location to signifi cant major population mass, high
FDI success in fi nance, technology and skilled manufacturing is a
particularly interesting model for Ireland to consider in terms of
its future maritime cluster strategies.
6 Opening remarks by Mrs Lim Hwee Hua, Minister of State for Finance and transport, at the “Singapore Nite” Reception, 8 June 2005, Oslo.
7 Singapore Maritime Foundation Website.8 Opening remarks by Mrs Lim Hwee Hua, Minister of State for
Finance and transport, at the “Singapore Nite” Reception, 8 June 2005, Oslo.
MARITIME COMMERCE
“Maritime Commerce” is the preferred term in the maritime
cluster for services related to shipping, its defi nition tends to vary
from country to country but traditionally it includes:
Ship broking ■
Ship management ■
Maritime fi nance ■
Legal services ■
Agency related businesses ■
Effectively, these are the administrative services one would
expect to fi nd specialising in the support of any industrial cluster.
Emerging sectors in freight futures and marine technology now
form a growing part of this sector.
Maritime commerce is of major strategic importance, as a
successful centre tends to attract infl uential decision makers for
many associated maritime activities. London is the world’s leading
centre, but its position is increasingly under threat from S.E. Asia
(particularly Singapore and increasingly Shanghai). However, it
is still the dominant force in world maritime commerce and is
worth particular focus.
London
London is the home of the majority of the world’s shipping and
shipping service associations and one of the world’s most important
centres of maritime commerce. It is an example of a mature
cluster that has developed through hundreds of years of trading,
and whose infl uence extends far beyond its port. This maritime
centre generated overseas earnings of £2.2bn in 2002.9
The principal benefi t of attracting and developing specialist
service activity is to achieve high value-added employment and
indigenous entrepreneurial development. In London, intermediate
and support services to maritime transport (shipbroking, banking,
insurance, legal services, publishing, international organizations,
accounting) account for approximately 14,200 staff.
In the preceding paragraphs, we have outlined maritime clusters,
how they can develop, and we have given two prime examples,
Singapore and London. The factors which affect their growth
and development can vary enormously, and a more detailed
comparison of the two selected centres, along with Cyprus and
Norway, is given in the appendix.
9 Maritime Services, City Business Series 2003. International Financial Services London. (Sept. 2003)
PAGE 14
In Ireland, there has been very strong growth in the services
sector over the last 10 years albeit from a relatively small base.
The Marine Institute Global Market Analysis concluded that:
”In this growing market there is good potential for
development of the Maritime Commerce sector based in
Dublin with international shipping fi nance as its core”10.
SEAFARER EMPLOYMENT
The last 10 years have seen a signifi cant change in worldwide
seafarer supply. The numbers of seafarers from the traditional
OECD maritime locations of Western Europe, Japan and North
America have declined while there has been a steady increase
from the emerging nations in the Far East, Indian sub-continent
and now Eastern Europe. Of these China, in particular, has
become a signifi cant supplier of maritime labour, although most
of this workforce is currently used by the Chinese-owned fl eet to
meet the country’s expanding domestic requirements.11
The worldwide supply of seafarers in 2005 was estimated to
be around 1,187,000 in total. Of this 466,000 are offi cers,
and 721,000 are ratings12. In its manpower report of December
2005, BIMCO/ISF estimated that the current demand for
seafarers worldwide stands at 476,000 offi cers and 586,000
ratings. When these supply & demand fi gures are put together
they indicate a worldwide shortfall of 10,000 offi cers, or 2% of
the total seafaring population. While the shortage of qualifi ed
offi cers is an industry wide issue, the problem is particularly
acute in the niche trades that operate specialist vessels requiring
high levels of skills & training.
LNG (Liquefi ed Natural Gas) vessels are an excellent example
of a developing niche market. New vessels cost $200 – 400m
each, and due to the nature of their cargo, a high degree of
competency (rather than cost) is the paramount consideration in
appointing their offi cers.
As world energy markets evolve, there is a growing need for such
vessels. In 1998, there were orders for 20 new LNG carriers.
By 2006, the number of orders had increased to over 120 – a
more than six-fold increase. We believe that this is an excellent
example of opportunity for high quality training for Irish seafarers.
In addition to trade- and vessel-specifi c shortages, there are
shortages in certain ranks, specifi cally senior ranks, with early
retirement being a dominant factor in many countries13.
10 Douglas-Westwood, Global Market Analysis March 2005.11 Clarkson China Intelligence Reports, 2006.12 BIMCO/ISF Manpower Update 2005.13 BIMCO/ISF (Ibid).
AGE STRUCTURE/OECD OFFICERS
Figure 1 Age Structure of OECD Offi cers, 1990 - 200514
The prospects of increased demand and diminishing supply
present an unfavourable situation for the world’s maritime industry
for the future. When viewed from an Irish context however, these
conditions present signifi cant opportunities both for Irish offi cers,
and for Ireland, as it seeks to establish a reputation as a centre
of excellence for maritime training.
SHIPPING & LOGISTICS
Shippers today require sophisticated seamless, integrated,
transport solutions to deliver competitive advantage to their
businesses. In addition to sea and land transport, this includes
air transport, warehousing, freight forwarding, electronic tracking
and tracing, and break bulk/LCL services.
Major shipping companies are all widening their services –
Maersk, NYK, Cosco, Hapag Lloyd and DHL all operate airlines
for example – and are integrating the third party logistics (3PL15)
services vertically into their business.
The top ten are listed in the following table, with the location of
their Irish operations (in fact 18 of the top 20 companies have
Irish operations), and these companies were reported to have
moved more than 0.5m TEU in 2004. These top 10 companies
are truly global entities, with turnovers in excess of $4 billion
each. The two largest had a combined turnover of more than
$23 billion in 2004.
14 BIMCO/ISF (Ibid)15 3PL: “An organization that manages and executes a particular
logistics function, using its own assets and resources, on behalf of another company” Source: Eyefortransport.com.
40%
50%
0
Year
% S
hare
30%
20%
10%
1990 1995 2000 2005
>31 31-40 41-50 50<
PAGE 15
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
INTERNATIONAL TOP LOGISTICS PROVIDER
Company Country of
Origin
Irish
Operator
ABX LOGISTICS Belgium Dublin
APL Logistics USA Dublin
CH Robinson USA Dublin
DHL Global Forwarding Germany Dublin
DSV (DFDS) Denmark Kildare
EGL USA Dublin
Expeditors USA Dublin
FedEx USA Dublin
Hellmann Worldwide
Logistics
Germany Cork
Kintetsu World Express Japan Dublin
Source: IMDO and Individual Company Data.
In the face of this global trend towards integrated logistics, our
research appears to indicate a gap in Ireland in integrated policy
planning with this sector and other inter-related sectors. There
is however a greater recognition by the European Commission
of the value of these sectors to the European maritime supply
chain with the growing importance of integrated development
measures such as Motorways of the Seas, Marco Polo and the
recent Freight Logistics communication, all of which we cover in
Section Three.
GLOBAL PORT TRENDS
Ports are an intrinsic element of the shipping process and their
importance can have a regional, national and international
impact. As we highlighted earlier they have, historically, been the
physical centres of trade and, for the most part, remain so.
The following is a very brief overview of global and European
development from a ports perspective, some of which are policy
driven and aimed at improving port performance. There are also
references to recent major port developments within Europe and
their relevance to Ireland.
There are two main trends in port activity worldwide at the
moment:
Integration of port activity into the overall logistics chain ■
Capacity challenges in container traffi c ■
Port Integration
Twenty port terminal operators control signifi cant levels of the
top fi fty ports in the world, and these ports in turn handle a large
percentage of ocean-borne freight. Some of these companies
such as P&O Ports, Maersk, CMA-CGM, Cosco and Evergreen
also control a large percentage of the global cellular container
fl eet. The trend to vertical integration amongst liner operators
over the past decade has been noteworthy, with an ever-
increasing desire by these companies to control larger amounts
of the total supply chain. There have been high levels of merger
and acquisition activity in this sector, a trend that many experts
expect to continue. Ports are viewed as considerable economic
and strategic assets by the market.
Container Traffi c Demand
Container shipping capacity is growing faster than the capacity of
many ports to receive them. Concerns have been expressed as
to whether the European container terminals and their hinterland
connections can adequately adjust to this continuous growth.
Initial fi gures from Rotterdam show a 16% surge in container
traffi c to 8.3 million TEU in 2004 and Hamburg has achieved its
fi fth year of double digit growth. US ports are also experiencing
severe congestion.
In addition, there are serious restrictions in Europe to the number
of ports that can handle the new mega-container ships –
10,000 TEU and upwards.
The result is a very large investment in expanding port capacity
worldwide. For example, Shanghai is spending $10bn in building
what it expects to be the world’s largest container port. Kuwait is
to build a $1.2bn container port becoming operational in stages
from 2008. Spain has announced a plan to spend ¤23bn on the
maritime and ports sectors over the 15 years to 2020. New York
invested a total of $1.7bn since 2005.
PAGE 16
The charts below show the increase in container freight rates
including the delivery of vessels in the sector. The container
trade has seen a global shift in the size of these vessels, which
have now gone over 10000 TEU (Twenty-foot Equivalent Unit)
capacity level.
CONTAINER CHARTER RATES
CONTAINER DELIVERIES
In Europe, Rotterdam has recently secured its permission
to commence the Masvlaakte II project – 1000 hectares of
additional containers capacity, Antwerp will also see the port
double its capacity from 6 to 13 million TEUs over the next 5
years, and the London Gateway schemes has received preliminary
approval in the UK (Sept 2005), to add a further 6.8 million
TEUs capacity. Other developments in the Liverpool, Bristol and
Teeside are also planned.
MARITIME SAFETY & REGULATION
Maritime safety and Regulation is a vast area which would merit a
substantial study in its own right. There are numerous international
conventions and agreements which must be enforced by the
appropriate national authorities, and in many cases must be
refl ected in national legislation. The cumulative effect of these
measures has been above all to approve safety at sea and to
reduce the risks of pollution. To achieve these aims, they impose
increasing responsibility and workload, both on the national
authorities to defi ne and implement the appropriate measures,
and on the operators (port authorities, shipping companies, etc.)
to implement them in an equitable and transparent manner. While
Maritime Safety and Regulation are not the focus of this report,
it is worth drawing attention to certain developments which have
taken place over recent years.
There have been changes resulting from casualties that have drawn
international attention and concern. The IMO has sought to regulate
international shipping through the development of international
treaties, conventions and codes. The global shift in attitude is towards
leveling the operational fi elds for shipping companies whilst raising
the health, quality, safety, environmental and security standards. The
main issue continually being advanced is crew welfare and training.
With introduction of new legislation and conventions, there is a
growing drive to maintain high training standards.
Non-compliance with the international regime has become
increasingly less viable as the repercussions can be severe. The
key priority in the maritime sector is to ensure that all countries
meet and maintain compliance with international conventions,
including the ISPS16 Code and STCW-9517, thereby maintaining
regional security, and also for trade, tourism, infrastructure, service
delivery and employment. Recent and major changes introduced
to the industry include the implementation of ISM18 in early 90’s
and the ISPS code. The Oil Companies International Marine Forum
(OCIMF) has also recently introduced the Tanker Management Self
Assessment (TMSA), under which all tanker owners will need to
establish additional documentary processes to co-ordinate their
management operations effectively. The TMSA shall cover the areas
of Change management/Risk management and Accident/Incident
analysis. This system shall also record any non-conformance and
defect management and closeout requirements, circulars, safety
bulletins and procedural changes etc.
16 ISPS Code: International Ship & Port facility Security Code. Brief overview is in the appendix
17 STCW-95: International Convention on Standards of Training, Certifi cation and Watchkeeping for Seafarers, as revised in 1995
18 ISM Code: International Safety Management Code. Brief overview is in the appendix
20
25
30
35
0
Year
% S
hare
15
10
5
650-750 TEU
1650-1750 TEU
1000-1100 TEU
Jan: 93
Jan: 94
Jan: 95
Jan: 96
Jan: 97
Jan: 98
Jan: 99
Jan: 00
Jan: 01
Jan: 02
Jan: 03
Jan: 04
Jan: 05
Jan: 06
12%
14%
16%
18%
4%
Year
% o
f Fle
et
OO
O T
EU10%
8%
6%
400
500
600
700
800
900
1000
0
300
200
100
% of Fleets Deliverys
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
PAGE 17
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
CORPORATE RESPONSIBILITY & RISK MANAGEMENT AREAS
The diagram above lays out how the industry has witnessed
legislative changes and why it is crucial for operators and
owners to maintain clear transparency of their assets and
dealings. Under the corporate governance issues, shipping
companies need to refl ect their commitment to environmental
issues and how they operate, in an ethical manner. This
backdrop of changes has in itself created a new service sector
catering to these changes and led to standardization across
global markets.
Environment ISO 14000
MEPC
> Ballast Water
> Ship Recycling
> GHG
WETREPPSSA
> Marpol
> ISM
Operations
Corporate
Performance
Standards
ISO 9000/2000
SafetySIRE OHSAS
18001 TMSA
> ISM
> SOLAS
> COLREG
> IMDG
> SAR
> SUA
SecurityISO PAS 28000
ISO PAS 20858
> ISPS
> AIS
Corporate
Governance
Corporate Transparency
GRI Reporting
> IMO CONVENTIONS
> SARBANES-OXLEY
> ISM
Staff & Crew
WelfareSA 8000
(ISO 26000)
> STEW
> ISM
> CONMARCON
Maintenance
> MSC Resolutions
> STCW
> MCA
> MGN
Corporate
Maintenance
Program & PMS
TMSA
Source: HMA Maritime, Oslo ‘Mare forum Shipping Conference’ presentation 2006
PAGE 18
CONCLUSIONS
The shipping industry is wide and diverse and at times highly cyclical. In spite of this cyclical nature, global trade output ■
has never decreased. It is a truly global industry and is affected by the impacts of globalisation, world economic outputs,
global recession, war, and currency risk and oil prices.
Different countries have different approaches to developing and supporting their maritime transport clusters. Furthermore ■
many countries have different approaches to collating and analysing the economic performance and value of these sectors.
The industry is also highly mobile and is continually seeking locations that offer stable, pro-business environments and ■
benign tax structures.
Availability of capital and pro-business investment structures are key sources to growing high value service clusters, in ship ■
fi nance and banking.
The leading shipping clusters are London, Oslo, Hamburg, Rotterdam, Hong Kong, Tokyo, Singapore and most recently ■
Shanghai. Offshore locations in Monaco, Cyprus, Isle of Man have emerged in the 70s ad 80s, and gained prominence in the
last decade. There is a high level of competition between these clusters for varying physical and service-based industries.
The forces and change drivers within the global industry have required the European Union and OECD countries to ■
introduce specifi c fi scal and regulatory measures to protect their maritime cluster base(s) and also to enable European
Ship-owners compete with lower cost offshore centres.
Ireland has no real track record as a major shipping centre, although in the past 6 years it has developed some competitive ■
advantages and has potential to compete for inward investment projects in some niche market segments, in particular the
banking sectors.
The globalisation of production, upward growth in containerisation, faster- larger ships, greater emphasis on supply chain ■
management, and effi cient freight and logistics movements are all factors that will impact on Ireland.
Maritime Safety and Regulation places increasing demands on the relevant national authorities to defi ne and police ■
measures, and on operators to implement them.
PAGE 19
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
SECTION 2 KEEPING EUROPEAN
SHIPPING AFLOAT
INTRODUCTION
This section examines how the world trends outlined in Section
1 have affected the Maritime Market in Europe. In particular it
looks at the response by the EU to the decline in the European
Shipping Industry and the individual measures it has introduced
or permitted, (and their applicability in Ireland).
It concludes with a brief overview of current legislative thinking
from the European Commission, mainly:
Green Paper on Maritime Transport ■
Mid Term Review of the current White Paper ■
The Commissions Communication on Freight Logistics ■
ECONOMIC PROFILE OF SHIPPING IN EUROPE
Shipping and maritime transport services is the largest sector
in the European maritime cluster, with an estimated 10,000
companies operating a across a diverse range of services. The
sector generated an annual turnover of ¤151 billion in 200419.
In Ireland the shipping and maritime transport sector is also the
largest component of the marine services industry, employing
directly 8,300 people in maritime services with an estimated
turnover of ¤1.5 billion in 2005.
There is a renewed optimism that Europe is regaining its position
as a leader in shipping services and this is supported by the
fi gures in the pie charts below.
From an economic position, recent European maritime policy has
placed a far greater emphasis on the important role that shipping
plays in the European community. It takes into account that
90% of EU external trade and over 40% of its internal trade is
transported by sea20. These numbers correspond to 3.5 billion
tonnes of goods and 350 million passengers per year.
Europe depends and will continue to depend on this mode of
transport and on the unhampered fl ow of maritime traffi c. It
would appear that with globalisation and greater competition,
in particular from emerging economies in Asia and the Indian
subcontinent, there is a greater need to ensure that Europe’s
main trading and shipping supply lines stay competitive. The
following pie-charts show that Europe accounts for a signifi cant
proportion of the world’s traded goods and services.
19 European Chamber of Shipping (2006)20 Green Paper “Towards a Future Maritime Policy for the Union
7.6.2006: Com (2006) 275 Final
WORLD TRADE BY GEOGRAPHIC AREA
Source: www.eurostat.ec.europa.eu/trade balance (2006)
Shares in World Trade in Goods (2005)
EU25 United States Japan
China Others
17.5%
17.2%
7.0%
49.4%
8.9%
Shares in World Trade in Services (2005)
EU25 United States Japan
China Others
26%
18.4%
6.9%
44.9%
3.8%
PAGE 20
The following chart show the trade balance for Europe and how
globalization has affected specifi c sectors.
TRADE BALANCE (BILLIONS OF EUROS)
United Nations Conference on Trade & Development Geneva Review Of Maritime Transport, 2006
THE FALL AND RISE OF EUROPEAN SHIPPING
The resurgence in the maritime industry in Europe comes
against a backdrop of sharp decline. In 1970, 32% of world
tonnage was under EU fl ags, but by 1995, this had declined to
14%21. During the same period, the share of major open registry
countries had increased from 19% to 38%22.
As discussed in section two, the emergence of offshore shipping
locations, offering zero tax and benign regulatory environments,
created signifi cant competition for the location of the shipping
industry.
Given the mobility of the industry, a large number of companies
and shipping service providers relocated out of Europe and
there was a steady drift of the EU fl eet towards ‘fl ags of
convenience’.
21 Cap Gemini Ernst & Young, Marine Institute: Developing Ireland as an Internationally Competitive Location for Shipping and Shipping Related Services. July 2000
22 Community Guideline on State Aid to the Maritime Sector: 1997
The effects in the EU were harsh, particularly for employment:
the number of EU seafarers employed on EU-fl agged ships fell
by 37% in the space of ten years (1985-1995), while the
number of seafarers from non-EU countries rose by 14% over
the same period. 51% of job losses are thought to have been
due to fl agging out. The decline in shipping in Ireland over this
period is almost a mirror image of the trend that took place at
European level.
In 1997, the European Union issued a revised version of its
1988 State Aid Guidelines to Maritime Transport. The Guidelines
are widely credited with halting the decline and reversing the
migration of shipping services. Today the EU fl eet has a signifi cant
share of the global market, with 8,690 ships under European
fl ags, totalling approximately 225 million deadweight tons.
The EU share of world tonnage is currently 23%. In addition,
it provides employment to some 190,000 European seafarers,
making the European Union the number one shipping power
in the world.23The EU also recognises that European-based
shipping companies control a further 3,500 vessels fl ying foreign
fl ags. The graph below shows the world tonnage distribution and
European share. The European tonnage has since 2004 seen
a slow decline due to a lack of competitive schemes to retain
ownership in the EU.
WORLD/EEAA TONNAGE DISTRIBUTION
United Nations Conference on Trade & Development Geneva Review Of Maritime Transport, 2006
23 European Commission – Maritime Affairs Division 2006
57
136
3
21
30
60
40
64
26
36
5
4
6
8
6
8
0
8
Chemicals
Machinery
Other Products
Non-metal Mineral Manuf.
Paper and Articles of Paper
Iron and Steel
Textiles and Clothing
Transport Equipment
Manufacturing
1999
2004
World EEA
EEA% of World’s Tonnage
6000000
7000000
4000000
5000000
0
1990 2000 2004
Year
Tonnes
(Million)
2005 2006
3000000
2000000
1000000
25.0
30.0
20.0
0.0
15.0
10.0
5.0
PAGE 21
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
In 2004, the European Commission further revised its State Aid
Guidelines to Maritime Transport, seeking to reinforce Europe’s
position as a signifi cant force in global shipping. The reinvigorated
maritime industry in Europe has grown since 2000, and there
are a number of reasons for this:
Organic growth of the industry, ■
A boom in world-wide shipping markets, ■
The policy focus by the European Commission, ■
The enlargement of the Union’s industry with the signifi cant ■
maritime clusters of Cyprus and Malta.
In addition, the EU seafaring base has also been boosted with
the accession of a number of states with strong seafaring
traditions and abundance of skilled workers, including Poland,
Latvia and Estonia.
Maritime transport and ports are recognised as key elements
in the logistics chain linking the single market to the world
economy. Their effi ciency is crucial to the competitiveness of
the EU and it is no surprise that shipping services and ports are
identifi ed as growing sectors and as key elements of the Lisbon
Policy which aims to make Europe the most competitive trading
entity in the world.
The European Commission State Aid Guidelines to Maritime
Transport are a key element of European maritime policy, in
particular in the context of competition and infl uence on market
forces. Therefore, in line with these provisions, we will review:
The latest measures outlined under the recent guidelines ■
with respect to their policy impacts on shipping in Ireland.
The higher focus placed by Europe on promoting ■
competitive internal shortsea shipping and the most recent
initiatives in that regard.
We will briefl y refer to ports policy in Europe. ■
Examine the publication of the Green Paper on Maritime ■
Policy, again from the perspective of its potential
contribution to shipping services in Ireland.
EUROPEAN STATE AID GUIDELINES
TO MARITIME TRANSPORT
The Commission recognized that, while there has been a positive
recovery in the European Fleet since the initial introduction of the
State Aid measures in 1997, an ongoing commitment is required
by Europe to maintain a long term, sustainable, maritime base.
It is accepted that European owners still need special fi scal
measures to make European shipping and the employment
of European seafarers competitive and the position in Ireland
refl ects this.
The Commission recognizes the emergence of competing
maritime clusters, particularly in Asia. These emerging clusters
compete not only in terms of location costs but also, and more
signifi cantly, in terms of innovation, research, fi scal policy, and
transparent, fl exible, regulatory environments.
In 2004, the Commission offi cially introduced the new Guidelines
on State Aid to Maritime Transport. These guidelines follow the
same approach as the 1997 version and maintain the same
over-riding proviso that
“a reduction to zero of taxation and social charges for
seafarers and corporate taxation of shipping activities is
the maximum aid which may be permitted”24
The 2004 guidelines reinforce the importance of monitoring
the effects of state aid, and also provide new guidance on tax
exemptions rules for seafarers and public support to Short Sea
Shipping.
The EU’s revised state aid guidelines seek to maintain
competitiveness in an international business environment. The
new framework continues to allow Member States to support the
European maritime industry by means of favourable tax regimes
while ensuring a level playing fi eld in the internal market.
While the new guidelines provide a positive fi scal environment,
they fail to stimulate a higher level of innovation or dynamism in
European shipping. However, the recently published Green Paper
does provide an opportunity to create such a framework.
The following are the measures currently approved under the
State Aid Guidelines, with the corresponding status for Irish
Initiatives.
European Measure Irish Status
Fiscal treatment of ship owning
companies (tonnage tax systems)
Irish tonnage tax
introduced
Labour-related costs:
Reduced rates of ❚
contributions for social
protection of community
seafarers;
Reduced rates of income ❚
tax for community
seafarers;
PRSI refunds for
employers introduced
Seafarers Additional Tax
Credit introduced
Crew Relief (repatriation costs) No
Investment Aid No
Regional aid No
Training (on-board) Yes, ISEAS
Restructuring aid No
Public services obligations and
contracts
No
Short sea shipping One Irish company has
received funding under
Marco Polo
24 Community Guidelines on State Aid to Maritime Transport
PAGE 22
The following is a brief review of the European measure in
relation to Ireland.
Fiscal treatment of ship-owning companies – Tonnage Tax
In December 2002 the European Commission approved Ireland’s
tonnage tax regime. Most other EU countries have introduced
tonnage tax regimes.
Rather than paying corporation tax on operational profi ts, tax is
paid on a notional amount determined by the tonnage owned/
bareboat-chartered and time-chartered by the company.
Depending on the fl eet size, type and fi nancial structure,
corporation tax rate for a ship operator can amount to a zero rate
(the lowest permitted under the current Guidelines)
Labour-related costs
In 2005 The European Commission approved the Ireland’s
scheme for the reimbursement of pay related social insurance
contributions for Irish seafarers for a period of 7 years.
In addition, there is currently a personal tax-free allowance of
¤6,350 for certain seafarers.
While Ireland has not formally sought any additional relief for its
seafarers, the rules further permit:
Reduced rates of income tax for EU seafarers on board ■
ships registered in a member state.
A reduction to zero of personal income tax and social ■
insurance charges.
At a time of signifi cant readjustment in the seafaring sector,
all options should remain open and be reconsidered by the
Government following a periodic review of the seafaring sector.
On-Board Training
The Commission has recognised the cost burden to European
ship-owners of cadet and offi cer training. Several member states
have introduced special support measures for their industries.
France, Italy and the United Kingdom have the largest training
budgets amongst the EU states. It is the Commission’s view that
“given the importance of such activities to the economy of the
Community and in support of earlier stated objectives, these
types of fi scal incentive measures can generally be endorsed”.
Through the administration of the seafarer training scheme,
ISEAS, Ireland provides a direct training support for seafarers of
about ¤365k annually.
Short Sea Shipping (SSS)
There are two major initiatives to develop Short Sea Shipping
in the EU. These are Motorways of the Sea (MWS ) which
promotes major maritime corridors between member States, and
Marco Polo which favours modal shift away from road freight.
Motorways of the Sea (MWS)
In its Transport White Paper of September 2001, the EU
Commission proposed the development of “Motorways of
the Sea” – MWS – as a “real competitive alternative to land
transport.” To help these lines develop, European funds would be
made available. These MWS will be part of the Trans European
Network – TEN-T’, and initially four corridors were designated
Baltic Sea (Member States in the Baltic Sea with those in ■
Central and Western Europe).
Western Europe (Iberian Peninsula to the North and Irish ■
Seas).
South East Europe (Adriatic, Ionian Sea and the Eastern ■
Mediterranean).
South West Europe (Western Mediterranean, and linking ■
with the South-East Europe, above).
A minimum frequency of service is stipulated, and there is a
requirement for streamlined administrative procedures at the
point of landing.
The focus of MWS programmes is to link member states, to
develop infrastructure, and projects must be proposed at joint
national level by a number of member states. To date no
projects have been approved for EU funding. However, there
are projects under study where Cork or Rosslare would feed into
developments as part of the Western European MWS.
Marco Polo
The Marco Polo programme was established to reduce
road congestion by promoting modal shift to rail, short sea
shipping, and inland waterways. The programme is available
for all international transport. Initially, a budget of ¤115m for
the period 2003 – 2007 was made available to grant aid the
infrastructural and other developmental costs of suitable projects.
Under Marco Polo, suitable projects can be proposed by the
operating companies – usually a lead proposer, with international
co-benefi ciaries also listed.
The programme has been a success, and has been heavily
oversubscribed. Its successor, Marco Polo 2 is planned to run
from 2007 – 2013, and will have a budget of ¤740m, and is
designed to be more accessible for smaller projects.
The funding allocations for 2003 and 2004 have been published
and are summarised in the following table.
Marco Polo Call ¤Amount
2003 21,120,000
2004 20,439,000
Total 41,559,000
Irish Interest26 1,000,000
Irish Percentage 2.5%
PAGE 23
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
A number of points are of interest:
31 projects have been grant-aided to date – 19 in 2003 ■
and 12 in 2004.
Four Irish projects were submitted, and one was successful ■
– Project Eucon. The Irish Continental Group was the lead
company, with benefi ciaries in France and the Netherlands.
In none of the other thirty projects did Ireland feature as a ■
benefi ciary.
CURRENT STATUS OF EU POLICY
Currently, three EU policy assessments indicate the current
thinking by the Commission on maritime transport matters,
namely:
Green Paper on Maritime Transport. ■
Mid Term review of the Current White Paper. ■
The Commission Communication on Freight Logistics. ■
EU Green Paper on Maritime Transport
In June 2006, the EU issued a Green Paper on the Future of
Maritime Policy for the Union25, acknowledging the important
role that shipping plays in the European Community, and calls
for attention to enhance the competitiveness of the industry.
Although it doesn’t defi ne the “industry” nor the extra policy
measures to achieve this, it is encouraging that the Green Paper
recognises the importance of the maritime dimension of Europe
and its economic potential. The Paper stresses the essential role
of shipping services for the European economy and for the daily
life and the wealth of EU citizens.
Amongst its observations are:
Forty percent of the EU’s internal trade is transported by ■
sea.
There is a decline in the number of merchant marine ■
offi cers, yet many sectors require a steady fl ow of former
seafarers.
“A strong Maritime Community in Europe is an essential ■
condition for the well being and development of maritime
transport. Given the high degree and the interdependency
of all players in the sector, a change in fortune in any one
industry will infl uence others”.
The Green Paper also recognises that the European ■
maritime clusters are the largest in the world and that
maritime transport is the catalyst for the maritime clusters.
25 “Towards a Future Maritime policy for the Union: A European Vision for the Oceans and Seas”; COM (2006) 275 – Commission of the European Communities
Mid Term Review of White Paper
On 22 June 2006, the Commission approved a communication
on the mid-term review of the 2001 White paper on European
Transport Policy26. In the latest agenda the overall objectives of
transport policy were confi rmed, notably a competitive, secure,
safe and environmentally-friendly mobility, fully in line with the
revised Lisbon Policy agenda for employment and growth.
The mid term review identifi ed that the growth of effi cient and
sustainable transport is considered essential. This is obviously
an important consideration from Ireland’s position. Particular
attention is drawn to the previously highlighted areas:
Growth of short sea shipping. ■
Requirement for investments in ports and hinterland ■
infrastructure.
Development of a strategy for freight transport logistics. ■
Modal shift should develop on the basis of optimising the ■
performance of the relevant transport modes.
The Commission Communication on Freight Logistics
The revised White Paper on Transport Policy was followed by the
publication of a Commission Communication on Freight Logistics
on 28 June 2006. The Communication will be the basis for an
Action Plan for Freight Transport Logistics, which is expected in
2007. The Communication proposes, amongst other items, to
set up a group of National Focal Points to identify and solve
bottlenecks that hamper the development of freight transport.
It also proposed to:
Improve tracking and tracing of freight movements in the ■
Union.
Build logistics terminals and, ■
Establish a dedicated rail freight network. ■
Furthermore, it envisaged the harmonisation of transport
documents and liability regimes for the transport modes. It is
imperative that Ireland forms a position with respect to this
paper.
26 European Transport Policy for 2010: A Time to Decide; COM (2001) 370
PAGE 24
CONCLUSIONS
The Policy framework developed through the European State Aid Guidelines and the White Paper on European Shipping ■
has had a positive impact on European shipping and thus on Irish shipping.
Policy & fi scal developments in Europe require constant monitoring in order to ensure that the Irish industry is not at a ■
competitive disadvantage relative to its closest trading and competing neighbours.
The Green Paper for maritime transport provides an important platform to pursue a national strategy on cluster ■
development consistent with the European Commission’s objectives and the Lisbon Agenda.
Maritime Transport is seen increasingly by the EU commission as a link in an overall logistics Process. The defi nition of ■
Motorways of the Sea, and the mid-term review of the current White Paper, and the 2006 Communication on Freight
Logistics all refl ect this.
The policy drive by the EU to transfer freight from road to water is likely, in the future. ■
Ireland has secured less than 1% of maritime transport research funds from previous European research programs. The ■
forthcoming FP7 program is an area where Ireland should aim to secure more funds for research projects and partnerships.
PAGE 25
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
SECTION 3 THE IRISH MARKET
INTRODUCTION
In the previous sections we provided an overview of both the
world and EU marketplace, including the effect of globalisation,
regulation, and the infl uence of European and wider policy. Ireland
is also amongst the fi ve most open economies in the world.
Because of its geographic location, Ireland is heavily dependent
on its ports and shipping corridors to connect national industry
to the global market place. The importance of international trade
to the Irish economy cannot be overstated and it is generally
accepted that the export sector has been a major driving force
in this development.
In this section we look at the Irish maritime marketplace and
how some of the broader global issues have affected it. This is
followed by a brief consideration of some of the developments
facing the industry, and the conclusions that can be drawn on
the Irish market. We examine the key components of the Irish
Maritime cluster and attempt to defi ne the principal segments
of this sector.
We will provide a profi le of the national maritime transport
cluster and how the cluster is adapting and developing to the
needs of the Irish economy. This section will also take account
of current and future constraints resulting from rapid economic
development and the position of maritime transport in an open
island economy increasingly infl uenced by the global economy.
In this section we examine:
Economic overview and competitiveness. ■
The industry profi le. ■
The Irish maritime cluster, and its components. ■
Core services. ■
Liner and Short Sea Shipping services. ■
Agency & Support services. ■
Maritime commerce. ■
Freight & logistics. ■
Knowledge and innovation. ■
Government regulation. ■
Professional bodies. ■
New Horizons – future challenges. ■
ECONOMIC OVERVIEW
Ireland is amongst the fi ve most open economies in the world,
and is therefore heavily dependent on its ports and shipping
corridors. The importance of international trade to the Irish
economy cannot be overstated and it is generally accepted
that the export sector has been a major driving force in this
development.
THE IRISH ECONOMY & WORLD SHIPPING
Table 1.1 2005 2006 2007
Irish GDP Growth 5.5 5.6 5.2
Irish GNP Growth 5.4 5.6 5.1
Global GDP Growth 4.5 4.25 4
Global Dry Bulk Fleet Growth 6.7 5.7 3.8
Global Wet Bulk Fleet Growth 7.6 5 6.5
Global Containership Fleet Growth 10.6 12.7 11.5
During the period 1995-2004 the value of the Irish Gross
National Product (GNP) at current market prices, expanded from
¤47 billion to ¤124 billion.27 There has been unprecedented
growth for almost a decade, and following the global slowdown
of 2001/2002, this softened to the more modest rate of
4-5%. The growth rate for 2005 was 5.5%, with the same
level forecasted for 2006.
There is a correlation between economic growth and the demand
for maritime transport, and the following diagrams clearly show
how the performance of the economy is closely shadowed by a
similar trend in container traffi c, both Lo-Lo and Ro-Ro.
GDP AND RO-RO TRAFFIC GROWTH
GDP AND LO-LO TRAFFIC GROWTH
Source: CSO
27 Indecon Reports on Irish Ports 2006.
120000
140000
160000
180000
80000
100000
0
Year
€ M
illion
No. of
Tra
ilers
60000
40000
20000
600000
700000
800000
900000
400000
500000
0
300000
200000
100000
1998
1999
2000
2001
2002
2003
2004
2005
GDP
RORO
120000
140000
160000
180000
80000
100000
0
Year
€ M
illion
TEU
s
60000
40000
20000
1200000
800000
1000000
0
600000
400000
200000
1998
1999
2000
2001
2002
2003
2004
2005
GDP
LOLO
PAGE 26
It is important to note that with the continuous increase of
volumes of goods moving into and out of Ireland, the demands
on the maritime transport infrastructure, including the public
sector element, are also increasing.
COMPETITVENESS
Competitiveness has become something of a global
preoccupation and certainly a national preoccupation in Ireland
since the early 1990’s. It is a central theme to this report.
Its attainment is necessary to underpin the future of the Irish
maritime cluster. It can be defi ned in a narrow or broad sense.
Today Ireland has moved towards accepting the broad defi nition
of competitiveness. This is generally accepted to mean “including
price and non-price factors such as product quality, reliability of
supply, back up marketing services and taxation and extends to
consideration of human resource development, business services,
infrastructure and public fi nance and administration. A country’s
long term competitive position can also be profoundly infl uenced
by its policy towards research and development (R&D) and by its
success in product innovation and technology”.28 We believe that
this clearly refl ects the approach advocated by this section of
the memo and the development methods pursued by the IMDO
and sector in search of achieving economic competitiveness.
The Irish shipping services is only one element of overall
competitiveness. Although transportation costs might allow
fi rms from a nation to compete successfully in their home
market or in adjacent markets, competitiveness usually refers
to advantage obtained through superior productivity. However,
competitiveness should not be seen as a means to an ends in its
own rights and other factors such as improved performance and
quality of services are also highly important.
The Forfas Annual Competitiveness report, identifi es transport
infrastructure as a key component of national competitiveness.
However it does not in our opinion clearly refl ect the important
role that Ports, Shipping and supply chain plays within the
competitiveness of an island economy such as Ireland. It is a
globally accepted phenomenon today, that supply chains and
not companies compete for business in the international market
place. As an island economy, we are at least one step in the
chain further removed from our customer base . These costs
can be as high as 20% of the total sales and delivered cost of
a product. Failure to compete in the supply chain will inevitably
mean that Irish companies will not be competitive.
28 Economics for Business, Prof Dermot McCallese, Trinity College Dublin, Press 2004.
INDUSTRY PROFILE
In 2005 the IMDO participated in an Industry Health Check carried
out by the Marine Institute and economist Peter Bacon, to provide
a wide-ranging survey and assessment of the Irish Marine Industries
Portfolio (MIP), which included the fi shing and aquaculture sectors.
The review determined that the turnover of the total portfolio was
about ¤3 billion per annum. The review attempted to provide as
accurate a fi gure as possible of the size of the MIP by fi rst identifying
all companies providing maritime specifi c services, either wholly or
in part, and to quantify the revenue, employment, government
support and outlook for them.
Given the size of the task and the resources available the scope
of the research was restricted and certain rules applied to the
data:
Access to corporate data was variable and public turnover ■
data was not readily available for companies with turnovers
of less than ¤7.5m.
Data available at the time was incomplete. ■
Companies were also contacted directly to provide ■
estimates in the absence of publicly available data and fi nal
fi gures depended on data provided.
No breakdown was possible between foreign-earned ■
revenue and revenue earned locally.
In terms of physical size the data did not include public ■
bodies or industry associations.
Despite these qualifi cations, there were a number of signifi cant
fi ndings from this study:
Total employment was estimated at 8,300 in Maritime ■
Transport services and 14,000 when other direct transport
services were included.
The Maritime Transport sector employed more than 50% ■
of all people directly employed in the Marine sector in
Ireland.
PAGE 27
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
IRISH MARITIME CLUSTER: TURNOVER BY SECTOR
Sector Turnover ¤m Market Share Number of Employees Number of Companies
Ship Broking/Agents ¤153.8 9.0% 1143 59
Liner Shipping services ¤155.9 9.2% 868 82
Ship Owners/Managers ¤820.4 48.6% 2542 19
Port Companies ¤100.6 6.0% 690 18
Banks & Legal services ¤110.0 6.5% 36 11
Surveyors/Safety & Training ¤3.8 0.2% 62 32
Freight Forwarders & Logistics ¤301.2 17.8% 2253 37
Stevedores ¤7.5 0.4% 74 17
Ancillary Services ¤38.4 2.3% 332 40
¤1,691.6 100.00% 8300 315
Turnover was estimated at approximately ¤1.5 billion for 2004.
The maritime services sector contributed to more than ■
50% of the combined direct turnover of companies
employed in the sector.
Average employee turnover was estimated as ¤210,000 ■
for the transport segment.
The shipping sector also had the highest economic output ■
and the highest economic employee multiplier of all of the
marine sectors.
A key fi nding from this analysis was that, in terms of size and
turnover, the Irish maritime transport cluster was the largest
segment of the current Marine Industries Portfolio.
THE IRISH MARITIME CLUSTER
Over the past six years a number of international studies on
maritime and other industrial clusters have been reviewed. These
show how to defi ne such a cluster and the resources required,
both physical and fi nancial, to develop and expand it. The Offi ce,
through the Marine Institute’s NDP, has funded a three year PhD
programme specifi cally researching Irish shipping and Maritime
Transport clusters.
While there are many methods of illustrating the industry and the
size of sectors in it (numbers of companies, numbers employed,
etc) the following table shows size of Irish Maritime Cluster, and
the main sectors in it, by turnover.
In Section 1 we highlighted how certain maritime clusters
develop in a particular location at a particular time. The Irish
maritime cluster is essentially a local cluster providing services
and facilitating economic growth. Initial analysis from the IMDO
stakeholder survey identifi ed that 47% of companies in the
cluster had only a moderate interaction and understanding of
other companies in the cluster, while a further 14% said they had
a very low or insignifi cant knowledge of the cluster dynamic.
There is therefore work to be done to make Irish operators aware
of other services that are available to them locally, from the
Irish cluster.
While local knowledge of the local cluster may be limited, this
sector is now a net exporter, rather than an importer for the Irish
economy.
As mentioned in the introduction, we have broken down the Irish
maritime cluster as follows:
Core services. ■
Liner and bulk services. ■
Support & agency services. ■
Maritime commerce. ■
Freight & logistics. ■
Knowledge and innovation. ■
Government regulation. ■
Professional bodies. ■
The chart opposite is a comprehensive representation of the
Irish maritime cluster as defi ned by the IMDO. The chart shows
the interaction and spread of activities of different services all
of which are related to the core activities of the port and ship
operations.
PAGE 28
THE IRISH MARITIME CLUSTER
Support
& Agency
Services
Maritime
Commerce
Freight
Forwarders
& Logistics
Providers
ICT Services
Education
Surveyors/
Technicians
Research
& Consultants
Ship Managers
Agents
Shipper or Charterer
Road Haulage
2 PL
3 PL
Ocean &
Air Forwarders
Ship Brokers
Legal Advisors
Bankers &
Accountants
Marine Insurers
Knowledge
& Innovation
Services
Liner
Services
Ancillary
Services
Professional
Services
IIMM
CITL
ICS
IPA
IRHA
IMLA
IME/NI
IHMA
MSD/MSO
IMDO
Dept of Transport
Lo-Lo Operators
Ro-Ro Operators
Ferry Services
& Tourism
Repair &
Manuafacturing
Chandlers
Offshore
Government
& Regulators
CORE SERVICESSHIP OWNERS
& PORT OPERATIONS
PAGE 29
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
CORE SERVICES
This segment comprises commercial ports and ship-owning
and operation. These companies lie at the heart of the Irish
maritime cluster, they are the largest in terms of turnover and
employment, they have the highest multiplier in terms of indirect
employment, they have the highest turnover of all the cluster
components, and they have invested approximately ¤1 billion
over the past decade. In essence, these core services sectors
sit at the centre of the Irish maritime cluster and they are the
dynamos that drive its growth.
In the last decade we have seen more Irish ship owners investing
outside Ireland through merger and acquisition activity and
joint ventures, and some Irish ports appear now in a position
to expand their services and export their expertise (this can be
compared to the ESB, which developed its know-how servicing
the domestic market and was then able to establish ESBI, a
successful international consultancy fi rm).
Both segments of the Irish maritime cluster, the Ports and Ship-
Owning, have benefi ted from positive regulatory interventions in
the past decade. While these segments of the cluster are defi ned
as core, the ports and Ship-owning communities are affected by
different policy drivers and competitive issues. We will discuss the
profi le, role, and broad issues for both of these independently.
We have seen at a global level a high degree of vertical integration
in the shipping market with major shipping companies buying
major ports, and major port companies acquiring shipping assets
as part of their business portfolios. A benign tax and pro business
environment is also conducive to attracting non-indigenous
industries to locate within these segments. Ireland has some
success in securing investment from overseas in these areas
and there has been tangible evidence of the impact that this
investment has had on catalysing growth in other commercial
services to these companies.
Ship-owning
The Irish ship-owning sector is relatively small compared to other
European clusters, yet it is the largest employer and has also the
largest combined turnover, estimated at just under ¤900m or
48% of annual turnover, of all companies in the cluster.
Vital Stats: Ships Owned, Operated or Managed
from Ireland.
Irish owned/operated fl eet 2000: 51
Irish owned/operated fl eet 2006: 163
During the last two years certain subdivisions of the industry have
endured major turbulence which has resulted in restructuring
and job losses. The total number of employees has decreased
by more than 840 over the past 24 months. These jobs were
principally all Irish seagoing staff, with more than 60% of the
jobs located in the hotel and onboard catering services. It must
also be mentioned that while traffi c volumes overall have shown
healthy growth in recent years, car and passenger ferry traffi c has
declined. This is partly due to strong competition from low cost
airlines (see diagrams under “Liner Services”).
Section two of the report identifi ed the highly cyclical and risk
intense nature of this business. It also highlighted the mobile and
intensely competitive nature of this industry and the evolving
pattern during the 1980’s of fl ags of convenience and the
migration of ship-owning to offshore centres. Traditional Irish
Ship-owners, mainly operating in UK and Northern European
trades, have also had to survive in highly competitive markets.
The introduction of various state aids by the Irish Government
such as PRSI relief and Tonnage Tax has provided some level of
equalisation with other owners and operators located outside
of Europe.
Vessels Owned/Operated
from Ireland 2006
Total Fleet Vessels x Irish
Flag
Arklow Shipping Company 42 31
Celtic Link 2 0
Coastal Container Lines 3 0
d’ Amico 60 0
Emerald Isle Group 2 0
Eucon/Eurofeeder 10 1
Irish Ferries 4 0
Irish Mainport 35 10
North Atlantic Shipping
Company
2 2
Marine Institute 2 2
Commissioners of Irish Lights 1 1
Returns by the Irish Chamber of Shipping indicate that in 1990
the number of ships owned/managed and controlled by Irish
companies on the Irish Register was 90. By 2000 this was 51
vessels, of which 41 of these were registered under the Irish fl ag.
Several Irish Ship-owners were relocating offshore, or had gone
bankrupt over the next 10 year period.
Registration of vessels under the Irish Flag was the historical
method used to calculate Irish-controlled tonnage and it
broadly refl ected the number of vessels owned and managed
from Ireland. By 2006, the number of vessels owned by
Irish companies and controlled by Irish-based operations had
increased to 163, some of this growth can be attributed to the
positive impact resulting from the introduction of tonnage tax in
Ireland. For a short period of time, between 2001-2003, Irish
Ship-owners recommenced registration of ships under the Irish
fl ag, buoyed by changes to the development and fi scal climate.
We conservatively estimate that Irish based owners have invested
in excess of $1 billion dollars in new vessels and machinery
over the past decade. There are currently a further 6 new-build
vessels on order. Irish Ship-owners operate in passenger, Ro-
Ro, Lo-Lo, tanker, dry bulk, offshore and research sectors. From
our review it is clear that Irish shipping companies in this sector
have continued to reinvest and improve the type and quality
of vessels under their ownership or operation. We believe that
the effi ciency gains produced as a result of cost savings are
passed back to the customers through new investment in ships
or competitive price structuring.
PAGE 30
While the availability of lower-cost European seafarers has
eroded competitiveness in lower Irish sea-going ranks such as
hotel and catering staff, the demand for senior Irish offi cers by
Irish and European companies remains buoyant.
The growth of the ship-owning sector is an important economic
contributor to the economic national maritime cluster, in particular
the signifi cant tangible spillover effect into the fi nance, tax, legal,
consulting, training & education, and shipbroking sectors.
We believe that simply measuring the health of the sector purely
by the number of vessels registered on the Irish register that the
following direct metrics provide a better indication of the wealth
and strength of the Irish ship-owning sector located here:
The benefi cial ownership, management and operations of ■
ships by companies managed and controlled in Ireland.
The number of companies undertaking this activity ■
from Ireland.
The combined annual turnover of these companies. ■
The number of European offi cers and senior ranking ■
crew employed.
Average salary paid to offi cers. ■
The number of Irish cadets engaged ■
in onboard training per annum.
Port Sector
Similar to the Ship-owning, this sector has a high impact on other
dependent sectors of the Maritime Cluster overall. The Ports
have a turnover of just over ¤100m and employ 690 people,
with Dublin and Cork the largest employers. Employment in this
sector has reduced signifi cantly over the last decade, much of
which has been driven by effi ciencies through the introduction of
greater automation and specialised handling equipment as well
as the increased unitisation of cargo.
IRISH PORTS: VITAL STATISTICS.
Number of Irish Ports and Harbours: 22
Number of Corporatised Ports: 10
All Irish ports, with the exception of Greenore are
100% owned by the Irish Government.
Total Bulk Tonnage Handled 2005: 32m
Total Unitised Handled 2005: 996,403 TEU’s
and 805,641 trailers
While the combined turnover of the ports sector is relatively
small, its economic impact is enormous and its effectiveness has
major signifi cance on the performance of the wider economy.
In our opinion, the ports sector has been a silent partner to the
success of the economy over the past decade. This is not widely
recognised by many stakeholders outside of those directly dealing
with the ports. From our review it is clear that Irish companies in
this sector have invested and innovated in anticipation of market
demand. Through effi ciency gains the sector has improved its
productive output, increased service capacity and cut costs, all
of which fl ow back through the economy.
Some notable statistics over the past decade include the
following:
Between 1995 and 2005 port tonnage has grown by 61%. ■
There has been a 79% increase in direct shipping services ■
between Ireland, UK and Continent over an 11 year period.
Growth in Lo-Lo traffi c is 89% since 1996. ■
Growth in Ro-Ro over the past 10 years is 87%. ■
The increase in the number of cruise ships calling at Irish ■
ports between 1995 and 2005 is over 150%.
GROWTH OF PORTS TONNAGE 2000 – 2005
There are a number of trends that enhance ports effi ciency and
productivity gains, including better, faster, and larger vessels,
higher levels of automation and improved unit productivity.
Ireland’s GDP has a high level of dependence on multinational
corporations, estimated at 85% of the value of merchandise
exports. Given the competitive nature of global trade, these
companies are continually seeking to maximise their own
effi ciency gains through seamless supply chain systems. Ireland is
losing its competitiveness in other areas due to wage and higher
infl ationary measures, and further erosion in supply chain costs
would clearly have a major negative impact on future decisions
by multi-nationals.
In this respect Ireland has been lagging and international
surveys of competitiveness from organisations such as the IMD
(International Institute for Management Development, Lausanne,
Switzerland) and the World Economic Forum consistently point
to the weakness of Ireland’s infrastructure and defi ciencies in
access facilities. The growth in Irish trade as part of world trade
and the concurrent growth in freight volumes transported by
sea needs to be viewed in the context of the evolving nature
of international manufacturing and distribution with careful
consideration given by the Irish government to this area from a
policy perspective.
48000
50000
52000
54000
44000
46000
0
Year
Tonnes
(000)
42000
40000
2001
2002
2003
2004
2005
PAGE 31
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
The Irish ports sector was reformed by Government policy with
the introduction of the Harbours Act in 1996, discussed in more
detail in section 4. This changed the way ports operate and invest
in their facilities and has stimulated and encouraged new direct
shipping services. Recent high-level reports commissioned by
the Government acknowledge that there is greater competition
within and between port companies. This ultimately creates
greater economic effi ciencies and a more effi cient operating
environment for Irish industry overall.
While this policy intervention has been positive, there are
misconceptions at large, both within the media and the industry
regarding port capacity in particular. The Government has
undertaken several high level reviews of ports capacity during
the last eight years, including those undertaken by Packer &
Associates, Baxter Eadie, Raymond Burke et al., and most
recently by Fisher Associates.
While these reports have been extremely important, they
inevitably refl ect variation in the terms of reference, and differing
approaches and expertise of the authors concerned. This invariably
creates inconsistencies in the information provided, gives rise to
dispute from the parties affected, and makes accurate long-
term forecasting diffi cult.
As a result of its previous consultation process, the Government
issued its Ports Policy Statement in January 2005. We believe
that this report provided more clarity to the sector, but will
require constant review and monitoring, particularly regarding:
Competition.1.
Market capacity & effi ciency.2.
The role of private sector.3.
Government ability to intervene in the market, including 4.
mergers and amalgamations etc.
Disposal of non core assets.5.
Ports have a duty to respond to market demand with commercially
viable projects to develop their capacity and enhance their
effi ciency. In certain cases, Dublin is a good example, the private
sector becomes involved in certain aspects of port operations,
creating competition not only between ports, but even within
an overall port facility. Disposing of non-core assets is a source
of funding encouraged by the Policy, but this is an operation
which requires care and due diligence by the Port authority and
ultimately by the share-holder.
There are several current or recent cases of ports moving
downstream, and selling off the upstream assets rendered
non-core by the move. However, as a commercial port pursues
bottom line results, the distinction between core and non-core
could easily become blurred. In virtually all cases, waterfront
property has greater value to a property developer than to a port
operator, and a short-term, bottom line profi t could be made
at the expense of a medium to long term loss of port capacity
or port development potential. Predatory asset stripping of the
ports and ongoing speculation by the private sector in port
estates is a real danger, which could have national consequences
if not carefully monitored.
From the point of macro-economic planning, it is important to
ensure that port capacity issues, including the overall national
capacity, are duly considered in the event of disposal of
Port estates
Ports are becoming less of a distinct entity and activities
extend beyond the traditional port precinct. They need to
integrate into other areas such as IT, be prepared to extend
their activities into transport hubs, and become more a link in a
seamless logistics chain.
Our fi ndings agree with the Ports Policy Statement that there
is competition between the Ports, and overall, apart from
ongoing discussions relating to capacity constraints, the sector
is competitive.
Nonetheless, it appears that the following items require further
consideration:
Port operations in general, and capacity constraints ■
in particular are regularly reviewed on behalf of the
shareholder, and the current situation is being addressed
by Fisher & Associates. However, a systematic, long-term
approach would provide Government with a consistent
picture, and would facilitate policy-making.
Operations of Irish ports need to be systematically ■
benchmarked against best practice elsewhere to help them
adapt to the expectations of their users29.
The costs of congestion, or ‘bottlenecks’, in the Irish supply ■
chain, and the scarcity of infrastructure or capacity are
key challenges in the Ports and logistics sector. They are
challenges currently being faced by many countries globally.
Ports are no longer simply public utilities, their location ■
and land banks represent multi-million Euro and in some
cases, billion Euro values which require careful due diligence
and monitoring.
29 A High level Review of the State Commercial Ports; DoCMNR: April 2003
PAGE 32
LINER & SHORT SEA SHIPPING SERVICES
This sector is made up of direct regular shipping services from
Ireland. Although the liner services operate in two separate modes
Ro-Ro and Lo-Lo, essentially they compete for market share.
The average size of container vessels calling at Irish Ports has
increased by 300% in terms of unit capacity in the past decade.
Some of the new ships on order for the world market now give
a TEU capacity in excess of 10,000 which will continue to have
a knock-on effect in the feeder markets. As we have previously
indicated, the Irish ports sector has seen substantial growth. The
table below sets out the steady rise in Lo-Lo traffi c and capacity
over the last decade. Between 1996 and 2004, unitized traffi c
has increased from 430,000 to 760,000 in Ro-Ro freight units,
and in Lo-Lo containers from 530,000 to 930,000.
10 YEAR TREND OF LO-LO TRAFFIC THROUGH IRISH PORTS
Number of TEU’s
Port 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 10 yr avg
Dublin 290,564 327,884 381,334 422,927 440,892 449,406 435,451 456,027 495,862 540,779
Avg annual growth 13% 16% 11% 4% 2% -3% 5% 9% 9% 7%
Drogheda 4,585 4,232 3,617 3,311 3,843 8,487 45,121 63,000 61,392 48,373
Avg annual growth -8% -15% -8% 16% 121% 432% 40% -3% -21% 62%
Waterford 149,779 131,020 61,345 85,967 105,896 131,518 140,579 147,166 175,049 180,216
Avg annual growth -13% -53% 40% 23% 24% 7% 5% 19% 3% 6%
Cork 59,091 64,930 84,183 97,835 115,495 120,740 117,703 121,279 137,246 155,081
Avg annual growth 10% 30% 16% 18% 5% -3% 3% 13% 13% 12%
Total ROI 504,019 528,066 530,479 610,040 666,126 710,151 738,854 787,472 869,549 924,449
Avg annual growth 5% 0% 15% 9% 7% 4% 7% 10% 6% 7%
10 YEAR TREND OF RO-RO TRAFFIC THROUGH IRISH PORTS
Number of Freight Units
Port 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 10 yr avg
Dublin 205,311 340,983 378,101 398,636 451,161 489,669 528,036 554,496 570,789 608,088
Avg annual growth 66% 11% 5% 13% 9% 8% 5% 3% 7% 14%
Rosslare 73,589 70,147 74,916 92,125 100,629 100,950 106,064 104,718 112,010 121,493
Avg annual growth -5% 7% 23% 9% 0% 5% -1% 7% 8% 6%
Dun Laoghaire 40,713 14,695 32,663 42,029 40,419 39,080 35,820 30,335 34,745 29,787
Avg annual growth -64% 122% 29% -4% -3% -8% -15% 15% -14% 6%
Cork 6,412 6,104 5,581 6,207 5,994 3,940 3,777 3,712 4,529 5,895
Avg annual growth -5% -9% 11% -3% -34% -4% -2% 22% 30% 1%
Total ROI 326,025 431,929 491,261 538,997 598,203 633,639 673,697 693,261 722,073 765,263
Avg annual growth 32% 14% 10% 11% 6% 6% 3% 4% 6% 10%
Source: IMDO
Similarly, the Ro-Ro market over this period of time has seen
strong growth of 10% over this period with the largest share in
terms of volume growth taking place in Dublin.
The growth in capacity has been supplemented by continued
growth and investment by the liner operators on these routes.
Key corridors such as Rotterdam in particular have seen the
largest amount of investment in new capacity, competition and
market entrants over this period.
PAGE 33
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
One section of the Ro-Ro liner business which is not faring well
is the car ferry business. The chart shows that the decline in
sea passengers traveling by ferry since 1995 is 14%. While this
was partly due to the dramatic growth in low-cost airlines (the
dramatic growth in Ryanair since the turn of the century is also
illustrated) it was a further challenge to which the ship-operators
had to respond. This was highlighted by the restructuring in Irish
Ferries in 2005.
TREND IN PASSENGER FERRY TRAVEL 2000 – 2005
RYANAIR: PASSENGER GROWTH IN MILLIONS
Source: Company Website
The main thrust of liner and short sea traffi c in Ireland is freight,
and the development of this sector over the past decade has
also seen two notable trends:
Today, 80% of the companies providing direct shipping 1.
services are owned or have their principal place of business
outside of Ireland. These companies have also established
local Irish offi ces and have also invested in new ships and
freight capacity. Much of this has been invisible to the Irish
economy. Today there are 74 separate services, serving 52
ports in the UK, Continent and Mediterranean.
The larger companies have vertically integrated their 2.
operations, expanding and directly investing capital into:
Port terminal operations. ■
Depot management & warehousing. ■
Logistics door-to-door services. ■
Transportation and logistics management. ■
VITAL STATS: LINER ROUTES
Liner Routes 1999: 47
Liner Routes 2006: 74, Serving 52 ports in UK,
Continental Europe, North African,
Mediterranean
While the number of liner services calling at many of the second
tier ports has remained relatively constant between 1999 and
2005, there has been a major increase in the number of services
overall, particularly at the major ports and an expansion in the
range of export markets served. The growth in liner services also
indicates the shift to unitised trade and the choice of new markets
open to the Irish importer/exporter. As one would expect, the
Irish-controlled shipping fl eet has also grown in sophistication
over the past six years. For example the MV Ulysses was the
largest and most modern type of vessel of her class in the world
when she was introduced in 2002. This represented a paradigm
shift in the type, class and quality of ship serving this particular
route. Other operators followed this investment lead, introducing
larger and more modern ships. In 1996, the average size of a
TEU vessel serving the Irish market was roughly 240, today it is
between 600-800 TEU.
4500
5000
3500
4000
0
Year
Tonnes
(000)
3000
2500
1995
2000
2001
2002
2003
2004
2005
40
0
5
10
15
95 96 97
Year
98 99 00 01 02 03 04 05 06 07
35
30
25
20
PAGE 34
As we have already mentioned, the pro-business environment
within the ports sector combined with rapid economic growth
has made an important contribution to the growth of these
services both for unitized and bulk traffi c over the past decade.
The table below highlights the development of direct shipping
services over the last decade.
LINER ROUTES TO AND FROM IRELAND
Republic Northern Ireland
Port Number of Services Port Number of Services
1999 2006 1999 2006
Dublin 15 29
Dun
Laoghaire
1 1 Belfast 10 10
Cork 6 14 Larne 3 4
Waterford 4 5 Warrenpoint 2 2
Rosslare 5 5
Drogheda 1 3
Shannon
Foynes
0 1
TOTAL 32 58 15 16
“Routes” are defi ned as operator x destination, e.g. Dublin-Holyhead x Stena counts as one route.This chart does not indicate frequency of service on any route.
LINER ROUTES TO AND FROM IRELAND 1999 – 2005
Earlier in the report we identifi ed the level to which major liner
companies have embedded themselves into the Irish market.
Today six of the world’s top ten global container companies have
established operations in Ireland, while the other four operate
here through agents. The IMDO has provided expert support
during this process to companies such as APL., MSC, and CMA-
CGM, and continues to work with them for new opportunities.
WORLD’S TOP CONTAINER COMPANIES
Container Group World rank Irish Operations
A.P Moller Maersk 1 Yes, Dublin
MSC 2 Yes , Dublin 2003
CMA CGM Group 3 No - Via agency
Evergreen Group 4 Yes, Dublin
Hapag-Lloyd 5 Yes, Dublin
CSCL 6 No - Via Agency
APL 7 Yes, Dublin (2005)
Hanjin/Senator 8 No - Via Agency
COSCO Container L 9 Yes, Dublin
NYK 10 No – via Agency.
SUPPORT & AGENCY SERVICES
VITAL STATS: AGENCY SERVICES
Ship agents/ turnover: ¤152m
Ship agents/brokers employment: 1143
Liner and Port agency turnover: ¤93m
Liner and port agency employment: 540
Ship management turnover: ¤4m
Ship management employment: 37
These services are dependent directly on the core shipping
services and include:
Ship agency activity. ■
Stevedoring. ■
Ship management. ■
It is one of the largest sub-sectors of the maritime cluster in
Ireland employing approximately 1,700 people directly with an
estimated annual turnover of ¤245m in 2005.30
30 Industry Health Check. Marine Institute (2005)
Dublin
Dun L
aoghaire
Cork
Wate
rford
Ross
lare
Dro
gheda
Shannon F
oynes
Belfast
Larn
e
Warrenpoin
t
1999 2006
30
35
20
25
0
Port
Num
ber
of
Serv
ices
15
10
5
PAGE 35
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
These companies provide a broad range of services such as
handling and stevedoring, and may also include those typically
provided by freight forwarders. Ship and liner agents specifi cally
service a vessel’s requirements while in port, providing local
liaison services including victualling, crew change facilitation,
liaison with the port operator, etc. Irish ship agents may also
provide charter broking services to shippers, particularly for non-
regular bulk imports/exports.
There have been a number of mergers and acquisitions in this
market over the past fi ve years, particularly in the ship agency and
stevedoring business. This has meant fewer but larger companies
providing these services.
There is a sub-sector of agency activity that has developed
signifi cantly in recent years, namely the Cruise ships business.
The world market in total is estimated at ¤12bn and the overall
economic benefi t is believed to be twice that amount. In Ireland,
ship visits increased from 77 in 2000 to 127 in 2003 – and in
2004, Dublin and Cork between them had 75,124 passenger
“calls”. The purchase of goods and services in Ireland totaled
¤66m, sustaining 484 full-time jobs.31 Estimates for 2005 put
the total value on the sector for the Irish economy at ¤122m32
There have however, been indications from Dublin Port of
possible capacity constraints in handling this trade.
Ship management services also have the potential to develop
further in Ireland, though this activity is starting from a low
base. Currently, there are only four Irish companies providing
ship management services. The development of these services
is primarily linked to the availability of skilled technical staff.
The opening of the National Maritime College in Cork should
have a major impact of the development of a competitive ship
management sector.
MARITIME COMMERCE
Maritime commerce is a general term used to describe high
value intermediary services including:
Banking & fi nance. ■
Insurance. ■
Legal. ■
Taxation and accounting. ■
Shipbroking fi rms. ■
We have already identifi ed the economic importance of maritime
commerce to national and regional economies in places such
as London and Singapore. Prior to 1995, a large majority of
Irish companies requiring this kind of service, whether banking,
broking or legal expertise, went overseas, mainly to London or
the Netherlands. Since 1995 and particularly since 2001, there
has been growth in this sector in Ireland. In most cases this has
been driven by established fi rms capitalizing on new opportunities,
particularly major law fi rms, accounting services and major banks.
31 Marine Industries Global market Analysis; Douglas Westwood Ltd: March 2005
32 IMDO E-Newsletter no 15: Q1 2006.
Banking & Finance
Financial services companies, providing international services from
Ireland, have seen opportunities to establish separate operations
to compete in the lucrative local marketplace. In addition to
providing competitive international fi nancing, greater competition
has led to cheaper fi nancing locally for local companies. Cheaper
fi nancing and readily available maritime fi nancial expertise has
allowed a number of Irish owners to expand fl eets and grow their
businesses overseas (There nonetheless remains the requirement
for an effective scheme for seed-capital to support new ventures
in ship-owning and operation. This is discussed in Section 5).
In the last 5 years, we have seen much higher amounts of ship
fi nance and leasing activity taking place in Ireland, in particular in
Dublin, one Irish bank in particular has built up an international
shipping portfolio of ¤1.5 billion, mainly to foreign Ship-owners.
This has seen a number of other Irish based banks also seeking to
expand into this niche in the market place. It is noteworthy that
the entire ship fi nance market in London, a long established centre
for this activity, is believed to be about $37 billion. Maritime
commerce therefore has the potential to develop the reputation
of Ireland as a centre for international ship fi nancing in the same
way as has been achieved in aviation fi nance. However, a number
of European countries, notably the Netherlands and Germany have
introduced a system of tax-breaks to aid fi nancing of their national
fl eet, and these schemes have proved particularly successful. There
is evidence that the current lack of tax-based fi nance is driving
some ship-owners to other jurisdictions for fi nancing advantages.
As long as more competitive fi nancial environments are readily
available elsewhere, this will continue as an issue, and will limit the
net backfl ow into the economy.
VITAL STATS: SHIP FINANCE
CMA CGM Securitisation 2006: US$800m
Ocean Star Securitisation 2004: US$1,040m
Ocean Star Securitisation 2005: US$570m
Banks and Financial Institutions providing international and
national ship-fi nancing services from Ireland:
Bank of Ireland, Allied Irish Banks, Ulster Bank, Lombard Global
Finance (Ulster Bank), IIB, Bank of Scotland.
Ireland has also become a particularly attractive jurisdiction for
Securitisation. This is a highly sophisticated fi nancing technique
that allows the corporation to separate credit origination and
funding activities. The technique comes under the umbrella
of structured fi nance as it applies to assets that typically are
illiquid contracts. It has evolved from tentative beginnings in the
late 1970s to a vital funding source with an estimated total
aggregate outstanding of $8.06 trillion (as of the end of 2005,
by the Bond Market Association) and new issuance of $3.07
trillion in 2005 in the U.S. markets alone.
PAGE 36
In the past four years there have been three major securitisations
of asset-backed portfolios by two major companies, an
international bank and an international ship-owner. These
securitisations also represent some of the fi rst undertaken in the
international shipping industry. CMA-CGM and HSH Nordbank
have securitisation ship portfolios and ship mortgage portfolios in
Ireland estimated at $2.4bn.
Insurance
The majority of marine insurance is placed in the London
market with Lloyds or the London Institute of Underwriters.
However, with the growth and expansion of fl eets in Ireland
marine brokerages services are likely to expand. Currently there
are six fi rms providing dedicated marine insurance brokerage.
Marine insurance claim activity can be a source of signifi cant
employment, often using former seafarers or others with marine
or insurance qualifi cations.
Insurance claims activity is already under pressure to move to
cost effective locations. Ireland is cost effective compared with
London and other United Kingdom locations. Ireland is well
served by telecommunications, air links and air courier links to
London, which are needed to ensure prompt transmission of
paper documents and face to face communications as needed.
Legal
The Irish Maritime Law Association represents Ireland at the
Comite Maritime International, one of the principal organisations
for advising on the preparation of international maritime
conventions. Ireland was one of fi ve members to construct the
constitution of this organization, and retains a role well beyond
its size. McCann Fitzgerald, Fitzpatrick and Associates, A&L
Goodbody and Mason, Hayes & Curran have secured business in
commercial maritime and/or admiralty legal services. In addition,
many insurance claims require legal activity for their resolution.
Attracting insurance claim activity to Ireland therefore would
have a multiplier effect for legal and allied expert services.
Taxation & Accounting
The growth in maritime investment in Ireland has also led to the
requisite growth in legal, company and tax services. In the past
six years all of the major tax and management consultant fi rms
have invested considerably to build up maritime tax capacity
including KPMG, Ernst & Young, PricewaterhouseCoopers and
Deloitte & Touche.
Shipbroking
Shipbroking has considerable potential to expand in Ireland. Several
niche shipbrokers operating here, servicing the international ship
sales and chartering markets, are estimated to have handle sales
and charter revenue in excess of $100million in 2005. Support
and investment in education is required to develop this potential
– and initial development work is underway.
Maritime commerce itself has developed strongly in recent years.
Ireland used to be a net importer of these services, but is now
a net exporter. The Irish maritime cluster is now contributing to
the nation’s invisible exports, and contributing to Ireland’s status
as a service economy.
The chart below demonstrates this development quite clearly.
Source:: CSO Balance of Payments Statistics
FREIGHT AND LOGISTICS OPERATORS
It is widely accepted today that supply chains and not companies
compete. This sector employs about 3,000 people directly
in maritime freight forwarding activity in Ireland, however this
fi gure could be as high as 14,000 if this was expanded to
include all other related logistics, supply chain, road transport
etc. The growth in world trade and the associated growth in
freight volumes transport by sea needs to be viewed in the
context of the evolving nature of international manufacturing
and distribution. These operators can provide services across the
full transport spectrum (Air, Sea, Road, Rail), and have not been
traditionally recognised in public policy as part of the maritime
cluster. However given the overwhelming volume of Irish trade
conducted by the sea they are de facto an integral aspect of the
shipping industry.
Earlier in this section we referred to vertical integration taking
place across the supply chain by both land-based and sea-
based operators. This is being driven by the increasing demand
of shipping consumers for just-in-time and more effi cient and
transparent services. Customers increasingly seek seamless
shipping processes. It has led to track and trace technologies
and a greater focus on the security of goods shipments by both
the shipper and national security agencies. Those providing a
shipping service see themselves today more as supply chain
companies rather than managers of discrete transport activities,
such as maritime transport, air transport, transport facilitating,
etc. Not only are the operators integrating, as Maersk, MSC, APL,
TNT etc., but so too is policy at EU level and also in a number
of Member States.
1000
500
1500
2000
2500
3000
3500
0
2000 2001 2002 2003 2004 2005
Transport Importation
m -
€
Transport Exportation
PAGE 37
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
The IMDO believes that the integration of the entire transport
portfolio into one government department will provide a
greater scope for developing transport planning in an integrated
manner. It will facilitate the integration of National Policy to
match the reality on the ground, and will allow Ireland to align
itself with policy developments at EU level. Other European
maritime countries, such as Norway, UK and the Netherlands
have invested signifi cantly in their national capacity to plan and
develop their maritime economic capability, modelling, logistics
and transport planning. There is also a clear policy drive by the
European Commission to bring the whole area of freight logistics
closer to the shipping and maritime transport sectors, and Ireland
now has the opportunity to match this.
KNOWLEDGE AND INNOVATION SERVICES
The maritime cluster includes a growing IT and technology sector,
offering Ireland considerable potential for further development. A
number of companies have set up here to develop and market
special technologies for the shipping and marine markets (Transas
Ltd, Altobridge, Monicon). To date there has been little interaction
between them and other parts of the Irish maritime cluster, or
in the general areas of research and education. However the
IMDO has identifi ed this as an area of high potential growth
and innovation.
Ireland is progressing steadily towards a knowledge-based
economy, of which education and training is a vital component.
It is a priority investment under the National Development Plan
(NDP), which has provided for a total investment of ¤12.6 billion
(at 1999 prices) in employability and training measures, covering
early education, third level access, skills development, training
facilities, and apprenticeships. However, nationally expenditure
on Research and Development is falling well short of the EU’s
target set as part of the Lisbon strategy (3% of GDP) or even
the more modest national target of 2.5% This is clearly shown
in the following chart.
GROSS DOMESTIC EXPENDITURE ON
R&D (GERD), % GDP, 2004
Source: OECD, Main Science and Technology Indicators, 2006/Issue 1
As part of the Lisbon Strategy, the European Council set a target that 3 per cent of EU GDP would be spent on R&D by 2010. The Irish Strategy for Science, Technology and Innovation, 2006–2013 envisages Ireland reaching 2.5 per cent of GNP expenditure on R&D by 2013.
While the development in maritime education facilities is timely
and welcome, there has been limited investment in the research
and development capacity of this sector through any of the
previous NDP programs. Any investment in R&D should be
a factor that will assist Ireland Inc in differentiate itself from
competing locations and should provide value to the indigenous
sector and should help attract new investment.
The Government has also invested ¤51m in a new National
Maritime College in Cork, and this is reviewed elsewhere in this
memo. The college will hopefully become an internationally
recognized centre of excellence in the future for maritime
knowledge.
4.0%
3.5%
3.1%
2.7%
2.5%
2.5%
2.3%
2.2%
1.9%
1.8%
1.4%
1.2%
1.1%
1.1%
0.9%
0.6%
Spain
US
Finland
Hungary
Italy (‘03)
Ireland GDP
Ireland GNP
Netherlands
UK (‘03)
France
OECD
Denmark
Germany
Japan
Sweden (’03)
Poland
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%
Irish Target 2.5% Lisbon Target 3.0%
PAGE 38
However, since the opening of the college, there has been no
increase in the throughput of Irish Offi cers (see chart), and those
who are coming through the system are tending to migrate towards
niche, high-value markets such as Cruise vessels and the oil and
gas vessels (VLCC,LNG, LPG). These are growth areas, with high
value potential, as referred to in Section 2 on world markets.
OFFICER TRAINING/NMCI 2003 – 2006
Number of offi cers trained at the NMCI 2003 - 2006
CADET EMPLOYMENT (BY TRADE) 2003 – 2005
Employment of Irish Cadets among different trades
GOVERNMENT & REGULATORS
Department of Transport
The transfer of the Ports and Shipping Portfolio to the Department
of Transport is designed to promote integrated transport policy.
It is obvious that much of the policy focus by the Department of
Transport has heretofore been focused on moving the factors of
production (i.e. people and materials) around the economy. This
is clearly refl ected by the very signifi cant investment programs by
the Government, in road, rail, bus and internal airlines. Transport
21 is an unprecedented investment program which is targeted
at improving modal mobility and meeting long term spatial
development needs. It is important that freight, logistics and
maritime transport are included in the multi-dimensional planning
that will underpin Ireland’s future economic competitiveness.
Given that Ireland has one of the most open economies in
the world, exporting 90% of its GDP, and that 85% of these
exports are due to FDI, it is important that the key outputs of
these investments fl ow seamlessly to the wider global economy.
The new integrated function of all of the key modes of industrial
transport and planning within the Department of Transport
provides the ultimate opportunity to assimilate strategies that
impact on the national and international supply chain.
In today’s highly globalised environment, supply chains are being
divided into ever fi ner segments, with activities being undertaken
in locations most suited to them (e.g. high volume manufacturing
in low cost countries)33. It is important that there is a policy
champion to identify trends and inform government planning of
the intrinsic role that ports, shipping and the entire logistics chain
have in continuing to deliver strategic competitive advantage.
In some instances the government role still lies in being an effective
service provider in the domestic market (i.e. as it major shareholder
in 90% of Irish port companies). This role should be supported by
policy and integrated planning at the highest level. It should continue
to research and explore opportunities for emerging technologies in
the scope of public/PPP construction projects where they might
add value to these shareholdings. The ability to plan and continue
to monitor, benchmark and assess the investment requirements of
these national assets, is in our opinion, highly important.
Maritime Transport Division
This division within the Department of Transport is responsible
for Ports and Shipping Policy. The Unit is responsible not only for
policy for the core elements of the sector, it is also responsible
for the corporate governance of the entire government ports
portfolios. Port companies have been transformed from state
utilities to companies that control, manage and operate vast
portfolios of high value real estate while also providing services
that are central to macro economic performance.
33 Enterprise Strategy Report, 2004
C Mate C Eng 2nd Eng
20
0
Certificate of Competency (CoC’s)
15
10
5
2004 2005 2006
Offshore
Cadet Numbers
Cruise
VLCC/LNG/LPG
General (Container/Bulk/RoRo etc)
0 10 20 30 40 50
2006 2003
PAGE 39
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
The Strategic Objectives of the Maritime Transport Division are:
To facilitate the availability of commercial port services ■
which are effective, competitive and cost effi cient.
To ensure adequate infrastructure at ports to cope with ■
growing throughput and facilitate competitive shipping
services.
To facilitate the coordination and integration of maritime ■
transport within the total transport chain.
To implement the general strategic development framework ■
for State regional ports and harbours through transfer of
ownership to port companies or local authorities.
To maintain and increase the Irish registered/managed ■
fl eet.
The sustainable increase Irish seafarer and onshore maritime ■
sector employment.
Safety
On the 1st January 2006, the Maritime safety Directorate, and
the Irish Coast Guard moved to the Department of Transport.
The Maritime Safety Directorate34 comprises of two main
sections, the Maritime Safety and Marine Environment Division
(MSED) and the Marine Survey Offi ce (MSO). The Marine Survey
Offi ce also includes the Marine Radio Affairs Unit (MRAU). The
Mercantile Marine Offi ce (MMO) also works to the Directorate.
The Maritime Safety and Marine Environment Division is
responsible for maritime safety, security policy and legislation
(including leisure safety), aids to navigation and corporate
governance of the Commissioners of Irish Lights and marine
environment protection issues.
The Marine Survey Offi ce deals with the inspection, survey,
certifi cation and licensing of vessels and vessels radio equipment;
the examination and certifi cation of seafarers competencies;
enforcement of standards by way of audits on organisation and
facilities and prosecutions for breaches of regulations.
Irish Coast Guard (IRCG) The Irish Coast Guard (IRCG) is
responsible for Search and Rescue, Pollution and Salvage
responses in the marine environment, Marine Communications
Network and Marine Safety Awareness.
In the main, the functions of the Mercantile Marine Offi ce have
their statutory origins in two pieces of legislation, the Merchant
Shipping Act, 1894 and the Mercantile Marine Act, 1955. There
are numerous functions and duties imposed on the Mercantile
Marine Offi ce in these Acts. One of the main statutory functions
carried out by the MMO is the maintenance of the national
General Register of Shipping.
34 Source: Department of Transport Website.
REGULATION AND TECHNOLOGY
In addition to the opportunities and challenges outlined in this
memo, our research and stakeholder meetings identifi ed that
the following regulatory and technological issues will have
implications for the shipping and maritime sector in the future.
Maritime-related activities will be subject to increased ■
regulation.
Security issues will be a central element in the regulation ■
of the sector.
The ‘Polluter Pays’ principle and Road Pricing equivalents ■
such as green taxes will increasingly be applied to the
sector, and thus be critical economic factors.
The management and control of ships as polluting ■
entities will be integral to the successful operation of
the shipping sector.
Overall, a convergence of regulations worldwide in relation ■
to environmental matters in the shipping sector is expected.
The sector will see increased recognition of the economic, ■
environmental and societal impact of ports and shipping.
This will affect development of existing and new ports,
with, for example, land access issues being important in
new ports outside city/urban areas.
Technology will play an important role in the development ■
of the sector, with, for example, the development of
improved IT and Logistics Systems affecting both its
operation and management, and the use of technology
to assist in environmental mitigation and design issues.
Resources to direct Irish IT expertise towards the area
of maritime transportation have not yet been identifi ed
or allocated.
There are increasing numbers of, and regulation required for, ■
small craft such as leisure craft commercial angling and small
in-shore ferries. For example, Dun Laoghaire marina alone
has recently increased from 500 to 800 berths, and further
developments are envisaged to bring the total to 2,500,
a fi ve-fold increase. For VHF radio licences and call-signs
alone, this gives rise to a commensurate increase in demand
from the licensing authority.
PROFESSIONAL BODIES
Activities in the maritime transport sector are well represented
by twelve relevant associations (see appendix). These range from
Trade or Industry Associations which admit relevant corporate
members, to Professional Organisations which require, or can
grant, an academic qualifi cation. Many are branches of wider,
international organisations, or have international affi liations.
The various disciplines and corporate activities within the sector
are well taken care of, and Irish operators and professionals have
ready access to best practice internationally.
PAGE 40
NEW HORIZONS
Over the last decade we have seen a transformation in the role
of internationally traded services in Ireland and have also seen
a growth here in demand for international Maritime Services.
Ireland has many of the key attractions for the industry such
as low taxation, English-speaking, stable economic environment
and good telecommunications. However, Ireland lacks two
essential elements, a strong track record in maritime commerce
and an experienced, skilled workforce.
Part of the initial IMDO strategy was to secure foreign direct
investment, stimulated purely by tax-based measures that we
will discuss later in this report. On closer examination of the
Irish maritime cluster, there is already a much higher level of FDI
present than had previously been identifi ed by the Government.
Therefore an increasing focus of IMDO strategy has been to
support many of these major FDIs already present and to
leverage further internal growth contributing to the maritime
cluster and economy.
Another major emerging trend in Ireland has been the rise of
outward investment by Irish fi rms. Outward investment began to
increase in the late 1990’s, albeit from a very low historic base.
This is a pattern consistent with that of other economies as they
move to higher stages of economic development. Since the late
1990’s, Irish Ship-owners have established overseas operations in
the USA, the Netherlands, Germany, Norway, South Africa and the
UK, and been involved in signifi cant merger & acquisition activity.
According to main Irish maritime companies, this outward fl ow
is complementary and even essential to the viability of their
Irish operations. Studies by Forfas show that outward direct
investment has positive benefi ts for the whole economy – it
boosts trade, technology transfer, and integration into global
production networks, and is a catalyst for movement into higher
value added activities.
In summary, the combination of organic growth and the knock-
on effect of both outward and inward direct investment all
contribute to the growing profi le and prosperity of the Irish
maritime economy.
PAGE 41
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
CONCLUSIONS
The principal developments over the last 5 years that are noteworthy: ■
Three-fold increase in the number of ships owned managed and operated by Irish Ship-owners. ❚
Between 1995 and 2005 port tonnage has grown by 61%. ❚
There has been a 79% increase in direct shipping services between Ireland, UK and Continent over an 11 year period. ❚
Growth in Lo-Lo traffi c is 89% since 1996. ❚
Growth in Ro-Ro over the past 10 years is 87%. ❚
The increase in the number of cruise ships calling at Irish ports between 1995 and 2005 is over 150%. ❚
Emergence of a multibillion ship fi nance activity in Dublin. ❚
Growth of maritime commerce services. ❚
Emergence of greater outward direct investment and M&A activity by Irish companies overseas. ❚
During the economic boom, the Irish maritime transport and services sector has been a highly important but relatively ■
undervalued to the economy.
The Ship-owning sector in Ireland has invested signifi cantly over the past decade, somewhere in the region of ¤600m in ■
new and second hand vessels. The return on capital by commercial standards is modest compared to the tough, risky and
competitive environment.
There is signifi cant merit in introducing a specifi c system of tax based fi nance to develop the national fl eet. ■
Ports and Ship-owning sectors are the principal sectors whose effi ciency and investment provide the economic backbone ■
to much of the wider economy.
The ongoing trend towards increased globalisation and the future role of our ports in facilitating changing patterns of ■
globalised trade will present challenges for stakeholders.
An effi cient integrated transport network in Ireland will infl uence the decisions of multinationals to invest here. ■
There is a need for continuous planning for Irish ports recognising their important position as facilitators for the ■
Irish economy.
The Irish export profi le is expected to continue its change to more high-value knowledge-based products, yet there is little ■
research or economic profi ling to indicate the impacts these changes will have on the sector or the type of supports required.
The national maritime college in Cork presents signifi cant potential to expand and grow (export) maritime educational ■
services from Ireland.
Measuring the size and scale of Irish shipping on the basis of the Irish register alone is outdated. A far better measurement ■
is the number of ships owned, operated and managed from Ireland, regardless of their fl ag.
The drive to reduce logistics costs throughout the supply chain continues to exert pressure to integrate transport modes ■
including the use of satellite-based technologies for seamless route and traffi c planning. Ireland lacks innovation and
capacity in this area.
The decision to integrate the maritime transport portfolios back under the aegis of the Department of Transport will ■
provide better integrated transport planning policies across the sector, particularly between the maritime cluster and the
freight logistics sectors.
Peak oil and rising fuel costs will continue to be a challenge for this sector. ■
PAGE 42
APPENDICES
Bibliography. ■
Comparison Of Leading International Maritime Clusters. ■
International Codes ISM (International Safety Management) ■
& IPS (International Ship And Port Facility Security Code).
Professional Associations. ■
PAGE 43
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
STRATEGIC REVIEW OF THE
MARITIME TRANSPORT SECTOR
BIBLIOGRAPHY
DOCUMENT AUTHOR DATE
Report on Shipping & Marine Services Sector Deloitte & Touche, IDA, IIMM (Irish Inst. Of
Master Mariners)
Apr ’99
Transport Corridors in Europe Atkins McCarthy, Dept. of Environment & Local
Government
Nov 2000
Report of the Task Force on Seafarer Training & Employment Dept. of the Marine & Natural Resources 1999
Report on the Market for an STCW 95 compliant East Coast Facility KPMG, DoMNR Mar 2000
Maritime Ireland Opens for Business Marine Institute, DOMNR
High Level Review of State Commercial Ports Raymond Burke, Farrell Grant Sparks, Posford
Haskoning, DoCMNR
April 2003
Communication from the Commission to the Council on the training
and recruitment of seafarers
Commission of the European Communities
COM(2001)188 fi nal
April 2001
The NETA Project (Logistics Module) Interim Report Transport Policy Research Unit UCD June 2000
Developing Ireland as an Internationally Competitive Location for
Shipping Services
Cap Gemini, Ernst & Young, Marine institute July 2000
Turning of the Tide IMDO Advisory Group Nov 2000
Review of Maritime Transport 2005 UN Conference on Trade and Development 2005
IMDO Annual Report 2000-2005 (Internal) IMDO Jan 2001
Community Guidelines to State aid to Maritime Transport Commission of the European Communities 1997
Review of State Aid Guidelines to Maritime Transport and Proposals for
the Irish Shipping Sector
IMDO July 2005
IMDO Newsletters IMDO April 2002 – Q2 2006
A Tonnage based Corporation Tax for the Irish Shipping Industry:
Executive Overview
IMDO Sept 2001
Tonnage Tax: Specifi c Tax Measures for Inclusion in a Tonnage Tax
Regime in Ireland
KPMG, IMDO Dec 2001
Full Steam ahead! Review of 2001 IMDO Jan 2002
Activity Report 2000 – 2003. IMDO Advisory Group 2003
The Human & Other resource Requirements of the proposed New
Commercial Ships Registry
IMDO/D.N. Gabe Thomas Sept 2002
International Shipping Services: Report on the Development of a
Tax-based Strategy designed to Encourage Growth in the Maritime
Services Sector.
IMDO 2005
Task Force on Transport Logistics in Connection with Ports DoCMNR April 2002
Report on the development of Taxation Incentives for Investment in
the Irish Shipping Industry.
KPMG – IMDO Feb 2003
Effects of the UK Tonnage Tax on the Training of Irish Merchant Navy
Cadets
IMDO 2004
Summary Report Supporting Continuance of the Social Welfare
Contributionsand Insurability Refund to Irish Ship Owners
IMDO Jan 2004
2005 IMDO Corporate Plan Key Result Areas IMDO 2005
Marine Industries Global Market Analysis Marine Institute/Douglas Westwood Ltd. March 2005
Ahead of the Curve Enterprise Strategy Group/Forfas July 2004
The Economic Contribution of the Cruise Sector to the Island of Ireland
for 2003
UCC/Failte Ireland/NITB 2004
Irish Short Sea Shipping Inter-European Trade Corridors IMDO Logistecon 2004
Shipping Challenges for Ireland 2002 – 2012. Seminar Report IMDO November 2002
ISEAS Irish Seafarers Educational Assistance Scheme. IMDO Sept 2001
Ports IT Infrastructure Study SONAS Innovation/IMDO Sept 2005
IMDO Global Shipping Targets 2003 IMDO 2003
Discussion Document on Internationally traded maritime and Aviation
Services
IMDO June 2004
In addition to the above, 87 different “Maritime” mentions in legislation on the Attorney-general’s website were reviewed.
PAGE 44
BIBLIOGRAPHY
DOCUMENT AUTHOR DATE
Beyond Tonnage Tax PWC/IMDO Date
Statement of Strategy 2003 - 2005 DoCMNR June 2003
The Future of London’s Maritime Services Cluster: A Call to Action Fisher Associates/Maritime London: Aug 2004
Availability and Training of Seafarers EU DSTI/DOT/MTC: Dec 2002
National Development Plan 2000 2006 Dept of Finance 1999
Annual Competitiveness Report 2005 Forfas. Aug 2005
Euromillions! Funding Opportunities for the Irish Maritime transport and
Research Sectors
IMDO: April 2005
Ports Policy Statement DoCMNR 2005
Economic Impact of State Commercial Seaports Indecon/IPA: May 2006
Review of State Regional Ports & Harbours DoMNR: June 1999
White Paper: European Transport Policy for 2010 EU:http://europa.eu/scadplus/leg/en/
lvb/124007.htm
2001
Maritime Ed & Training 2005: Corporate Plan
Idem: Corporate Review 2004 IMDO: 2004/5
Budget 2006: Review of Tax Schemes (Tonnage Tax) Dept of Finance: Feb 2006
“The New Titans” Survey of the World Economy “The Economist” 16 Sept 2006
The 35 Most Important maritime Countries, Tables 1998, 2000,
2005
UNCTAD Secretariat -
Green Paper: Towards a Future Maritime Policy for the Union EU Commission COM (2006) 275 Final June 2006
Flight Path to the Future: An Action Plan to Develop Aviation &
Aerospace Enterprise in Ireland:2004 - 2006
FAEI Feb 2004
Dynamic European Maritime Clusters Maritimt Forum, Norway & The Dutch Maritime
Network Series
Aug 2006
Marine Safety Directorate Dept of Transport Website Current
Report of Task force on the Development of Port Estates in
Commercial Harbours
Dept. of the Marine & Natural Resources May 2002?
Review of Practice Worldwide on the Development of Port Estates Plymouth Enterprise Partnerships Nov 2001
Review of Port Users Forums Dept. of Marine & Nat. Resources June 2000
Assessment of Irish Commercial Seaport Capacity Baxter Eadie/ DoMNR April ‘98
Task Force on Transport Logistics in Connection with Ports Dept. of Marine & Nat. Resources Feb 2002
Assessment of Shipping Costs to and from Irish Ports Baxter Eadie/ DoMNR July 2000
United Kingdom Seafarer Analysis 2005 London Metropolitan University 2006
In addition to the above, 87 different “Maritime” mentions in legislation on the Attorney-general’s website were reviewed.
PAGE 45
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
COMPARISON OF LEADING INTERNATIONAL MARITIME CLUSTERS
Vibrant maritime clusters all bring high level economic benefi t, but the form that they take, and the factors that infl uence them, can
vary enormously. The following tables analyse them in more detail, and by way of further illustration, two further examples are included.
Cyprus is a relative newcomer, while Norway is another example of a traditional, well-established maritime cluster.
CENTRE
TRADITIONAL
OR NEWLY
DEVELOPED
CLUSTER
CENTRAL
ACTIVITIES INCENTIVES
VALUE TO
ECONOMY
NUMBER
OF PEOPLE
EMPLOYED
Cyprus Newly developed
Benefi ted from EU
membership.
Ship management Flag - White Tonnage
Tax Favourable tax
regime for ship
management.
No tax on profi ts
from operation or
management of a
Cypriot registered
vessel or dividends
received from a
shipowning company.
No capital gains tax
on the sale or transfer
of a Cypriot registered
vessel. No stamp duty
on ship mortgage
deeds.
4% to GDP41 Employs over 6,000
people.42
Singapore Newly developed
Serves as a gateway to
the Asian market.
Port, shipping and
shipbuilding and repair
dominated. Sizeable
register of shipping.
In recent years has
attracted a wide range
of ancillary services,
(ship management,
agency, fi nance,
insurance and law).
Flag - Grey Maritime
Foundation Cluster
Fund.
International Shipping
Enterprise Scheme.
MERIT Shipping &
Logistics Scheme.
MINT Maritime
Industry Attachment
Programme.
6% to GDP43
Directly contributes
some US$4.7 billion44
100,000 jobs45
Norway Traditional Globally
orientated.
Rejected EU
membership partly
to protect maritime
industry.
Dominated by the
shipping sector,
fundamental to the
economy.
Oslo is a major centre
for shipowning and
management.
Leading ship
classifi cation society.
Offshore market.
Flag - White Tonnage
Tax.
The average value
creation between
1998-2001 was
4.7bn US$46
Employs 65,000
people worldwide47
UK (London) Traditional Historical
and well established
maritime cluster.
Marine insurance, ship
chartering & broking,
ship fi nance, ship
classifi cation, legal
services & dispute
resolution, accountancy
services.
Maritime education
& training, publishing,
event organising,
research & technical,
engineering consulting.
Flag - White Tonnage
Tax Major source of
capital.
2004 maritime
services net overseas
earnings £1,301m48
Maritime services
sector provides
employment for
14,00049
35 Conway, M. (2006) Lloyd’s List Special Report: Shipmanagement, Powerful Umbrella Group speaks up for Cyprus.36 Conway, M. (2006) Lloyd’s List Special Report: Shipmanagement, Powerful Umbrella Group speaks up for Cyprus.37 Singapore Maritime Foundation Website.38 Opening remarks by Mrs Lim Hwee Hua, Minister of State for Finance and Transport, at the “Singapore Nite” Reception, 8 June 2005, Oslo.39 Opening remarks by Mrs Lim Hwee Hua, Minister of State for Finance and Transport, at the “Singapore Nite” Reception, 8 June 2005, Oslo.40 Jacobsen, Erik W, Ari Mortensen, Martin Vikesland and Alexander W Cappelen, Attracting the Winners, The Competitiveness of Five European Maritime
Industries, BI Norwegian School of Management 2002.41 Marine Norway website, The Norwegian Maritime Industry.42 IFS, (2005) City Business Series; Maritime Services. International Financial Services; London.43 IFS, (2005) City Business Series; Maritime Services. International Financial Services; London.
PAGE 46
DRIVERS FOR
THE CLUSTER
LOCATION
ADVANTAGES
LOCATION
DISADVANTAGES
NEW AREAS OF
POTENTIAL GROWTH/
FUTURE DIRECTION
Cyprus Proactive government who
recognise the importance of
the shipping industry to the
economy.
Access to European market,
although not essential as
provides ship management
services.
Political instability due to
relationship with Turkey.
Effects of EU policy -
competition.
In order to retain sea-based
staff to provide greater
incentives such as more
training and pensions.
Singapore Had it origins as a sea town
from which the cluster has
grown.
Proactive government who
recognise the importance of
the shipping industry to the
economy.
Has understood the key
drivers of the maritime
economy and provided
conductive policies and
programmes to attract key
players’.
Huge investment in
innovation and R&D.
As the Asian maritime
market has rapidly expanded
Singapore has positioned
itself to become the hub for
the region.
The Singapore Maritime
Foundation is the primary
promoter of Singapore’s
maritime interests and
aims to advance the cluster
internationally.
Cluster growth is fuelled by
the development of the
individual elements.
Strategically placed to take
advantage of growth of
Asian markets.
Access to skilled and cost
effective workforce.
Only a small nation facing
competition from other
emerging maritime nations
such as China and India.
Looking to encourage
shipping companies, law
fi rms and ship fi nanciers to
set up operations in the
location.
To enhance its image as
a hub with access to a
regional market of 2.8bn
people50
Looking to attract maritime
associations has set aside
money from maritime
cluster and innovation fund
to enhance manpower
development and
technology.
Norway The cluster that exists today
is largely driven by Norway’s
history as a maritime nation.
Substantial number of
companies and individuals
who operate in the maritime
fi eld.
One of the most important
success factors is the
cooperation and synergy
that Norwegian shipping
companies have with one
another across the board.
This is the driver for the
Norwegian maritime cluster.
International perspective as
most products produced in
the cluster are exported.
Benefi ts of the maritime
environment outweigh the
cost of doing business there.
The population is intrinsically
linked to the maritime
industry and its importance
is recognised at an early age
through education.
An extensive coastline of
2650 km51.
Has access to the European
markets.
Offshore services sector
- now one of the most
signifi cant sectors for
Norwegian shipping.
Expansion into the LNG
market Value of the industry
is recognised by the
government.
PAGE 47
STRATEGIC REVIEW OF IRISH MARITIME
TRANSPORT SECTOR
DRIVERS FOR
THE CLUSTER
LOCATION
ADVANTAGES
LOCATION
DISADVANTAGES
NEW AREAS OF
POTENTIAL GROWTH/
FUTURE DIRECTION
UK (London) London is losing it pre-
eminence as a maritime
cluster and is looking for
ways to reverse the decline.
It has been recognised that
there needs to be greater
government support, mostly
fi nancial, to maintain the
cluster.
London has a well-
established maritime
history and combined
with the current maritime
infrastructure is the primary
driver of the maritime
industry.
London has a vast
infrastructure of maritime
services and combined an
effi cient transport system.
Skilled workforce.
Access to a vast array of
expertise.
Cost of doing business is
expensive.
Employment costs are high.
Effects of EU policy -
competition.
To build on the existing
cluster activities through
greater interaction of players’
and remaining up to date
and innovative.
44 Lloyd’s List 29/09/2006 Inroads seen into Chinese and male domination.
THE INTERNATIONAL SAFETY MANAGEMENT (ISM) CODE
Background to ISM Code
Due to a number of very serious accidents which occurred ■
during the late 1980’s, which were manifestly caused
by human errors, with management faults also identifi ed
as contributing factors, e.g. The “Herald of Free Enterprise”,
the IMO.
The International Safety Management (ISM) Code evolved ■
through the development of Guidelines on Management
for the Safe Operation of Ships and for Pollution Prevention
adopted in 1989 at the 16th regular session of the IMO
Assembly by resolution A.647(16). The objective of the Code
was to provide an international standard concerning shipboard
and shore-based management. The Code became applicable,
under chapter IX of the International Convention for the
Safety of Life at Sea, 1974, fi rst for passenger ships, tankers
and bulk carriers on 1 July 1998, thereafter for all other ships
over 500 GT on 1 July 2002 and has, therefore, been in force
globally for just over two years.
Objectives of the ISM Code
The Code establishes safety-management objectives ■
and requires a safety management system (SMS) to be
established by “the Company”, which is defi ned as the
Ship-owner or any person, such as the manager or bareboat
charterer, who has assumed responsibility for operating
the ship.
The Company is then required to establish and implement a ■
policy for achieving these objectives. This includes providing
the necessary resources and shore-based support. Every
company is expected “to designate a person or persons ashore
having direct access to the highest level of management”.
The procedures required by the Code should be documented ■
and compiled in a Safety Management Manual, a copy of
which should be kept on board.
Impact of the ISM Code
The ISM Code has helped to improve the safety of ■
international shipping and to reduce pollution from ships
by impacting on the way shipping companies are managed
and operated.
Effective implementation of the ISM code has led to a move ■
away from a culture of “unthinking” compliance with external
rules towards a culture of “thinking” self-regulation of safety
- the development of a ‘safety culture’. The safety culture
involves moving to a culture of self regulation, with every
individual - from the top to the bottom - feeling responsible
for actions taken to improve safety and performance.
PAGE 48
PROFESSIONAL ASSOCIATIONS
NAME OPERATION IRISH MEMBERSHIP
Institute of Chartered Shipbrokers An International organisation, headquartered in London. Membership is normally by
examination.
5 Corporate, 90 full,
and 25 student.
Institute of Marine Engineers An International organisation, headquartered in London, open to individual
membership. There are professional examinations for various levels of membership.
Approx. 450 members on
the Island of Ireland
The Nautical Institute An International organisation, headquartered in London, open to individual
membership. Professional qualifi cation is normally required, but there is also a
“Companion” category.
176 members.
Irish Institute of Master Mariners Irish Organisation with two international affi liations (IFSMA &CESMA). Membership
is individual, and requires a Class 1 Master Mariners Certifi cate. Cadet members also.
450 members, incl
Associates and Cadets.
Irish Maritime Law Association
(Comite Maritime International)
Irish organization affi liated to the Comite International Maritime, which aims to unify
and simplify (international) maritime law.
53 corporate members,
and 38 individual,
mainly barristers.
Chartered Institute of Transport
and Logistics in Ireland
Part of an international network. Membership normally requires a qualifi cation or
requisite experience.
1190
Irish Offshore Operators Association Trade Association for companies holding offshore exploration licences. 8
Irish Chamber of Shipping Trade Association for corporate members, with a number of international affi liates. 10
International Harbour Masters
Association
International professional organisation with an Irish branch, open to members
holding an appropriate position.
176 full members, of
which 10 are in Ireland.
Irish Ports Association Trade Association open to individual and corporate membership. 27 members, of which 19
are full members
Irish Road Haulage Association Trade Association open to currently licensed hauliers, with associate membership
also available.
Over 1000
Irish Ships Agents Association Trade Association open to corporate membership. 40
THE INTERNATIONAL SHIP AND PORT
FACILITY SECURITY CODE (ISPS CODE)
Background to ISPS Code
The International Ship and Port Facility Security Code (ISPS ■
Code) is a comprehensive set of measures to enhance the
security of ships and port facilities, developed in response to
the perceived threats to ships and port facilities in the wake
of the 9/11 attacks in the United States.
The ISPS Code is implemented through chapter XI-2 Special ■
measures to enhance maritime security in the International
Convention for the Safety of Life at Sea (SOLAS). The Code
has two parts, one mandatory and one recommendatory.
In essence, the Code takes the approach that ensuring the ■
security of ships and port facilities is a risk management
activity and that, to determine what security measures are
appropriate, an assessment of the risks must be made in
each particular case.
Objectives of the ISPS Code
The objective of the ISPS Code is to provide a standardised, ■
consistent framework for evaluating risk, enabling Governments
to offset changes in threat with changes in vulnerability for
ships and port facilities through determination of appropriate
security levels and corresponding security measures.
Ship and port facility security is a risk management activity. ■
As with all risk management efforts, the most effective
course of action is to eliminate the source of the threat.
Eliminating the source of the threat, which in this case is
those that would commit acts of terrorism or otherwise
threaten the security of ships or of the port facilities, is
essentially a Government function. 100% security is an
aim but cannot be guaranteed - hence the risk reduction
approach to lessen possibilities to the lowest practicable.
Contracting Governments are obliged to address all the ■
objectives and functional requirements of the ISPS Code and
to ensure that appropriate security measures and procedures
are in place in the port facilities and waterways located
within their territory.
Impact of the ISPS Code
The new requirements form the international framework ■
through which Governments, ships and port facilities can
co-operate to detect and deter acts which threaten security
in the maritime transport sector. The whole idea of the ISPS
Code is to reduce the vulnerability of the industry to attack,
thus countering the threat and reducing the risk.
There are potential commercial benefi ts to the maritime ■
industry in implementing the Code. It seems clear that,
in the long run, implementation of the Code should provide
considerable cost-benefi t for the port industry as a whole
and for individual ports. By putting in place an effective and
compliant security regime, ports will be able to continue
to participate fully in global trade and, of course, the
potential economic consequences of a major security breach,
which might result in disruption or even port closure, are
serious indeed.
STRATEG
IC R
EVIE
W O
F IR
ISH
MARIT
IME T
RAN
SPO
RT S
ECTO
R
design by drawinginc