As befits an island nation with a long tradition of sea-faring adventures and an even longer coastline of 11,000 miles, the UK’s maritime industry is one of our most successful.
The maritime industries — including shipping, ports and related services — generate around £22 billion for the economy, rising to £40 billion if you include the wider supply chains. Neither is it surprising, given this is an island, that more than 95% of all the UK’s trades in goods — exports and imports — is moved by sea.
The maritime sector is also a big employer: the UK has more sailors, engineers and fishermen on the water at any time than in any other country in Europe. Nearly 186,000 work in the maritime and marine industries — about a third of whom are based in Scotland — and they support another one million jobs in the wider economy.
We also have an extraordinary number of ports. There are 100 major and minor ports and 1400 harbours and docks. Our port sector is the biggest in Europe, handling 484 million tonnes of freight in 2016, of which less than half (207 million) was traded with the EU. Four ports — Dover, Holyhead, Harwich and Hull — carry out more than 75% of their trade with Europe.
On just about every measure, the City is still the world’s leading hub for shipping finance and the undisputed master of ancillary services ranging from insurance to shipbroking to arbitration: more arbitrations took place in London between 2011 and 2015 than across the rest of the world.
The International Maritime Organisation — the global UN agency that regulates shipping — is based in London. So too is the Baltic Exchange (the derivatives exchange now owned by the Singaporeans), and Lloyd’s Register, best known for certifying the seaworthiness of ships and an industry standard-setter. And guess what? Shipping is also the one industry where almost everyone across the Brexit spectrum agrees that leaving the EU would allow the UK to boost industry competitiveness — without lowering standards.
Even the usually pessimistic Confederation of British Industry — that hotbed of Remainers — is unusually optimistic about the shipping industry, having singled it out in a recent report as the one most likely to flourish post-Brexit.
What’s more, the authors of the Smooth Operations study went so far as to say that: “Divergence from some EU regulations that do not properly reflect how UK ports operate could benefit the industry. Brexit also creates other opportunities for the UK to boost the reputation and attractiveness of its ship register.”
One of the big concerns for UK port owners over the past decade has been attempts by the EU to legislate ports as part of its strategy to build an integrated trans-European transport network. This was particularly irritating to the UK’s port operators because many of the new regulations focused on public funding. You can see the problem — the UK’s ports are privately owned whereas those on the Continent are in public hands.
There are other benefits from being set free. Professor Nikos Nomikos, expert in shipping finance at the Cass Business School, suggests volumes will grow as the industry moves from short-haul trips to long haul on the basis that the UK’s global trade will grow in a post-Brexit world. So, too, should shipping services.
But the key to the UK’s future resilience, says Nomikos, is that most shipping rules — set by the IMO and the Maritime Labour Convention — are international. Since the UK has always been a leader in setting the highest standards, leaving the EU should not cause any problems.
Yet it’s not all plain sailing. If the UK is to stay a great maritime power, industry needs to modernise to compete with rival ports in Dubai, Hong Kong and Singapore — now also nibbling at the City’s dominance in shipping services — to capture the massive rise in Far Eastern trade. Just look at the numbers: China is spending $900 billion alone on upgrading its ports and related infrastructures to meet demand. Technology is also changing fast — ships and containers are being built bigger by the day, with containers having doubled in size in the past decade.
How do we compete with that? Happily, neither the Government nor industry is navel-gazing. Quite the reverse. Transport secretary, Chris Grayling, recently published an excellent analysis of the sector — Maritime 2050 — calling on experts to come up with ideas for improving the industry, from updating technology to attracting skilled youngsters to seek a career at sea. Britannia might yet keep ruling those waves.