Deloitte says Europe risks losing its place as the major shoreside base for shipping companies as other maritime centres come to the fore.
The consultancy says the continent needs to address issues covering regulation, fiscal incentives and flag registration in order to keep its pole position in shipping markets.
The Deloitte study, which was obtained by TradeWinds and will be released Monday, points to Europe's current leading share in shipping. Some 620,000 people in Europe are employed in industry. Companies based in Europe owned over one-third of the world commercial fleet and oversaw commercial operations of some 46% of commercial vessels.
But as a mature market, Europe's growth rate in those measurements has been at or below average, with other regions showing stronger growth. Both Dubai and Singapore have shown growth north of 10% in owned and operated tonnage over the last two years.
Vancouver likewise saw nearly 10% growth in tonnage operated from businesses in that city. Hong Kong companies saw their owned tonnage grow 15%.
These other maritime centres represent "fierce international competition" for maritime businesses and providing a "competitive advantage for shipping companies operating under such regimes," Deloitte said.
Many of these new maritime centres are providing tax and other fiscal incentives for setting up shop. Deloitte says the European Union (EU) should boost its program that allows shipowners to reduce their taxes if at least 60% of their tonnage is registered under EU flags.
Europe's shipowners are also feeling the effects of the Basel IV regulations, which are limiting the amount of financing available to the shipping industry. Deloitte notes that 70% of the European fleets are privately owned, thus remain dependent on bank financing.
The Deloitte report also singled out EU efforts that go "beyond or contradicts (International Maritime Organisation) conventions" as particularly damaging to its attractiveness. Such efforts include ship recycling measures and pollution abatement rules.
What other centres do right
Deloitte benchmarked the EU against Singapore, Hong Kong, Dubai, Vancouver and Shanghai, noting some of the advantages of each location.
Singapore's government is providing direct grants through its Maritime Cluster Fund and the Maritime Sector Incentive provides a tax exemption for shipping income. Other shipping-related support services are also eligible for tax breaks.
Hong Kong's long established shipping industry, low regulatory hurdles and proximity to China were seen as its key advantages. Deloitte also singled out the Hong Kong Maritime and Port Board as a benefit to shipowners.
Dubai offers no corporate or personal income tax. Likewise, the country has built Dubai Maritime City to woo owners and operators and set up its own arbitration centre for maritime claims.
Vancouver also offers no tax on shipping activities, including ship management services and financing activities. The efforts of the Vancouver International Maritime Centre have also promoted other incentives to attract international shipping companies that want to have a base of operations in the Pacific Basin market.
Shanghai was noted for its access to the Chinese market and its relative low costs compared to other major cities. The government has also established the Shanghai Pudong Free Trade Zone and is providing ship financing subsidies.
