EUROPE • GERMANY
Not all plain sailing
Felicity Landon scans the maritime horizon of a north European powerhouse in search of renewed impetus.
A simple snapshot of the state of the German fleet? The answer would inevitably be ‘continuing decline’, in the numbers of German-flagged vessels and also in the number of German-owned and managed vessels. Economic pressures, the market situation and the collapse of the traditional KG system which provided easy-to-access finance have all seen to that – and last year’s sale of Hamburg Sud to Maersk served to add a shock factor. Meanwhile, Germany’s share in the container ship market fell from 29% at the end of 2015 to 21% at the end of 2016.
And yet, there are chinks of light to be found; changes in German legislation on payroll tax, social insurance and safe manning are encouraging owners to bring their vessels under the national flag once more, and the German government is expected to give the go-ahead for a subsidy programme to support owners looking to use LNG to fuel their vessels. Germany remains Europe’s largest exporter by far, and its marine equipment manufacturers are turning to new technologies and new sectors for growth. Germany’s shipyards are benefiting from a cruise ship building boom. The Port of Hamburg achieved a turnround in cargo throughput last year, including a 1% rise in containers.
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Meanwhile, the industry has launched its Maritime Agenda 2025 – endorsed by the government, it recognises and emphasises the importance of the maritime economy to the German economy.
‘Indeed, the number of German managed and owned ships, regardless of flag, has decreased tremendously despite a growing world fleet,’ says Ralf Nagel, ceo of the German Shipowners’ Association (VDR). In 2012 there were 3,800 German managed and owned ships – more than a quarter of those have gone. Some have been scrapped, but most of them have been sold, including a certain amount to Greek shipowners.
Ralf Nagel
It’s not all doom and gloom, however. Nagel points out that the German- flagged share of German-owned tonnage has actually increased and is set to do so further once all the benefits allowable under EU state aid guidelines – in particular changes to employer’s payroll tax and social insurance contributions – are introduced. Already it’s clear that German shipowners prefer EU flags, which enjoy a 40%+ share of the nationally owned fleet, with Portugal/Madeira, Germany and Malta the three most favoured registries in that order.
But there is also concern over a potential challenge from a post-Brexit UK, says Nagel. ‘Could the UK become some sort of Singapore for shipping,
just a jump across the Channel? We are watching very carefully for anything related to Brexit that could impact on our shipping industry.’
Another question mark hangs over German shipowners’ access to capital for any fleet renewal and growth. ‘Until 2009, we benefited from a more or less unique situation when many German banks granted loans and equity was collected easily via limited partnerships, the KG model,’ says Nagel, adding that since then ‘both capital flows more or less disappeared’ (see following article). ‘Now German shipping companies need to restructure their business in a way that makes them attractive to international investors. It is a challenge if you are from an environment where you have never had a problem getting loans and now need to meet international reporting standards and a certain size to get a foot in the door of investors.’
Environmental regulations such as the Ballast Water Management Convention and discussion on limiting greenhouse gases will bring new economic challenges for shipowners, he continues – but the move towards LNG could be an opportunity.
In a programme within EU state aid guidelines due to be rubber-stamped soon, the government has agreed to subsidise the costs of refitting or newbuilding to use LNG. ‘The ship still has to be financed, of course,’ says Nagel, ‘but the opportunity to use LNG as fuel could make them attractive for investors.’
Seatrade Maritime Review • Quarterly Issue 2 • June 2017 39
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