Major contribution of UK maritime services as London retains position as leading maritime centre
The continuing importance of UK maritime services is demonstrated in our new report, Maritime Services 2011, which highlights its direct contribution to GDP of £1.5bn, tax revenue of £644m, overseas earnings of £2.2bn and employment of 12,000. This contribution is based on a broad range of services as London retains its position as the world’s leading maritime centre providing a broad range of services. The multiplier effect of business procured through the supply chain and spending of those involved in maritime services, more than doubles its GDP and tax contribution to £3.9bn and £1.4bn respectively, while employment dependent on maritime services is raised to over 63,000.
Shipbroking: The 200 shipbroking firms operating in the UK generate about a third of activity in UK maritime services, as they employ 4,200 people and generate overseas earnings of £744bn. Shipbrokers have established a substantial UK market share in the chartering business, with Baltic members accounting for an estimated 50% of the global tanker and 30-40% of dry bulk. The Baltic Exchange Dry Index (BDI) has averaged 1,500 in the first ten months of 2011, a fraction of its 2008 peak, owing to surplus capacity in shipping and concerns about the global economy.
Derivatives: Trading of Forward Freight Agreements (FFAs) permits charterers and shipowners to hedge the future movement of freight rates. In 2011 turnover of FFAs is expected to be around the 1.4m lots traded in the two previous years.
Insurance: With 20% of premiums in the international marine insurance market in 2010, the UK remains the leading centre in the face of stiff competition from Japan, the US, China and Germany. The UK is also the largest centre in the management of protection and indemnity insurance, with P&I Clubs operating in the UK accounting for 62% of the global market in 2010.
Ship finance: The total loan book of $64bn of 13 banks operating in the UK accounted for 15% of the global ship finance portfolio of $452bn at end-2010.
Ship classification: Lloyd’s Register is the second largest ship classification society in the world making up 16% of the world’s fleet.
Education: New research indicates that there are 10,500 students on marine courses at 24 universities and colleges around the UK.
Legal services: The UK is a leading centre in legal services involving over 40 law firms. English law is applied widely to shipping disputes. The London Maritime Arbitrators Association saw a drop in appointments to 3,492 in 2010 from the high point of 4,445 in 2009.
Although TheCityUK report notes that London remains the leading centre of expertise, the Baltic Exchange has highlighted industry concerns about its future prospects: these concerns relate to growing competition from other centres, such as Hong Kong, Singapore and Dubai, as well as to the stability and predictability of the UK tax framework, particularly as it applies to non-domiciles. The Greek Shipping Cooperation Committee has reported that a third of its membership, 50 out of 150 companies, has left the UK since the Remittance Basis Charge on non-domiciles was introduced in 2008, taking 1,500 jobs overseas.
Duncan McKenzie, Head of Research at TheCityUK, said “Maritime services in the UK continue to make a substantial direct economic contribution notably through 12,000 jobs and £2.2bn generated in overseas earnings. While most maritime services are clustered in London, some services, such as the maritime education offered by universities and nautical colleges, are evenly spread throughout the UK”.
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