Young professionals identify challenges to London’s shipping role
A survey by The Shipping Professional Network in London (SPNL) has confirmed London’s pre-eminent position as a global maritime centre. But almost seventy per cent of the young shipping professionals who responded to the survey warned that London faces the risk of declining influence over the next ten years unless specific measures are put in place to address the key challenges to its future development.
The survey, conducted in co-operation with leading accountant and shipping adviser Moore Stephens, canvassed the opinions of young professionals working primarily in the shipowning, shipbroking and management, chartering, advisory and associated industries.
Respondents were provided with a list of key challenges facing London in its attempts to remain a relevant global maritime centre, and asked to choose the three options which they considered to be most important, in order of priority. ‘Competitiveness’ was the leading choice of respondents, followed by ‘taxation’ and ‘the ability to adapt to a fast-changing environment.’
A number of respondents acknowledged London’s traditional strength in the professional services sector relating to the maritime industries, with one emphasising, “The high-value professional services such as finance, insurance, P&I, law and shipbroking underline the prime importance of having a central London office.” Another said, “As long as IMO, the P&I clubs and NGOs are based in London, it will always be a maritime business hub.” Elsewhere it was noted, “London must concentrate on its strengths in the legal, insurance and financial sectors to raise its shipping profile and attract fresh talent,” and, “London is competitive because a huge proportion of global commodity trade is centred there.”
Others, however, saw threats to these traditional strengths. While acknowledging that, “London is a leading service hub and a one-stop-shop for all ancillary shipping services,” one respondent warned, “Unless it comes up with a way to retain more of the highly educated and trained people coming out of British universities, London’s attractiveness will decline.” Another said, “There is only a shipping industry in London because of the use of English law in contracts. But English law has become very expensive and uncertain. Currently there seems to be nothing better, but this is changing, and the legal and shipping professions are not stepping up to the changing times.”
A number of respondents to the survey identified the prohibitive cost of operating in London. “London is a great city, but too expensive,” said one, “and this, together with high labour costs, makes it uncompetitive.” Another noted, “The cost of operating in London is now outweighing the importance of having a London address. Now it is only foreign shipowners setting up in London, and even the oil majors are moving out.” Elsewhere it was noted, “Unless London faces up to the fact that many other centres are competing on costs, it will see progressive erosion of its premier status.”
Respondents were more or less of one mind in identifying London’s biggest competitor over the next ten years as a centre for maritime business - the Far East and, specifically, Singapore. “London has to remain more attractive than Singapore and Asia for brokerage and shipping industry-related services,” said one. Others, meanwhile, felt that this was unlikely, with one commenting, “It is natural that Singapore and Hong Kong will gradually take over from London.” Others still acknowledged that “places like Singapore and Hong Kong are trying to steal the attention,” and, “The best people now are going to Singapore instead of coming to London.”
One respondent suggested, “Work with Singapore, not against it,” while another said, “Companies should partner with Far East organisations so that, if nothing else, London is their European hub.”
UK taxation was cited by a number of respondents as an implicit threat to London’s reputation as a maritime centre. “The UK needs to come up with a more hospitable environment in terms of taxes and regulations in order to attract more shipping companies,” said one. Others advocated “a beneficial tax regime”, “lower tonnage tax”, “an improvement in the tax regime for foreign professionals who are not dependent on public services”, and “changes to corporate taxation.”
Technology was also perceived by a number of respondents as a competitive threat to London. One noted, “There is a need to understand the potential in new technology and its benefit to global trade. Asia understands this and is open to exploiting technological advantages much more than London, where a conservative approach still dominates.”
SPNL chairman Claudio Chistè says, “The survey is a timely reminder of the challenges which London faces over the next ten years if it is to retain its pre-eminent position as a provider of global maritime services. Our members showed a proper understanding of London’s strengths as a maritime centre, combined with a keen sense of what is happening elsewhere. These are people who are working at the coalface, as it were, who are absorbing new technology and new ideas, and who have the prospect of long careers ahead of them. They want London to succeed.
“The survey also showed that, overall, SPNL members are confident that the markets in which they operate will continue to improve over the coming twelve months, after a very difficult period for the shipping industry.”
Richard Greiner, a shipping partner with Moore Stephens in London, says, “The SPNL survey contained a number of constructive observations. Of course, reducing the cost of operating in London is actually outside the control of the maritime industry, and London is by no means the only city in the world where costs are increasing. But there are things which the shipping industry in London can do, and is already doing. The UK operates a very successful tonnage tax regime, for example, which provides participating companies with a low level of tax on shipping activities, the potential to pay no tax when vessels are sold, and predictability on future tax liabilities. The UK also continues to offer significant tax advantages for individuals resident but not domiciled in the UK.
“London should embrace competition, and use it as a platform to expand and improve. The SPNL survey is a welcome addition to the ongoing debate about London’s role as a global centre for maritime services. Recognising the challenge is the first and most important step towards meeting it.”
Claudio Chistè concludes, “London has shown over centuries that it has the mettle and the determination to compete. The SPNL believes that it will continue to do so, provided it can meet the challenges which have been identified.”
The Shipping Professional Network in London (SPNL) is London's foremost networking forum for young shipping professionals. It enjoys significant broad-based support from over one thousand industry companies and individuals, and has official backing from the UK Chamber of Shipping. SPNL supports tomorrow’s young shipping professionals by way of the recently launched prize for the top ICS London-based student, the SPNL Future London project which is under way, educational port visits, and the support of charities. The SPNL continues to recruit new members from various areas of shipping, including shipowners, service providers, lawyers, brokers, insurers, accounting, class, registry and the offshore sector. www.spnl.co.uk
Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 624 offices of independent member firms in over 100 countries, employing 21,224 people and generating revenues in 2012 of $2.3 billion. www.moorestephens.co.uk