Maritime London will be part of a high profile City of London delegation beating the drum for the UK’s maritime and financial services sectors in China next week. On the agenda will be meetings with the Shanghai Municipal & Transport Assoc, Shanghai International Shipping Institute. The delegation includes representatives from the IUA, Markel, Norton Rose, Ince & Co and Clyde & Co.

Lord Mayor Michael Bear, writing in City AM says: “By sharing our experience and expertise we can help China overcome bottlenecks and help it develop a thriving financial industry to serve Chinese companies’ domestic needs and support international expansion. Just as London is the natural point of entry for international firms looking to access European markets, Chinese centres want to become financial gateways to Asia and beyond.”

He adds: “Hong Kong is already established among the top three world financial centres, alongside London and New York, while the State Council and the Shanghai municipal government are taking steps towards realising the vision of Shanghai becoming China’s international financial centre and shipping hub by 2020. The growth of new financial centres will ultimately benefit established centres such as London: as the size of the global industry expands, we will see new business opportunities forged on the basis of strong links between financial centres.”

The visit follows Maritime London's successful dinner for Greek shipowners in Athens, hosted by the British Ambassador in March.

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Shipping accountant and adviser Moore Stephens says that, despite mixed news for non-UK-domiciled individuals, the UK Budget 2011 appears to be good news for shipping. The firm says that the bad news in the Budget, announced on 23 March, is that the existing annual remittance basis charge for non-doms resident in the UK for 12 years or more will increase from £30,000 to £50,000, albeit not until 6 April next year.

Sue Bill, a tax partner with Moore Stephens, says, Sue Bill says, “There is mixed news for non-UK-domiciled individuals. But there are few other changes that will affect shipping. The government has emphasised the need for stability, and clearly intends to consult before making any major taxation changes. The government has also emphasised the need for the UK corporation tax regime to be attractive to international businesses. Overall, it seems to be good news for shipping.”

Moore Stephens, a Maritime London member, notes that the government also proposes not to tax foreign income or capital remitted to the UK for the purposes of ‘commercial investment in UK businesses’, and to simplify some aspects of the current rules for non-doms to remove administrative burdens, which increased significantly from April 2008. It is also proposed that no other substantive changes to the rules for non-doms will be made for the rest of this parliament. The government will issue a consultation document in June with a view to implementing the rules from 6 April, 2012.

Ms Bill adds: “The government will also be consulting on the introduction of a statutory definition of residence. Under current rules, the residency of individuals is a very grey area and greater certainty is only to be welcome. Again a consultation document is proposed for June with implementation of the new measure from April 2012. It is unlikely that there will be more detail until June, but the timetable should provide time for adequate planning. “Overall, there seems to be an acceptance by the government of the positive impact that inward investment by non-doms brings to the UK”.

Other minor changes in the Budget include a change to the rate of capital allowances on ships which are leased to tonnage tax companies. The rate of writing-down allowances that can be claimed on the first £40 million of expenditure will be aligned with the rate applicable to other ships, including where the ship is a long-life asset. This legislation has effect for expenditure incurred on or after 1 January, 2011, and is likely to reduce the rate of writing-down allowances in respect of such ships.

Corporation tax rate will be reduced by a further 1 per cent, so that, from April 2011, the corporation tax rate will be 26 per cent and, by 2014, it will be 23 per cent.

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The UK’s Foreign Office has announced a GBP6m fund to tackle piracy improving capacity to prosecute and jail Indian Ocean pirates. The funding includes £5.3 million to United Nations Office on Drugs and Crime (UNODC) counter piracy programme to build regional capacity for piracy prosecutions and detentions in Somalia, Kenya and Seychelles. It will also help ensure that prison accommodation is in line with international standards and that prosecutions are in full compliance with due process and the rule of law. £600,000 will be provided to fund enhanced optical imagery equipment for the Seychelles Coastguard to allow surveillance aircraft to take high image quality video and photograph. This will aid the capture of the pirates and provide valuable evidence in court cases. The fuel tanks of the aircraft will also be upgraded to enable them to fly longer distances.

Foreign Secretary William Hague said: “There are currently around 820 Somali pirates either serving sentences or awaiting trial around the world. I am pleased that the UK’s new support to counter piracy efforts in the Indian Ocean will aid the location, capture and detention of pirates across the region.

“I applaud the efforts of UNODC to improve the conditions of prisons to international standards and the leading role the Government of Seychelles is playing in tackling the scourge of piracy in the Indian Ocean”.

The UK is leading international action in the Contact Group on Piracy off the Coast of Somalia, which works to deliver a comprehensive approach to piracy.

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US warship launches missiles at Libyan targets

The Warlike Operations Area Committee, comprising the Chamber of Shipping, Nautilus International and RMT, has agreed that the territorial waters of Libya should be designated as a warlike operations area. This is in recognition of developments in Libya since the adoption of UN Resolution 1973 and, in particular, the participation of the UK in military activity in several coastal locations in Libya.

The agreement has been backdated to be effective as from Friday 18 March. While the standard international designation for territorial waters is 12 nautical miles from shore, Libya claims territorial waters up to 24 nautical miles from its shore.

A WOAC statement says: “In view of the possible hazards to shipping, the Warlike Operations Area should be treated as extending 24 nautical miles from the shore of Libya. The parties to WOAC have agreed to review the position jointly within a month.

The Chamber recommended that its members:

• advise seafarers before they board a vessel if it is known that the vessel will proceed to the Warlike Operations Area;
• give seafarers already on board a vessel proceeding, or scheduled to proceed, to the Warlike Operations Area the opportunity to terminate their engagement at a scheduled port of call on the vessel’s itinerary if facilities for repatriation are available;
• ensure that any seafarer who declines to proceed into the Warlike Operations Area does not suffer a detriment by reason of their decision;
• pay compensation of 100% of basic pay, in addition to earnings that are otherwise due, to seafarers remaining on board in respect of any day on which the vessel is in the Warlike Operations Area that they pay compensation to any seafarer who is injured as a result of warlike activity or detained by parties hostile to the UK, or to the next of kin of any seafarer who is killed as a result of warlike activity, whilst they are in the Warlike Operations Area, in accordance with the scale of uprated National Maritime Board payments agreed by WOAC;
• underwrite seafarers’ personal insurance policies if these are rendered void by reason of a vessel proceeding into the Warlike Operations Area.

Meanwhile Nautilus assistant general secretary Paul Moloney has responded to enquires from London Matters following an agreement at the International Bargaining Forum (IBF) covering a large number of open register ships when sailing through large large parts of the Indian Ocean. The IBF agreement was includes payments should vessels be attacked.

Mr Moloney says: “There are differences between the IBF agreement and that made by the Warlike Operations Area Committee, but I am not sure they leave seafarers on UK ships at a disadvantage. The WOAC agreement extends the existing high risk area to include the Indian Ocean (this was then replicated by the IBF agreement). Seafarers on ships not complying with the BMP guidelines have the right to refuse to sail into this wider area. We feel this is reasonable as few if any ships following this guidance have been boarded by pirates.”

The IBF agreement does not give seafarers this right but gives them bonus payments but only when their vessel is attacked. He concluded: “Our view is that the WOAC agreement delivers protection to seafarers within the widest possible area and therefore we are very content with it.”

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The latest figures from the London Maritime Arbitrators Association (LMAA) show that its members were appointed to 3492 arbitration cases in 2010, leading to 611 awards. This is down from the 4445 appointments and 647 awards LMAA members were involved with in 2009. The LMAA's statistics show that mediations have still not taken off in the maritime sector with LMAA members being involved in only two unsuccessful mediations in 2010.

At the Association’s AGM at the end of March Christopher Fyans was elected as its president. Patrick O Donovan and Mark Hamsher were re-elected to the committee.

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Over-tonnaging and the uncertainty created by political unrest in the Middle East and North Africa as well as expected finance costs increase have hit confidence within the shipping industry. Overall confidence levels in the shipping industry dropped for the third successive quarter in the three months ending February 2011, to reach their lowest level for fifteen months, according to the latest survey by leading accountant and shipping adviser Moore Stephens.

In February 2011, the average confidence level expressed by respondents in the markets in which they operate was 5.8 on a scale of 1(Low) to 10(High), compared to 6.0 in the previous survey in November 2010. Although confidence levels were down on the previous survey, a number of respondents felt that the prospects for improvement were reasonably good.

“Although we are not truly out of economic recession,” said one, “we have effectively weathered the storm and are now in an advantageous position for future growth.”

Others were more pessimistic, however, typified by the comment that, “Most shipping markets are over-supplied to such an extent that even good incremental demand will not strengthen them”.

A number of respondents were convinced that there was worse to come, with one pointing out, “Western governments are still spending far more than their income and, when the crunch comes, there will be a knock-on effect for shipping”.

Political developments were uppermost in the minds of many. “Political and economic developments in countries like Egypt, Tunisia, Yemen, Jordan and Libya over the next few months mean that prospects for shipping and world trade in this part of the world are likely to be very uncertain for some time,” observed one respondent.

This a sentiment echoed by another who suggested: “The problems in Egypt could affect the smooth flow of cargo through the Suez Canal”.

Concerns about over-tonnaging and the effect of a glut of newbuildings coming on to the market dominated the responses. “The amount of new tonnage due for delivery this year in all three major vessel categories will continue to depress the markets,” said one respondent, while another observed that the industry is facing a ‘wall’ of newbuildings yet to be delivered. Others took the thinking a stage further.

“You get the impression,” said one, “ that, unless rates improve, owners are not going to generate sufficient reserves to cover drydocking, maintenance, surveys and the like. It's a ticking time-bomb”.

There was a 15% point rise (from 44% to 59 %) in the number of respondents who expected finance costs to rise over the coming year - the highest figure recorded since October 2008.

One respondent felt that: “For cash-rich owners with finance lines available, this will be a period of opportunity for expansion”. But another complained: “Finance is the major constraint”, and asked, “Which ruined banker or high-level investor is going to pull us out of this one?”

Moore Stephens shipping partner, Richard Greiner, says: “Although the small drop in confidence levels is disappointing, particularly since it follows a similar fall in the previous quarter, there are some compelling external factors influencing the current mood of the industry. The political unrest in the early part of the year in North Africa and the Middle East was bound to have had an adverse effect on confidence. When you operate in a global industry, you are susceptible to global influences."

Mr Greiner concludes: “In any industry, news of new investment can be something of a double-edged sword. So it was with the recent confirmation of Maersk’s order for a series of big new container ships which, while sending a confident message to the market, will at the same time have done little to ease fears about over-tonnaging, particularly on the part of smaller operators. Yet new investment is undoubtedly good for any industry and, despite the difficult economic climate, our survey still showed an increase in the number of respondents who expected to make a major investment or significant development over the next twelve months. It was noticeable, also, that a large number of respondents felt that shipping had taken the worst that could be thrown at it and was now ready to bounce back. However, it will be interesting to see the impact of events in Japan in our next survey.”

UK-based shipowners are being invited to attend training courses on the Maritime Labour Convention, 2006, run by the Maritime and Coastguard Agency (MCA). The MCA will be hosting three UK based training courses. Each one will be aimed primarily at a different sector of the maritime industry :

Passenger / Cruise Ships - MCA Southampton 18-19 May
General Cargo Ships - MCA Liverpool 9-10 June
Offshore - MCA Aberdeen 13-14 September

There will be a fee for attendance to cover costs.

Click here for further details.

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• The business climate
• Employment and training
• Maritime security
• The environment

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