Amid difficult circumstances in most global shipping markets Norwegian owners are seeking out opportunities in sectors where the prospects are brighter
According to the Norwegian Shipowners’ Association’s (NSA’s) Maritime Outlook Report 2017, Norway has maintained its position as the world’s sixth largest shipping nation, measured by fleet value, despite challenging markets for shipping. The report expects both shortsea and deepsea segments to face the same tight margins that have characterised the industry since the financial crisis.
NSA chief executive Sturla Henriksen said: “Shipping is a global industry, and as such we are directly influenced by global trends and international developments. The current situation is extremely challenging for many of our members, but we must not lose sight of the many opportunities that lie ahead.”
In 2016, Norwegian deepsea and shortsea shipowners suffered a sharp drop in revenue of about 16 per cent. NSA’s survey of its members, carried out in late January and early February 2017, indicated that they expect another difficult year in 2017, with a further drop in revenue of 10 per cent. The Norwegian-controlled fleet was valued at US$51 billion in 2016, a decline of 21 per cent from 2015.
At the beginning of 2017 Norwegian international shipowners had a total of 72 vessels on order, less than half the number on order a year earlier.
Mr Henriksen expressed concern about the risks to Norwegian shipowners from a slow-down in international trade. “Seventy per cent of [Norwegian] shipowners’ income stems from foreign markets. Given this, we are naturally concerned by the current rise of protectionism in the world, not least in Norway.”
On a more positive note, NSA reported that there was a trend of more Norwegian shipowners switching from foreign flags to the Norwegian flag. Changes in trade area limitations, a strengthened tax refund scheme for seafarers and improved service in the Norwegian Maritime Authority have led to more shipowners re-flagging ships from foreign registers. The Norwegian International Ship Register (NIS) gained strength during 2016 with net growth of more than 40 ships, while deadweight tonnage increased by 9 per cent.
Overall, 82 newbuildings were delivered to Norway’s foreign-going fleet in 2016, with a large share of these going to the NIS. According to NSA, the current growth in the NIS is due largely to re-flagging from foreign registers and newbuild deliveries. One example in the second half of 2016 was Norwegian owner Awilco which took delivery of four 300,000 dwt very large crude carriers (VLCCs), all of which have been placed on the NIS.
This demonstrates the importance of strengthening the competitiveness of the NIS. “This is proof that active maritime policies work. A significant number of ships sailing under the Norwegian flag is a welcome development, and it is vital if Norway is to maintain its position as a leading international shipping nation,” Mr Henriksen said.
He added that a competitive Norwegian tonnage tax regime is critical to keep Norway attractive as a host country for shipowners and other maritime activities. And the regime’s competitiveness must continuously be maintained for shipowners to find it attractive to invest in and from Norway. “A competitive tax refund scheme is critical to ensure that Norwegian seafarers are recruited to Norwegian-registered ships. In order to secure Norwegian maritime competence, it is essential for the tax refund scheme to be internationally competitive. This is unfortunately not the case today.”
In 2017, an incentive scheme for transferring goods from land to sea is being introduced. This should contribute to strengthening the competitiveness of sea transport. The Norwegian government allocated NKr82 million (US$9 million) in its 2017 budget to support this scheme. It will continue for three years. Companies can apply for grants to assist with establishing new maritime freight services between a Norwegian port and another port in the European Economic Area.
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