Cyprus is already putting into effect the first recommendations of a study by a team involving PortEconomics members Thanos Pallis and George Vaggelas, and partners, that aims to help the country rekindle growth as a shipping centre after several flat years.
The study, prepared after a government tender, has put forward a five-point action plan designed to boost the island against the claims of other maritime hubs and open ship registries at a time of industry volatility and heightened competition.
Blueprint for Action
The recommendations of the study included developing a national strategy for promoting Cyprus’ shipping industry and strengthening co-operation within the country’s maritime cluster. Further suggestions fell under the broad headings of establishing new and innovative incentives, modernising ship registration policies and developing a ‘one-stop shipping shop’
As the study details, the Cyprus-flagged fleet consists of more than 1,800 vessels with a total capacity of more than 22m gt, which puts its standing at third-largest fleet in the EU and 10th largest worldwide. Its current contribution to the island’s economy is about 7% of gross domestic product value-added and the sector provides about 4,500 jobs in Cyprus, as well as employment for about 55,000 seafarers. But in recent years the flag has, if anything, slipped back slightly while the size of the resident shipping community has also remained flat.
According to the study, the main reasons for the stagnant recent performance have been the Turkish ports embargo against Cyprus-linked ships that has been in place since 1987, competition from other flags, the overall industry crisis, a lack of adequate promotion of Cyprus’ attractions, and “a lack of flexibility” in operations.
The twin targets of both the government and the private sector, the study says, are to prevent further erosion of the fleet and attract additional shipping companies to the island. The study calls for a strict timeline for action, including the submission of incentives and suggestions for enhancing co-operation in the sector all within the first six months. It also calls for completion of a full study into restructuring the shipping administration.
Cyprus implements
As Nigel Lowry, reports for Lloyd’s List (Cyprus acts to boost lustre as maritime centre: New EY study lays out blueprint for action as island holds latest Maritime Cyprus event, Monday 14 September 2015), in line with detailed in the study blueprint for action pricing policies for registering tonnage under the Cyprus flag are among the aspects being reviewed by the Department of Merchant Shipping.
The island’s plans for strengthening its roots and burnishing its image as a shipping centre were aired during last week events during Maritime Cyprus 2015, which officially kicked off on Sunday evening.
Shipping’s merits as a sector were made more obvious by the country’s 2013 financial meltdown which wiped 5.3% off the economy as a whole but shipping revenues were unaffected.
The episode was also positive for Cyprus’ reputation within shipping circles as a stable environment since, even in its hour of crisis, the government did not resort to increasing taxation of shipping companies.
Both the government and the shipping community agree that shipping has the potential to contribute even more to Cyprus’ economic recovery than it is doing now.
The first measures based on the study are for immediate implementation – such as increasing the budget allotment for the Department of Merchant Shipping for 2016 in order to hire specialist staff to promote Cyprus internationally and strengthen regional offices in locations such as Piraeus, New York, London, Rotterdam and Hamburg.
“The overall aim of this study is to lead to a properly structured and properly trusted and timely national shipping policy,” said Cyprus Shipping Chamber director general Thomas Kazakos, who chairs two of the four working groups set up to pursue the study’s recommendations.
“There has already been some tangible progress,” he said. “It comes down to political commitment and push, that is happening now. We need the appropriate political attention to be focused on our industry which has proven itself at the worst of times.”
Mr Kazakos said that it was especially important for Cyprus to sharpen its act while the international freight market remains volatile.
“Things are increasingly competitive – we are seeing it everywhere, which is only natural if the market is not doing well,” he told Lloyd’s List. “Everyone is trying to catch a piece of the pie. The only way to stay strong in business is to improve yourself. You can’t be complacent.
“As a maritime centre and a responsible flag we stand relatively well, but we think we can be even more business-focused and we are now on the right track.”
Among the immediate priorities is giving the maritime training and education available in Cyprus “better focus and structure”.
He said: “We have high unemployment and a high level of graduates in Cyprus. There’s no reason why part of this cannot be absorbed by shipping and we can then import fewer professionals from abroad.”
According to Mr Kazakos, aims include rounding out the resident shipping cluster with different types of companies, such as more shipbrokers and commodity traders.
In the longer term, he felt it would be positive to also work at boosting the ship finance activities available in Cyprus and even encourage shipbuilding, another missing piece of the jigsaw.
Read the study
Some key points of the study were presented at the recent European Conference on Shipping, Intermodalism and Ports (ECONSHIP) 2015 – and they are available to be read via PortEconomics.
