It may take years to fully understand what Brexit will mean to the global economy in general and to the shipping industry specifically. Our research of recent articles on Brexit and its implications for shipping, however, offered some interesting items.
As reported in Maritime Executive, the UK Chamber of Shipping emphasized that Britain is an island nation that relies on shipping for 95% of its international trade. There are many trade treaties in place or being written around the world with Britain as part of the EU. Examples include the EU-Canada trade agreement, the EU-India Bilateral Trade and Investment Agreement, and the EU-US Transatlantic Trade and Investment Partnership. These will need to be re-negotiated to establish new trading ties with global partners and with the EU. Both the Chamber and Lloyd's of London anticipate that these complex negotiations will not occur swiftly.
Lloyd's List indicates that the main concern for shipping companies will be taxes and tariffs since the UK will no longer be within the European trading bloc. As well, shipping firms will experience a new burden in terms of complying with both UK and EU regulatory standards. The site also mentions that Brexit should have no immediate impact on regulations overseen by the International Maritime Organization (IMO).
Britain had the world's largest merchant fleet in the past, but no longer holds that distinction with European countries Greece, Norway, Denmark and Germany now outstripping the UK, and with many Asian nations boasting active shipping industries. UK container volume now makes up less than 2% of the world total (by TEUs).
The UK is still a major center for shipping services – shipping law firms, insurance underwriters, shipbrokering. However, that may change with bank and insurance operations looking abroad to move their operations to a new, European, financial center.
World Maritime News reports that while the UK will have little impact on container shipping, Brexit might have a positive impact on oil products. Recently, crude oil shipments to EU countries from the UK, have been trending down; the first quarter of 2016 saw exports down to 5.1 million tons, from 7.8 million tons of crude oil in 2005. But, Britain's propinquity to Europe may see a cost benefit due to the short-haul shipping nature of the trade.
The Norton Rose Fulbright Law Firm views the effect of Brexit upon the shipping sector this way: Although Brexit will not stop British shipping firms from carrying cargo to or from EU ports, taxes and duties may change, as will passport requirements. Access to the British ship register may be affected for EU entities.
Britain is also a partner, via the EU, in a variety of global efforts such as the Navfor anti-piracy project off Somalia, maritime security measures with NATO regarding migrant trafficking as well as joint EU-NATO naval operations in the Mediterranean Sea. As well, SOLAS and MARPOL (international conventions governing safety at sea and environmental issues) may need to redefine the UK position with the UK soon to be outside of the EU.
Hellenic Shipping News reviewed the impact of Brexit on shipping before the vote was taken. Here is their take on the topic. Shipping is extremely important to the UK with that sector of the economy contributing €12 billion each year. Approximately 420,000 people are involved in the shipping sector and the country is still one of the top ten ship owning nations in the world. Shipping is also important to the EU economy; 51% of its freight is transported by sea, 400 million people utilize the sea for travel, there are 22 coastal member states in the EU with 1,200 seaports handling the cargo from 60,000 non-EU ships annually.
The rest of the EU is the UK's biggest trading partner and that trade is unlikely to stop with Brexit. The laws governing shipping and trade between the two entities is bound to need modifications. What those will be is unclear at this point. As Lloyd's has also mentioned, trade agreements will need to be adjusted particularly if membership in the EU was a major point of any agreement. Finally, competition between EU and UK shipping firms and economies may change and become more aggressive.