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German Shipowners “Cautiously Optimistic”

VDR HQ
VDR HQ

By The Maritime Executive 02-26-2020 08:26:03

The German Shipowners’ Association (Verband Deutscher Reeder – VDR) has released figures showing that Germany remains the fifth biggest shipping nation with a 4.9 percent share of the global maritime fleet (down by 0.6 percent year-on-year).

At the end of 2019, there were 2,140 ships registered in German shipping registers with a gross tonnage of 52.8 billion. “That’s 184 fewer ships or 4.7 million less in gross tonnage than a year earlier but still substantially more than when the global shipping boom began 20 years ago,” says VDR President Alfred Hartmann. 

In terms of total TEU, Germany is no longer the biggest nation in the container shipping sector: “The fact that China would overtake us in this respect was quite foreseeable. For one thing, the simple reason is that very much larger container ships are being built today. For another, this was to be expected in the wake of the long crisis after 2009,” said Hartmann.

“Nevertheless, most shipping companies at least have a cautiously optimistic outlook for the future,” he says. Following the crisis years and the partly painful process of coming to terms with them, today many are fortunate in focusing on the future and the challenges it holds in store. “Unfortunately, the earnings situation varies quite substantially and is volatile on top – depending on the industry segment, the shipping areas and partly also even daily events,” said Hartmann. 

He indicated, however, that the German fleet remained extremely versatile, offering high-tech products in particular thanks to the maritime expertise in their companies.

Today, over 43 percent of the German fleet’s vessels sail under an E.U. flag, in particular Portugal, Cyprus and Malta. “During times where the idea of a unified continent has come under pressure, I assess this as a commitment to Europe,” says Hartmann.

302 ships sail under the German flag. Antigua & Barbuda and Liberia remain the biggest individual flag states of the German fleet.

Germany remains characterized by a large number of small to medium-sized enterprises (SMEs). Some 80 percent of German shipping companies operate fewer than 10 vessels.

Not only do the shipping companies compete fiercely with their counterparts based in Singapore, but also with neighboring European countries like Denmark, Belgium or the Netherlands, which partly enjoy more favorable framework conditions as E.U. member states. “To be able to survive in the prevailing intense global competition, the shipping industry must be able to operate competitively from the location of Germany on an international scale,” said CEO Ralf Nagel: “We’re not interested in privileges, but simply in equal opportunities.”

He indicated that German shipping companies were faced with the immense challenge that they need to produce their services profitably with yields roughly at the same level as over 20 years ago. Nagel says: “In particular, this is why Germany as a business location cannot afford to impose new taxes on its shipping companies as special burdens that exist nowhere throughout the world, as in the case of insurance tax charged on premium payments for ship insurance policies. This is particularly fatal because parts of the landscape of German shipping companies are developing into a ship management service industry, away from classic ownership.” 

He said that the tax relief currently granted in Germany for maritime shipping remain in force. Additionally, the tonnage tax meanwhile offered by all key shipping locations across the globe should be updated in accordance with the guidelines and directives prevailing in the E.U. “We recommend that the tonnage tax relief already enacted in Denmark, the Netherlands and Norway should also apply to offshore vessels and activities in Germany. German shipping companies are increasingly making efforts to establish offshore wind farms and to transport the necessary material and skilled staff for operation and maintenance of facilities.”

Despite the decline in the number of vessels, it has been possible to keep the number of crew members subject to mandatory social security cover more or less stable at 8,265 employees.  420 sea apprentices joined in 2019 and 249 signed up onshore, thus outstripping the previous year’s figures for employees on board.