Navigare necesse est
The German maritime industry is complaining about intensifying international competition – probably rightly so. In fact, Rotterdam and Antwerp have outpaced the German ports of Hamburg and Bremen in terms of growth. From a global perspective, however, national shipowners and port operators, in the face of competition from the Far East, are looking to join forces in Europe as a whole.
The bad news first. Germany’s seaports handled less cargo in 2018 than in 2017. The national statistical office announced on World Shipping Day on 26 September that 296.5 million t of goods were handled last year, or 0.7% less than in 2017. However, the benchmark here too is the global financial crisis. In the golden years before it set in, that is to say before 2008, cargo flows in German seaports amounted to around 318 million t a year.
Shipbuilding is also under pressure
Sea freight remains the pacemaker of the German logistics industry. The high value added by airfreight services is offset by the volumes handled by the maritime shipping industry. In 2018 these came to approximately 58 times more than the freight handled at the country’s airports.
It is sometimes overlooked in certain quarters that Germany continues to be an important location for shipbuilding activities. The largest shipyards are located in South Korea and China today, but around 80% of the value added in the construction of a ship is accounted for by suppliers.
According to an analysis carried out by Germany’s Shipbuilding and Ocean Industries Association (Verband für Schiffbau und Meerestechnik, VSM), the federal states of Bavaria, Baden-Württemberg and North Rhine-Westphalia are important locations for the shipbuilding supply industry, with companies such as MAN, Siemens, MTU, ZF and numerous other suppliers of navigation and propulsion technology active there. “The supplier industry alone employs more than 63,000 people, generating a turnover of more than EUR 10 billion.”
The industry sees Chinese efforts in the field critically. “We’ve experienced market distortions without any remedies for decades,” says Reinhard Lüken, CEO of the industry association VSM. “This has to stop.”
Call for German and European government aid
Structural change in the shipping industry has had far-reaching ramifications for Germany. Its merchant fleet has shrunk from 3,500 to around 2,300 ships, with the number of shipping lines slipping from more than 400 to around 330. State aid is sought to cope with the competition – which is not usually the German approach.
The president of Germany’s National Association of Maritime Port Enterprises (Zentralverband der deutschen Seehafenbetriebe ZDS), Frank Dreeke, appealed to politicians recently. It’s not enough that Germany is a world champion when it comes to exports and logistics, he said. “In order to play even more to its strengths the German port industry has to be freed from competitive disadvantages.” As one practical example he cited the German procedure when levying import turnover tax.
German shipowners have made the same appeal, taking the European dimension of shipping, including its impressive promotion, on board at the same time. The reason for this was a recently-published report of the OECD’s International Transport Forum (ITF), which criticised the allocation of state subsidies, that is to say tax exemption for public bodies in charge of managing seaports in some member states. Associations representing private enterprise in the maritime industry in Europe, including the Brussels-based Federation of European Private Port Companies and Terminals (Feport), have therefore called for a revision of the EU’s guidelines for the application of state-aid rules, as they believe private terminals and ports are lagging behind. Feport president Gunther Bonz believes the time has come to subject the shipping industry to a European ‘fitness check’, as has been done with other sectors, such as banking.
The European Community Shipowners’ Association (Ecsa) and the German Shipowners’ Association (Verband Deutscher Reeder VDR), for example, have a different view, however. According to Ecsa, the state-aid rules are “a highly effective instrument to maintain and strengthen the European shipping sector in this most competitive environment.”
On top of this the approach adopted by the ITF’s study has been criticised, as it did not use global benchmarks. The German shipowners’ association also emphasised this aspect. “The shipping industry is not a purely European issue, of course, as the report suggests. On the contrary, we in Europe, and especially in Germany, continue to face tough global competition, also from competitors who receive some support.”
The VDR therefore believes that for the industry is to compete on a level playing field, then public aid in support of its ability to compete is indispensable. It wants to work with the EU Commission, which agrees that support “should be continued”.
