Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Memorandum by the Retired Railway Officers' Society (FUS 23)

THE FUTURE OF THE UK SHIPPING INDUSTRY

  This memorandum has been written on behalf of the Society by a member with experience of the general management and operation of some 14 passenger and freight vessels during the periods 1974-87 and 1993-95 and of port facilities and who is currently involved in shipping and port projects. The writer has also consulted colleagues involved in the shipping industry.

SUMMARY

  The five main areas of the UK shipping industry which need to be addressed are:

    1.  A dramatic increase in the training of seagoing officers (cadet training).

    2.  Incentives to encourage the registration of vessels on to UK and other Category One Red Ensign flags.

    3.  The overhaul of the current regulatory requirement and procedures for vessels registering on to the UK register.

    4.  A review of coastal shipping competitiveness and in particular to see if it can achieve a transfer of freight traffic from road to ship.

    5.  Investment and development of the UK inland waterway network.

  Responses to the Sub-Committee's terms of reference are given below:

1. What action and partnership is required of the industry and government to develop a sustainable, internationally competitive shipping industry;

  1.1 Whilst it has to be recognised that the UK will never be competitive when compared against some crew options notably from the Far East, it is argued that the quality of our Seafarers and the quality of their training does mean that the UK has a valuable resource in international terms. This is shown by the fact that a majority of UK Officers are employed by companies other than those based in the UK and on non UK Flag Ships.

  1.2 With regard to ship tonnage, incentives have to be introduced similar to those of other flag states which will enable the Red Ensign to be marketed as a cost effective option. The Dutch, for example, have introduced initiatives to encourage the return of vessels to the national flag. This has been very successful to the extent there are not the numbers of Dutch Nationals within their industry to meet the crew manning requirements.

  1.3 On the short sea trades, a level playing field is needed so that the cabotage (reservation to a country of traffic within its territory) operated by a number of EU and other administrations within the coastal shipping operating sector is preferably reciprocated or that a more vigorous attitude taken towards the flag states which do not allow free trade.

  1.4 There also needs to be a more user friendly approach from the maritime and Coastguard Agency (MCA). Hopefully this may happen as a result of the creation of this new organisation. Simplified regulation and procedures are required without detracting from the safety issues which remain paramount, and a means of expediting enquiries is needed if ship owners are to be encouraged to the UK National Flag.

  1.5 It would be good business if the UK Government could provide or procure funds or loans at preferential rates of interest to improve and infrastructure of ports and their hinterland (road, rail and inland waterways) in the way that other EU countries appear to do.

  1.6 International cargo carrying is now dominated by a few large carriers such as Maersk, P&O Nedlloyd and Evergreen. These companies are so large that it is hard to see how the UK shipping industry can now re-enter the market. It is believed that other countries (including those of the EU) subsidise their shipping industries either directly or indirectly while the UK has hitherto offered little incentive for companies to stay British.

2. The benefits of encouraging UK ship registration, the extent and implications of flagging out, and the specific position of the Isle of Man registry

  2.1 It is in everyone's benefit to encourage ship registration both in the UK and the Isle of Man. With the benefits, of which the defence consideration is one, other positive points are:

    A major contribution to the UK's invisible earnings;

    It will bring other revenue benefits;

    Employment opportunities for UK Seafarers;

    Opportunities for shore based associated industries;

    Careers for school leavers;

  2.2 With regard to "flagging out" this was mainly brought about by the over regulation and tax burden on UK Flag vessels. If incentives are introduced similar to other flag states with a simplified and more user friendly approach from the regulatory authorities, then there should be a return to the UK Flag.

  2.3 To increase UK registration more has to be done to encourage UK ownership of ships. Bureaucracy has to be reduced and the insistence that the UK MCA surveyors have to carry out surveys anywhere in the world should be relaxed. Other registries use classification societies or foreign registry administration surveyors to act on their behalf. This reduces cost and problems in getting a UK surveyor to the right place at the right time. The popularity of the Red Ensign flagged out registries, such as the Isle of Man, is a case in point.

  Possibly the UK should follow Norway with its Norwegian International Ship register (NIS) which has rebuilt the Norwegian Fleet.

3. The contribution that shipping can make to achieving the objectives of the Transport White Paper

  3.1 The contribution that shipping can make in achieving the objectives of the Transport White Paper are by having a firm commitment to the operation of its vessels under a Red Ensign accompanied with commitments to the employment and training of quality British Officers and Ratings wherever possible.

  3.2 A further contribution could be made by opening up coastal shipping again. This will require modern, possibly fast, cargo carriers with scheduled services, linking intermodally by inexpensive transfer with road, inland waterways and, possibly, rail freight services. This should not be limited to the UK and Ireland but preferably should be EU wide.

4. Whether enough UK registered shipping is available to fulfil the country's strategic needs and international obligations

  4.1 Whether the UK has sufficient vessels of differing capabilities to fulfil its strategic needs is questionable. It is only by the right conditions being generated by government that vessels will return and strategic needs and international obligations met through the charter of national flag vessels.

  4.2 There is some doubt that the UK shipping can fulfil its strategic role. Ship chartering companies are frequently being asked to provide tonnage on a short-term basis to move UK troops. Hardly any UK company ever takes up the option as it rarely has any spare tonnage. The troops are now moved in foreign vessels notably other EU ships.

  4.3 However, the international ship charter market is such that given sufficient financial inducement a government ought normally to be able to charter a vessel in the market.

5. The present level of employment of UK seafarers, the effects of any present and future shortage of skilled personnel in the shipping industry and in related on-shore industries, and how the training and employment of UK seafers can be promoted

  5.1 There is a general awareness of the present levels and shortage of UK Officers given their employment demand internationally. All companies within the industry must recognise the need to increase cadet training in order to meet these demands both at sea and to fill the large number of employment opportunities within associated areas of the industry such as technical superintendents, brokering and insurance.

  5.2 To achieve an increase in numbers being trained, more monies need to be injected into the SMarT (Support for Maritime Training) scheme along with a more liberal approach to the requirements to obtain the training subsidy. For example the training officer should not necessarily be a UK National with a UK Certificate, but an officer acceptable to the MCA with a certificate reaching internationally recognised standards. The current procedure for obtaining the training subsidies needs to be addressed and simplified.

  5.3 Market forces and governments led the industry to be very lean and drove companies out of employing UK Seafarers as they were and are too expensive on a world scale. However, present salaries of UK Seafarers are low compared to national standards and the dilemma is that this can only be solved by paying reasonable and fair national salaries. People will not go to sea unless they are adequately compensated. The "adventure" attraction of the job has probably gone.

6. What the UK can learn from the experience of other countries in dealing with similar problems, and the role of the European Union;

  6.1 The UK needs to look at the various initiatives introduced by flag states elsewhere to encourage vessels on to their own registers. It also needs to look at the accompanying regulatory requirement to ensure the very best is adopted.

  6.2 On coastal shipping, cabotage needs to be addressed with the ability for any vessel of a EU country having the ability to trade without restriction (see paragraph 1.3 above).

  6.3 There should also be environmental benefits of transferring carriage of goods from the roads to sea transport. With an integrated transport policy, far greater benefit can be achieved using coastal shipping in association with the inland waterways of the UK. It is only with the commitment and partnership of government and industry can this be achieved.

  6.4 In the 1980's the writer worked with the Tees and Hartlepool Port Authority on the study to develop coastal shipping on the east coast between the Tees and Harwich. At the time it did not prove economic but a number of factors have changed such as increased road fuel duties and the possibility of road pricing. It may now be worth revisiting the subject.

7. The role and importance of on-shore shipping services provided in the UK, such as insurance and ship broking

  7.1 The importance of the onshore shipping service sector in supplementing UK and other ships cannot be overstated. At the moment many of the personnel in these services are filled by former seafaring officers whose expertise is difficult to replace. With insufficient marine training the numbers available to fill these vacancies will get fewer.

2 December 1998


 
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