171.The UK is reliant on maritime transport to facilitate its trading activity. Over 90% of UK trade by volume is carried at sea. At 12.5%, UK ports handle the second highest share of seaborne freight in the EU. In addition, over 20 million passengers travel on sea routes to and from the UK each year. Both freight and passengers are handled by two distinct yet connected constituents of the maritime sector: shipping and ports.
172.Shipping can be broadly thought of in terms of short-sea routes, such as those connecting EU ports, and the deep-sea routes that cross oceans. Different services operate within those routes, varying in cargo and vessel types:
173.The UK has one the largest port sectors in Europe, comprising international gateways such as Dover and Felixstowe, as well as many smaller ports serving regional and local interests. A large proportion of the international traffic going through the UK’s largest ports is with the EU—in 2017, 55% of international cargo moved through UK major ports was to or from EU ports.
174.In contrast to the largely publicly-run port sector in the rest of Europe, UK ports exhibit three main models of ownership, all operating on a commercial basis:
175.Under international law, ships travelling internationally must be registered in a country and fly its flag. The country of registration is responsible for ensuring the ship’s regulatory compliance, for example by inspecting it regularly and certifying its crew. These functions are typically carried out by a ship registry, which can be ‘national’—only admitting residents in the country—or ‘open’. The UK Ship Register (UKSR), which is part of the Maritime and Coastguard Agency (MCA), is currently open to UK and EEA persons and businesses. All vessels registered with the UKSR fly the UK flag. The UK flag enjoys a strong reputation, scoring positively by all international performance indicators.
176.The UK’s shipping and ports sectors are supported by a sizeable marine industry, which includes vessel and equipment design, manufacturing and repair. The UK is also recognised internationally as an excellence centre for maritime law. Most shipping contracts are governed by English law and subject to London arbitration. Within the EU, this is facilitated by the Brussels I regulation (recast), which provides for the recognition of judgments issued by EU courts on civil and commercial matters throughout the Union.
177.Professor Emily Reid, Professor of International Economic Law and Sustainable Development, University of Southampton, set out the regulatory system governing the UK’s maritime sector. She began by explaining that international law was the “overarching framework”. Many of the customs and practices of international law had been “incorporated in international conventions, such as the United Nations Convention on the Law of the Sea (UNCLOS), and the treaties and agreements of the International Maritime Organization (IMO)”. Prof Reid told us that us that although international law was binding, “it frequently does not have great enforcement potential”.
178.According to Prof Reid, the EU had “taken a significant volume of the IMO conventions and incorporated them into EU law”. In so doing, it had given those regulations “teeth and a binding force that [they] would not otherwise have”. She explained that “those regulations can be enforced directly by individuals, including private parties, in national courts”. On top of this, Prof Reid noted that the EU tended to ‘gold-plate’, or strengthen, IMO standards, “particularly IMO environmental standards and standards relating to pollution from ships”.
179.Prof Reid gave further detail on the EU’s role in legislating on market access: “Cabotage is transport between ports within one state and is currently liberalised for EU members. Traditionally, it has been retained for ships of the state where the ports are located. Under EU liberalisation, cabotage has been opened up for EU members.” We explore maritime cabotage arrangements in Box 7.
In EU and other EEA countries, maritime cabotage is governed by Regulation (EEC) No 3577/92, which grants cabotage rights to maritime transport operators qualifying as ‘Community Shipowners’. Under Article 2(2) of the Regulation, these include:
Third countries can only perform cabotage where the national legislation of EU Member States extends that right to third country interests. At present, this is possible in Denmark, Ireland, Belgium, The Netherlands and the UK.
Sources: Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage), (12 December 1992); European Commission, Notice to stakeholders: Withdrawal of the United Kingdom and EU rules in the field of maritime transport (27 February 2018), p 2: [accessed 23 November 2018]
180.The Government’s White Paper stated: “The maritime sector is liberalised at a global level. On that basis, UK ship operators will be able to serve EU ports largely as now, following the UK’s withdrawal from the EU.”
181.The UK Chamber of Shipping nevertheless argued that, while the fully liberalised shipping markets of the EU are underpinned by the OECD Common Principles of Shipping, “a comprehensive maritime services deal will be important”. Drewry, a maritime consultancy, on the other hand, made a distinction between the implications of Brexit for “deep sea container trades”, which would be “limited”, and the “short sea trades, where demand is driven by intra Europe/UK trade”.
182.A number of witnesses discussed arrangements for continued cabotage rights, which were described in the Commission’s negotiating slides as an exception to the “already open” maritime sector. Gavin Simmonds, Policy Director—Commercial, UK Chamber of Shipping, noted that the UK had a “very broad shipping market … and if there is one where we are not particularly active, it is coastal shipping and cabotage trades”. Nonetheless, he felt that the loss of cabotage freedoms would “threaten commercially a number of contracts for UK shipping companies engaged in the sort of trades where there are multiple port calls in EU countries, with ships dropping off little bits of cargo along the route”.
183.The UK Chamber of Shipping contrasted the UK’s approach to third country cabotage rights with those of other Member States: “The UK has become one of the most liberalised maritime service countries in the bloc, several other EU states maintain loose cabotage rules [for third countries]”. In addition, the Chamber noted that “UK traders sometimes require the availability of EU flagged ships to undertake the carriage of goods around the UK”. Even in the absence of an arrangement with the EU on cabotage for UK vessels, Mr Simmonds did not expect the UK to introduce reciprocal restrictions: “It is difficult to see the benefit of [the UK] reverting to a closed market approach in shipping when for several hundred years we have had the most open market.”
184.Mr Simmonds drew attention to the post-Brexit status of the UK flag by observing that “a number of UK-flagged vessels” are “in foreign ownership and on the UK register, on the basis of the UK being an EU flag”. He explained that this was because EU-flagged ships were eligible for beneficial tax arrangements, “approved by the European Commission under its State aid guidelines, known in the UK and elsewhere as the tonnage tax regime”. The cessation of UK qualification as an EU flag was a “principal concern”, and would “require several major companies to evaluate the prospect of moving ships from the UK flag”. This, he argued, would “affect the tonnage on the UK ship register, the reputation of the UK flag and the attractiveness of the UK as a whole to accommodate … businesses”. Ross Wombwell of British Marine highlighted that there were “60,000 UK-flagged recreational craft in Europe”.
185.Mr Simmonds concluded that the UK flag needed to be “recognised in some sort of mutual way” with the EU, but questioned whether this would be a negotiating priority. Doctor Jenny Jingbo Zhang, Lecturer in Commercial and Maritime Law, University of Southampton, suggested that an alternative could be for the UK to “open up internationally and welcome all qualifying owners from around the world”, though this would depend on “national priorities and the economic benefits”.
186.Dr Jingbo Zhang highlighted that post-Brexit arrangements would be required for the continued mutual recognition of seafarer certificates of competency after Brexit. Ian Hampton, Chief People and Communications Officer, Stena Line, emphasised that the UK was “a large maritime nation”, and had “by far the largest number of seafarers in the EU community, upwards of 30,000”.
187.We note that the Government’s ‘no deal’ technical notice in relation to recognition of seafarer certificates of competency explained that the UK would seek third country recognition of UK certificates by the EU under the Standards of Training, Certification and Watchkeeping for Seafarers (STCW) Convention.
188.Echoing the White Paper, the Government said that market access would remain “largely” unchanged for UK ship operators. It did not, however, address cabotage rights or prospects for the UK Ship Register. In relation to seafarers, the Government noted: “UK seafarers are amongst the best trained in the world … it is therefore in nobody’s interests to add barriers to recognition of seafarer certificates after exit.”
189.Maritime transport is generally liberalised and underpinned by an extensive body of international law. Post-Brexit, UK and EU ship operators will in most respects be able to access each other’s ports as at present. Cabotage rights, however, are provided under EU law. Unlike the UK, some EU countries do not permit third country cabotage. Loss of cabotage rights would have negative implications for some UK operators.
191.The UK flag has attracted a number of registrations from EU and EEA interests, as allowed under EU law. This has supported the growth of the UK Ship Register (UKSR) and strengthened its international reputation. Post-Brexit, the UK will be able to review registration rules and determine if the UKSR should become a national registry, remain open to EU and EEA interests, or open up internationally.
192.The European Maritime Safety Agency (EMSA) has two broad functions. First, it assists the Commission in developing legislation around safety, security and environmental standards for shipping, and monitoring its implementation across Member States. Second, it runs a range of monitoring programmes in cooperation with national authorities, including the UK’s MCA.
193.In its White Paper, the Government proposed that the UK should “continue cooperating closely with both the EU and … EMSA, including sharing information on safety and to counter pollution”.
194.Mr Simmonds told us that the UK Chamber of Shipping’s members were “highly reliant on established [EMSA] programmes”. Neil Glendinning, Council Member, British Ports Association, drew our attention to three EMSA programmes in particular:
“The current co-operation with EMSA extends to SafeSeaNet and CleanSeaNet. SafeSeaNet monitors vessel traffic and dangerous goods flying around European waters, and into and out of the UK. One aspect of SafeSeaNet is THETIS, the arrangement whereby the MCA and partner organisations in Europe co-operate and exchange information, particularly on defective vessels, banned vessels or high-risk cargoes.”
195.Mr Glendinning concluded that the Government’s approach “excludes membership of EMSA and participation in SafeSeaNet, CleanSeaNet and, very importantly, THETIS”. He argues that the replication of EMSA programmes by the MCA might “not necessarily be as inclusive, widespread or efficient as the current arrangements”. His comments were echoed by Mr Simmonds, who noted that EMSA’s “reporting disciplines are integrated into company systems, and there appears to be a general benefit”.
196.Prof Reid pursued this issue further: “Given the importance of the European Maritime Safety Agency, particularly in light of disasters such as the ‘Erika’, it would make sense for the UK to seek an agreement that allowed it member status.” She also highlighted conditions that restrict EMSA participation to third countries “that have adopted and are applying community law in the field of maritime safety, security, pollution and the response to pollution caused by ships”. It would not be desirable for the UK to be “be relegated to observer status”, which “would be the alternative”.
197.The Government confirmed that it would seek “continued collaboration with Member States through EMSA … in the interests of tackling shared safety and environmental issues”. This objective is reflected in the Political Declaration, which sets as a negotiating objective the facilitation of “cooperation on maritime safety and security, including exchange of information between the European Maritime Safety Agency (EMSA) and the United Kingdom Maritime and Coastguard Agency (MCA), consistent with the United Kingdom’s status as a third country”.
198.In our follow-up evidence session with the Minister of State, Mr Jones told us that “slightly different considerations apply to each [EMSA] database”. He said that the UK would continue to have access to THETIS, although “some technical fixes need to be made” so the UK could still interact with it. Mr Jones said that other databases would require replication to “allow us the necessary capabilities”.
199.EMSA programmes such as CleanSeaNet, SafeSeaNet and THETIS are important to the safety and security of maritime transport and to countering sea pollution caused by ships. Replicating the two former programmes will be less efficient than current arrangements. We welcome the Government’s aim of close cooperation with EMSA, including the exchange of information on maritime safety and security. We note, however, that no mention is made of cooperation on environmental matters. We encourage the Government to seek wide-ranging, deep cooperation arrangements with EMSA, including in the area of response to sea pollution.
200.Prof Reid described two potential approaches to divergence from EU maritime regulation after Brexit. The first one would be deregulation, but this carried the “obvious risk … that we become less attractive”. The second option would be “looking at enhancing standards for all those engaged in the maritime sector”. Prof Reid described the latter as an opportunity for “leadership and a more independent stance within the IMO”. Mr Wombwell concurred: “At the IMO, the UK is often led by EU interests, and Brexit will give us an opportunity to lead again, specifically in the superyacht sector, where we have always been a global leader.”
201.Prof Reid recalled that after Brexit the UK would “still be bound by the IMO convention requirements”. There would be the option, however, where those requirements have been gold-plated by the EU, “to revert to IMO standards”. Mr Hampton argued: “There are pros and cons in choosing to diversify away from EU common standards. It may create some opportunity for the UK flag and other areas … but sometimes moving away from a degree of commonality creates another challenge.”
202.Mr Glendinning expressed the view of a number of our witnesses that “one possible gain that may come out of Brexit relates to the EU Port Services Regulation … That series of regulations was introduced by the EU and particularly aimed at the ports industry in the EU”. He described the regulations as “entirely superfluous to the ports industry in the United Kingdom”. We discuss the Port Services Regulation in Box 8.
The Ports Services Regulation entered into force on 24 March 2017 and will become applicable on 24 March 2019. It is intended to make the EU ports sector more competitive, by setting requirements around a level playing field and the quality of services.
The Regulation contains specific provisions on port services and infrastructure charges. In particular, port authorities will have to set their infrastructure charges based on commercial strategies and investment plans. They will be able to apply differentiated charges—for example by category of users—as long as those follow transparent and non-discriminatory criteria.
The UK port industry has strongly opposed the Regulation. In April 2017, Frans Calje, PD Ports’ Chief Executive, was quoted as describing the Regulation as “ill conceived” and “barely thought through”. In its 2017 Annual Report, the British Ports Associated stated: “The final Regulation was watered down somewhat but moving forward the BPA will be exploring the impacts and how it might be revoked after the UK leaves the EU.”
Sources: Regulation (EU) 2017/352 of the European Parliament and of the Council of 15 February 2017 establishing a framework for the provision of port services and common rules on the financial transparency of ports, (3 March 2017); ‘Port Services Regulation is ill-conceived, says ports chief’, Port Strategy (10 April 2017): [accessed 18 December 2018] and British Ports Association, Annual Report 2017 (24 April 2018): [accessed 18 December 2018]
203.The establishment of free ports has been cited as a potential post-Brexit opportunity to boost the UK’s maritime sector. On 4 August 2017, for example, the External Affairs and Additional Legislation Committee of the Welsh Assembly recommended that “the Welsh Government is more proactive in its approach to the designation of Free Zones/Free Ports and undertakes further work to determine whether or not a port, or ports in Wales, could benefit from Free Port designation”.
204.There is no uniform definition of free ports. In general terms, a free port forms part of a country’s territory but is outside of its customs area. As a result, goods can be imported, manufactured and re-exported without becoming subject to customs duties or taxes. Mr Glendinning elaborated on the functioning of free ports in oral evidence: “The free port concept is to establish a bonded area, whereby value can be added to a product by construction or finishing.” He argued that, while having “some mileage”, the concept was “of limited use throughout the UK, where most of the ports are gateway ports that rely heavily on the effective throughput of trade”. Mr Glendinning said: “One or two possibly might; Teesport and Humber, for example, have large areas of estate with some established industrial processes, where there would definitely be some benefit.”
205.Mr Simmonds told us: “We would like to be freed from some of the restrictions of EU recycling, which is a little administratively complicated and restrictive, and prevents us doing things outside the EU.” Dr Jingbo Zhang agreed that ship recycling legislation was an example where “divergence from the current EU regulations could provide some opportunities”.
206.Drewry pointed to the possibility of the UK setting its own tonnage tax regime—a specific taxation mechanism applied to shipping companies. A similar point was made by Dr Jingbo Zhang: “At the moment, we charge tonnage tax under EU regulation, which has a certain limit, but after Brexit … arguably the UK could have a flexible tonnage tax system. We could then encourage more ship registration.”
207.When we highlighted the Government’s stated intention to launch a “British shipbuilding renaissance” after Brexit, Prof Reid warned: “There are WTO rules on subsidies, and what is and is not legitimate. Regardless of what we might agree with the EU, we would still be constrained by the WTO subsidy rules.” Mr Wombwell, however, thought that there was growth potential for construction activities in the superyacht sector: “We are a global leader in design in the superyacht sector, but not in construction at the moment, and there is an opportunity, should we move away from EU directives, to enable that side of the industry to thrive in the UK.”
208.Mr Simmonds voiced reservations: “Do we see a model whereby the UK could compete internationally for major shipbuilding in future? Probably not.” Nonetheless he recognised “opportunities for technology or high-end, UK-led expertise”.
209.The Government noted that, while it was “too soon to make specific predictions”, it would “consider the opportunities to adjust our regulatory regimes to better suit the UK’s requirements”. The Government also observed that the UK would “continue to be an active participant in any future review of IMO rules”.
210.Divergence from EU rules could benefit the UK maritime industry in certain areas. A prominent example is the EU Port Services Regulation, which is generally agreed to be unfit for the structure and requirements of UK ports. But more broadly, the UK’s opportunities for divergence on port regulations are likely to be limited by the depth of maritime cooperation arrangements sought with EU.
211.In seeking to support the UK’s maritime sector post-Brexit, the Government would remain bound by WTO anti-subsidy rules. Any deep and comprehensive trade agreement made with the EU would also contain State aid controls. Nonetheless, we encourage the Government to work with the devolved administrations to explore opportunities to promote growth in the sector, including the possibility of free ports.
212.We did not seek specific evidence on the impact of future customs arrangements on the maritime sector. However, as with other modes, this was at the forefront of our witnesses’ minds. The European Sea Ports Organisation explained that ensuring the free flows of goods and passengers was particularly important to ports handling short sea RoRo traffic: “The Customs Union and Single Market allow … roll-on/roll-off vehicle traffic to call at a port without prior reservation, avoiding any congestion … and enabling businesses to rely upon just-in-time logistics.” Mr Hampton implored us to “bear in mind that a political decision could very much change trade flows”.
213.Captain Wyn Parry, Port Manager at Holyhead Port, told us about the challenges faced by Holyhead as an example of a gateway for ‘just-in-time’ freight, and the implications for the adjacent transport network:
“Holyhead port is built in the middle of Holyhead town, dividing the town into two halves. The A55 expressway brings traffic to Holyhead port from the north-west, stopping about half a mile from the port entrance. That half mile is a single carriageway road that leads to our check-in booths; any delay at the check-in booths impacts not only on the port itself but unsurprisingly on local traffic, which finds it difficult to manoeuvre from one side of the town to the other.”
He also pointed to the potential impact on ferry scheduling: “Delays for any customs checks required will probably affect ferry schedules, which are very important to us.”
197 Written evidence from Oxera Consulting ()
198 The Netherlands has reported the largest volumes of seaborne freight handling in Europe every year since overtaking the UK in 2010. The volume of seaborne goods handled in Dutch ports represented 15.2% of the EU total in 2016. Eurostat, ‘Maritime ports freight and passenger statistics’: [accessed 7 May 2019]
199 Department for Transport, Sea Passenger Statistics: Final 2016 (22 November 2017): [accessed 4 December 2018]. International passengers include those on short sea (ferry) routes and passengers travelling for pleasure on cruises and long sea journeys.
200 Wärtsilä, ‘Wärtsilä Encyclopaedia of Marine Technology: Container Ships’: [accessed 4 December 2018]
201 Wärtsilä, ‘Wärtsilä Encyclopaedia of Marine Technology: Tankers’: [accessed 4 December 2018]
202 International Maritime Organisation, ‘Safety regulations for different types of ships’: [accessed 4 December 2018]
203 Eurostat, ‘Glossary: Roll-on-roll off’: [accessed 4 December 2018]
204 Department for Transport, Ports Good Governance Guidance: Moving Britain Ahead (March 2018), p 6: [accessed 18 December 2018]
205 Department for Transport, UK Port Freight Statistics: 2017 (22 August 2018), p 20: [accessed 18 December 2018]. UK major ports are defined as those with cargo volumes of at least 1 million tonnes, plus some strategically important ports.
206 UK Trade & Investment, The UK Ports Sector: A Showcase of World Class Expertise (May 2013), p 10: [accessed 18 December 2018]
207 Maritime UK, ‘Ports’: [accessed 18 December 2018]
208 UKSR Advisory Panel, UKSR Advisory Panel Report: Review of the UK Ship Register and recommendations for future improvements (16 July 2015), p 4: [accessed 18 December 2018]
209 International Chamber of Shipping, Shipping Industry Flag State Performance Table: 2017/2018 (February 2018): [accessed 18 December 2018]
210 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, (16 January 2001)
211 (Dr Jenny Jingbo Zhang)
212 (Prof Emily Reid)
213 (Prof Emily Reid)
214 (Prof Emily Reid)
215 HM Government, The future relationship between the United Kingdom and the European Union, Cm 9593, July 2018, p 43: [accessed 18 December 2018]
216 Organisation for Economic Cooperation and Development, Understanding on Common Shipping Principles (9 June 2013): [accessed 18 December 2018]. The principles, set out in a non-binding understanding, include free and non-discriminatory access to seaborne trade and ports, the promotion of free and fair competition and the convergence of competition rules.
217 Written evidence from the UK Chamber of Shipping ()
218 Written evidence from Drewry ()
219 European Commission, Internal preparatory discussions on framework for future relationship: Road, rail and maritime transport (20 February 2018), p 21: [accessed 18 December 2018]
220 (Gavin Simmonds)
221 Written evidence from the UK Chamber of Shipping ()
222 (Gavin Simmonds)
223 (Gavin Simmonds)
224 (Ross Wombwell)
225 (Gavin Simmonds)
226 (Dr Jenny Jingbo Zhang)
227 (Dr Jenny Jingbo Zhang)
228 (Ian Hampton)
229 Department for Transport, ‘Recognition of seafarer certificates of competency if there’s no Brexit deal’ (13 September 2018): [accessed 23 November 2018]. The STCW convention establishes international standards of training, certification and watchkeeping for seafarers. SCTW was adopted by the International Maritime Organization (IMO) in 1978.
230 Written evidence from the Department for Transport ()
231 (Gavin Simmonds)
232 CleanSeaNet is a satellite-based system monitoring pollution at sea. It relies on the satellite infrastructure of the European Space Agency (ESA). See EMSA, ‘CleanSeaNet Service’: [accessed 18 December 2018]
233 (Neil Glendinning)
235 (Gavin Simmonds)
236 The oil tanker Erika sank off the west coast of France on 12 December 1999, following a storm in the Bay of Biscay. It carried approximately 31,000 tonnes of heavy fuel oil, out of which around 11,200 tonnes were subsequently recovered. See The International Tanker Owners Pollution Federation Ltd., ‘ERIKA, West of France, 1999’: [accessed 22 November 2018]
237 (Prof Emily Reid)
238 Written evidence from the Department for Transport ()
239 Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom (22 November 2018), p. 26: [accessed 18 December 2018]
240 (Martin Jones)
241 (Prof Emily Reid)
242 (Ross Wombwell)
243 (Prof Emily Reid)
244 (Ian Hampton)
245 (Neil Glendenning)
246 See for example ‘Are free ports the future?’, BBC (29 November 2018): [accessed 18 December 2018].
247 National Assembly for Wales External Affairs and Additional Legislation Committee, Inquiry into the implications of Brexit for Welsh Ports (August 2017), p 29: [accessed 18 December 2018]
248 House of Commons Library, The establishment of free ports in the UK, Debate Pack, , 9 October 2018
249 (Neil Glendinning)
250 (Gavin Simmonds)
251 (Dr Jenny Jingbo Zhang)
252 Written evidence from Drewry ()
253 (Dr Jenny Jingbo Zhang)
254 HM Government, ‘Brexit Britain will have the world’s best maritime industry’ (11 September 2017): [accessed on 18 December 2018]
255 (Prof Emily Reid). See also our report: European Union Committee, (12th Report, Session 2017–19, HL Paper 67).
256 (Ross Wombwell)
257 (Gavin Simmonds)
258 Written evidence from the Department for Transport ()
259 Written evidence from the European Sea Ports Organisation ()
260 (Wyn Parry)