THE ECONOMIC VALUE OF SHIPPING AND

MARITIME ACTIVITY IN EUROPE

Andrew P Goodwin

1 December 2016

INTRODUCTION

2

SHIPPING IS A VITAL FACILITATOR OF WORLD TRADE

3

Real-terms increase

in world GDP in the

last two decades

Increase in world

seaborne trade

over the same

period

90%IMO estimate of the value of world trade carried by

sea

112

%

73

%

€3.5

trillion

Value of EU’s trade

with the rest of the

world in 2015

OVERVIEW

The European Community Shipowners’ Associations (ECSA) asked

Oxford Economics to:

• Assess the economic contribution of the shipping industry Directly

Through its European supply chain

Through the spending of workers and those in the supply chain

• Estimate the impact of measures permitted under Community

guidelines on state aid to maritime transport

• Review the contribution of maritime academies

Extending the analysis to the wider maritime cluster – example from

the UK

4

DEFINITIONS

5

Transport of goods by sea (containerised and non-containerised)

Transport of persons by sea (on ferries and cruise ships)

Service and offshore support vessels (e.g. ships laying or repairing

undersea cables or pipelines; prospecting for oil; conducting oceanographic

research; diving assistance; undertaking undersea work; servicing offshore

wind farms, oil and gas platforms)

Towage and dredging at sea

The shipping industry

+

“The EU”

ECONOMIC IMPACT ANALYSIS

6

THE STUDY ASSESSES THE ECONOMIC IMPACT OF THE EU

SHIPPING INDUSTRY ACROSS THREE CHANNELS

7

Total economic impact

Induced impacte.g. Food and beverages

Other consumer goods

Restaurants

Recreation services

etc.

Indirect impacte.g. Ship building

Ship repairs

Port services

Insurance

Shipping-related financial and

legal services, etc.

Direct impacte.g. Freight services

Passenger services

Towing & dredging

Service and offshore support activities

Renting and leasing

WE ASSESSED THE ECONOMIC VALUE OF SHIPPING ACROSS

THREE METRICS

The contribution to

the economy of

each individual

producer, industry

or sector.

Aggregated across

all industries to

form the basis of

GDP

Gross value

added

contribution to

GDP

Measured on a

headcount basis

Employment

Employee income

taxes

Employee and

employer social

security

contributions

Tonnage and

corporation tax

VAT on

employees’

consumption

Tax revenues

THE STUDY DREW UPON ON EXISTING RESEARCH, OFFICIAL STATISTICS AND

THE OXFORD ECONOMICS GLOBAL INPUT-OUTPUT MODEL

Direct impact

Indirect

impact

Induced

impact

Previous national studies

Eurostat national accounts and Structural Business

Statistics datasets

Estimation to align time periods and sector definitions

Oxford Economics Global Input-Output

model Impact of the shipping industry on firms in its supply

chain

‘Induced’ impact of spending by shipping industry

employees and those in the supply chain

Estimates impacts that occur within countries, and cross-

country impacts amongst other EU countries

THE EU SHIPPING INDUSTRY IS ESTIMATED TO HAVE DIRECTLY

EMPLOYED 590,000 PEOPLE IN 2012

Travel agents &

tour operators

530,000

Forestry &

logging

500,000

Air transport

425,000

This means shipping employs more people than…

ALMOST TWO-THIRDS OF SHIPPING EMPLOYEES ARE

EMPLOYED IN FREIGHT TRANSPORT

372,000

158,000

54,0007,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Freight transport(incl. towing &

dredging)

Passenger transport Service & offshoresupport vessels

Renting & leasing

Source: Oxford Economics

IN 2012, THE EU SHIPPING INDUSTRY IS ESTIMATED TO HAVE

DIRECTLY CONTRIBUTED €56 BILLION TO EU GDP

€47bnto EU GDP

in 2004

€56bnto EU GDP

in 2012

+18%

EU average

€53,000Shipping

€88,000

2012 GDP per worker

Water

supply

€86,000

Film &

TV

€84,000

Air

transport

€71,000

Land

transport

€44,000

THE TOTAL GDP CONTRIBUTION OF THE EUROPEAN SHIPPING

INDUSTRY IN 2012 IS ESTIMATED TO HAVE BEEN €145 BILLION

56 56

59 59

30 30

0

20

40

60

80

100

120

140

160

Direct Indirect Induced Total

€bn

Source: Oxford Economics

€145bn

THE SHIPPING INDUSTRY ALSO SUPPORTED EMPLOYMENT

FOR AN ESTIMATED 2.3 MILLION PEOPLE

590 590

1,126 1,126

547 547

0

500

1,000

1,500

2,000

2,500

Direct Indirect Induced Total

000s

Source: Oxford Economics

2.3m

THE SHIPPING INDUSTRY HAS SIGNIFICANT ‘MULTIPLIER’

EFFECTS ACROSS THE WIDER EU ECONOMY

For every €1 million the

shipping industry

contributes to GDP itself, it

creates another €1.6 million

elsewhere in the economy

€1m

€1.6m

For every direct job the

shipping industry creates,

another 2.8 are created

elsewhere in the EU

economy

6 6

23 23

12 12

0

5

10

15

20

25

30

35

40

45

Direct Indirect Induced Total

€bn

Source: Oxford Economics

THE SHIPPING INDUSTRY SUPPORTED TOTAL TAX REVENUES

OF AROUND €41 BILLION IN 2012

Employee income

taxes

Employee and

employer social

security

contributions

Tonnage and

corporation tax

VAT on

employees’

consumption

Tax revenues

estimated

€41bn

THE IMPACT OF MEASURES PERMITTED UNDER

THE COMMISSION’S GUIDELINES ON STATE AID

TO MARITIME TRANSPORT

OVER AND ABOVE ITS ROLE IN FACILITATING TRADE, THE SHIPPING

INDUSTRY HAS A NUMBER OF UNIQUE FEATURES AND WIDER BENEFITS

WHICH PROVIDE A JUSTIFICATION FOR STATE SUPPORT

18

Inherent

mobility

Core of the

wider maritime

cluster

Security of

energy supply

Military

support &

peacekeeping

Safety

standards

Trained

seafarers

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,0001

980

198

2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

Controlled fleet

Source: UK Chamber of Shipping, Oxford Economics

DWT (000s)

No tonnage tax Tonnage tax

THE UK INTRODUCED A TONNAGE TAX IN 2000. BY 2012 THE UK

CONTROLLED FLEET HAD MORE THAN TRIPLED IN SIZE

19

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,0001

980

198

2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

Controlled fleet Controlled fleet, 'No state aid' scenario

Source: UK Chamber of Shipping, Oxford Economics

DWT (000s)

No tonnage tax Tonnage tax

THE UK INTRODUCED A TONNAGE TAX IN 2000. BY 2012 THE UK

CONTROLLED FLEET HAD MORE THAN TRIPLED IN SIZE

20

-85%

FRANCE INTRODUCED A TONNAGE TAX IN 2003, AND SIMPLIFIED

ITS SOCIAL SECURITY EXEMPTIONS IN 2006

21

0

2,000

4,000

6,000

8,000

10,000

12,000

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

Controlled fleet Controlled fleet, 'No state aid' scenario

Source: ISL Bremen; counter-factual scenario estimated by Oxford Economics

DWT (000s)

Tonnage Tax No tonnage tax

-61%

GERMANY INTRODUCED A TONNAGE TAX AND A SEPARATE WAGE

RETENTION SCHEME IN 1999

22

-68%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,0001

994

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

Controlled fleet Controlled fleet, 'No state aid' scenario

Source: ISL Bremen; counter-factual scenario estimated by Oxford Economics

DWT (000s)

No tonnage tax Tonnage tax

SWEDEN INTRODUCED SOCIAL SECURITY AND INCOME TAX

INCENTIVES IN 2001, BUT HAS NOT INTRODUCED A TONNAGE TAX

23

0

5,000

10,000

15,000

20,000

25,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

198

0

198

2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

Controlled fleet, 000 DWT

Flagged fleet, 000 DWT

Flagged fleet (left scale) Controlled fleet (right scale)

Source: UNCTAD, ISL Bremen

1.1% of world fleet under

Swedish flag

0.1% of world fleet under

Swedish flag

APPLYING THIS APPROACH TO NINE COUNTRIES SUGGESTS THE ECONOMIC

CONTRIBUTION OF THE EU SHIPPING INDUSTRY COULD HAVE BEEN 50 PER CENT

LOWER IN 2012 WITHOUT STATE AID MEASURES

24

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

GVA GVA(counter-factual)

Employment Employment(counter-factual)

InducedIndirectDirect

GVA, €m Employment

Source: Oxford Economics

MARITIME ACADEMIES

IT IS ESTIMATED THAT THERE WERE AROUND 38,000 STUDENTS/CADETS IN

MARITIME ACADEMY–TYPE TRAINING ACROSS THE EU AND NORWAY IN 2012

26

+11% since 2004

SUMMARY

27

THE ECONOMIC VALUE OF THE EU SHIPPING INDUSTRY

28

EXTENDING THE ANALYSIS TO THE WIDER

MARITIME CLUSTER – AN EXAMPLE FROM THE UK

SIMILAR TECHNIQUES CAN BE USED TO ASSESS THE IMPACTS OF

THE WIDER MARITIME CLUSTER

• In 2015, Maritime UK asked Oxford Economics to assess the

economic contribution of the UK maritime cluster

• Defined to include:

• Shipping

• Ports (cargo handling, warehousing, storage, transport services,

shipbuilding and repair undertaken within UK ports)

• Maritime business services (ship broking, insurance, maritime

financial and legal services, classification societies)

30

7% 0%11%

61%

11%

2%8%

7%1%

9%

60%

16%

1%6%

Manufacturing

Wholesale and RetailTrade, Repairs

Construction

Transport and Storage

Financial and Insurance

Professional, Scientific andTechnical

Public Admin, Defence andSocial Services

GrossValue Added Employment

WE USED DETAILED LOCAL DATA TO ESTIMATE EMPLOYMENT

WITHIN A SAMPLE OF PORTS

31

118,000 direct

jobs after

scaling (inner

ring)

£7.7 billion in

direct GVA

(outer ring)

INCLUDING MULTIPLIER EFFECTS, WE ESTIMATE THAT PORTS

CONTRIBUTED £19 BILLION IN GDP AND 344,000 JOBS IN 2013

32

0

50

100

150

200

250

300

350

400

0

2

4

6

8

10

12

14

16

18

20

Contribution to GDP (LHS axis) Employment (RHS axis)

Direct Indirect Induced£ billion 000 jobs

IDENTIFYING MARITIME BUSINESS SERVICES ACTIVITY POSES

CHALLENGES

• Maritime business services typically do not have their own category

within official statistics

• Our estimates of the industry’s direct employment and GDP

contribution therefore relied on detailed research by the industry. That

in turn used a survey, interviews and industry yearbooks to identify

relevant firms and the size of those firms

• Total direct employment was estimated to have been just over 10,000

workers in 2013, slightly more than in cargo handling

33

Shipbroking39%

Insurance services

37%

Legal services15%

Classification8%

Financial services

1%

INCLUDING MULTIPLIER EFFECTS WE ESTIMATE THAT MARITIME BUSINESS

SERVICES CONTRIBUTED £3.5 BILLION TO UK GDP IN 2013

34

0.0

0.5

1.0

1.5

2.0

2.5

Insuranceservices

Ship broking Legalservices

Financialservices

Classification

£ billion

Induced

Indirect

Direct

IN TOTAL, THE MARITIME CLUSTER SUPPORTED £22 BILLION IN GDP

AND 489,000 JOBS IN THE UK ECONOMY IN 2013

35

0

50

100

150

200

250

300

Ports Shipping Business services

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

GDP (Left scale) Employment (Right scale)

Source: Oxford Economics

GDP, £ million Employment, 000s

All data shown in tables and charts is Oxford Economics’ own data, and is

copyright © Oxford Economics Ltd, except where otherwise stated and cited in

footnotes.

The modelling and results presented here are based on information provided by

third parties, upon which Oxford Economics has relied in producing its report and

forecasts in good faith. Any subsequent revision or update of those data will affect

the assessments and projections shown.

To discuss the report further please contact:

Andrew P Goodwin: apgoodwin@oxfordeconomics.com

Oxford Economics

Broadwall House, 21 Broadwall, London, SE1 9PL, UK

Tel: +44 207 803 1400

36

DECEMBER 2016

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