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Call to make Italian flag more competitive

Italy can boast the second largest registry in the European Union. However, changes need to happen fast to avoid owners flying off elsewhere.

The Italian shipping industry finds itself in troubled waters. Although in late 2014 an 8% fleet reduction was recorded, last year the deliveries of new ships led again to an increase of the national fleet, according to the national shipowners association’s (Confitarma) statistics.

The Italian shipping industry has preserved its position in the world and in Europe: Italy’s fleet ranks second in the European Union and fourth in the world among national fleets discounting flags of convenience such as Panama and Liberia.

According to the most recent Confitarma numbers there are some 1,500 ships under the Italian flag (a decrease from 1,564 in 2013): 273 are tankers, 202 bulk carriers, 440 roro and ropax vessels, 587 service ships (tugs, OSV, etc) and 1 obo. In the last decade, Italian shipowners invested more than $15bn in renewing their fleets and 436 newbuildings were delivered.

However, data from VesselsValue.com shows that throughout 2015 there were only three ships purchased by Italy-based companies, not considering other shipping firms based in Switzerland, Monaco or somewhere else headed by Italian owners. On the other hand at least 25 vessels were sold by Italian owners in the past year: most of them were tankers offloaded by D’Alesio Group, Fratelli d’Amico, d’Amico International Shipping, Scerni di Navigazione, LGR di Navigazione, Navigazione Montanari, Motia di Navigazione and Premuda. Some bulk carrier were also dismissed by Sidernavi, Perseveranza di Navigazione and Fratelli D’Amato.

At the latest general assembly held in Rome, Confitarma’s chairman Emanuele Grimaldi listed some specific conditions required to make the Italian flag more competitive with other leading EU flags. “To preserve the Italian merchant fleet it has been hard work in the past years due to the economic crisis,” he said, adding: “As of today Italy, with 17m gross tonnes, still has the second largest European fleet and the fourth worldwide.”

Grimaldi said Italian shipowners are now asking the premier Matteo Renzi and the minister of transport for a wide range of administrative simplifications regarding procedures for registering ships, safety certification, rules on passenger transport at sea and some others.

“Compared to other EU flags, registering a ship in Italy today costs some $100,000 more due to these factors,” Grimaldi contended.

As Italy will soon have to amend its tonnage tax scheme in order to allow other EU ships to access the regime there is a serious risk of local owners departing. Rome should brace itself for an exodus from its flag, with Malta likely to be a big winner. The regime basically allows for the determination of presumptive income based on the net tonnage of the qualifying ships apportioned to the effective shipping days (tonnage income). Last April, the European Commission agreed to lengthen tonnage tax until 2023, but asked Italy to cease its flag limit and make this same regime available also for other EU flag units.

Looking back at the Italian shipping industry in 2015, several stakeholders said that mainly three companies emerged as ‘buyers’ while just about all the rest of the market players are involved in debt restructurings and asset sales.

At the latest Shipbrokers and Shipagents Dinner held in Genoa, Gian Enzo Duci, president of the ship agents association Assagenti, said: “Italian shipping companies are staying strong in the current market scenario with the pros and cons of their traditional family-business models.”

On one hand, most of them have not invested heavily in newbuildings when the market was at the top, but on the other hand it has been often a limit on the dimensional side of the fleets managed. According to Duci: “In the Italian shipping industry three well known champions are emerging: Grimaldi Group, d’Amico Group and Costa Cruises. The fourth would be MSC Group but they are based in Geneva) even if they are active in Italy with MSC le Navi Agency, box terminals and the ferry operators Snav and Grandi Navi Veloci.”

Looking at the liquid bulk market Matteo Tomarchio, a tanker broker at Banchero Costa, tells Splash: “The Italian shipping companies in 2015 benefitted from higher daily rates both for product tankers and for oil tankers in the Med region and in most of the other trades.” Given the fact that some major refineries are relocating and opening in the Middle East, a ton/miles expansion is underway and the traditional routes have changed substantially.

By and large, Italian shipowners have been sellers in 2015 as confirmed by Paolo Cartasegna, an S&P broker with Genoa Sea Brokers. “We have many ships to sell at the moment but the shipping market is bearish, dry bulk in particular, and also the scrap rates are down. For that reason this is not exactly a nice period for shipbrokers too, in Italy and abroad,” Cartasegna says.

As for new investments Francesco Fuselli, ceo of Banchero Costa, believes: “The Italian banks have not disappeared completely from the scene but nowadays they are mostly involved in restructuring instead of looking at new opportunities. However, they are still lending money to solid companies with promising projects and that was also the case of some Italian firms in the past months.”

In the full year 2015, Grimaldi Group ordered eight new car carriers worth $465m at two different shipyard in China (five to Yangfan and three to Jinling respectively plus options for a further eight units) to be delivered by 2017, while d’Amico Group diversified its activity in the liquid bulk business going for long range tankers. During the past year Luxembourg-based subsidiary d’Amico International Shipping signed multiple orders with Hyundai Mipo shipyard for six LR1 newbuildings worth some $265m.

At the end of 2015 the Italian flagged orderbook also included two small chemical tankers for Arcoin Srl (De Poli Group) under construction at Ningbo Xinle shipyard in China, three handysize bulk carriers are still under construction at Chinese Avic Weihai shipyard for Visentini Giovanni Trasporti Fluviomarittimi and for Globeco, and finally two PSVs will be delivered in the coming months to Marnavi from Selah Shipyard in Turkey. Finally in the port tug sector, in 2015 Damen Shipyards signed five newbuilding contracts with Italian shipping companies such as Rimorchiatori Riuniti, Gesmar and Italtugs.

This article first appeared in the just published Splash Italy Market Report 2016. You can read the full magazine online for free by clicking here.

Nicola Capuzzo

Nicola is a highly qualified journalist focused on transport economics, logistics and shipping with broad experience in both online and printed media. Specialties: shipping, ship finance, banking, commodities and port economics. He regularly interviews Europe's top shipowner executives for Maritime CEO magazine.
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