Shipping industry figures have reacted to the news that the UK has voted in a 52% majority to leave the European Union (a so-called ‘Brexit’), which led to prime minister David Cameron’s resignation this morning.
Dr Martin Stopford, the president of Clarkson Research, called the news “an exciting prospect because, as every Greek shipowner knows, change creates opportunity”.
The process of leaving the EU is an extension of what the maritime industry has been doing for years, Stopford told Splash.
“Shipping started its ‘Sexit’ in the 1980s when even the German shipping companies flagged out – today over 70% of the world fleet is trading under international flags (i.e. not the owner’s national flag),” he said.
“The resulting economic roller coaster has been exciting for investors; a problem for regulators like the IMO and port state control; and a great deal for consumers – today’s freight rates are no higher than they were 50 years ago!”
Clive Richardson, president and CEO of V.Group, thinks the Brexit’s impact on the shipping industry will be more or less neutral.
“Of course, any event that causes regional economic uncertainty is going to add to the instability that the shipping market is currently dealing with. However, absent a major economic ripple effect from the UK’s decision, global trading patterns should be unaffected,” Richardson told Splash.
“Consequently the impact on the medium-term trend in shipping rates is likely to be minimal and this is the main barometer of health in the shipping sector, and certainly the indicator that shipping services businesses watch most closely,” he went on.
Tim Huxley, the CEO of Wah Kwong, was similarly sanguine: “People need to be realistic. It’s not going to change the fundamental problems we already have in the industry. In the short term, it’s probably good for UK-based shipping service companies as the dollars they earn will buy a lot more pounds.
“As usual, the only immediate winners will be the lawyers, but out of change will come opportunities, and shipowners have been pretty good at seizing opportunity out of changing times. I’m glad I live in Hong Kong,” Huxley told Splash.
Lawyer Chis Lowe, a partner at Watson Farley & Williams (WFW) in London, would seem to agree. Lowe said the firm will probably see a short-term uptick in enquiries from clients regarding their immediate financial, legal and contractual positions.
“The shipping industry and WFW have always seen and realised opportunities in volatile markets, so it is business as usual and we will continue to develop and prosper notwithstanding the challenges that will invariably arise,” Lowe told Splash.
The UK Chamber of Shipping says the shipping industry is resilient by its nature, but the UK government needs to act quickly and strategically if it really wants to go it alone.
“The rest of the world beyond Europe has experienced significant economic growth, and a key argument by the Vote Leave campaign was that the UK would be able to quickly sign free trade deals with trading partners around the world. Government now has to act quickly to ensure that happens,” the Chamber said in a statement.
“We believe that Government should establish a new Free Trade Commission, working across the Department for Business and the Foreign Office, to train trade negotiators and begin the process of establishing new trading ties around the world and be ready for the negotiations with the remaining members of the EU,” it continued.
Lars T Ugland of LT Ugland Shipping thinks a Brexit will only affect the shipping industry if “dramatic changes in price of oil and other commodities directly affect the cost of vessels”.
“The EU need to listen and take a hard look at themselves in order to keep Europe together. We must hope something good comes out of Brexit,” Ugland told Splash.
As for how the Brexit will be effected, Splash columnist Andrew Craig-Bennett says the EU should offer no deals at all but to allow the UK to choose whether to remain within the single market or exit completely. “That would allow the UK Government to call a second referendum which would go the other way,” he said.
“Meanwhile the UK economy has already started the slide into collapse – UK imports will fall sharply as the construction industry shrinks,” Craig-Bennett added.
As the UK bids farewell to one trading bloc, another hopes its ties with the nation will continue to grow stronger.
“Economic and trade ties have always been strong, with Europe by far the largest source of FDI [foreign direct investment] for ASEAN and also one of ASEAN’s largest trading partners, and the UK a significant player in that relationship,” Chris Humphrey, executive director of the EU-ASEAN Business Council, said.
“Notwithstanding the outcome of the referendum, we see the long term trade and investment with ASEAN relationship growing, and going from strength to strength going forward.”