In September 2009, the Swedish Government commissioned the Swedish Agency for Growth Policy Analysis (Growth Analysis) to conduct an analysis of the Swedish maritime cluster. In this assignment, the maritime cluster is limited to the shipping industry and industries directly related to it, such as ports, suppliers, equipment manufacturers and shipbrokers. In parallel with this assignment, a strategy process to draft a proposal for a broad maritime strategy that builds on the definition of the maritime cluster used in the EU maritime strategy was underway in the scope of the NGO, Maritime Forum.
In order to clarify the differences between various types of definitions, this report has used the following terms:
The assignment included making a description and conducting an analysis of the cluster’s significance to the economy, regionally and nationally. Requests are presented for analyses that specifically concern the shipping industry, such as questions on the development of merchant tonnage, vessel flagging and personnel and staffing costs. In a change decision in April 2010, Growth Analysis was commissioned to also comment on and analyse a company review of the Swedish Ships’ Mortgage Bank that the Ministry of Enterprise, Energy and Communications commissioned an external analyst to conduct. Pursuant to the Government decision, the results of the company review were to be taken into account in Growth Analysis’ original assignment and the role and significance of the Swedish Ships’ Mortgage Bank in the cluster were to be illustrated. Both of these assignments are presented in the following report.
With the help of data from Lloyd’s Register Fairplay, the various segments in the Swedish shipping industry are presented, including the tanker, bulk, dry-cargo, container, feeder, ro-ro, trailer-system, ferry, refrigerated and offshore markets. This is followed by a description of the development of merchant tonnage internationally and in Sweden over the period 1975 to 2009.
During the period, there was strong growth on the world market, primarily in the tanker, bulk and dry-cargo markets. This resulted in the number of vessels with a size of 100 gross tonnes or more increasing by 75 per cent to a total of 81,400 vessels. At the same time, a trend towards larger vessels contributed to an increase in capacity of 129 per cent to a total of 1,306 million deadweight tonnes. Competition from Eastern Asia and South and Central America increased, both in the number of ships and in capacity. This meant that the proportion of vessels registered in the EU-27 and Norway decreased from 27 to 18 per cent during the period, corresponding to approximately 15,000 vessels in 2009. However, companies operate approximately 21,300 vessels in the EU-27 and Norway. Within this group, the UK, Denmark and Germany have the largest volumes in operated tonnage. These countries also had the most rapid growth in operated fleets, with Denmark at the top.
Since 1975, the proportion of Swedish-flagged vessels has decreased from 1.3 per cent to 0.6 per cent, and the number of Swedish-flagged vessels has been relatively unchanged since the mid-1980s. At year-end, Sweden had 451 Swedish-flagged vessels in the size category of 100 gross tonnes or larger. However, Swedish companies operated 687 vessels with a combined tonnage of 9.4 million tonnes. The operated tonnage, primarily in the tanker fleet, increased through the inchartering of tonnage from other countries and the proportion of foreignregistered vessels in the Swedish fleet amounts to 34 per cent.
The merchant fleets in Norway and Denmark are larger than the Swedish merchant fleet and the growth in operated tonnage has been higher than in Sweden, particularly in Denmark. Both Norway and Denmark currently have an international register and the proportion of foreign-registered vessels amounts to approximately 35 and 71 per cent, respectively. Today, Norwegian companies operate approximately 2,384 vessels and Danish companies operate 2,126 vessels, corresponding to an operated tonnage of 33.1 and 57.4 million tonnes, respectively.
The main cost items of vessel operation consist of staffing, insurance, bunker oil, lubricants, repairs, maintenance and capital costs. The prices for most of the cost items are set internationally and, consequently, the price variations generally affect everyone at the same time. However, the terms for personnel and staffing are set by the regulations in the flag state with which the vessel is registered.
For vessels registered in the Swedish register, Swedish regulations apply, which currently include two main principles for staffing. These pertain to shipping support, which applies to the handling of income taxes and employer’s social security contributions (net model), and the possibilities of temporarily hiring personnel at internationally applicable terms (TAP agreement). In a calculation of the costs for crews on two different type vessels, it was confirmed that the costs for Swedish personnel, even with the application of the net model and the TAP agreement, appear to be higher. This is not because the Swedish base salary levels are high, but rather because the Swedish terms entail that a vessel needs to have slightly more than two annual employees per position (2:1), while employees in several international registers only receive remuneration for time on board (1:1).
Following up the number of people employed and sales in the shipping industry and maritime sector with the help of Swedish public statistics is difficult. Data has been prepared by various actors and for various purposes, which means that definitions and years vary. In order to obtain a perception of the maritime sector’s economic significance in the form of employment, turnover, exports and tax revenues, a number of different sources of data were used. The results are presented in chapter four, with a focus on the shipping industry, and in chapter five, which also includes other segments of the maritime sector.
With the help of various data sources and estimates, this report found that the number of people employed in the shipping industry/maritime transport in 2008 can be estimated at between 13,200 and 18,900 people, of which between 9,400 and 14,100 are employed on board (1). Sales in 2008 are estimated at between SEK 43 million and 47.6 million. The value added for 2007 amounted to SEK 9.2 billion. Maritime transports have a higher labour productivity than the average in enterprise and had the second highest net sales per employee in the transport sector in 2007, after air transport, at slightly more than SEK 3.1 million per person. The industry is also one of the most export-intensive in Sweden, with a share of exports of more than 80 per cent. In 2005, net exports amounted to approximately SEK 18 billion.
Estimating the tax effects of the sector is difficult. In 2007, tax payments from Swedish limited companies in maritime transport amounted to a total of approximately SEK 533 million. Altogether, the tax assistance appears more moderate. This is partially a result of the Swedish net model, meaning that under certain conditions the Board for Shipping Support (Rederinämnden) credits the shipping companies tax and social security contributions for on-board employees on vessels subject to international competition in the form of shipping support. In 2008, total shipping support amounted to just over SEK 1.5 billion.
With the help of input-output methods, the connections between maritime transport and other parts of the maritime sector were analysed more closely in chapter five. Besides support services such as ports, stevedoring companies and shipbrokers, important suppliers to the shipping industry also include other shipping companies such as through inchartered tonnage, suppliers of bunker oil, corporate services such as marketing and training, and shipyards and other subcontractors that assist with repairs, maintenance and spare parts. With the help of various methods, the report provides an estimate of the number of employees with suppliers that account for a significant part of the deliveries and where maritime transport constitutes an important customer group. Depending on the method is used, the maritime sector employs somewhere between 18,200 and 33,000 people.
There is extensive mobility between different segments of the maritime sector and an ambition for a labour market career, where crews of on-board employees can further train themselves to become officers and, at a later stage, take a position in land-based operations. This could be at the shipping company office or in some other part of the maritime sector, such as at ports, shipbrokers, subcontractors or authorities. In the strong economy of recent years, there has been a lack of trained officers, both in Sweden and internationally. Swedish officers currently have a high status on the labour market, but it is difficult to satisfy the need for trainee positions on board.
The level of education in the maritime sector is relatively high. Nearly one fourth of the employees have at least a three-year university education, which can in part be attributed to the requirement of a university education for officers on board. The level of education is also high in both the shipping companies’ land-based operations and in the support services, which may be due to the labour mobility that exists within the sector. However, the level of education is significantly lower among subcontractors. Approximately one fifth of the employees in the maritime sector are women, but women account for nearly 80 per cent of on-board employees within service, just as food service, catering and cleaning, and only 10 per cent among the suppliers. Although women's income has shown a higher increase since 1997, on average, their income is 78 per cent of the men’s.
At the end of chapter five, a survey is presented of the regional distribution of the maritime sector. This is made difficult by deficiencies in public statistics. With this limitation, an analysis is made of the Swedish functional analysis (FA) regions’ share of national employment in the maritime sector, defined as Water Transport (SNI 61), Other supporting water transport activities (SNI 63.220) and Building and repairing of ships (SNI 35.110). The total number of employees in this strictly defined maritime sector amounted to 18,172 people in 2008.
With this definition, slightly more than 70 per cent of the maritime sector in 2008 was concentrated to the three metropolitan regions of FA Stockholm, FA Gothenburg and FA Malmö. The maritime sector as a whole was the most specialised in Blekinge, although Strömstad and Gotland also had a high degree of specialisation. For the three metropolitan regions, the distribution of operations was somewhat different. In the Stockholm region, ferry traffic was dominant on inner waterways, including the archipelago, while the Malmö region, like Blekinge, has a clear concentration of operations in shipyards. Gothenburg is the region that has the broadest maritime sector, with extensive operations in all three segments.
With the help of supplemental data, slightly more than 27,000 people were identified that can be distributed on the county level. This analysis strengthens the earlier patterns, but indicates that on-board employees are also clearly concentrated to the metropolitan regions, even though they can in principle live anywhere in the country and still work on board. Other regions that stand out in terms of the proportion of on-board employees are Kalmar, Halland, Östergötland and Gotland.
In the chapter on the maritime cluster, the shipping industry and the maritime sector are set in a broader perspective based on the broader definition presented in the EU Blue Book and used in the Maritime Forum’s strategy process. There, the earlier statistical analyses are supplemented with qualitative descriptions of the various components and data from other sources.
After several years of a strong economy, the economic crisis and decreased product volumes of recent years has struck both ports and maritime transports hard. At the same time, there is great interest from transport buyers and public actors in increasing the proportion of maritime transports for environmental, energy efficiency and safety reasons. Sweden is very advance in terms of the environment and safety, since there is a high level of expertise and established cooperation between shipping companies, consultants, technology suppliers and authorities within the development area. However, the national public investments in research, development and demonstration in shipping are lower than in other forms of transport. In addition, the shipping infrastructure is financed by fees to a higher degree than other types of transport, which can impede the possibilities of increasing the use of domestic maritime transports.
There is a tendency for the maritime sector to only be viewed as a part of the transport sector by public actors, which has contributed to there being a lack of an economic policy tradition and strategy for the sector. In the past year, work has commenced to develop a national maritime strategy for the entire maritime cluster. This creates new possibilities to work across sectors, with national and regional development efforts to create new conditions for innovation and entrepreneurship.
Altogether, approximately 105,000 people are estimated to be employed in shipping and related industries. Of them, approximately 14,200 people are employed in the shipping companies and in maritime transport. Support services, such as ports, stevedores, shipbrokers, banks, etc., are estimated to employ approximately 6,300 people. Technical suppliers, such as shipyards that work with repairs and maintenance, consultants in design and development, suppliers of spare parts, and others that are affected by shipping in some way are estimated to employ approximately 72,500 people. In addition, there are approximately 4,200 public employees in the Swedish Transport Agency, the Swedish Maritime Administration, the Swedish Navy, the Swedish Coast Guard and the educational system, for example. Approximately 400 people were identified in the research system, approximately 5,200 in the pleasure boat sector and around 2,500 in fishing and aquaculture. Here, consideration has not been taken to the fact that parts of the tourism industry with approximately 152,000 employees, road and rail transports with around 70,000 employees, and parts of other support services for transports with about 30,000 employees have clear links to the shipping sector.
The assignment also included conducting a SWOT analysis with proposals of measures to strengthen and develop the cluster’s competitiveness. The issue of the impact of shipping fees was also a part of the assignment. It was not possible to conduct a more in-depth analysis in the assignment, since it demands a more extensive dialogue with the transport buyers than was possible. However, there is reason to examine the effects more closely, since the fees risk creating competitive disadvantages compared with other, less environmentally effective types of transport.
The SWOT analysis identified the following strengths, weaknesses, opportunities and threats:
Long maritime tradition
High level of skill and more cooperation
Quality in environment and safety
Competitive university education
Sweden’s ports – important for shipping
Weak tradition of cooperation Low interest from political sphere and public
High cost level in shipping
Weak economic dynamic
Limited national R&D investments Uncertain long-term skill supply
Deficiencies in statistics
New markets growing forth Interest in the environment, energy and safety
More and more efficient intermodality
Potential for innovation and renewal
Large economic fluctuations
Protectionism and greater free trade
Higher requirements on environment and safety
Threats within the infrastructure area
Conflicts and terrorism
In the concluding chapter, some factors are discussed that should be taken into account in an assessment of whether Sweden needs a Swedish maritime sector. This primarily concerns the possibilities of having an opportunity to influence international debate on prioritised issues, such as the environment, energy and security. These possibilities demand both expertise and credibility, obtained through such measures as continued development of cooperation between actors in the Swedish maritime sector. Other factors concern the sector’s economic significance, primarily within the export field, the importance of skills transfer between various parts of the maritime sector, on board and on land, and the issue of supply and safety aspects.
If the Swedish Government deems it to be important to continue to have a Swedish vessel fleet and a Swedish maritime sector, there is reason to consider the following proposals:
Serial number: Report 2010:03
Reference number: 2010/098