The UK maintains leading maritime business services role despite competition from overseas
New research published today by the City of London Corporation highlights the importance of maritime services to the UK economy.
The UK holds a world leading position in maritime business services for insurance, shipbroking, legal services and education which means the sector as a whole now contributes £4.4 billion to the economy annually and employs over 10,000 people.
Produced by PricewaterhouseCoopers (PwC), the report showed that 80-85 per cent of its business is brought in from overseas, while it has also highlighted a number of strengths that explain why the UK is a leading maritime hub. These include:
- The UK’s holds global market leading share in insurance (35 per cent share of global marine insurance premiums), shipbroking (26 per cent of global revenue), law (25 per cent of maritime legal partners are in the UK) and education. The UK also has a strong track record in maritime finance, accountancy and consultancy.
- The UK is headquarters for many of the world’s leading maritime law and shipbroking firms, many of whom have expanded internationally by opening new offices across the globe. Also, the UK is the destination of choice for complex risk insurance, backed up by the expertise of Lloyd’s of London, the International Underwriting Association and the UK’s insurance broking community.
- The cluster effect whereby the above services have a multiplying effect, helping bring in business for each other and attract talent. Customers highly value being able to access all these services in one place.
- The depth and scale of the UK’s talent pool remains unrivalled in comparison to other leading maritime centres such as Hong Kong, Singapore and Shanghai.
- The UK’s stable business environment, Rule of Law, geography, time zone and the attractiveness of London as a place to work and live were all cited as benefits.
However, the sector faces a number of threats to its preeminent position including:
- For many years, the UK has not been considered a major area of shipping activity due to its lack of an established major hub port, limited local ownership and shipping activity when compared to the likes of Rotterdam, Hamburg or Shanghai. However, this disadvantage is not new.
- Corporation tax set at a higher rate in comparison to some other hubs, problems attaining visas and ‘gold-plated’ regulation were all cited.
- The relative cost of doing business in London. The capital is the 4th most expensive city to rent high-rise offices, while average salaries (£870 per week) are far higher than those in the likes of Shanghai (£200) and Singapore (£450). It is therefore most feasible for high added value businesses to be located here.
- Other maritime hubs are competing hard. Singapore has introduced tax incentives for ship operators and services, offered incentives for specific institutions to relocate and is now the second largest maritime business services hub after London. Shanghai has also prioritised the maritime sector, including services, while Hong Kong has created a new promotional body to recommend ways to help grow the sector.
The report also identified that the UK should grow its links with mainland China and attract maritime investment by highlighting its strengths as a services hub.
In addition, the report recommended that greater support from government is required to encourage young people to consider a career in this area, while companies should invest more in their people and training. For the UK to stay ahead of the curve it would need to look at emerging industry issues such as cyber security, international piracy and new trade routes.
Finally, the UK must work to maintain and protect key pillars of the industry like the Baltic Exchange and the International Maritime Organisation, as well as ensuring London remains attractive for the Greek and other notable international shipping community.
Commenting on the report, Lord Mayor of the City of London Jeffrey Mountevans, a shipbroker with Clarksons for over 40 years, said:
“Maritime business services are a very strong part of the UK professional services offer, but perhaps an area which does not always get the recognition it deserves.
“However, their importance to the economy cannot be denied. As a nation, with our unrivalled maritime heritage, we can be proud of a services sector with world-leading firms and unmatched expertise in areas like insurance, law, shipbroking, shipping finance, and education and training. But we do have competition from across the world following close in our wake.
“We need the continued support of the government in backing this sector and serious commitment by the industry to play a leadership role. This includes investing in the skills of our workers and promoting the sector and wider maritime industry effectively. We must be bold if we are to maintain our number one status – now and in the future.”
David Smith, Assistant Director, PwC said:
"This report reveals not just the scale of maritime business services in the UK, but also their continued success.
“Despite growing competition from other hubs, many parts of the industry have shown growth in recent years, and in some cases even gained share from overseas competition. However, the industry faces a number of challenges. Meeting these will require companies and government to work together to ensure the sector remains a UK success story."
Vice Chairman of Maritime London, Harry Theochari, said:
“With a history of more than three centuries in maritime business services, we at Maritime London are not surprised to see that the UK remains the undisputed global leader in this sector and we are well aware of the huge contribution that maritime business services make to the economy of the UK. This report re-enforces the findings of the recently published Mountevans Report and, again, highlights the importance of implementing the recommendations outlined in the Mountevans Report.
“With the maritime industries facing the worst recessions in living memory, this is a pivotal time for everyone involved in the maritime industry and it is clear that the United Kingdom and the City of London, through their maritime professional services capability, are exceptionally well placed to assist and serve the maritime industry through these very challenging economic times and to continue to build on the excellence and expertise that has been developed over such a long period of time.”
While the industry is concentrated in London with insurance, shipbroking, law and finance focussed in the capital, the report also cited the importance of Southampton (for education and consulting), Glasgow (for cadetship education and ship management) and Liverpool (general maritime services), as well as Aberdeen, Hull and Newcastle.
Notes to editors
- The full report will be available here on 22 April.
- The City of London Corporation provides local government and policing services for the financial and commercial heart of Britain, the 'Square Mile'. In addition, the City Corporation has three roles:
- We support London’s communities by working in partnership with neighbouring boroughs on economic regeneration, education and skills projects. In addition, the City of London Corporation’s charity City Bridge Trust makes grants of around £20 million annually to charitable projects across London and we also support education with three independent schools, three City Academies, a primary school and the world-renowned Guildhall School of Music and Drama.
- We also help look after key London’s heritage and green spaces including Tower Bridge, Museum of London, Barbican Arts Centre, City gardens, Hampstead Heath, Epping Forest, Burnham Beeches, and important ‘commons’ in south London.
- We also support and promote the ‘City’ as a world-leading financial and business hub, with outward and inward business delegations, high-profile civic events and research-driven policies all reflecting a long-term approach.
- About the Lord Mayor of the City of London:
- The Lord Mayor is head of the Square Mile’s City of London authority for one year and the position is unpaid and apolitical. It is an exceptionally demanding role. The Lord Mayor spends some 90 days abroad and addresses some 10,000 people face-to-face each month (making around 800 speeches a year).
- The Lord Mayor represents City businesses and helps the City Corporation advise the Government of the day on what is needed to help the financial services sector to function well. The Lord Mayor frequently travels to represent the City; and travels overseas with the status of a Cabinet Minister.
- The Lord Mayor meets several international Heads of Government and Business each month to discuss financial services, often in conjunction with senior City business representatives. The Lord Mayor lives in the Mansion House for the Mayoral year.
See www.cityoflondon.gov.uk for more details.