THE ECONOMIC VALUE of SHIPPING and MARITIME ACTIVITY in EUROPE Andrew P Goodwin
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
Real-terms increase Increase in world 73 in world GDP in the 112 seaborne trade % last two decades % over the same period
Value of EU’s trade €3.5 with the rest of the trillion world in 2015
90% IMO estimate of the value of world trade carried by sea
3 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
The shipping industry
. 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 EU”
+
5 ECONOMIC IMPACT ANALYSIS
6 THE STUDY ASSESSES THE ECONOMIC IMPACT OF THE EU SHIPPING INDUSTRY ACROSS THREE CHANNELS
Direct impact e.g. Freight services Passenger services Towing & dredging Service and offshore support activities Renting and leasing
Indirect impact Induced impact e.g. Ship building e.g. Food and beverages Ship repairs Other consumer goods Port services Restaurants Insurance Recreation services Shipping-related financial and etc. legal services, etc.
Total economic impact
7 WE ASSESSED THE ECONOMIC VALUE OF SHIPPING ACROSS THREE METRICS
Gross value added Employment Tax revenues contribution to GDP
The contribution to Measured on a Employee income the economy of headcount basis taxes each individual Employee and producer, industry employer social or sector. security Aggregated across contributions all industries to Tonnage and form the basis of corporation tax GDP VAT on employees’ consumption THE STUDY DREW UPON ON EXISTING RESEARCH, OFFICIAL STATISTICS AND THE OXFORD ECONOMICS GLOBAL INPUT-OUTPUT MODEL
. Previous national studies . Eurostat national accounts and Structural Business Direct impact Statistics datasets . Estimation to align time periods and sector definitions
Indirect Oxford Economics Global Input-Output impact model . Impact of the shipping industry on firms in its supply chain . ‘Induced’ impact of spending by shipping industry Induced employees and those in the supply chain . Estimates impacts that occur within countries, and cross- impact country impacts amongst other EU countries THE EU SHIPPING INDUSTRY IS ESTIMATED TO HAVE DIRECTLY EMPLOYED 590,000 PEOPLE IN 2012
This means shipping employs more people than…
Travel agents & Forestry & tour operators logging Air transport
530,000 500,000 425,000 ALMOST TWO-THIRDS OF SHIPPING EMPLOYEES ARE EMPLOYED IN FREIGHT TRANSPORT
400,000
350,000 372,000
300,000
250,000
200,000
150,000 158,000 100,000
50,000 54,000 7,000 0 Freight transport Passenger transport Service & offshore Renting & leasing (incl. towing & support vessels dredging)
Source: Oxford Economics IN 2012, THE EU SHIPPING INDUSTRY IS ESTIMATED TO HAVE DIRECTLY CONTRIBUTED €56 BILLION TO EU GDP
€47bn €56bn +18% to EU GDP to EU GDP in 2004 in 2012
2012 GDP per worker
Water Film & Air Land EU average Shipping supply TV transport transport €53,000 €88,000 €86,000 €84,000 €71,000 €44,000 THE TOTAL GDP CONTRIBUTION OF THE EUROPEAN SHIPPING INDUSTRY IN 2012 IS ESTIMATED TO HAVE BEEN €145 BILLION
€bn 160 €145bn
140 30 30 120
100 59 59 80
60
40 56 56 20
0 Direct Indirect Induced Total
Source: Oxford Economics THE SHIPPING INDUSTRY ALSO SUPPORTED EMPLOYMENT FOR AN ESTIMATED 2.3 MILLION PEOPLE
000s 2,500 2.3m
2,000 547 547
1,500
1,126 1,126 1,000
500 590 590
0 Direct Indirect Induced Total
Source: Oxford Economics THE SHIPPING INDUSTRY HAS SIGNIFICANT ‘MULTIPLIER’ EFFECTS ACROSS THE WIDER EU ECONOMY
€1.6m €1m
For every €1 million the For every direct job the shipping industry shipping industry creates, contributes to GDP itself, it another 2.8 are created creates another €1.6 million elsewhere in the EU elsewhere in the economy economy THE SHIPPING INDUSTRY SUPPORTED TOTAL TAX REVENUES OF AROUND €41 BILLION IN 2012
€bn 45 €41bn Tax revenues 40 estimated 35 12 12
30 Employee income taxes 25 Employee and 20 employer social 23 23 security 15 contributions 10 Tonnage and corporation tax 5 VAT on 6 6 employees’ 0 consumption Direct Indirect Induced Total Source: Oxford Economics 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
Inherent Core of the Security of mobility wider maritime energy supply cluster
Military Safety Trained support & standards seafarers peacekeeping
18 THE UK INTRODUCED A TONNAGE TAX IN 2000. BY 2012 THE UK CONTROLLED FLEET HAD MORE THAN TRIPLED IN SIZE
DWT (000s) 40,000 No tonnage tax Tonnage tax 35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1980 1982 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 1984 1986 2010 2012 Controlled fleet
Source: UK Chamber of Shipping, Oxford Economics
19 THE UK INTRODUCED A TONNAGE TAX IN 2000. BY 2012 THE UK CONTROLLED FLEET HAD MORE THAN TRIPLED IN SIZE
DWT (000s) 40,000 No tonnage tax Tonnage tax 35,000
30,000
25,000
20,000 15,000 -85% 10,000
5,000
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010 2012 Controlled fleet Controlled fleet, 'No state aid' scenario
Source: UK Chamber of Shipping, Oxford Economics
20 FRANCE INTRODUCED A TONNAGE TAX IN 2003, AND SIMPLIFIED ITS SOCIAL SECURITY EXEMPTIONS IN 2006
DWT (000s) 12,000 No tonnage tax Tonnage Tax
10,000
8,000 -61% 6,000
4,000
2,000
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011 2012 Controlled fleet Controlled fleet, 'No state aid' scenario
Source: ISL Bremen; counter-factual scenario estimated by Oxford Economics
21 GERMANY INTRODUCED A TONNAGE TAX AND A SEPARATE WAGE RETENTION SCHEME IN 1999
DWT (000s) 140,000 No tonnage tax Tonnage tax 120,000
100,000 -68% 80,000
60,000
40,000
20,000
0
1995 1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 1994 1998 2009 Controlled fleet Controlled fleet, 'No state aid' scenario
Source: ISL Bremen; counter-factual scenario estimated by Oxford Economics
22 SWEDEN INTRODUCED SOCIAL SECURITY AND INCOME TAX INCENTIVES IN 2001, BUT HAS NOT INTRODUCED A TONNAGE TAX
Flagged fleet, Controlled fleet, 8,000 000 DWT 000 DWT 25,000 7,000 1.1% of world fleet under 20,000 6,000 Swedish flag 0.1% of world 5,000 fleet under 15,000 4,000 Swedish flag 3,000 10,000 2,000 5,000 1,000
0 0
1980 1982 1984 1988 1990 1994 1996 2000 2002 2004 2006 2008 2010 1986 1992 1998 2012 Flagged fleet (left scale) Controlled fleet (right scale)
Source: UNCTAD, ISL Bremen
23 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
GVA, €m 160,000 Employment 2,500,000
140,000 2,000,000 120,000 Induced 100,000 Indirect Direct 1,500,000 80,000
60,000 1,000,000
40,000 500,000 20,000
0 0 GVA GVA Employment Employment (counter- (counter- factual) factual) Source: Oxford Economics
24 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
+11% since 2004
26 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 WE USED DETAILED LOCAL DATA TO ESTIMATE EMPLOYMENT WITHIN A SAMPLE OF PORTS Manufacturing 6% 7% 1% 1% Wholesale and Retail 7% 9% 8% 0% Trade, Repairs 16% 2% 11% Construction 11% Transport and Storage
Financial and Insurance
Professional, Scientific and Technical 61% Public Admin, Defence and Social Services GrossValue 60% Added Employment
118,000 direct £7.7 billion in jobs after direct GVA scaling (inner (outer ring) ring)
31 INCLUDING MULTIPLIER EFFECTS, WE ESTIMATE THAT PORTS CONTRIBUTED £19 BILLION IN GDP AND 344,000 JOBS IN 2013
£ billion 000 jobs Direct Indirect Induced 20 400
18 350 16 300 14 12 250 10 200
8 150 6 100 4 2 50 0 0 Contribution to GDP (LHS axis) Employment (RHS axis)
32 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 Financial Classification services 8% 1%
Legal services Shipbroking 15% 39%
Insurance services 33 37% INCLUDING MULTIPLIER EFFECTS WE ESTIMATE THAT MARITIME BUSINESS SERVICES CONTRIBUTED £3.5 BILLION TO UK GDP IN 2013
£ billion 2.5
2.0 Induced Indirect 1.5 Direct
1.0
0.5
0.0 Insurance Ship broking Legal Financial Classification services services services
34 IN TOTAL, THE MARITIME CLUSTER SUPPORTED £22 BILLION IN GDP AND 489,000 JOBS IN THE UK ECONOMY IN 2013
GDP, £ million Employment, 000s 14,000 300
12,000 250
10,000 200 8,000 150 6,000 100 4,000
2,000 50
0 0 Ports Shipping Business services
GDP (Left scale) Employment (Right scale)
Source: Oxford Economics
35 DECEMBER 2016
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: [email protected]
Oxford Economics Broadwall House, 21 Broadwall, London, SE1 9PL, UK Tel: +44 207 803 1400
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