Shipping firms drop British flag as Brexit risks loom

Stolt-Nielsen

02/07/2019 14:47

By Jonathan Saul
    LONDON, July 2 (Reuters) - Companies are leaving Britain's
shipping registry due to uncertainty over Britain's departure
from the European Union and future commercial arrangements with
the bloc, industry officials say.
    All commercial ships have to be registered, or flagged, with
a particular country partly to comply with safety and
environmental regulations. Shipping companies in many so-called
"flag states" pay corporation tax based on vessel tonnage rather
than profit. 
    Britain's ship registry forms part of the country's maritime
services industry and the loss of such companies from the flag
could be a blow to the taxation revenues they generate.
    The departures could also complicate any attempts by the
British government to secure extra space on ships to help cope
with potential trade disruption in a no-deal Brexit.
    The government faced a major embarrassment this year after
stacking up a 50 million pound ($63.17 million) loss for
cancelling contracts for extra ferries to bring in essential
supplies in the event of a no deal, which included arrangements
with a ferry company that had no vessels.  urn:newsml:reuters.com:*:nL5N22D3G0
    With Britain due to leave the EU on Oct. 31, there are
growing worries among business leaders that the UK could still
crash out without a deal.   
    French shipping group CMA CGM said prior to Britain's 2016
referendum on EU membership it was the largest owner of
container ships under the UK flag with 49 vessels. 
    "In light of Brexit and to avoid any uncertainty in the
period with our fleet status and regulations ... CMA CGM has
decided to transfer its fleet under UK flag to other European
countries," the company said in a statement to Reuters.    
    "This decision was taken after it appeared to us that the UK
flag was excluded from the draft agreement envisaged between the
UK and the European Union." 
    CMA CGM, the world's fourth biggest container shipping line,
said as a French company it complied with the EU regulatory
framework with regards to its fleet registered in EU member
states, allowing the group "to remain competitive".
    Shipping data showed CMA CGM's UK ships were transferred to
the French and Maltese flags on March 1, 2019. 
    A spokesperson for Britain’s Maritime & Coastguard Agency
said: "We regret that CMA CGM has chosen to reflag its vessels
due to its obligations under EU regulation". 
    "It is however, no reflection on the UK Ship Register itself
which the company came into originally because of the high
quality it represents."
    
    DECLINE IN REGISTRY 
    As of May 31 2019, there 1,229 vessels registered with the
British flag, representing 10.5 million GT (gross tonnage). This
was down from 1,315 vessels or 16.5 million GT at the end of May
2018, official data showed.
    Separate data from valuation company VesselsValue showed the
British flag was ranked 22nd in the world, with Panama at no.1
with over 203 million GT. 
    Norwegian vehicle carrier Wallenius Wilhelmsen  WALWIL.OL 
told Reuters it had completed the sale of eight UK registered
vessels to its company in Malta at the end of October last year
as part of efforts to simplify its ship owning structure.
    "Due to the need for simplification of group structure and
uncertainty of Brexit consequences we concluded to exit UK," a
company spokeswoman said.    
    Bermuda-registered Stolt-Nielsen  SNI.OL , which is listed
in Oslo and whose business includes ships and terminals, said
the group was reviewing its UK-registered ships.  
    In January, British ferry and shipping freight operator P&O
decided to shift the registration of its UK vessels to Cyprus in
part to keep its tax arrangements in the EU.  urn:newsml:reuters.com:*:nL8N1ZM4E6
    "Companies undoubtedly will have flagged out because of
Brexit and it will be to do with either fiscal or financial
considerations," said David Balston, director of policy with the
UK Chamber of Shipping trade association. 
    "The flag is suffering both from the uncertainty and because
of Brexit itself."


($1 = 0.7915 pounds)

 (Editing by Jane Merriman)
 ((jonathan.saul@thomsonreuters.com; + 44 207 542 4357 ; Reuters
Messaging: jonathan.saul.thomsonreuters.com@reuters.net))