Blog

Studying shipping in the Brexiting Maritime world

By 12.4.2019 No Comments

As many of you know I have been living in Southampton, England since September 2018 and studying at Solent University a degree in Master of Business and Administration in International Maritime Management. Studies at Solent have been very interesting and rewarding with experienced lecturers. Several people have wondered why I’m studying at this point, but even more people have said that it’s probably very fruitful to study once you have a strong work experience. I agree with the latter as I am convinced that I can now understand and relate the theory into practice in a deeper way than what I would have 10 years ago without the work experience. SometimesI do feel sorry for the lecturers because I keep on questioning them a lot, but they are very competent on answering even to off topic related questions. I really enjoy the interactive approach of the lecturers at Solent.

At present it is a very interesting time to study as we have the Sulphur cap coming into force worldwide in less than 9 months’ time. What will happen to those enormous container ships that burn 200 tons more bunkers a day compared to Meriaura-fleet vessel, and will that have an impact on availability or price of low sulphur bunkers? Or is shipping negligible in the crude oil market that it won’t make a difference? That is something that we won’t know until a year from now.  After reading numerous articles, and having several conversations with the lecturers, it seems to me that there are as many opinions in the air as we have shipping professionals in the world. It remains to be seen if it will have an impact on our small Baltic Sea. We all remember what happened to the market and crude oil price in 2015 when sulphur cap came into force in the Baltic Sea. That said, situation is now completely different as we are talking about world-wide shipping with more than 50 000 merchant vessels compared to the 2000 merchant ships trading in the Baltic Sea.

One thing that makes it very interesting to study in UK right now is the loved and, I think especially, hated unborn child called Brexit. I have been staring on an empty paper for about a month now – what to say about Brexit that you wouldn’t already know? I started by researching a topic that one of our long-time customers asked me about last summer: what will happen to Gibraltar flag after Brexit? After some thorough research I learned how garbage will be transported if Brexit happens, and that Gibraltar issue is more complicated than the one with i.e. Northern Ireland, and even if 96 % of the population voted for staying in EU it yet remains a silent topic. But, no research papers or relevant data detected about the Gibraltar flag. Also, our lecturers didn’t know, so I had to take a new approach: some banks are moving their headquarters out from Britain, will the big shipping companies do the same? According to World Maritime News on 1stof February 2019, the answer is yes. In this article it is stated that Maersk, Europe’s largest shipping company would be following in the footsteps of ferry and logistics company P&O, which had a week before announced it was reflagging all its short sea vessels to Cyprus due to Brexit uncertainty, and the desire for its ships to be flagged in an EU member state. In my understanding this could lead to a future with less jobs at the maritime sector in Britain. Well, is the new generation, my ‘Uni Mates’ in their 20’s and soon holding a MSc in Maritime Business, scared about this? A general opinion is no. Even if majority of them are originally from outside UK they plan to stay and work in UK, but they also could move to another country and work there instead. It will be interesting to follow where my new friends will end up working. I sincerely hope that I will do some business with at least some of them in the future.

We just learned that the EU and UK agreed a further delay to Brexit until Halloween. The country must take part in European elections in May. If not, there is still a possibility for a hard Brexit on 1st of June during my stay here.

Dr. Stopford is stating in his Maritime Economics book (2009) that shipping is like gambling. “Shippers turn to the shipping market because they do not know how much shipping capacity they will need in future. Nobody does. The job of the shipowner is to make the best estimate he can and take a gamble. If he is wrong, he loses. These decisions are complex and often require decisive action which flies in the face of market sentiment. That is why individuals are often more successful than large companies “. The usual cycles and market influencers are now being spiced up by Sulphur cap 2020 and Brexit. Will it have an impact on the market? My opinion is, that in short term definitely yes, long term not really.

Enough about politics. You must all be keen on knowing if I’ll come back to Meriaura or do I stay gambling in UK. Answer is that I’ll definitely come back to our family company Meriaura and can’t wait to work with you all again in the end of this summer.

 

Riinu Walls
Member of the Board of Meriaura Group