Brexit: What Next for Shipping Markets?
For many in shipping, the Brexit was unexpected. Many believe that Brexit’s impact on the shipping industry will be more or less neutral.
The UK Chamber of Shipping remained neutral on the question of Britain's departure during the runup to the vote.
It issued a statement emphasizing the industry's importance in all events. "We are still an island nation that has to make its way in the world through buying and selling, and the shipping industry is here for that purpose . . . shipping moves 95 percent of the UK's international trade and we don't see that changing," the organization said.
The chamber highlighted a series of key policy areas that will need attention from the government before the UK leaves.
According to Lloyd’s List Brexit could lead to the UK's withdrawal from the EU's customs union, and the Union Customs Code could cease to apply.
Shippers and freight forwarders could have to spend time and money adapting to new UK-specific customs regulations, and the introduction of such new regulations could have the effect of creating delays at UK ports and terminals.
UK shipping companies or shipping companies controlled by UK nationals could lose the right to offer cabotage services throughout the EU.
The impact on the UK's extensive maritime services sector remains to be seen, and Nick Brown, marine and offshore director of Lloyd’s Register, forecast a period of uncertainty ahead.
Many shipping contract (for example voyage and time charters) provide for trading to certain countries or geographical regions. There may be uncertainty as to whether a contract signed pre-Brexit (which contains such a clause) which refers to the EU will continue to include the UK.
IHS Fairplay has quoted Arthur Bowring, managing director of the Hong Kong Shipowners Association (HKSOA), as saying the decision came as a surprise but it was difficult to say how it would hit Asia’s shipowners. “Not too sure how this might affect the industry, but any ray of light at the moment would be most welcome,” he said.
Singapore Shipowners’ Association president Esben Poulsson told IHS Fairplay that shipping, like all markets, did not like uncertainty, which is what the Brexit situation had given rise to, but there was a greater issue at stake.
Precious Shipping chief executive Khalid Hashim told Lloyd's List the impact on trade flows of UK leaving the EU was not immediate. "The way I understand the treaty agreements, it will take the UK about two years before they can actually exit. So nothing much will happen in the immediate future in terms of trade flows which would have an impact on shipping."
