Monday, February 4, 2019

Global Leader in Container Shipping Pulls Out of UK Shipping Before Brexit

Maersk Re-Flags and Declines to Train British Cadets in Future
Shipping News Feature
UK – DENMARK – WORLDWIDE – There is an horrific dose of irony in that, just as the British government has sworn to reinvigorate its shipping industry and establish the flag as a world leader once again, so the largest container shipping company is the world is about to reflag any of its fleet sailing under the Red Ensign to foreign registers. This week Maersk has followed an example set by P&O and others in quitting the Red Duster in favour of another flag.

This would not be as big a deal as it sounds as Maersk has not registered any box ships in the UK since 2015, and the only one known to pay UK tonnage tax, which the company are quoted as saying will continue, actually sails beneath a Netherlands banner. What is even more concerning however is news from professional mariners’ union Nautilus International that no more British cadets will be employed by the Danish group.

Maersk has apparently decided it will concentrate on trainees from its homeland together with applicants from India, a decision which will impact South Africans and Filipinos with aspirations to join the company as well as Brits. Maersk says a variation in its employment and training model and a decrease in demand for Junior Officers are the causes for the change. Any cadets currently undergoing training with Maersk will however be allowed to complete their courses and receive the appropriate Certificates of Competence.

The dramatic fall in UK seafaring numbers, down from 66,000 in 1977 to only 23,000 today, in part prompted the government’s pledge to reinvigorate the industry with its Maritime 2050 pledge. Nautilus however is warning that the continuing decline in the number of British seafarers and UK-flagged vessels is putting the nation's economic security at risk and could leave it dependent on other countries for many essential goods and services, and Nautilus general secretary, Mark Dickinson, said:

"The news coming out of Maersk is deeply concerning for the future of the UK maritime industry, especially in light of the recent announcement from P&O and rumours that CMA-CGM is also set to leave the UK register. Brexit has already put UK seafarer certificates at risk and the ongoing uncertainty is forcing the hand of large businesses, it has created a perfect storm, threatening the current and future employment of UK-based workers.

"As an island nation, we rely on shipping and seafarers for 95% of everything we consume, and our workers need support to ensure they have training opportunities, decent jobs and career progression. These developments are only serving to make us more dependent on other countries. We will offer support to the Cadets affected by Maersk's discontinuation of its programme, but on a wider level, there needs to be a step-change from government and industry to curb this worrying decline. Assurances are needed that commitments already made to supporting the SMarT Plus initiative (Support for Maritime Training), which aims to support Cadets moving into Officer employment, won't be affected by these developments."

Maersk is itself under pressure to compete as it goes through a cycle of change. Having sold off its oil business to Total and got out from Maersk Tankers it is having to demerge Maersk Drilling this year after it failed to receive sufficient interest in its sale. With main rivals in the container shipping field, MSC and CMA CGM, venturing further into general logistics Maersk looks to be keen to continue the trend, having bought Damco in 2005 and then switching the brand affiliation for digital forwarder Twill from that company into the Maersk fold last year.

However, whilst CEO Soren Skou is keen to re-organise the business he has ruled out any truly major acquisitions at present after in 2017 acquiring Hamburg Süd and being hit by the Petya computer virus, which collectively cost the group several billion dollars.

Skou recently revealed that only 20% of its ocean freight customers utilised Maersk for the land haul segments of their transits, a position he is keen to adjust saying it was in this area, along with other shore based logistics provision including warehousing that future investments were most likely to be made. The pressures of a shrinking market fuelled by escalating trade restrictions and a balance sheet that has looked healthier, have led Maersk to look at the expenses in all parts of the business, and it seems British mariners must bear some of the costs.

Photo: Maersk Kimi, flagged in Holland but subject to UK tonnage tax.