An Industry in Transition

Published Jun 3, 2005
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Norway has long been a major force in the global shipping industry. As a seafaring people, we have long and glorious tradition of building and manning ships, traversing the oceans, and transporting goods all over the world. But in a globalised world, Norwegian shipping is struggling to adapt to increasing demands, and the industry is not happy with government policies. We asked Marianne Lie, Director General of the Norwegian Ship owners’ Association about Norway’s role in a changing industry.

Ship owning companies have become increasingly important over the years, reflecting a strong trend towards institutionalization and industrialisation of the shipping industry. Norway is a country of several important ship owners, with John Fredriksen’s Frontline as the most prominent. But is Norway keeping up with global development?

Dynamic and Competitive
“International shipping has always been a dynamic and competitive sector, and it has always been able to adapt to new patterns of trade and commerce, and to meet increasing demands on ships and security,” says Lie. And she is confident in the role of Norwegian shipping.

An Industry in Transition-Body-2

“Norwegian ship owners are keeping up very well,” Lie says with emphasis. She points out that Norwegian owners have become increasingly oriented towards industry niches that require special knowledge and skills, such as logistics, or in construction of more advanced vessels – as in the offshore sector. “We have several companies which are leaders in their respective fields. They have often been the first to present new technological solutions and designs,” she says.

International shipping is a growing sector. As long as there are more and more goods to be transported, there will be ships to carry them across the globe. About 90% of international trade in goods is conducted through sea transport. Lie points out that global trade has been growing steadily over the last decades, and that there are no signs of it slowing down. “Increasing globalisation, and the growth in China’s foreign trade in particular, are major factors in the growth of international commerce,” she says.

Clouds on the Horizon
But while the industry as a whole is strong and stable, and ship owners are doing well, there are clouds on the horizon for Norwegian shipping. NSA has been arguing for many years that the Norwegian government has to change its policies to enhance the competitiveness of the industry. Ship owners are registering under foreign flags, Norwegian shipping firms’ share of new orders continues to decline, and Lie states that the responsibility for this lies with the government.

Uneven Conditions
“NSA has repeatedly pointed out that unless we could compete under the same conditions as EU countries, the result would be more companies moving abroad, fewer Norwegian sailors, and a significant loss of jobs in the industry. We are still hoping that they will see the gravity of the situation and make the necessary changes,” Lie says.

“Another big issue is that Norwegian employees are generally paid a lot more than workers in other countries. This places great demands on competence and productivity. There are still many Norwegian employees on Norwegian vessels. But we have to accept that we have left the era of only having Norwegian sailors on our own ships,” she says.

Companies and Individuals
NSA has always been clear on the point that they focus on the companies, not their owners. But Lie stresses the connection between operating conditions and taxation and share revenue. “For instance,” she says, “taxation of private holdings and revenue can have significant effects on competitiveness and market valuation. If taxation levels are significantly higher in Norway than in other countries, it will be increasingly difficult to keep shipping firms under Norwegian control.” Lie notes that this has been a trend in recent years. “Differences in operating conditions have clearly played a significant part in many instances,” she says.

So, how can Norwegian shipping stay in the game and stop the declining share of the global market? Where should we place our efforts? Lie is confident in the broad potential of our shipping industry: “There is significant potential in almost every area of international shipping,” she says. “Norwegian shipping firms have always been at the forefront of international developments.”

Competence and Other Assets
Lie emphasises competence and know-how as important Norwegian assets in the international marketplace. “Our shipowning companies are characterised by experience and deep knowledge of the running of large scale shipping operations, with advanced vessels and high levels of security and competence in handling cargo,” she says. “In general, Norwegian ship owners derive their greatest strengths from adaptability, and excellent technical and market oriented expertise. We believe that the biggest growth
for Norwegian shipping will continue to be found within industrial segments and areas where specific competence is needed.”

NSA is an organisation covering all Norwegian involvement international shipping and offshore activity. I asked Lie how the different trade organisations in Norway work together to secure the interests of the sector, with companies increasingly moving abroad. Lie feels the trade organisations are cooperating well. “We feel that Norwegian shipping interests are well organised, and work together effectively,” she says.

“We do, however, see a an increased tendency towards Norwegian shipping firms taking parts, or all, of their business abroad. On the international arena, NSA has important partnerships with several organisations, such as ICS, ISF, Intertanko, ICSA, and others.”

Lie is keen to emphasise the importance of Norwegian shipping: “Last year, the Norwegian international fleet generated nearly NOK 30 billion – showing that the significance of Norwegian shipping goes beyond it’s contribution to employment.”

An Industry in Transition-Body

Environmental Issues
Changing pace a little bit, I asked Lie about environmental issues, and the aftermath of the Prestige and Erica accidents. How can the environmental perspective be incorporated into the industry? “International shipping is under strict regulation from IMO conventions,” she says. “Regulation has become increasingly strict in recent years. This has led to a significant reduction in the number of accidents and shipwrecks. After Prestige and Erica, the rules have become stricter still. If we compare shipping to terrestrial cargo transport, there is a very low risk of accidents.”

The fact that this is not a perception shared by the general public can be attributed to the media. “Accidents at sea always generate a lot of media attention, while many accidents on the road don’t get the same coverage.”

“In general, shipping is an environmentally sound industry,” Lie says. Again, she compares shipping to land transport: “Cargo trucks consume about ten times as much energy per ton/kilometre as a container ship. Increased use of shipping in domestic cargo transport could also gain society and the environment significantly. Shipping pays its way when it comes to taxes and coverage of infrastructure, accidents, and environmental damage, to a much larger extent than the land transport
sector does.”

Another fact to remember when we are thinking about the future of Norwegian shipping.

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