Forecasting Eye 

 

The maritime sector is a vital aspect of the UK economy, providing access to global markets and contributing to economic growth. The maritime sector directly employs over 220,000 individuals and generated a turnover of £47.4 billion in 2017. Revenue has increased by 25% since 2010 and the sector is forecast to grow by an additional 15% by 2023.

 

On 11th September, Maritime UK released the Cebr report on the ‘State of the Maritime Nation’ as part of the UK’s International Shipping Week. This report highlights the role the maritime sector plays in the UK as part of the country’s heritage and in the modern economy, driving innovation and trade. It is a sector that provides opportunities to develop and maintain the UK’s position as a global leader which will be of particular importance after the UK leaves the European Union. Some of the key areas of UK maritime success are mentioned below.

 

The UK shipping industry dominates the sector, accounting for 40% of its turnover. This is not surprising given its importance to UK trade and supply-chains – 95% of all UK trade is seaborne [1]. UK ports are also central to world trade: 5% of all global maritime freight traffic passes through UK ports at some point in its journey. However, shipping is likely to be negatively affected in the case of a no-deal Brexit, creating large ramifications for the UK as a whole. According to the government’s recently released Yellowhammer documents, it is expected that channel freight trade could face significant disruption for up to six months. This would add a sizeable friction to seaborne trade.

 

Although smaller in terms of its economic contribution, the UK’s Maritime Business Services industry is a world leader and central hub for maritime insurance, finance and legal activities and education. The industry had a direct turnover of £6.6 billion in 2017 and employed 23,500 individuals making it comparable in size to architectural activities and market research industries. The UK’s maritime insurance market accounts for £4.1 billion of Maritime Business Services turnover and is approximately a third of the global maritime insurance market [2]. This is a product of the UK’s long maritime history and status as a global hub for the industry.

 

More recently, the UK has been establishing itself as a hub for autonomous vessel development. It is projected that this industry will reach $136 billion in turnover globally by 2030 [3] and is likely to be a significant disrupting technology. For example, it is estimated that up to 95% of all insured losses from shipping are from human error [4] – autonomous vessels may overcome this while also adding the ability to navigate through areas too dangerous for conventional manned ships, lowering the overall cost of seaborne trade. The UK is a major player in autonomous vessel production, with Rolls-Royce in partnership with Finferries completing the world’s first autonomous ferry crossing and docking in 2018. This development is occurring partly due to the innovation and training systems in place; maritime education GVA has grown by 20% since 2010 alone and has received funding of £30 million a year from the UK government since 2018.

 

Given the stature of these sub-industries, it is not surprising to see that the Maritime sector is significantly more productive than the UK as a whole at £77,400 GVA per employee per year compared to a UK average of £54,300. The Maritime Business Services industry is the most productive at £117,600 GVA per employee with shipping close behind at £102,600. If UK average productivity were to increase to the Maritime average, total GVA would increase by 42%. This is equivalent to an additional £800 billion in the economy.

 

Despite the challenges posed by Brexit, it is clear that the UK, as an island nation, will always require a thriving maritime economy. The government should commit to the targets set in the Maritime 2050 strategy document if it wishes to maintain the UK’s stature as a leader in the global maritime economy and cultivate its successful clusters.

 

[1] Department for Transport. ‘Maritime 2050’.

[2] Maritime London. ‘Insurance’.

[3] & [4] HWF. ‘Autonomous Shipping’.

 

Contact: Daryn Park dpark@cebr.com phone: +44 (0)20 7324 2875