Italian shipping is building on success story, says shipowners’ chief
By James Brewer
Italian shipowners have shown faith in their capabilities by investing heavily in hardware over the past decade, Stefano Messina, president of Commissione Risorse Umane e Relazioni Industriali (Confitarma), the trade association for Italian shipowners and shipmanagers, has said.
He was addressing the 2016 conference of the International Union of Marine Insurance in Genoa on the theme: the Italian merchant fleet: challenges, opportunities and risks in a changing world.
He said there had been 10 years of a success story in Italian shipping: 65% more in terms of specialist employment, 75% fleet development, and nearly Euro30bn investment in material assets. “The fleet growth brings a significant increase of employees both ashore and on board ships. It is essential that the skills of seafarers are in line with the development of the technological evolution of the fleet,” declared Mr Messina.
Mr Messina is chairman of Gruppo Messina, and a member of the board of the International Chamber of Shipping.
In terms of gross tons, the Italian fleet is the second in Europe, he claimed, and ranks fourth in the world, behind China, Greece and Japan. It had the leadership in some specialist sections. In 2015 Italian trade was 450m tons, of which 240m tons moved by sea.
The Italian merchant fleet had seen in the last years an important development thanks to heavy investments by shipowners, construction of new ships, introduction of technological innovations, and competitive ships on traditional and new routes.
Although the overall Italian-linked fleet size had fallen in the last year, Italian roll on-roll-off cargo, ro-ro passenger and cruise markets continue to expand. Mr Messina said that according to Confitarma processing of Clarkson Research Services data, Italy has in passenger ro-ro cargo 191 units totalling 2.35m gt; in ro-ro cargo 60 units of 2.67m gt,
The shipping leader acknowledged that alongside the opportunities were challenges.
The global economy remained at low growth levels and several recent factors undermined recovery opportunities: geopolitical tensions in many countries, the slowdown in the economy of most emerging countries, and the fall in the crude oil price. “Maritime activity has been badly hit by the economic downturn. The crisis has particularly hit the dry bulk and liquid markets in the past years, and today the containership sector is in another dramatic, volatile moment.”
Shipping overcapacity had resulted from “acceleration of naval gigantism with the aim to increase capacity and cargo volume and to optimise costs and performances” Extreme competition, reduced profit margins and reduced stays in port were among challenges for the Italians.
There had been a slowdown in infrastructure investments in many developing countries and in Africa following the downward trend in crude oil quotations. An industry under financial pressure meant that mergers and acquisitions could be back on the agenda.
New technologies required increasingly skilled seafarers able to manage the developments. “Human resources are the key element to guarantee a safe, efficient and environmentally-friendly maritime transport.”
In the short term, economic and financial unsustainability had been shown up by the troubles of Hanjin Shipping, and there were various cases of corporate and debt restructuring. It was significant that according to the latest forecasts, the global capacity of shipyards would decrease by 20-30% over the next five years. Many small yards were already disappearing especially in China because of lack of orders, and large yards were cutting their production and workforce. From January to August 2016 new orders amounted to 7m gt – the lowest figure in 25 years.
Mr Messina emphasised the strategic importance of the Mediterranean Sea, saying that 19% of world shipping passes through, 30% of worldwide crude oil, and 65% of world energy resources. At the same time the region was at the centre of world attention because of migration and certain incidents.
Risks of generalised instability, growing conflicts between communities, hotbeds of instability, migrant flows, Islamic ‘caliphates’ and piracy impacted the Mediterranean.
There were 257,186 migrant arrivals by sea from January to the beginning of August 2016, with 3,120 people dead or missing. For the whole of 2015, there were 1,011,712 arrivals. In 2014-2015, voyages of 1,374 merchant ships were diverted in this connection, More than 57,000 people were saved in 270 search and rescue operations, Italian shipping had been the most called-upon with 275 ships called to embark migrants: 12,200 people, and 388 small boats were saved.
The expansion of the Suez Canal, he said, “might have enhanced the centrality of the Mediterranean.” The increased centrality of the Mediterranean in the maritime economy was a trend which continued despite the political instability characterising the area and specific incidents with regard to some of these countries. Of voyages involving the Suez Canal, every day nine Italian-flag ships were in the risk area although the number of piracy cases had strongly decreased.
Returning to the opportunities, Mr Messina said that Italy is between two port hubs. One was northern Europe where there was port infrastructural expansion, investment in new terminals, dredging, and new technologies. The other was North Africa, where some ports thanks to their free zones attract investment and companies which plan to become international.
Offering an Italian point of view on marine insurance, Mr Messina said that “Italian shipowners do prefer domestic companies because of old-established backgrounds, long-lasting relationship based on continuity. They can rely on high expertise of brokers and professionals with a worldwide network ready to support clients at any time.”
Among Italian operations, Generali and SIAT (Unipol Group) were in a leading position both in hull and cargo.” Major international group Swiss Re, which in 2012 set up its hub for European operation in Genoa, is contributing to widen our market and to increase visibility in the international community.”
Lloyd’s had been successful in expanding its involvement in the cargo segment with a significant income. “Over the years Italian underwriters have been spreading their book outside Italian borders. As a matter of fact they are raising their profile abroad more than in Italy with remarkable amounts of premium written in European countries and others.
Italian owners’ policy to be largely covered in Italy proved to be correct and consequently a number of international players have elected to operate in the Italian market as well.”