Cyprus Central Bank – Ship Management Survey second half 2019


( The Central Bank of Cyprus has published the results of the Ship Management Survey for the second half of 2019. Cyprus ship management shows ‘record’ revenues in 2H 2019. Revenues from Cyprus ship-management companies, by far the biggest money earner for the maritime cluster, reached an all-time high of €581 mln in the second half of 2019, up €58 mln from the first half, to reach €1.104 bln.

The main developments concerning the transactions of resident ship management companies, are summarized as follows:

  • Ship management revenues amounted to €581 million during the second half of 2019, recording an increase by €58 million when compared with the first half of 2019.
  • The main exporting destinations for the services of the ship management industry include Germany, Greece, Malta and Switzerland.
  • The industry’s payments decreased by €15 million during the period under review.

Central Bank of Cyprus data also suggests some changes in revenue by country of billing or by category of ship management, with an underlying stable trend of increasing income.

Shipping Deputy Minister Natasa Pilides said it was a “record” turnover and saw a 7% increase from 2017 when revenue from ship management amounted to €1.034 bln.

The rise is generally attributed to Cyprus’ regime of competitive management fees, as well as the low-tax system based on the tonnage of a vessel, that was renewed by parliament for a further 10 years last week.

The central bank’s Ship Management Survey also shows that the sector’s contribution to the economy’s gross domestic product (GDP) climbed from a steady 4.9% recorded from early 2018 to 5.2% in the second half of 2019.

This was fractionally below the 5.3% seen in 2015 when shipping was the main driving force in the economy’s recovery following the banking collapse and financial meltdown, obliging Cyprus to seek a €10 bln bailout from the ‘Troika’ of the European Union, European Central Bank and the IMF.

The shipping cluster is conservatively estimated to be worth 7.5% of GDP through revenues from ship management, ship ownership and other services, including legal and audit, training and telecommunications.

The Cyprus Shipping Chamber, the umbrella organisation that accounts for the majority of maritime companies, said shipping’s contribution to the economy demonstrates its robustness and the tangible prospects for its further development.

“The economic contribution of the local shipping industry reaches such high levels in only a few other maritime nations, so it is important to receive the appropriate financial and operational support, to deal with the effects of this pandemic crisis, keeping world trade and maritime transport moving,” the CSC said in an announcement.

The central bank also warned that the 2H2019 survey was for the period between July and December 2019, which preceded the outbreak of the coronavirus pandemic.

“Consequently, it does not contain any information concerning the impact of the pandemic COVID-19 on the ship management industry. We reserve this analysis for future editions of the report,” the central bank report said.

In its general remarks, the survey noted the shipping sector faced several challenges in the second half of 2019, that derived mainly from changes in environmental regulations, including the reduction in the use of fossil fuels, with an impact on the total value of seaborne trade associated with oil and liquefied natural gas and a possible reduction in the values, profitability and fleet size associated with oil tankers.

“In contrast, bulk carriers and container ships are more robust to these changes, since they can also be used for transferring substitute commodities,” the survey said.

Historically, consumer spending and increasing demand in the US have exerted considerable influence on seaborne trade, especially during periods of trade liberalisation and lower tariffs. Possible negative developments in the US economy, like for example a slowing down of manufacturing growth and a continuation of the tariff war with China, would exert pressure on shipping markets.

As regards Cyprus ship management revenues by country of payment, the central bank survey said there was a decline in Germany’s contribution, from 48% in 2019H1 to 45% in 2019H2, with a considerable increase in the revenue share from Switzerland, from 3% of the total revenues in 2019H1 to 10% in 2019H2.

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Source: Cyprus Central Bank

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