In his first of a series of contributions on the maritime industry in Cyprus, Dr Nektarios Michail gives a brief overview of the Shipping industry in Cyprus today
Cyprus has always been an active player in the world’s maritime scene. Its strategic geographical location, at the crossroads of three continents (Europe, Asia, Africa), the legal system based on the English law, the quality and high level of professionalism in the legal and accounting sectors, as well as the support from the banking system and a favourable tax regime, have enabled Cyprus to play a prominent role in its success as an international shipping centre. According to data from the Department of Merchant Shipping, the Cyprus registry ranks today in the tenth place worldwide (and third in the EU) with 1857 ocean-going vessels and gross tonnage exceeding 21 million.
The success of the Cyprus maritime industry is even greater in the case of ship management companies: an estimated 20% of the world fleet is operated by firms located in Cyprus. Around 150 ship management companies and companies with shipping related activities operate in Cyprus, all with fully fledged offices in the island. Approximately 7,000 shore-based people are employed within the Cyprus maritime cluster, representing approximately 2.5% of the total gainfully employed population. Despite a reduction during the first half of 2016, the provision of services to ships carrying the Cyprus flag increased to 27% of the total revenues during the second half of 2016.
Ship management includes technical management, attending crewing needs, marine engineering, negotiating and agreeing on contracts for oil and freights, and other tasks which address the day-to-day needs of the vessel. These companies employ almost 40,000 seafarers of which 5,000 are EU nationals. According to the Central Bank of Cyprus, ship management revenues increased by 4% to €458 million in the second half of 2016. This corresponds to approximately 5% of Cyprus’s GDP.
The ship management industry in Cyprus remained robust with a stable flow of revenues. Despite the overcapacity and weak demand conditions that continue to characterise most shipping markets (e.g. container and bulk shipping), new data from global shipping markets indicate several important developments and structural changes in the maritime transport sector which have initiated the painful process towards recovery. This is expected to benefit Cyprus’s ship management industry in the future.
The prospects of the industry appear bright, especially considering the significant recent developments in the business and energy sectors in Cyprus. The island is fast becoming a new European hub for imports and re-exports activities linking Europe with the Far East in ways previously unexplored. The maritime industry is expected to seize the opportunities at hand and further increase its presence in Cyprus.
