Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87753
Authors: 
Hernesniemi, Hannu
Year of Publication: 
2012
Series/Report no.: 
ETLA Discussion Papers, The Research Institute of the Finnish Economy (ETLA) 1270
Abstract (Translated): 
The Ministry of Finance commissioned a report from Etlatieto Ltd on maritime operating conditions, competitiveness and the adaptability of this sector. The competitiveness of cargo ship has significantly improved when mixed-nationality crews were allowed and the Tonnage Tax Act went into force. The use of non-EU seamen reduces the labour costs of a ship by 20 to 30 %. The Tonnage Tax Act cuts the taxation of cargo vessels from 10-30 million euros to half a million euros. The mixed-nationality crew agreement does not apply to passenger ships. It is not worthwhile for them to shift to being taxed under the tonnage tax, because their store sales would be subject to special taxes, which would cut profitability significantly. In 2015, 0.1% sulphur limits for maritime transport will go into effect. In new ships, nitrogen oxides and carbon dioxide emissions must be limited. In addition, bilge water and waste disposal regulations will become stricter. These will result in significant pressure on investments. The EU is considering removing the VAT-free sales status of the internal transport, which would lower sales of passenger ships by 55 million euros and profit margins by 25 million euros. If the prevalence of mixed-nationality crews grows at current rates, this would lower shipping subsidies - in 2015 the savings would amount to over 10 million euros. Savings would also come from the rationalization of fragmented training, which would allow raising the level of training. Maritime rescue and VTS centres' control functions could be combined in Helsinki and Turku. The government should concentrate ice breaking operations on safeguarding the transport of foreign trade and give up offshore business activities. The sale of offshore businesses and multipurpose icebreakers would finance new investments in the ice-breaking fleet without any additional debt and its interest expenses.
Subjects: 
Shipping
competitiveness
subsidies
savings and development
JEL: 
L92
L98
H25
K20
Document Type: 
Working Paper

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