Maritime & <strong>Shipping</strong> Maritime & <strong>Shipping</strong> OPPORTUNITIES AND CHALLENGES The last few years have seen opportunities arise for <strong>Cyprus</strong> shipping in the wake of Brexit and natural gas exploration in the Eastern Mediterranean, however, the biggest trends that are already impacting the sector are rapid tech development, environmental challenges, dealing with decarbonisation and finding alternative fuel options to power global shipping in the future. Ship owners are also facing a predicament of whether to buy ships at this point, when in less than 10 years the tech and other spec requirements could be completely different – making it a costly and perhaps redundant investment. The next five years will be most exciting in terms of satellite communication developments and disruptive tech being introduced to improve safety and efficiency in the industry. Much of core tech being used by shipping companies will be replaced by new smart tech, such as smart weather foresight, smart performance analytics and report alarms. Digitalisation is key to staying competitive, but industry experts say tech and AI will not replace humans anytime soon. Speaking of the human element, shipping executives have voiced concerns that finding competent crew is a growing problem worldwide. It is increasingly difficult to attract young people of high calibre and ambition to choose a career at sea. Seafarers are both the heart and soul as well as the Achilles heel of the industry, and companies are acutely aware that all the tech in the world will never replace a well-trained and experienced crew. Shipmanagement giants such as Columbia Marlow have highlighted the industry’s need for more care and support of crew members whether on- or off-shore, to introduce more perks and better training opportunities and to create a safer working environment. Fintech is also set to bring new ways to raise capital in shipping and introduce better ways of risk profiling for both investors and investments, and growing ship financing possibilities available through <strong>Cyprus</strong> banks will support the future growth and diversification of the sector. Although the banks’ portfolios are still comparatively small, this development will not only increase the size and scope of the maritime cluster and create opportunities, but expand the expertise in this area within <strong>Cyprus</strong>’ financial services sector. Following the financial crisis of 2013, shipping finance virtually stalled in <strong>Cyprus</strong>, but there are signs of a revival. The gap left by the once-dominant foreign banks is being filled by local banks, Greek banks with subsidiaries, and/ or independent entities based in <strong>Cyprus</strong>. Due to the smaller size of these banks, their focus is on providing a close, relationship-based service and being carefully selective of the clients they onboard. For example, local banks consider how the prospective client behaved during the downturn and assess the quality of the clients’ so-called soft assets, such as management and ownership history, with equal precision to assessing the quality of the asset itself. The majority of owners that <strong>Cyprus</strong> banks deal with are small-tomedium companies with a limited fleet of vessels, as larger companies are well catered to by big US and European banks, or Chinese leasing companies. One improvement that shipping executives have been calling for to help <strong>Cyprus</strong> strengthen its maritime centre is to improve flight connectivity and establish more direct flights to other key hubs around the world. One historical challenge of significant impact remains for <strong>Cyprus</strong>. The size of the world fleet has doubled over the last two decades, but currently the <strong>Cyprus</strong> industry is prevented from realising its true potential by the Turkish embargo, which was unilaterally imposed in 1987 on <strong>Cyprus</strong>-flagged ships calling at Turkish ports. A settlement of the <strong>Cyprus</strong> problem would immediately resolve this and dramatically boost the size of the country’s commercial fleet. Pending a settlement, Cypriot officials continue to press for the lifting of the Turkish embargo to be included in any package of confidence-building measures in reunification talks. RIDING OUT THE STORM Although a small economy, <strong>Cyprus</strong>’ shipping sector punches well above its weight, expertly navigating through economic storms and market fluctuations and evolving with new tech coming on stream. Recognised for its competence, safety and multiple advantages, <strong>Cyprus</strong> is clearly capable of competing on a global scale. Although the fullscale impact of the Coronavirus pandemic is yet to be unveiled, what is certain is that global trade and shipping will not emerge unscathed. However, there is always a silver lining to every storm cloud. Maritime industry observers say these developments could also be a blessing in disguise for the <strong>Cyprus</strong> shipping sector, forcing it to fast-track reforms and speed up the introduction of advanced communications services, thus beefing up the cluster to become more efficient in a shorter period of time. With its growing registry and reformed procedures, <strong>Cyprus</strong> will emerge as a more competitive shipping hub once this storm passes – and quite rightfully stand strong as an EU jurisdiction and maritime centre full of potential and ambition. n Discover more at www.cyprusprofile.com <strong>Shipping</strong> accounts for 7% of <strong>Cyprus</strong>’ GDP 1 in 5 vessels under thirdparty management are controlled from <strong>Cyprus</strong> 3rd largest merchant fleet in Europe 11th largest merchant fleet in the world 200+ shipping related companies based in <strong>Cyprus</strong> EU’s largest shipmanagement centre Country Report CYPRUS 2020
THE 2020 CYPRUS COUNTRY REPORT Features in-depth articles on the economy, foreign direct investment, international trade and headquartering as well as detailed sector profiles and insights from <strong>Cyprus</strong>’ 100 most influential political, economic and business leaders shaping the future of their country and its industries. Read Now www.cyprusprofile.com
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