By David Z. Smith, Assistant Director, PwC
Our recent study (published by City of London Corporation) - The UK’s Global Maritime Professional Services: Contribution and Trends – reveals that the UK is the leading global hub for maritime business services. The sector contributes around £4.4bn to the UK economy and leads the way internationally in maritime insurance, law, education and shipbroking.
Industry leaders we spoke to identified a range of strengths behind the UK’s dominance in maritime business services. These included:
- The depth and breadth of expertise – The size of the sector in the UK means that there is a depth of talent and expertise which cannot be matched anywhere else in the world. While some business has moved to other hubs in recent years, much of the most complex work still takes place in the UK;
- The pre-eminence of English Law – English law remains ubiquitous in the maritime sector and is trusted by maritime professionals around the globe. In addition, the English legal system maintains a strong reputation for fairness, making the UK a desirable location to do business;
- The cluster effect – Many of the individual sub-sectors of maritime business services interact with one another. Strength in one part of the cluster therefore becomes mutually reinforcing for the others, with a flow of business and talent between them.
The factors above are difficult for other countries to emulate, but the industry does face growing competition. This competition underlines the importance of government and industry taking action now to preserve the UK’s position as world leader.
In the report we identify three main threats:
- A shift in vessel ownership towards Asia;
- Tax and regulatory burdens in the UK;
- Proactive policies from foreign governments to build their own maritime services hubs.
To respond to these challenges it is essential that UK firms and government continue to invest in maritime education and skills development. Companies must also focus on innovation, either by being at the forefront of emerging industry issues or through the use of data and analytics. Institutions that are important pillars of the maritime business services cluster, like the International Maritime Organisation and the Baltic Exchange, must be maintained.
Despite the challenges, the sector also has a number of opportunities for growth. The sector could encourage inward investment by emerging Asian services companies and drive an increase in shipping capital markets activity in London. By focusing on the growth areas as well as addressing the main challenges, the UK will be able to keep its position as world leader for maritime business services.
For more detail on the advantages, challenges and opportunities for the UK’s maritime business services sector you can read the full report here.