Home Cyprus Cyprus Shipping Industry: Focuses on opportunities with compass Green and Digital Transition

Cyprus Shipping Industry: Focuses on opportunities with compass Green and Digital Transition

2023 has just “set sail” and before we highlight the challenges and prospects that the new year “carries”, let us review the main developments of 2022 and especially how it marked the Shipping sector.

An interview of Cyprus Shipping News with Thomas A. Kazakos, Director General, Cyprus Shipping Chamber

Where did 2022 leave Cyprus Shipping?  What were the main developments of the year that has passed for the sector and how did the Shipping Industry respond to them?

2022 brought a gradual return to normal life and operations after a prolonged period of uncertainty and global recession due to the Covid-19 pandemic.  It also confirmed, that the Shipping sector remains as one of the most important “blood donors” of the Cyprus Economy, transferring 90% of World Trade and offering its vital services to humanity as well as being an integral part of the supply chain for the majority of businesses in this critical period, both at a European and global level.

The Cyprus Shipping Industry continued to be probably the only truly globalised industry in Cyprus, with a very substantial contribution to the Cyprus Economy (7% of GDP) and to have the 11th largest Merchant Fleet worldwide and the 3rd largest in the European Union as well as the largest third-party shipmanagement centre in the European Union, and one of the largest in the world. Also, the renewal of its very competitive and EU approved Shipping Tonnage Taxation System, allowed to maintain the existing Shipping companies and even attract more quality shipowning, shipmanagement and Shipping related companies in Cyprus and maintain the employment of 9000 highly qualified land-based personnel and 55000 seafarers working in companies operating from Cyprus.

In 2022, the Shipping Industry also came across to the negative effects of the war in Ukraine, which greatly affected the global supply chain and the Energy sector, which is directly linked to Shipping.

With regard to the developments pertaining to the Shipping Industry’s “Green Transition”, Cyprus during 2022, had an active role in global efforts to find a sustainable way to apply the environmental regulations concerning the maritime transport sector. It was highlighted once again, that cooperation between industry and regulatory bodies is the way forward and that the immediate implementation of a global fund, is a crucial element for the Shipping Industry to achieve its decarbonisation targets set by the IMO in a faster pace and ensure equal terms of competition worldwide.

What areas Cyprus Shipping shall focus upon in 2023? What are the sector’s needs to continue being a substantial pillar of the Cyprus economy and society?

In order to be able to continue constituting, as it has for many years now, a stable pole of attraction of foreign investment and providing a solution to the problem for the employment of graduates and other Cypriot employees, as well as supporting other sectors, the following improvement measures are required:

  1. “One-Stop-Shipping-Centre

With the unanimous support of all Political Parties in Parliament, the Shipping Deputy Ministry was established and has been operating productively since 2018, which indeed strengthens and promotes the development of Cyprus Shipping. However, in order to be able to upgrade the services offered to the Cyprus Shipping Industry to the extent that they satisfy the constantly changing operational needs of the 11th worldwide and 3rd largest merchant fleet in the European Union, it is imperative to create a specialised “One-Stop-Shipping-Centre” at the Shipping Deputy Ministry.

This new proposed service, will deal with issues involving the establishment and operation of Shipping companies, Cyprus Ship Register, Merchant Shipping Taxation, selected Flag State matters, registration issues with the Immigration Department of European Union (EU) countries citizens who will be employed in Cyprus by Shipping Companies and issuance of relevant certificates, as well as issues of issuance of residence and work permits in Cyprus for non-EU citizens, which will be employed by Shipping Companies.

  1. Formation of a Cyprus Shipping Company with Limited Liability

The recent unanimous approval of the Bill for the formation of a Cyprus Shipping Company with Limited Liability by the House of Representatives will further develop and improve the competitiveness of the Cyprus Flag internationally, as well as to simplify the procedures and the operating regime of the Cyprus Shipping companies that are owners of Cyprus ships is the recent. As such, the Chamber is working closely with the Shipping Deputy Ministry for the immediate implementation of this long-standing request of the Shipping Industry.

  1. Immediate Digitalisation / Automation of the Shipping Deputy Ministry’s Services

The complete Digitalisation/Automation of the services offered by the Shipping Deputy Ministry to Shipping companies, will provide a more flexible, prompt, efficient and integrated customer-oriented service on a 24-hour basis, making Cyprus Shipping substantially even more competitive, and will fulfill this constant request of the Shipping Industry. The digitalisation/automation of all the services provided by the SDM, will create a purely digital environment, shaping the “one-stop-service” support framework, which can be implemented through a specific project funded by the Recovery and Resilience Fund/Mechanism of the European Union.

  1. Establishment of Specialised Financing Institution for Shipping/Transport Sector

The existing ship financing provisions by Cyprus Commercial Banks cannot accommodate the demanding / specialised needs of operational liquidity for Shipowning companies.  There is therefore, a strong need for the establishment of a specialised Financing Institution for the Shipping and Transport Sector, which will focus exclusively on providing competitive finance for the purchase of ships or other forms of transport, through other regional financial institutions funding, thus, supporting the Industry’s “Green” Transformation efforts.

  1. Turkish Embargo on Cyprus ships

Since 1987, it constitutes the “Achilles Heel” of the Cyprus Flag, hindering the further development of the Cyprus Register. It is therefore, imperative for the Cyprus State to follow a multiple-level campaign both at EU and internationally, for the imposition of maximum pressure on Turkey to immediately lift this illegal restriction, taking into account the recent geopolitical developments in Europe and especially, the position taken by the EU with regard to Ukraine.

What lies ahead for Cyprus Shipping?

Undoubtedly, there are challenges ahead, particularly as the Shipping sector faces a challenging journey to sustainably achieve its decarbonisation targets and address the complex issues arising from the fragile geopolitical environment, but there are also opportunities which we need to focus and capitalise on.

History has proved that Cyprus Shipping is a robust Industry and its Shipping Community, has in its foundations, deeply engraved the values of cooperation, responsibility and reliability which are reflected in its steady contribution to the Cyprus Economy and Society.

2023 finds the Cyprus Shipping Industry, given the implementation of the above measures, ready to face the challenges of the new year, to ensure the uninterrupted provision of its essential services and to continue to practically strengthen the political entity of our country internationally.

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