Managing vessels is something the Special Administrative Region does better than most. The latest installment from our brand new magazine being distributed across Hong Kong Maritime Week.
Hong Kong remains one of the world’s greatest centres for shipmanagement with a number of the biggest brands in the sector headquartered in the Special Administrative Region (SAR).
“Hong Kong has been the historic leader in shipmanagement, with many of the top shipmanagers being headquartered in Hong Kong. This has resulted in Hong Kong becoming a shipmanagement knowledge centre,” says Gautam Chellaram, executive chairman of local dry bulk concern, KC Maritime.
Why Hong Kong?
“One obvious reason,” says Richard Hext, deputy chair of the Hong Kong Shipowners Association, “is that overall, Hong Kong provides an environment that is very conducive to business growth including fantastic airline connections, a most liveable city, easy inward migration and a fantastic maritime ecosystem.”
All business enterprises are looking for stability and freedom, wherever they go, Hext says, let alone government policy initiatives such as tax incentives and the fact that Hong Kong itself has a busy port and a big maritime cluster with many well-established shipowners from different parts of the world. Hong Kong also provides special tax concessions for shipmanagement companies.
Tax
One of the key advantages of Hong Kong is its low tax rate and simple tax regime. Hong Kong does not impose global tax, making it particularly appealing to maritime businesses. This favourable tax environment including the series of maritime specific tax incentives launched in the past few years contributes to the attractiveness of Hong Kong as a preferred destination for shipmanagement companies and others in the industry.
“Hong Kong offers an independent and well-established legal system and a transparent business environment that inspire confidence among international maritime players, and a very high degree of economic freedom,” says Firoze Mirza, managing director of BSM Hong Kong.
Anglo-Eastern, the world’s largest shipmanager, was founded in Hong Kong 50 years ago and remains headquartered in the city.
“We fully recognise its strategic location – it remains a free port with strong international connectivity while also benefitting from a well-established legal framework, skilled workforce, and business-friendly environment,” says the company’s CEO, Bjorn Hojgaard.
Advice
To nurture this booming sector further, Hojgaard suggests the government could provide targeted support through training programmes, industry partnerships, regulatory reforms, and incentives to encourage growth and innovation.
Continued investment in education and training programs focused on developing specialised skills relevant to shipmanagement will be crucial for maintaining a skilled workforce capable of meeting industry demands, urges Chelleram from KC Maritime.
“We believe that the government’s recent efforts to provide tax concessions to shipmanagers, and promotion of the maritime services generally to ship leasing and marine insurance, will further strengthen this sector overall,” says Biju Narayanan, the deputy general manager at Wah Kwong Ship Management who also welcomes the recent relaxed visa arrangements for Hong Kong residents which, he says, will help boost the shipmanagement sector.
Crew retention
One issue all shipmanagers face is crew retention. Attracting and retaining qualified employees is undoubtedly challenging during times of skills shortage.
Officer supply shortage has hit an all-time high and is unlikely to improve, resulting in manning cost inflation, according to a recent study published by shipping consultants Drewry.
Drewry said the 2023 officer availability gap had widened to a deficit equating to about 9% of the global pool, up from 2022’s 5% shortfall and the highest level since it first started analysing the seafarer market 18 years ago.
The consultancy forecasts similar deficit levels through to 2028 based on the limits of new seafarer supply becoming available.
“While these deficit levels are based on vessel numbers together with assumptions on crewing levels and so largely theoretical, they clearly indicate that the seafarer labour market has become particularly tight, with important implications for recruitment and retention as well as manning costs,” Drewry noted.
Market-based pay and good working conditions for seafarers are a prerequisite, says Ioannis Stefanou, the managing director of shipmanagement at Wallem.
Staff retention starts with training and the entry point into the industry, argues Hojgaard from Anglo-Eastern.
“Access to email, messaging, calling and internet is vitally important for seafarer morale, wellbeing and links to family. Poor connectivity contributes to isolation from family and life at home,” states a recent report from Idwal, a British surveying firm.
“We can do better, and many good companies do,” concludes Steven Jones, the founder of the Seafarers Happiness Index.
“However, while the number of vessels which do not allow seafarers the right to be connected outweigh the percentage which have unlimited access, then we clearly still have work to do. It is time for a change, and it should be hoped that the capability to apply a social sense check to the ways in which ships go about their business, then we can build a better, brighter reality for life at sea. We can see the impact of doing good reflected in the market value of the vessel, and that has to be progress.”
This magazine is being distributed across Hong Kong Maritime Week. Splash readers can access the full magazine for free online by clicking here.
