Owners Flourish As Yards Suffer

Shipping is now the second largest export earner in Denmark.

Generally speaking, the Danish shipowning community is in good shape, says Jan Fritz Hansen, a director at the Danish Shipowners Association with responsibility for trade and shipping policy.

Although the final figures are not yet available, the shipowner`s association estimates that Danish shipowners turned over approximately DKr50 billion ($6.73 billion) in 1999, and as of October 1999 had nearly 80 newbuildings worth nearly DKr22.9 billion ($3.08 billion) the equivalent of 4,049,000dwt, on order.

But as Danish owners enjoy the fruits of expansion, the prospect of a tonnage tax, and other measures designed to help them, Danish yards have declined, with only A P Moller`s Odense Steel Shipyard enjoying regular input of new orders.

Highlighting the main trends in the shipping business in Denmark, Jan Fritz Hansen says the larger companies, which operate more sophisticated tonnage are doing well, and that many have or intend to order new tonnage, but the situation for numerous small shipowners is not quite so bright.

As Fritz Hansen explains, the proportion of newbuilding orders placed in Danish yards has decreased steadily as more and more owners have taken advantage of low prices in Asia, particularly in China.

In previous years, says Fritz Hansen, getting on for two thirds of orders from Danish shipowners were placed in Denmark; currently, however, that figure is around 25 per cent, and is largely attributable to the orders for container ship companies with the A P Moller group placed at the Odense yard.

More and more of the larger shipowning concerns are turning to Chinese yards for their newbuildings, says Fritz Hansen, where prices 40 per cent lower than elsewhere can still be obtained.

Another reason underlying the trend to ordering overseas is that Danish yards no longer have the capacity to build the ships owners require, but in spite of low prices in Asia, many small shipowners find it difficult to gain access to the capital they need to replace older tonnage.

The quantity of tonnage in the Danish merchant fleet is approaching the DMk7 million, says Fritz Hansen, which although not quite as high as levels experienced in the early 1990s, remains somewhat higher than the figures for late 1980s.

Danish shipping companies are engaged worldwide in almost every aspect of modern maritime activities, ranging from full door-to-door container, passenger roro, double-hulled tankers, advanced product carriers, specialised salvage and offshore supply operations, to more traditional bulk, general cargo and reefer activities.

More than 95 per cent of the tonnage is engaged in international cross trade between foreign ports in all parts of the world. In addition to the tonnage under Danish flag, the industry operates an almost equivalent tonnage chartered in from foreign shipowners or from affiliated foreign companies.

Danish shipowners operate worldwide with their dominant markets being North America, the Far East and Europe. Major market opportunities are being pursued throughout the southern hemisphere, and South America and China are emerging as the two most attractive potential markets for the Danish shipping sector.

Owners are also active in maritime-related areas, such as shipbuilding, offshore drilling, warehousing, storage, trucking, rail transport, distribution logistics and selling and purchasing ships. They employ some 20,000 nationals and 3,000 foreigners in the shipping industry alone. It is estimated that the whole maritime sector in Denmark employs some 45,000 nationals.

Danish maritime activities also include nautical schools providing excellent nautical training as well as research and development, international brokerage, coastal and ferry services, maritime financing and insurance.

“The national maritime authorities play an active, supportive role in the Danish maritime sector,” explains Fritz Hansen. Like many other European countries, the Danish authorities are considering legislation to create a tonnage tax, a move that is expected to be the subject of new legislation this spring.

Also likely to be the subject of legislation this spring are moves to enable Danish ferry operators to operate under the aegis of the Danish International Register (DIS). Geographical demarcations on which companies are entitled to join the DIS currently mean that international ferry companies and those that operate within Denmark cannot take advantage of the benefits of joining the Danish register.

The foremost advantage of joining the DIS is that Danish seafarers working for companies in the register do not have to pay tax. This enables the companies that employee them to agree new, low cost wage structures with the collectives that represent employees, and thus reduce operating costs.

However, moves are afoot to ensure that, in future, domestic ferry companies that operator internationally, but not those that are purely domestic operators, will be able to join DIS, and thus boost their competitiveness. Without this opportunity, some ferry operators say they would be forced to flag out, which could lead to Danish jobs being lost.