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Water Transport
Employment in Europe
The Role of GovernanceCase-Specific Policy Analysis

Water Transport
Employment in Europe
The Role of GovernanceCase-Specific Policy Analysis

The International Transport ForumThe International Transport Forum is an intergovernmental organisation with 66 member countries. It acts
as a think tank for transport policy and organises the Annual Summit of transport ministers. ITF is the only
global body that covers all transport modes. The ITF is politically autonomous and administratively
integrated with the OECD.
The ITF works for transport policies that improve peoples’ lives. Our mission is to foster a deeper
understanding of the role of transport in economic growth, environmental sustainability and social
inclusion and to raise the public profile of transport policy.
The ITF organises global dialogue for better transport. We act as a platform for discussion and prenegotiation of policy issues across all transport modes. We analyse trends, share knowledge and promoteexchange among transport decision makers and civil society. The ITF’s Annual Summit is the world’s largest
gathering of transport ministers and the leading global platform for dialogue on transport policy.
The Members of the Forum are: Albania, Armenia, Argentina, Australia, Austria, Azerbaijan, Belarus,
Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Cambodia, Canada, Chile, China (People’s Republic of),
Colombia, Costa Rica, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany,
Greece, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Latvia, Liechtenstein,
Lithuania, Luxembourg, Malta, Mexico, Republic of Moldova, Mongolia, Montenegro, Morocco, theNetherlands, New Zealand, North Macedonia, Norway, Poland, Portugal, Romania, Russian Federation,
Serbia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Tunisia, Türkiye, Ukraine, the United ArabEmirates, the United Kingdom, the United States and Uzbekistan.
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Case-Specific Policy Analysis Reports
The ITF’s Case-Specific Policy Analysis series presents topical studies on specific issues carried out by the
ITF in agreement with local institutions. Any findings, interpretations and conclusions expressed herein arethose of the authors and do not necessarily reflect the views of the International Transport Forum or theOECD. Neither the OECD, ITF nor the authors guarantee the accuracy of any data or other information
contained in this publication and accept no responsibility whatsoever for any consequence of their use.
This work is published under the responsibility of the Secretary-General of the ITF. This document, as wellas any data and map included herein, are without prejudice to the status of or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the name of any territory,
city or area.
Cite this work as: ITF (2023), “Water Transport Employment in Europe: The Role of Governance”,
International Transport Forum Policy Papers, No. 118, OECD Publishing, Paris.

Acknowledgements
This report was written by Olaf Merk of the International Transport Forum (ITF). It builds on expert
discussions during two workshops and Steering Group meetings organised by the European Transport
Workers Federation (ETF). The author would like to thank Estelle Brentnall (ex-ETF) and Berardina Tommasi(ETF) for their support to the project. The report has benefited from feedback on a draft version by
Elisabeth Windisch (ITF), Berardina Tommasi (ETF) and a review group from the ETF. Lauren Chester (ITF)
managed the editorial process. This is an ETF EU-funded project.

TABLE OF CONTENTS

Table of contents
Executive summary ........................................................................................................................ 6
Water transport: Definition and interlinkages ................................................................................. 8
Backward and forward linkages ...................................................................................................... 8
Vertical integration........................................................................................................................ 10
Spatial linkages .............................................................................................................................. 12Interlinkages between water transport sectors ............................................................................ 13
Towards a holistic perspective on water transport? ..................................................................... 13
Water transport employment....................................................................................................... 15
The strategic value of water transport employment..................................................................... 15
Water transport employment numbers ........................................................................................ 16
Water transport labour costs ........................................................................................................ 19
Quality of water transport labour ................................................................................................. 25
Governance of water transport .................................................................................................... 35
Flags of convenience ..................................................................................................................... 35
Second registries ........................................................................................................................... 37
State aid ........................................................................................................................................ 39
Minimum labour standards in territorial waters ........................................................................... 42
Coherence of governance frameworks ......................................................................................... 42
Notes ........................................................................................................................................... 44
References ................................................................................................................................... 45

FiguresFigure 1. Water transport employment in EU/EEA countries (2008-19) ......................................... 16
Figure 2. Maritime transport employment in EU countries (2014-19) ............................................ 17
Figure 3. Domestic seafarer numbers in France, Germany and the United Kingdom ...................... 18
Figure 4. Fisheries employment in EU countries (including the United Kingdom) (1995-2019) ....... 19
Figure 5. Crew costs as a share of global ship operating costs (2020) ............................................ 20
Figure 6. Crew costs as a share of global ship operating costs (2000-18) ....................................... 21
Figure 7. Total personnel costs (in million euros) for EU/EEA ........................................................ 22

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TABLE OF CONTENTS

Figure 8. Personnel costs (EUR) per full-time equivalent for EU/EEA ............................................. 22
Figure 9. Average daily manning costs (USD) per ship per day for bulkers andtankers (2000-18)......................................................................................................................... 23
Figure 10. Average daily manning costs (USD) per ship per day in roll-on/roll-off (2000-21) .......... 24
Figure 11. Average daily crew costs and operational profit (USD) per ship
per day in container shipping (2012-21) ....................................................................................... 24
Figure 12. Number of very serious casualties by EU and non-EU flag vessels (2000-21) ................. 26
Figure 13. EU-flag share of global fleet and EU-flag share of very serious casualties (2000-21) ...... 26
Figure 14. Crew fatalities in fisheries and non-fisheries (2021) ...................................................... 27
Figure 15. Average fatal accident rate for selected European merchant fleets (1945-2009) ........... 28
Figure 16. Fatal incidence rate for selected OECD fisheries fleets (1945-2009) .............................. 29
Figure 17. Accidents in European ports with chemical substances (1911-2017) ............................. 30
Figure 18. Crew abandonment cases, EU flagged and non-EU flagged vessels (2004-22) ............... 31
Figure 19. Top 10 flag states for crew abandonment (2004-22)..................................................... 31
Figure 20. Crew abandonment cases by EU flag (2004-22) ............................................................ 32
Figure 21. Crew abandonment cases, EU and non-EU ports (2004-22) .......................................... 32
Figure 22. Seafarer deaths by suicide in the United Kingdom, Denmark and Poland fleets ............. 33
Figure 23. Share of global ship capacity with flags from Cyprus, Malta andother EU countries, 1980-2018..................................................................................................... 36

TablesTable 1. Water transport in the European statistical classification NACE Rev 2 ................................ 9
Table 2. Backward linkages of water transport sectors .................................................................. 10
Table 3. Forward linkages of water transport sectors .................................................................... 10
Table 4. Vertical integration in water transport sectors in the EU .................................................. 11
Table 5. Top 15 ranking of European ports for the different water transport sectors ..................... 13
Table 6. Labour costs as a share of operational costs in water transport sectors ........................... 20
Table 7. Second shipping registers in European countries ............................................................. 37
Table 8: Nationality requirements for crews in selected shipping registries ................................... 38

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EXECUTIVE SUMMARY

Executive summary
What we did
This report assesses the current state of water transport employment in Europe and links it to watertransport governance. Authorities generally consider the skillset required by employees in water transport
strategically important. However, evolving governance frameworks might have undermined the possibilityof maintaining these skills in Europe. This report assesses incoherence in government policies and provides
recommendations for reform to ensure the relevant skills needed in water transport can be maintained. It
builds on discussions with experts and relevant stakeholders, as well as workshops with European
Transport Workers Federation member organisations.

What we foundThe data on employment in water transport in Europe are limited. The existing numbers suggest thatgeneral employment by European companies has increased in sea and coastal transport, inland waterway
transport and maritime services. By contrast, it has halved in the fisheries sector between 1995 and 2019.
There are no reliable figures on the number of seafarers that are nationals of the EU/EEA.
Labour costs make up a considerable share of the operating costs of water transport sectors, ranging fromaround a third to more than half of their operating costs. Trends in labour costs have differed acrosssectors. Labour conditions in water transport have improved in some respects but worsened in others.
Chemical accidents in ports have become fewer since the 2000s, and working and living conditions on
ships improved since 2010. At the same time, there is no discernible trend towards fewer fatal accidents
over the past decade. Fatalities among crew members have significantly decreased since the 1950s in bothmerchant shipping and fisheries. However, this trend has halted since the 2000s. Also, a record number of
seafarers were abandoned without pay by ship operators in 2022. Concerning accidents, EU-flagged
vessels have not necessarily performed better than non-EU-flagged vessels: their share in “very serious
casualties” is higher than that of the EU-flagged fleet share.
Maritime transport policies in Europe can be interpreted as an attempt to adapt to the emergence of open
shipping registries by developing countries in the 1950s and 1960s. After a period of rapid decline of mostof their domestic flags in the 1970s, various European countries decided in the 1980s to reinvigorate theirnational shipping sectors by creating second shipping registries and granting state aid to their maritime
sector, in particular through the tonnage tax systems.
Maritime transport policies often suppose that state aid for the maritime sector supports seafarer
employment. However, there are few indications for effects on employment. There are three reasons forthis. First, state aid is not directly linked to employment. Second, the link between a ship operating undera national flag and employing nationals of that flag is weak. Third, ships in second registries are also eligible
for state aid.

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EXECUTIVE SUMMARY

What we recommend
Ensure European maritime policies support the development of seafarers’ skills
Seafarer skills are generally not addressed coherently and consistently in EU policies. Policies related to
employment data, shipping registries and state aid for shipping should be reviewed and adjusted to ensure
the required skills are available.
Improve employment statistics for water transport employment in Europe
National statistics agencies in Europe could start collecting data on the number of EU/EEA seafarers andthe types of vessels on which they are deployed. This will help orient national and EU policies to strengthen
seafarer skills in Europe.
Make sure that there is a “genuine link” between state and ship in shipping registries
To improve safety standards and labour standards in general, on board ships, governments must ensurethat the “genuine link” between state and ship required by the United Nations Convention on the Law of
the Seas is enforced in their shipping registries, including the open and second registries.
Link state aid for the maritime sector more directly to employment-related objectives
If sustained, subsidies such as the tonnage tax and wage-cost reductions could be used in more targeted
ways to incentivise desired labour-related outcomes in the maritime transport sector. For example, EU
maritime state aid could be limited to ships with a minimum share of seafarers from EU/EEA nations. It
could also be made conditional on shipowners and operators actively supporting EU/EEA seafarers’
education, e.g. through stipends, mentoring at nautical schools and programmes for seafarers (cadets andratings). In addition, the link between the national flag and water transport employment could be
strengthened, e.g. by more stringent manning requirements or abolishing the exemptions from nationality
requirements for crews.
Limit the eligibility for state aid of ships registered in second shipping registers
Governments could restrict the eligibility of ships to receive state aid to vessels registered in a first registry.
Ships in a second or international registry that are declared flags of convenience should not be eligible.
The EU Maritime State Aid Guidelines could be adapted to indicate the second registries for which theregistered ships would not be eligible for state aid.

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WATER TRANSPORT: DEFINITIONS AND LINKAGES

Water transport: Definition and interlinkages
This report focuses on employment in the water transport sectors in Europe. It considers the following
water transport sectors: shipping, port terminals, harbour towage, inland waterway transport andfisheries. This report will, as much as possible, align to the statistical classification of economic activities
used in the EU, the NACE, which stands for “nomenclature statistique des activités économiques dans la
Communauté européenne”. This classification, developed in the 1970s, was revised in 2007. This revised
version is known as NACE Rev 2. The main categories relevant to the water transport sector are listed inTable 1. Whereas the shipping, inland water transport and fisheries sectors are identified as separate
sectors, this is not the case for port terminal handling (which is part of the broader category of cargohandling) and harbour towage (which is part of the broader category of service activities incidental towater transportation). This means there are no official statistics on port terminal handling and harbour
towage as separate economic sectors.
There is a tendency to frame water transport as part of a larger economic sector, as evidenced by the
emergence of terms such as “blue economy” and “ocean economy”. Despite differences in definitions,
there is a broad understanding that “blue economy” and “ocean economy” refer to the economic activities
related to oceans, seas and coasts. Several international and supra-national organisations have developed
programmes in this area. For example, the European Union has developed a strategy for a sustainable blue
economy in the European Union (EC, 2021) and releases a report every year on the state of the EU blue
economy (EC, 2022). The OECD has initiated an Ocean Economy programme with related publications tomonitor policies for ocean economic activities.
The composition of blue economy sectors and their interrelations requires investigation. This report will
start by assessing the links between the different water transport sectors. The interrelations between
these different sectors will be explored by examining three kinds of interrelations: backward and forward
linkages, vertical integration and spatial linkages.

Backward and forward linkages
A traditional tool in economics to assess the interrelations of economic sectors is the assessment of
backward and forward linkages. Backward linkage refers to production in a certain economic sector
requiring inputs from other economic sectors. Forward linkages refer to an economic sector's productbeing supplied as input to another economic sector. For example, a tyre manufacturer has backward
linkages with rubber producers and forward linkages with car manufacturers. Similar backward andforward linkages are at play in the blue economy. So the question is: to what extent is each blue sector a
supplier of another blue sector? In this report, these linkages are identified by estimating the extent towhich the output of one sector (e.g. terminal handling) provides a cost to the other sector (e.g. maritime
shipping), as provided in table 2. We also show the dependence of that sector on the payments comingfrom the other sector, provided in Table 3.

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WATER TRANSPORT: DEFINITIONS AND LINKAGES

Table 1. Water transport in the European statistical classification NACE Rev 2
SectorDefinition

Sea and coastal watertransport

50.1, 50.2 NACE Rev 2:•
operation of excursion, cruise or sightseeing boats•
operation of ferries, water taxis etc.
•
renting of pleasure boats with crew for sea and coastal water transport•transport of freight over seas and coastal waters, whether scheduled or not•transport by towing or pushing of barges, oil rigs etc.
•
renting of vessels with crew for sea and coastal freight water transport
50.3, 50.4 NACE Rev 2:•transport of passengers and freight via rivers, canals, lakes and inland waterways, including insideharbours and ports•
renting of pleasure boats/vessels with crew for inland water transport
52.22 NACE Rev 2:•
operation of terminal facilities such as harbours and piers•
operation of waterway locks etc.
•
navigation, pilotage and berthing activities•
lighterage, salvage activities•
lighthouse activities
52.24 NACE Rev 2:•
loading and unloading of goods or passengers’ luggage irrespective of the mode of transport•
stevedoring•
loading and unloading of freight railway cars
03.11 NACE Rev 2:•
fishing on a commercial basis in ocean and coastal waters•
taking of marine crustaceans and molluscs•
whale catching•taking of marine aquatic animals•
activities of vessels engaged both in marine fishing and in processing and preserving of fish•gathering of other marine organisms and materials

Inland water transport

Service activities incidental
to water transportation

Cargo handling

Marine fishing

As these tables show, there are strong economic linkages between shipping companies, ports and terminal
operators. Terminal handling costs make up around 25% of the operational costs of shipping companies.
Most of the ports’ revenues come from concession fees paid by terminal operators and port dues paid byshipping companies. There is also a strong economic link between towage and shipping, as almost all
revenues of towage companies come from fees from shipping companies.
Various other economic linkages are less strong but still noticeable. Towage companies often pay for berth
use and electricity in ports. Fisheries often do not pay port user fees, with a few notable exceptions, e.g.
Ireland, Canada, Vietnam and Costa Rica. Inland shipping companies pay port dues in the main seaports(representing a small part of the budget of seaports) and in inland ports (representing a large part of thebudget of inland ports). Terminals and inland shipping companies get most of their income from shipping
companies, except for hinterland transport services paid for by forwarders or shippers.
The presence of significant linkages has implications for competition policy. Most competition policies
focus on assessing the effects of competitive relations between providers of goods and services and theircustomers, e.g. in terms of monopoly or oligopoly. They generally pay much less attention to thecompetitive relations of providers of goods and services and their suppliers, e.g. in terms of monopsonyand oligopsony. Considering the large dependency of ports on either shipping dues or concession fees,
these last competitive relations are of great importance. Suppose only a few shipping companies (in caseof an oligopsony) provide almost all of the ship traffic to a port. In that case, they will have huge leverageon port fee tariffs, as they can threaten to divert traffic to other ports if tariffs are not reduced (ITF, 2018).
This highlights the importance of regulations that facilitate industry concentration and collaboration and

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WATER TRANSPORT: DEFINITIONS AND LINKAGES

allow or prohibit joint negotiations of shipping companies with ports and port service providers (ITF,
2019a). This report will steer clear from discussions on competition policy for the shipping sector while
noting that alternative proposals have been formulated that would reserve certain privileges – such as
anti-trust exemption – only for small shipping operators (German Competition Authority, 2022).
Table 2. Backward linkages of water transport sectors
SectorType of costs

Shipping
Shipping
Shipping
Terminals
TowageInland shipping
Fisheries

Port costs
Terminal handling costs
Inland shipping costs
Concession fees
Port costs
Port costs
Port costs

Share of operational costs
5%25%
Variable10%< 5%
Not available< 5%

Source: based on annual financial reports of shipping companies, ports, terminal operators, towage companies
and fisheries.

Table 3. Forward linkages of water transport sectors
Sector

Sources of income

Ports
Ports
Ports
Ports
TowageVessel charges
Concession fees
Inland vessel charges
Rent from towage companies
Fees from shipping companies

Share of operational income
30-60%
30-60%
0-4%
< 5%
100%

Source: based on annual financial reports of shipping companies, ports, terminal operators, towage companies
and fisheries.

Vertical integration
Vertical integration between different water transport sectors has become significant over the last decade.
Most of the vertical integration is driven by shipping companies, especially in container shipping. Various
carriers, such as Maersk, COSCO and CMA CGM, aspire to become global integrators of containerisedflows. Such strategies are reflected in more control by carriers over the different parts of the maritime
logistics chain. For example, Europe's share of carrier-controlled terminal operations is now around 30%.
Some carriers have their own towage subsidiary or have invested in logistics, road and rail freight capacity
and capabilities. Although vertical integration is not a particularly new tendency in container shipping, it
has likely received new impetus in the era of dominant container shipping alliances, as alliances
homogenise shipping services leaving land-based services as practically the only way to distinguish oneself
from competitors (ITF, 2018).
There are considerable differences per country in the vertical integration of water transport. For example,
carrier-controlled terminal operators carry out more than half of the cargo handling in Greece and Spain.
In contrast, this percentage is around 15% in Germany and zero in the United Kingdom. The world’s largest
towage company, Svitzer, forms part of the Maersk group and is active in 120 countries worldwide. Carriers
are active in offering hinterland transport services in various countries, e.g. COSCO has dry ports in
Kazakhstan, Madrid and Zaragoza. Carriers like MSC, ONE and HMM own haulage companies, whereas

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WATER TRANSPORT: DEFINITIONS AND LINKAGESCMA CGM, MSC and Maersk created subsidiaries to organise inland water transport, such as from the main
French ports Le Havre and Marseille (Frémont et al., 2009).
At the same time, there are also vertical integration tendencies driven by other stakeholders in themaritime logistics chain. For example, the terminal operator Hutchison Ports Holdings has invested in dry
ports in some of the countries in which it has large terminal interests, such as the Netherlands and Mexico(OECD, 2017).
Vertical integration comes with mixed effects for the maritime logistics chain. On the positive side, this
could allow carriers to better co-ordinate their shipping activities as part of a whole logistics chain. On theother hand, it also risks discriminatory treatment – as the carrier can, as terminal, towage or logistics
operator, provide worse service to competing carriers, especially in concentrated markets. For example,
carriers often use their terminals as leverage to bring down rates in independent terminals and play out
ports against each other (ITF, 2018; ITF, 2019a).
Within the EU, vertical integration is advanced, particularly regarding container terminals, where container
carriers have a 30% market share of container terminal operations, and harbour towage, where container
carriers have an 18% market share (Table 4). Container terminal operators controlled by container shipping
companies are APM Terminals (Maersk), TIL (MSC), Terminal Link (CMA CGM) and COSCO Ports (COSCO).
These terminal operators run terminals in the main European ports. In harbour towage, the main verticallyintegrated companies are Svitzer, a Maersk subsidiary and MedTug, controlled by MSC. Their activities in
Europe represent around 18% of the market share in Europe.
To a considerable extent, other shipping sectors are vertically integrated, even if it is more difficult toquantify the degree of vertical integration. Main dry bulk shipping companies like Bunge and Louis Dreyfus
have a network of dedicated terminals, although more often outside Europe. Ferry companies in Europe
have their own terminals and berths. Many oil terminals worldwide are integrated with the largest global
oil companies, even if there are also independent tank terminal operators, such as Vopak and Oiltanking,with a large terminal presence in Europe.
Links via vertical integration are less common among the other water transport sectors. Direct
participation of shipping companies in port authorities are rare, with the majority stake of COSCO in theport authority of Piraeus as the most notable exception. In addition, there are a few examples of terminal
operators that carry out port authority functions, especially in private ports in the United Kingdom, e.g.
Felixstowe. In the fisheries industry, there are a few examples of dedicated private wharfs in the Pacific,
but there are no such dedicated wharfs in EU ports.
Table 4. Vertical integration in water transport sectors in the EU
SectorActive inContainer shipping
Container shipping
Shipping
Shipping
Terminal

Container terminals
Inland shipping
TowagePorts
Ports

EU market share
30%
<5%
18%
< 5%
< 5%

Source: based on annual financial reports of shipping companies, ports, terminal operators, towage companies
and fisheries.

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WATER TRANSPORT: DEFINITIONS AND LINKAGES

The exceptionally high profits of container shipping companies since 2020 have accelerated vertical
integration. These profits provided companies with funds to acquire port terminals, forwarders, and freightairlines and to achieve their ambition of becoming vertically integrated providers of door-to-door logistics
solutions. These ambitions were articulated and operationalised well before the Covid-19 pandemic, but
the newly-found profitability provided a new impetus for vertical integration, including in air freight. For
example, Maersk ordered five freight aeroplanes and acquired the freight forwarder Senator International,
which has an air freight fleet. CMA CGM launched its airline in February 2021, acquiring four freighters to
be operated by Air Belgium and ordering two additional freighters in September 2021 (ITF, 2022a).
A related policy discussion is on screening foreign investments in infrastructure, including water transport
infrastructure. Some countries, such as the United States, have mechanisms for screening foreign
investments, which might hinder foreign companies' acquisition of controlling stakes – either shipping
companies or other companies – in domestic ports. A European foreign direct investment (FDI) screening
mechanism was adopted in 2019 and came into force in 2020. It promotes co-operation, information
sharing and a minimum level of transparency regarding FDI control between the European Commission
and member states. Still, it does not replace or impose national FDI screening mechanisms. EU member
states remain largely autonomous in dealing with foreign investment.

Spatial linkages
A third way to identify linkages between water transport sectors is to assess to what extent the activitiesof these sectors are spatially clustered in the same ports. To map this, one can establish rankings of ports
according to their activity related to shipping, container shipping, harbour towage, inland water transportand fisheries (Table 5). The statistics these rankings are based on are publicly available for total shipping,
container shipping and inland water transport activity but have to be collected for harbour towage andfisheries. The port names in bold indicate the top 15 ports for cargo shipping.
This mapping shows that harbour towage is spatially clustered with shipping activity. However, the spatial
linkages cannot be convincingly shown due to a lack of comparable data on harbour towage activity indifferent European ports. Table 5 shows a significant overlap between container shipping and othershipping activities: most of the largest 15 ports in terms of total cargo handled are also in the top 15 rankingof container ports.
Fisheries activities are spatially unrelated to shipping activities: European ports with the highest fish
landings per port completely differ from large European cargo ports. Most of the significant fisheries ports
are specialised in this activity and do not handle much cargo, with a few notable exceptions, e.g. Vigo.
Inland shipping activity is concentrated in a few large European seaports, such as Rotterdam, Antwerp,
Amsterdam and Constanta that are connected to the Rhine and Danube inland waterway corridors. Mostof the ports with inland shipping activity are inland ports.

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Table 5. Top 15 ranking of European ports for the different water transport sectors
Total cargo
Rotterdam
Antwerp
Hamburg
Amsterdam
Algeciras
Marseille
Valencia
TriesteLe Havre
PiraeusBarcelona
Immingham
LondonGenoa
Bremerhaven

Containers
Rotterdam
Antwerp
Hamburg
Piraeus
Valencia
Algeciras
Bremerhaven
Felixstowe
Barcelona
Gioia Tauro
Le Havre
Genoa
Southampton
GdanskLondonTowageInland shipping

Fisheries

Antwerp
Rotterdam
Contanta
Hamburg
Bremerhaven
VeniceRotterdam
Antwerp
Amsterdam
Duisburg
Ghent
Contanta
Vlissingen
Moerdijk
Terneuzen
Köln
Hamburg
Mannheim
Neuss
Karlsruhe
Born

SkagenThyboron
Killybegs
HanstholmPeterhead
Vigo
Sesimbra
A Coruna
Castletownbere
Lerwick
PasaiaFraserburgh
Bahia de Cadiz
Scrapster
IJmuidenNote: total cargo as measured by tonnes handled. Containerised cargo in TEUs handled. Towage in terms oftugboats operating in ports. Inland shipping as tonnes in inland waterway cargo handled per port. Fishing as total
fish landings per port in tonnes. The 15 largest ports in terms of total cargo volumes are indicated in bold.
Source: data collection by the authors.

Interlinkages between water transport sectors
The analysis of the three ways to assess interlinkages – described above – provides indications of theoverall linkages between the different water transport sectors. The strongest interlinkages appear
between the shipping and terminal sectors; and between shipping and harbour towage. In both cases,
there are high scores on all three types of interlinkages: backward and forward linkages, vertical
integration and spatial clustering. There are also strong linkages between terminals and ports; andbetween shipping and ports. In these cases, strong backward and forward linkages and spatial clustering
exist but only limited vertical integration.
Less strong linkages exist between inland shipping on the one hand and the shipping sector and ports on
the other hand. This is logical because relatively few large seaports are connected to inland waterways.
The weakest linkages exist between the fisheries sector and the other water transport sectors identified
in this report (shipping, terminals, towage and inland water transport). Fisheries activities are related todifferent ports than large cargo ports. They also have limited inter-sectoral and functional links with theother water transport sectors. Rather than interlinked, the fisheries sector seems complementary to theother water transport sectors.

Towards a holistic perspective on water transport?
The analysis shows significant interlinkages between most water transport sectors, except fisheries. The
corporate reality of many water transport sectors consists of interrelations and interdependencies. For
example, shipping companies are clients of terminals, ports and towage companies; ports grantconcessions to terminal operators, and shipping companies control a substantial share of terminal and

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WATER TRANSPORT: DEFINITIONS AND LINKAGES

towage operations. Moreover, shipping companies, towage companies and terminal operatorsconcentrate their activities in a relatively select number of ports. Sometimes, these interdependencies
between water transport sectors can be so strong that they create concerns of abuse of market power.
For example, when a dominant position in one market (e.g. shipping) is used to force clients (e.g. shippers)
to subscribe to services in other markets (e.g. terminal handling or towage service) (ITF, 2018). Growinginterlinkages require strong competition policies that can detect and avoid abuses of market power.
It could be argued that the interlinkages go beyond water transport. The vertical integration of container
carriers extends well into land-based logistics, freight forwarding, inland transport and aviation. For
example, the market share of carrier-controlled freight forwarding activity could be around 15% of the
global market share. At the same time, terminal operators have also integrated with other parts of thetransport chain. For example, PSA International has developed freight forwarding services, and DP World
has ambitions in freight logistics and acquired Unifeeder, a coastal shipping operator. Hutchison Port
Holdings has developed a network of inland terminals connected to its main hub port terminals.
The interlinkages have become increasingly global. The largest companies in the different water transport
sectors – such as shipping, terminal operations and harbour towage – have approached global reach andcoverage of their networks and services. This means that corporate decisions on strategy are increasingly
concentrated in a few places, often outside Europe. For example, around half of the container terminal
capacity in Europe is controlled by non-European companies. This global corporate concentration raises
the question of the ultimate ownership and control of such corporate entities, ranging from states,
sovereign wealth funds, and institutional investors to other entities. This is particularly relevant if
companies partly owned by sovereign wealth funds of non-EU states receive state aid from EU countries.
The reality of public policies is, in many cases, not well aligned with the corporate reality of interrelatedparts of freight transport chains. Despite an increased focus on holistic policy frames – such as the ocean
economy – there still is a pre-dominant policy practice of compartmentalisation. Many sector-specificpolicies – especially for maritime shipping – create competition-related tensions when shipping companies
can use shipping-specific privileges, such as anti-trust exemptions and fiscal exemptions, to compete innon-shipping markets (ITF 2018; 2019a; 2019b). One of the challenges for policy makers is to provide
conditions for fair competition in an increasingly vertically integrated water transport sector.

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WATER TRANSPORT EMPLOYMENTWater transport employment
This chapter provides an overview of water transport employment in Europe. It sets out why numerous
governments consider water transport employment of strategic importance. Then it presents data on thequantity, cost and quality of European water transport employment.

The strategic value of water transport employment
Many countries – and supra-national organisations such as the European Union – have developed strategic
policy documents that acknowledge water transport's strategic value. The elements that could constitutethis strategic value are related to the value of maritime skills and competencies, spillover effects tomaritime industry clusters and safety and security concerns.
Sustaining maritime skills and competencies means that countries will not depend on foreign workers forwater transport activities that they consider strategic, e.g., energy, food and certain commodities.
Considering that the market for seafarers has become globalised, seafarers from developing countries
compete with those from developed countries. Whereas a higher level of qualifications to some extent
compensated for the higher cost of seafarers from developed countries, this equation has started tochange as non-OECD seafarer qualifications are increasing. At the same time, there are concerns about
the qualifications of EU seafarers. For example, stakeholders in France have pointed to the decreasing
quality of maritime training in France due to a lack of funding, which has intensified competition with highly
qualified non-EU seafarers trained in institutes that have increased in quality (ITF, 2019b). Moreover, thelevel of cadet entries from European countries is low compared to forecast demand (ISF/BIMCO, 2020). As
it can take more than ten years before a trainee becomes a senior officer, a low level of EU cadet entries
might contribute to a rise in non-European seafarers and could further replace EU seafarers with similarly
qualified seafarers from Asia.
Seafarer competencies might have some effect on the quality of the maritime cluster. An increasing
number of countries aim to stimulate maritime clusters. These are essentially platforms for different
maritime sub-sectors to meet and exchange. Depending on local preoccupations, policy orientations ofsuch maritime clusters can cover labour markets, innovation, environment or other fields. Evidence from
Norway suggests that seafarer competencies are in demand among employers in marine equipment
manufacturing and maritime service provision. These sectors absorbed much of the abundant labour after
the oil and gas price spike in 2014, resulting in massive layoffs in Norway's offshore oil and gas sector. In
the United Kingdom, a certain amount of seafarer certificates of competency are used to target employers
onshore rather than for a seafarer career. (ITF, 2019b). Maritime skills and competencies could also be
helpful in maritime safety and security employment, for example, port state control and inspections.

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WATER TRANSPORT EMPLOYMENTWater transport employment numbers
Eurostat, the statistical bureau of the European Union, collects employment numbers on three main watertransport sectors: sea and coastal transport, inland waterway transport, and services incidental to sea andcoastal transport. The definitions of these sectors, corresponding to NACE Rev 2 statistical classifications
50.1, 50.2 (sea and coastal water transport), 50.3, 50.4 (inland water transport) and 52.22 (service
activities incidental to water transportation), were provided in the previous chapter. There are no separate
official statistics on harbour towage, but it is included in the sector called service activities incidental towater transportation. Terminal operations are partly included in the sector cargo handling (52.24) andservice activities incidental to water transportation (52.22), so it is not possible to deduct reliable
employment numbers in terminal operations from the Eurostat statistics.
According to Eurostat, European companies' employment in the sea and coastal transport sector stood ataround 174 000 full-time equivalent jobs in 2019, in addition to 33 000 jobs in inland waterway transport
and 98 000 jobs in service activities incidental to water transportation (Figure 1). The countries with thelargest employment numbers in sea and coastal transport in 2019 are Italy, Norway, Greece and Germany.
The countries with the largest employment numbers in inland waterway transport in 2019 are Germany,
the Netherlands and France.
The number of jobs in these water transport sectors increased between 2008 and 2019 by 17% in boththe sea and coastal transport sectors and service activities incidental to water transportation and by 21%
in the inland waterway transport sector. These employment numbers refer to the employment ofcompanies based in Europe. These workers are not necessarily all EU citizens.
Figure 1. Water transport employment in EU/EEA countries (2008-19)

Employment (full-time equivalent)

250 000
200 000
150 000
100 000
50 000
0

2008

2009

2010

2011

Sea and coastal transport

2012

2013

2014

2015

Inland waterway transport

2016

2017

2018

2019

Maritime services

Source: Eurostat (n.d.).

Specific seafarer employment statistics

There are various ways to measure the number of seafarers, and measurement varies across countries.
For example, seafarers have been counted according to membership of a professional association, holders

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WATER TRANSPORT EMPLOYMENT

of certificates and endorsements and contributors to a social security system. This makes it difficult tocompare seafarer data across countries. Moreover, coverage and definitions for seafarer statistics incountries frequently change over time, further complicating the task of identifying trends.
The BIMCO/ISF Manpower Reports offer the most sustained effort in providing global seafarer statistics.
These five-yearly reports have provided estimates and forecasts of demand and supply for seafarers
worldwide and per world region since 1990. Their definition of “national seafarers” is based on the numberof certificates issued by national maritime institutions. In most cases, these certificates give thecertificate-holder the right to be employed on vessels flying the national flag (or EU flags in the case of the
EU countries). In most cases, certificates are issued to nationals, so this definition is a good proxy for theavailability of domestic seafarers but not necessarily the employed domestic seafarers. These estimatesare based on various sources: answers to questionnaires sent to national administrations and shipownerassociations, expert estimates and other sources. The estimates are complemented with BIMCO/IFS’s own
manning estimates by ship type. However, the BIMCO/ISF data are not fully comparable over time.
Changes in country coverage and methodology since 1990 make it difficult to compare country numbersin these reports over time. The numbers provided by the countries participating in the data collection havebeen irregular and show a range of inexplicable and drastic variations over time for some countries.
The reports published by the European Maritime Safety Agency (EMSA) since 2016 are the most thoroughattempt to gather comparable and reliable data on seafarer employment. The EMSA reports count the
number of seafarers holding valid certificates 1 and endorsements for EU-flagged vessels, so they provide
available data on seafarers. This does not mean these seafarers were active on EU Member State flagged
vessels. The data are also exclusively focused on seafarers on international merchant ships. As numbers
have been available only since 2014, no longer-term trends can be identified yet. However, an increase incertificates for masters and officers on EU-flagged vessels since 2014 can be detected (Figure 2).
Figure 2. Maritime transport employment in EU countries (2014-19)

Number of masters and officers

250 000
200 000
150 000
100 000
50 000
0

2014

2015

2016

2017

2018

2019

Masters and officers with Certificate of Competence issued by EU
Masters and officers with non-EU Certificate of Competence endorsed by EU
Source: EMSA (2021).

A few countries have collected data on the number of domestic seafarers. In the United Kingdom, thesenumbers were for certified active seafarers; in Germany and France, these numbers are based on social

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WATER TRANSPORT EMPLOYMENT

security data. The trends observed in these three countries suggest a steady decrease in domestic
seafarers since 2007 (Figure 3).
Some EU countries face difficulties recruiting sufficient seafarers. In Italian coastal shipping,coastal shipping companies received a derogation from the obligation to recruit seafarers with
EU-approved certifications.
Figure 3. Domestic seafarer numbers in France, Germany and the United Kingdom
14 000

Number of domestic seafarers

12 000
10 000
8 000
6 000
4 000
2 000
0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Germany

FranceUnited Kingdom

Source: ITF (2019b).

Fisheries employment

In 2019, there were 133 000 full-time equivalent jobs in fisheries in the EU. European countries with thehighest employment numbers in fisheries are Italy, Spain, Greece and Portugal. Together, they account for
62% of the fisheries employment in Europe in 2019. It halved between 1995 and 2012 and has since thenstabilised (Figure 4). The countries with the most significant decreases in fisheries employment are Latvia,
Spain and Estonia. In all three countries, fisheries employment in 2019 was less than a third of what it wasin 1995. The only countries where fisheries employment has grown slightly over this period were Finlandand Greece.

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WATER TRANSPORT EMPLOYMENTEmployment (full-time equivalent)

Figure 4. Fisheries employment in EU countries (including the United Kingdom) (1995-2019)

300 000
250 000
200 000
150 000
100 000
50 0000

Source: OECD (n.d.).

Water transport labour costs
Labour costs make up a considerable share of the operating costs of water transport sectors, ranging fromaround a third to more than half of the operating costs (Table 6). The data sources on operating costs aremost detailed for the shipping sector. Therefore, our analysis of water transport employment costs focuseson this sector. Operating costs in shipping are related to the day-to-day running of the vessel. They do notcover fuel costs included in voyage costs, which are volatile as they depend on oil price development.
Operating costs in shipping generally represent around 14% of total shipping costs (Stopford, 2009).
The importance of labour costs for shipping’s operating costs depends on ship type and ship size. Labourcosts comprise the largest share of operating costs – around fifty per cent – in the tanker sector but asmaller share in dry bulk shipping. In container shipping, there are considerable differences between thelargest and smallest vessel types regarding the share of labour costs, ranging from 35% to 51% (Figure 5).

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WATER TRANSPORT EMPLOYMENTTable 6. Labour costs as a share of operational costs in water transport sectors
Water transport sector

Labour costs as a share of operational costs (%)

Shipping

35-55%

Terminals

35-50%

Towage35-40%

Inland waterway transport+/- 35%

Fisheries

30-50%

Source: own data collection based on annual financial reports of shipping companies, ports, terminal operators,
towage companies and fisheries.

The share of crew costs in ship operating costs has increased over the last two decades. This is particularly
the case for the tanker sector, where the percentage rose from 42% in 2000 to 54% in 2018 and to a lesser,
but still significant, extent for the bulk shipping sector (Figure 6).

Figure 5. Crew costs as a share of global ship operating costs (2020)

Crew costs as share of operating costs

60%
50%
40%
30%
20%
10%
0%

Chemical tankers

Container vessels

Dry bulk carriers

Smallest ship size category

Gas carriers

Oil tankers

Largest ship size category

Source: Drewry (2021).

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Figure 6. Crew costs as a share of global ship operating costs (2000-18)

Crew costs as share of operating costs

60%
50%
40%
30%
20%
10%
0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bulkers

Tankers

Source: Moore, Stephens and Drewry (2020).

Total personnel costs for European companies in sea and coastal transport amounted to EUR 9.2 billion in
2019, EUR 7.1 billion for services incidental to maritime transport and EUR 1.1 billion for inland waterway
transport (Figure 7). The personnel costs for the maritime services sector increased by 42% between 2008
and 2019. The increases in the other two sectors were more moderate: 10% for inland waterway transport
and 12% for sea and coastal transport. The increases in personnel costs were partly caused by increased
employment numbers (observed in Figure 1). Another part of the explanation is increasing costs per
full-time equivalent employee. This is particularly the case for the maritime services sector, where theaverage personnel costs per full-time equivalent worker increased from EUR 60 000 in 2008 to EUR 72 000
in 2019, an increase of 21%. In the sea and coastal transport sector, personnel costs per full-time
equivalent worker decreased by 4%, from EUR 55 000 in 2008 to EUR 53 000 in 2019, according to Eurostat
data (Figure 8).

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Figure 7. Total personnel costs (in million euros) for EU/EEA

Personnel costs (mn EUR)

12 000
10 000
8 000
6 000
4 000
2 000
0

2008

2009

2010

2011

Sea and coastal transport

2012

2013

2014

2015

Inland waterway transport

2016

2017

2018

2019

Maritime services

Source: Eurostat (n.d.).

A similar decrease in crew costs is found in the databases on ship operating costs. According to these
databases, the average crew costs per ship per day increased from 2000 up to 2011 by 130% for the tanker
sector and 85% for the bulk sector. Since then, they decreased slightly – by 6% in the tanker sector and 5%
in the bulk shipping sector between 2011 and 2018 (Figure 9). In 2018, the average daily crew cost per
ship per day was USD 4 300 in the tanker sector and USD 2 600 in the bulk shipping sector.
Figure 8. Personnel costs (EUR) per full-time equivalent for EU/EEA

Personnel costs (EUR per full-time
equivalent)

80 00070 00060 00050 00040 00030 000
20 000
10 00002008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sea and coastal transport

Maritime services

Source: Eurostat (n.d.).

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WATER TRANSPORT EMPLOYMENT

Figure 9. Average daily manning costs (USD) per ship per day for bulkers and tankers (2000-18)
5 000

Manning costs (USD) per ship per day

4 500
4 000
3 500
3 000
2 500
2 000
1 500
1 000
500
0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bulkers

Tankers

Source: Moore, Stephens and Drewry (2020).

In the roll-on/roll-off (Ro-Ro) sector, the average daily manning cost was USD 3 000 per ship per day in2021. This is 59% higher than the average daily manning costs in 2000. The largest increase in averagemanning costs took place between 2005 and 2008. The average daily manning costs were almost flat
between 2013 and 2018 (Figure 10).

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Figure 10. Average daily manning costs (USD) per ship per day in roll-on/roll-off (2000-21)

Manning costs (USD) per ship per day

3 500
3 000
2 500
2 000
1 500
1 000
500
0

Source: Drewry’s Annual Report on Ship Operating Costs (2005-2022).

In the container shipping sector, the average daily crew costs amounted to around USD 2 800 per ship per
day in 2021, around 10% higher than in 2012. For most of that period, the operational profit per container
ship per day was more or less the same. This changed in 2020 when it amounted to USD 10 000 per ship
per day, further increasing in 2021 to USD 70 000 per ship per day (Figure 11). This increase in container
shipping profits was caused by much higher container freight rates that reflect the scarcity of container
ship capacity in relation to demand (ITF, 2022a; Merk et al., 2022).
Figure 11. Average daily crew costs and operational profit (USD) per ship per day in container shipping(2012-21)

Crew costs and profits (USD) per ship perday

80 00070 00060 00050 00040 00030 000
20 000
10 0000-10 000

2012

2013

2014

2015

Crew costs per day

2016

2017

2018

2019

2020

2021

Profit per day

Source: Drewry’s Annual Report on Ship Operating Costs (2012-2022) and annual reports of container shipping
companies.

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WATER TRANSPORT EMPLOYMENT

Quality of water transport labour
The quality of water transport is assessed in this report by looking at six different indicators:
1. very serious shipping casualties
2. crew fatalities
3. port accidents
4. seafarer abandonment
5. seafarer suicides
6. working and living conditions on board ships.
Very serious shipping casualties

The International Maritime Organisation (IMO) collects data on shipping incidents in its Global Integrated
Shipping Information System (GISIS). In this system, ship casualties are classified into five categories: very
serious casualties, serious casualties, less serious casualties and marine incidents. In GISIS “very serious
casualties” are defined as casualties to ships which involve total loss of the ship, loss of life, or severe
pollution (IMO, n.d.-b). In this report, very serious shipping casualties are included as one of the indicatorsof the quality of water transport.
In 2021, 125 very serious shipping casualties occurred. This is below the average of 182 very serious
shipping casualties between 2000 and 2021 (Figure 12). The number of very serious shipping casualties
varies a lot by year, so it is difficult to discern a clear trend for the last two decades. On average, the shareof EU-flagged ships involved in very serious shipping casualties was 23% between 2000 and 2021. Whereas
the share of EU-flagged vessels, as part of the global fleet, has decreased from around 25% to 15% overthat period, there is no similar decline in the share of very serious shipping casualties of EU-flagged vessels(Figure 13). One could argue that the position of EU-flagged vessels has worsened over time. Between
2000 and 2010, there have been five years where EU-flagged vessels have had a higher share of very
serious casualties than the share in the global fleet. Between 2011 and 2021, this has risen to eight years(Figure 13).

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WATER TRANSPORT EMPLOYMENT

Figure 12. Number of very serious casualties by EU and non-EU flag vessels (2000-21)
300

Number of very serious casualties

250

200

150

100

50

0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

EU flagged vessel

Non-EU flagged vessel

Vessel flag unknown

Note: “very serious casualties” are defined as casualties to ships which involve total loss of the ship, loss of life, orsevere pollution (IMO, n.d.-b).
Source: IMO GISIS (n.d.).

Figure 13. EU-flag share of global fleet and EU-flag share of very serious casualties (2000-21)
40%

Share of EU flagged vessels

35%
30%
25%
20%
15%
10%
5%
0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

EU flagged vessels as % of global fleet
EU flagged vessels involved in very serious casualties as % of total very serious casualties
Source: IMO GISIS (n.d.).

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WATER TRANSPORT EMPLOYMENTCrew fatalities

Crew fatalities – the second indicator for employment quality used here – are related to very serious
shipping accidents, as shipping accidents with losses of life are defined as very serious shipping accidents.
Consequently, the IMO GISIS database provides a source of information on seafarer fatalities. Although
the database does not systematically provide information on the number of deceased crew in eachaccident, nor on the nationality of the deceased seafarers, it provides information on which very serious
accidents involved loss of life. It also provides the flag of the vessels on which the deceased seafarers
worked, and the type of vessel, making it possible to distinguish between fishing vessels and other vessels.
In 2021, 88 very serious shipping accidents involving loss of life were reported. Twelve of these fatal
accidents took place on fishing vessels. A significant part, 28%, of total crew fatalities occurred on
EU-flagged vessels; 8 out of the 12 fatal accidents on fishing vessels were on EU-flagged vessels (Figure 14).
Figure 14. Crew fatalities in fisheries and non-fisheries (2021)
100

Number of crew fatalities

90
80
70
60
50
40
30
20
10
0

Total
Non-fishing vessels

EU-flagged vessels
Fishing vessels

Source: IMO GISIS (n.d.).

Long-term trends in crew fatalities can be assessed by combining various sources on different national
fleets. Studies have been conducted on the fatal accident rates in individual European fleets over diverse
periods since 1950. These studies can be made comparable by converting the numbers in these studies
into one indicator, the fatal accident rate per 100 000 seafarer-years (a seafarer-year is a measure offull-time seafarer employment during a full year). These fatal accident rates per country can be comparedover time to identify trends.
Crew fatalities on several European merchant fleets have declined since the 1950s. This can be concluded
from studies on crew fatalities in fleets of the United Kingdom, Germany, Sweden, Norway, Iceland andDenmark. The only exception is Poland, where fatal accident rates in the 1990s and 2000s were higher
than those reported in the 1960s and 1970s (Figure 15). Differences between countries seem to become
smaller over time. There appears to be some convergence of fatal accident rates for seafarers on selected
European fleets. It can also be noted that the declining trend seems to have stalled in the 2000s. As there
is only a limited number of European countries for which multiple studies on seafarer fatal accident rates
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WATER TRANSPORT EMPLOYMENT

have been conducted, one should be cautious in inferring declining crew fatalities over time for all
European fleets.
Figure 15. Average fatal accident rate for selected European merchant fleets (1945-2009)

Crew fatalities per 100 000 seafarer-years

400
350
300
250
200
150
100
50
0
1940

1950

United Kingdom

1960
Poland1970
Germany

1980
Sweden

1990
Norway2000
Iceland2010

Denmark

Note: The fatal accident rate is expressed as number of fatal accidents of seafarers per 100 000 seafarer-years ona national fleet.
Source: based on Roberts et al. (2014).

A similar decline in fatal accident rates can be observed in various fishing fleets in OECD countries. The
number of countries for which studies on fatal accident rates in fisheries exist is smaller than for merchantshipping. However, a declining trend since the 1960s was found in five countries: the United Kingdom,
Poland, Iceland, Denmark and Canada. For the United States, a slightly increasing trend was observed in
the 1990s and 2000s (Figure 16). The values for the fatal accident rate for fisheries in the 2000s range from
0.02% to 0.13%.This is a slightly higher and larger range than found for cargo shipping (from 0.01%
to 0.08%).

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WATER TRANSPORT EMPLOYMENTCrew fatalities per 100 000 person-years

Figure 16. Fatal incidence rate for selected OECD fisheries fleets (1945-2009)
300
250
200
150
100
50
0
1950

1960
United Kingdom

1970

1980

1990

PolandIcelandDenmark

2000

2010

United States

Canada2020

Note: This is the fatal incident rate per 100 000 person-years.
Source: based on Roberts et al. (2014); Jensen et al. (2014).

Port accidents

There are no official international statistics on accidents in ports. However, there are a few studies thatassessed the occurrence of port accidents – accidents in the port area – globally and in Europe (Darbra
and Casal 2004; Lecue and Darbra 2019). These studies calculated the number of port accidents based ona variety of sources, including IMO’s GISIS and the Major Hazard Incident Data Service (MHIDAS) database.
During 1911-2017, around 650 port accidents with chemical substances took place in Europe, according
to Lecue and Darbra (2019). Around 80% of the documented accidents happened after 1990, with 41%
registered in the 1990s alone, but a clear reduction in the 21st century (Figure 17). The sharp increase in
documented accidents could be related to the increase in maritime transport volumes and the better
documentation of port accidents since the 1980s. The reduction since 2000 could be due to a generalincrease in the awareness of the safety culture of the chemical industry, as highlighted by new EU
regulations, such as the EU Seveso directives and Directive 2008/68 on inland transport of dangerous
goods. Around 27% of port accidents involving chemicals are caused by human factors. Spillage of oil has
been the most common accident in European ports concerning hazardous materials since the beginningof the 20th century. (Lecue and Darbra, 2019). A study on port accidents globally showed that the severityof port accidents was lowest in the European Union, slightly higher but still relatively low in North America,
Australia and Japan, and highest in the “rest of the world” (Darbra and Casal, 2004).

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Figure 17. Accidents in European ports with chemical substances (1911-2017)
Number of chemical accidents in ports

300
250
200
150
100
50
0

Source: Lecue and Darbra (2019).

Crew abandonment

In 2022 there were 103 cases of seafarer abandonment. Abandonment occurs when the shipowner does
not fulfil his obligations regarding the timely repatriation of seafarers, payment of outstanding
remuneration and provision of basic necessities, such as food, accommodation and medical care. In
practice, abandonment occurs when the master of the ship has been left without any financial means withrespect to the operation of the ship (IMO, n.d.-a). On the 103 abandoned vessels, at least 1 682 seafarers
were affected. This makes 2022 the worst year for cases of seafarer abandonment since seafarer
abandonment cases started to get reported in the joint IMO/ILO database on abandoned seafarers.
Whereas seafarer abandonment cases between 2004 and 2016 have been fairly stable (with the exceptionof 2009), with an average of around 20 cases per year, abandonment cases have sharply increased since2017. The Covid-crisis in 2020 made crew changes more complicated, likely contributing to a further
increase in seafarer abandonment cases in 2020 and 2021. Despite the normalisation of the crew changesituation, abandonment cases have continued to grow.
A small share of the crew abandonment cases takes place on EU-flagged vessels. Whereas EU-flagged
vessels make up around 15% of the global world fleet in 2022, on average less than 7% of the crew
abandonment cases take place on EU-flagged vessels (Figure 18). In 2022, none of the abandoned vessels
were EU-flagged vessels. The flags with the most crew abandonment cases are Panama, Liberia and St.
Vincent & Grenadines (Figure 19). The EU flag with – by far - the most crew abandonment cases is Malta:
26 cases between 2004 and 2022 (Figure 20).

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Figure 18. Crew abandonment cases, EU flagged and non-EU flagged vessels (2004-22)

Number of crew abandonment cases

120
100
80
60
40
20
0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
EU flagged vessels

Non-EU flagged vessels

Flag unknown

Source: IMO/ILO (n.d.).

Figure 19. Top 10 flag states for crew abandonment (2004-2022)

Crew abandonment cases

200
180
160
140
120
100
80
60
40
20
0

PanamaLiberia

St Vincent &Grenadines

Togo

Malta

Tanzania

BelizeSt Kitts &Nevis

Comores Sierra Leone

Source: IMO/ILO (n.d.).

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Figure 20. Crew abandonment cases by EU flag (2004-22)

Crew abandonment cases

30
25
20
15
10
5
0

Source: IMO/ILO (n.d.).

A significant part of the crew abandonment cases occurs in EU ports, but this share seems to be decreasingover time. The share of seafarer abandonment cases in EU ports was higher than 30% between 2004 and2013, around 25% between 2014 and 2018, and approximately 10% since 2019 (Figure 21).
Figure 21. Crew abandonment cases, EU and non-EU ports (2004-2022)
120

Crew abandonment cases

100
80
60
40
20
0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
EU port

Non-EU port

Source: IMO/ILO (n.d.).

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Seafarer suicides

There is only a limited amount of studies with reliable data on seafarer deaths by suicide. The reason isthat most of the time, there is no certainty on whether a seafarer’s death is related to suicide, so suicides
are often not reported or underreported. From the few studies that exist on country fleets over time, noclear tendency can be identified (Figure 22). There are indications that seafarer suicides in the cruise
shipping sector increased during the Covid-19 pandemic, related to the complications in changing crews(Carr, 2020; Smith and Franklin, 2022).
Figure 22. Seafarer deaths by suicide in the United Kingdom, Denmark and Poland fleets

Share of suicides in seafarer deaths

12%
10%
8%
6%
4%
2%
0%
1965

1970

1975

1980

Denmark

1985
Poland

1990

1995

2000

2005

2010

2015

United Kingdom

Source: Mellbye and Carter (2017).

Working and living conditions

Valuable insights on the quality of maritime labour can also be gained from data related to port state
controls on compliance with the 2006 Maritime Labor Convention (MLC, 2006). This convention, adopted
in 2006 and entered into force in 2013, aims to improve the health and wellbeing of seafarers. The
convention covers the minimum requirements for seafarers to work on a ship, the conditions of
employment, accommodation, recreational facilities, food and catering, health protection, medical care,welfare and social security protection and compliance and enforcement. Compliance with the convention
rests with the flag states, but port states also have a role via the system of port state control (PSC). Thissystem allows countries that have ratified the convention to inspect foreign-flagged ships that arrive intheir ports to control compliance with international conventions. Data collected as part of the PSC can
indicate whether ships comply with the prescribed working and living conditions requirements.
A study that analysed PSC data found that the average number of MLC-related deficiencies per inspection
declined from 2010 to 2017. This implies an improvement in conditions overall and an increased focus on
seafarers’ conditions on board (Fotteler et al., 2020). The same study could not establish that thisimprovement in seafarers’ conditions was due to implementing the MLC, 2006. Its authors remarked thatseveral issues remain for seafarers, which the MLC, 2006 fails to adequately address (Fotteler et al. 2020)
without specifying which issues remain.

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WATER TRANSPORT EMPLOYMENTAssessment of quality of water transport labour conditions

Based on the above indicators, the assessment of the quality of water transport labour conditions is mixed.
There are areas where conditions have improved. Chemical accidents in ports have decreased since the2000s, and the deficiencies related to working and living conditions in port state controls havedecreased since 2010. The situation concerning very serious shipping accidents and crew fatalities ismore complicated. There does not seem to be a clear tendency towards fewer fatal accidents over thelast decade.
In contrast, crew fatalities have significantly decreased since the 1950s in both merchant shipping andfisheries. This decrease in fatality rates seems to have halted since the 2000s. An area where things havedeteriorated is seafarer abandonment. Since reporting started in 2004, there have never been moreseafarer abandonment cases than in 2022. Finally, there are areas where existing data do not allow to
identify clear trends; this is the case for seafarer suicides.
One could wonder if EU-flagged vessels have performed better than non-EU-flagged vessels regarding thequality of water transport labour conditions. The evidence on this seems to be mixed. The share of
EU-flagged vessels in very serious accidents is higher than the EU-flagged fleet share in 13 out of 22 years.
Most of this relatively bad performance has occurred in the last decade. Regarding crew abandonment,
Malta-flagged vessels are amongst the world’s worst offenders.
Conversely, the share of EU-flagged crew abandonment cases is lower than the EU-flagged fleet share.
Moreover, crew fatalities have decreased in selected European and OECD countries, especially before
2000. However, the question is whether this is relevant when many European and OECD shipowners havechanged their flags from EU and OECD flags to non-EU and non-OECD flags (flagged out).

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Governance of water transport
Regulation of shipping has become increasingly globalised in recent decades. Within the framework of theInternational Maritime Organisation (IMO) and the International Labour Organisation (ILO), countries haveadopted a gradually increasing number of international conventions that regulate safety, security andpollution from ships, as well as labour standards in maritime transport.
This globalisation of regulation has reduced the scope of national shipping policies. On the one hand,policymaking has moved to the international level. Hence, in many areas, national shipping policies havebeen moved into international diplomacy to achieve outcomes in line with national priorities. On the other
hand, the levers of national policy makers have been reduced.
In Europe, EU regulations have often further constrained the remaining policy space for national
governments, but not in all respects. For example, shipping is exempt from the EU Posting of Workers
Directive. Some EU regulations, such as the EU maritime state aid guidelines, provide the framework forwhat is allowed, but it still leaves room for member states to shape specific policies for water transport.
This chapter will focus on three elements within the governance of water transport that greatly impact
water transport employment: flags of convenience, second shipping registries and maritime state aid.

Flags of convenience
Ships have an obligation to be registered. They fly the flag of the country where they are registered. For
most of history, ships have been registered in the country of residence of the shipowner. There areexamples of ships flying flags of different countries than the nationality of their owners, but these were
exceptions rather than the rule (Carlisle, 2017). This situation had changed since the Second World War,when the US and its representatives started actively promoting open shipping registries, such as Panama,
Liberia and the Marshall Islands (Carlisle, 1981). Such registries are open to all ships, so there is often nolink with the shipowner's nationality, origin, or destination of the cargo transported on the ship. The open
shipping registries attracted many ships in the 1950s and 1960s at the cost of the flags of traditional
maritime nations, mostly developed Western economies. The growth of open registries – and the parallel
decline of traditional maritime flags – continued in recent decades. Ships flying the flag of an OECD country
have decreased from 54% of the global fleet in 1980 to 16% in 2019 (ITF, 2019b).
The attractiveness of open registries for shipowners consists of near-zero taxation and looser regulation.
Countries with open shipping registries generally exempt shipping activity from taxation, and ships
registered in open registries can benefit from this tax exemption. These countries have also ratified fewer
international conventions on safety, security and environment, put less effort into enforcing them andissue no additional national regulations. For example, open registries do not have nationality requirements
for ship crews, unlike traditional shipping registries that often require a particular share of domestic
seafarers or officers. As domestic seafarers in developed countries are more expensive than in developing
countries, open registries can reduce crew costs for shipping companies (Luo, Fan and Li, 2013; Mitroussi
and Arghyrou, 2016).

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Open registries are also known as flags of convenience. The International Transport Workers Federation
maintains a list of registries it declares to be flags of convenience. Criteria used to develop the list include
the ability and willingness of the flag state to enforce international minimum social standards on its vessels,
the degree of ratification and enforcement of ILO conventions and recommendations and the safety andenvironmental records of ships (ITF Seafarers, 2019). At the beginning of 2023, the list included 42
shipping registries.
The traditional maritime nations of Europe initially tried to stop the development of flags of conveniencebut did not manage to achieve this. Two of the EU flags that have grown since the 1980s were Malta andCyprus 2 (Figure 23), both declared flags of convenience by the International Transport Workers Federation.
Both flags managed to attract EU-owned vessels, sometimes at the cost of other EU flags. For example, agrowing share of Greek-owned vessels fly the Cyprus flag since the mid-1980s and the Malta flag since themid-1990s. At the same time, this reduces the share of Greek-owned vessels flying the Liberia and Panama
flag and also the share of Greek-owned vessels flying the Greek flag (Goulielmos, 1998).
After a period of rapid decline of most domestic flags, various European countries decided since the 1980s
to reinvigorate their flags by creating second shipping registries and tonnage tax systems. The share of the
global fleet that flies a European flag is 18%, whereas the share of EU-owned vessels is 36% of the global
fleet. This suggests that around half of the EU-owned vessels are flagged in open registries.
Figure 23. Share of global ship capacity with flags from Cyprus, Malta and other EU countries, 1980-2018
40
35

Share of global ship fleet

30
25
20
15
10

0

1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

5

Rest of EU

Malta

Cyprus

Source: ITF (2019b).

The emergence of Cyprus and Malta as flags of convenience creates a special dynamic in European inland
waterway transport. The EU has regulated aspects of inland waterway transport, such as working time andprofessional qualifications, in Council Directive 2014/112/EU and Directive (EU) 2017/2397. Both Cyprus
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and Malta have opted out of this legislation, considering that there are no navigable rivers in bothcountries, so there is no inland waterway transport. At the same time, the shipping registers of Malta andCyprus are open to inland waterway companies, and an increasing number of river vessels in the EU are
now flying the flag of Malta. In addition, many labour contracts with staff in European river vessels are
now with crewing agencies from Cyprus. These set-ups likely undermine EU efforts to create minimum
standards in inland waterway transport in Europe. (ETF, n.d.)Second registries
Many countries have created second registries or international registries that offer advantages that arecomparable to those of open shipping registries. At least nine European countries currently have at least
one second shipping registry (Table 7). Some second registries take the form of an offshore dependencyof European countries, such as in the case of the Netherlands’ Antilles, the Kerguelen Islands, the CanaryIslands and Madeira. Most of these second shipping registries were created in the mid-1980s and 1990s.
Efforts in the 1980s to 1990s to create a single European shipping register (EUROS) with a single agreementon minimum conditions to be respected have not succeeded due to political divergences.
Table 7. Second shipping registers in European countries
Second registry

Country

Year of establishment

Isle of Man

United Kingdom

1984

Netherlands Antilles

Netherlands

1987

KerguelenFrance1987

Norway International Ship Registry (NIS)

Norway1987

Danish International Ship Registry (DIS)

Denmark

1988

German International Ship Registry (GIS)

Germany

1989

Madeira Ship Registry (MAR)Portugal

1990

Canary Island Registry

Spain

1991

Italy International Registry

Italy

1998

French International Registry (RFI)France2005

Second registries aim to provide favourable conditions to domestic shipping companies to ensure they fly
the national flag. Still, they are also open to foreign shipping companies to a more or lesser extent. Somesecond registries, such as the Madeira registry, explicitly aim to attract foreign shipping companies. In
contrast, other second registries, such as the Danish International Ship Registry, only grant access toforeign companies upon request and on an exceptional basis.
Some but not all of the second registries are declared Flags of Convenience by the International Transport
Workers Federation. This is the case for the German and French International Registry and the Madeira
Ship Registry.

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Nationality requirements for crews

Considerable differences exist between second registries concerning nationality requirements for crews.
For example, the Canary Islands registry requires “at least one skipper and first officer of EU Member Stateor European Economic Area nationality; the rest of the crew must be at least 50% EU citizens”, whereas
the Dutch and Danish International Ship Register only requires the shipmaster to have EU/EEA nationality(Table 8). In the case of the Dutch register, these requirements can be circumvented: “if shipowners candemonstrate that despite their best efforts to do so, it is not possible to employ a master from one ofthese nationalities, they may ask for approval to employ non-European masters” (NL Flag, n.d.). A similar
possibility to be exempted from the nationality requirement exists in the Norwegian International Ship
Register but not in the Norwegian Ordinary Ship Registry.
Table 8: Nationality requirements for crews in selected shipping registries
Shipping registry

Shipmaster

Other crew

Canary Islands

EU/EEA

50% from EU/EEA

Denmark (DIS)

EU/EEANo requirements

France (RFI)

EU/EEA

25%-35% from EU/EEA

Germany (GIS)

EU/EEAOne additional officer from EU/EEA

Italy (IIS)

EU/EEA

Two other members from EU/EEA

Madeira30% from EU or Portuguese speaking country

Netherlands Antilles

EU/EEA (exemption possible)

No requirements

Norway (NIS)EU/EEA (exemption possible)

No requirements

Source: DMA (2014); Federal Ministry of Justice (2016); NL Flag (n.d.); NMA (2021); RF (2019).

Labour costs of foreign seafarers

One of the key advantages of second registers for shipping companies is that they reduce crew costs by
allowing foreign seafarers not to be covered by national collective labour agreements. For example, inGermany, based on the German Flag Act section 21, paragraph 4, national contract conditions and theapplicability of foreign labour and tariff contract law can be agreed upon for non-EU seafarers. Ships
registered in the Norwegian International Ship Registry may employ foreign seafarers based on theirnational collective agreements.
Regulatory requirements

Second registries are generally associated with fewer regulatory requirements than first shipping
registries. For example, the Danish ordinary shipping registry requires that ship masters, navigating andengineering officers, radio operators and cooks hold a Danish certificate of competence. Danish
certificates are not required for ships registered in the Danish International Register of Shipping (DIS). They
only need a valid certificate of competency and a Danish certificate of recognition issued by the Danish
Maritime Authority (DMA, 2014). It is also likely that shipping companies prefer second shipping registries
that have less stringent oversight and inspections.

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Access of foreign companies to domestic shipping markets

Second registries also allow foreign shipping companies to access domestic shipping markets. The Madeira
ship registry promises “immediate access to European cabotage through the Portuguese flag” (MAR, n.d.).
There seems to be a tendency to expand the markets that ships in second registries can access. For
example, the Norwegian International Ship Registry (NIS) was originally established for ships oninternational voyages, excluding Norwegian domestic and passenger shipping. However, this approach wasamended with a reform in 2021 (NMA, 2021). Ships registered in the NIS can now also offer domestic
maritime transport services, including passenger transport.

State aid
The water transport sector benefits from a considerable amount of state aid. Although there are
estimations of subsidies to the fisheries sector globally, no reliable data exist on subsidies and state aid tothe other water transport sectors considered in this report. A recent overview of maritime transport
subsidies identifies various subsidies but does not quantify maritime subsidies (ITF, 2019b). One of themain subsidies for the shipping industry is the favourable tax treatment via tonnage tax schemes, which
can be considered a tax subsidy scheme that has become widely implemented in response to theemergence of flags of convenience. Tonnage taxation represented at least EUR 1.1 billion in foregone
revenues in 2015 in OECD countries (ITF, 2019b). However, the foregone tax revenues related to corporate
tax exemptions have been estimated at between USD 2.5 billion and USD 4.6 billion per year (Merk, 2020).
A range of European countries provide state aid to coastal shipping to reduce congestion and greenhousegas emissions from land and air-based transport. Such schemes aim to encourage a modal shift of freightfrom road to coastal shipping transport. These exist in Italy, Norway, the United Kingdom and Sweden. EU
programmes such as Motorways of the Seas provide start-up aid to new or improved short-sea shipping
services and financial contributions for establishing and operating a maritime transport service. Subsidies
for inland water transport are granted in the Netherlands, Belgium, Austria, Sweden and the Czech
Republic, and the European Union has a subsidy programme (NAIADES) to stimulate inland water transport(ITF, 2022b).
Ports also frequently receive state aid. These are granted for investments and projects to maintain andexpand their general infrastructure, often for port adjustments related to increased ship size, such as
dredging, raising bridges and deepening and widening canals. EU member states can make public
investments of up to EUR 150 million in sea ports and up to EUR 50 million in inland ports without priorchecks by the Commission. Some port infrastructure projects in Europe may be co-funded by the European
Regional Development Fund (ERDF). The public funding of port infrastructure projects often consists of a
50% contribution from ERDF and 50% from national bodies. Co-funding of Trans-European Transport
Network projects in EU Member States is possible under the so-called Connecting Europe Facility. Port
infrastructure in some Member States may also benefit from the EU Cohesion Fund (ITF, 2019b).
Part of the maritime state aid is directly related to maritime employment. The employment-related state
aid is likely only a fraction of total maritime state aid, considering the substantial amounts of state aid
related to other categories, such as exemptions from fuel taxes and corporate taxes (ITF, 2019b; Merk,
2020). Below are the main categories of maritime employment-related state aid:•

Direct labour subsidies, which are often linked to training provisions. In the United Kingdom, theSupport for Maritime Training (SMarT) scheme has been in place since 1998. It covers up to 50%
of training costs and is directly paid to the shipping companies who sponsor the trainees. The

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spending on this programme amounted to GBP 13.5 million in 2017/18. In Ireland, a shipboard
training subsidy is paid by the Department of Transport, Tourism and Sport through the Irish
Maritime Development Office to companies providing training for cadets studying in Ireland.
•

Assistance with seafarer travel costs, which are provided by some countries. In the United
Kingdom, the Crew Relief Costs Scheme (CRCS) subsidises 20% of the cost of flying British
seafarers to and from ports outside Europe. The spending on this programme amounted to
1.5 million UK pounds in 2010. Denmark covers 50% of returning costs for seafarers who haveworked for at least six months on a ship that has not called on home ports for the last
three months.

•

Wage-cost deductions, which are established by several countries. They are the amount of payroll
tax to be paid by shipping companies. Such mechanisms are in place in many European countries,
but also in Australia, India, Japan and South Korea. In these countries, a differential tax rateapplies to eligible seafarers under certain conditions. This should make it more attractive forshipping companies to hire domestic seafarers. The wage cost deduction is supposed to correct
for the cheaper wage costs of foreign seafarers. For example, these deductions could go up to
100% of the payroll tax in Germany and Denmark. In Greece, seafarers’ income tax is reduced to
15%, and officers and lower crew pay a rate of 10%. In general, such deductions are only provided
for domestic seafarers on vessels flying the national flag, but there are exceptions. In the EU,these deductions must apply to all EU/EEA residents.

•

Deduction schemes for non-wage costs of seafarers, such as exemptions from social security
contributions and other ancillary labour costs. This includes employers’ contributions to social
security (including pension, family allowances and public health insurance) that shipping
companies can keep. Seafarers continue to be covered by the social security arrangements of
their countries, even if their employers do not pay their contributions. These schemes are being
justified regarding the high non-wage labour costs of seafarers in developed countries that would
make them less attractive to hire. For example, Germany provides grants to shipping companies
that cover the costs of the employer’s contributions to the social security for their seafarers on
German-flagged ships. Since the amendment of the scheme on the reduction of non-wage labourcosts in shipping in 2016, EU and EEA seafarers on flagged-out ships can be included into thisscheme under specific conditions. Other countries such as Estonia, Finland, France and Irelandalso refund social security contributions of seafarers. For example, in Estonia, reimbursed social
tax comprises pension and health insurance contributions. Family allowance and employment
insurance scheme contributions are eligible for a refund in France. (ITF, 2019b). Fiscal exemptions
for seafarers’ payroll taxes and social contributions represented around EUR 0.8 billion in 2016
(ITF 2019b).

Maritime transport policies often suppose that maritime state aid also indirectly supports seafarer
employment. For example, the justification of many tonnage tax schemes is often based on the idea that
more favourable tax regimes for ships can attract shore-based and seafarer jobs for the country that
introduces such schemes. However, there are few indications that these employment effects have beenrealised (ITF, 2019b). There are three main reasons why such employment effects have not been realised:
1) state aid is not directly linked to employment, 2) the link between national flag and national employment
is weak, 3) ships in second registries are eligible for state aid.

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GOVERNANCE OF WATER TRANSPORTState aid is not directly linked to employment

Maritime state aid is often not directly linked or conditional on national maritime employment. This is, forexample, the case for tonnage tax schemes. These are favourable tax schemes for the shipping industry
that are supposed to sustain – and ideally, grow – national flags, shore-side and seafarer employment.
While the EU Maritime State Aid guidelines require member states to design tonnage tax schemes with an
EU flag requirement, there is no such requirement related to the use of EU seafarers. So, in practice, there
have been very few links between tonnage taxes and EU seafarer employment.
The UK’s tonnage tax scheme contained a training requirement, which required each company entering
tonnage tax to recruit and train one officer trainee each year for every 15 officer posts in its fleet. If thatwas not possible, it required the tonnage tax firm to make payments to the Maritime Training Trust in
respect of each training place it cannot offer. Despite cadet uptake at the programme's outset, it proved
ineffective in the long term as increased training activity did not translate into more national seafarer
employment. Moreover, Leggate and McConville (2005) observed that many companies in the regime
have opted out of the training obligation and paid compensation instead.
Another example of a link between the tonnage tax and EU seafarer employment exists in France. The
nationality requirement for ship crews registered in the French International Shipping Register is stricter
for ships that receive fiscal subsidies.
The link between national flag and national employment is weakIn most shipping registries, the nationality requirements for the crew are fairly loose, often requiring thatthe shipmaster and a few officers are nationals of the flag country (or EU/EEA nationals in the case of theflags of EU/EEA countries). This implies that stimulating the use of a certain national flag does notnecessarily translate into more use of seafarers from that country. Existing impact studies show little
evidence of the wider domestic employment effects of subsidies to support re-flagging, such as tonnage
taxes (ITF, 2019b). An evaluation by Leggate and McConville (2005) of the UK tonnage tax concludes that
although the UK tonnage tax has increased the total tonnage, it has not substantially increased the numberof vessels, and the jobs created have mainly benefitted non-EU nationals. This finding was confirmed byGekara (2010), who noted that while the UK fleet grew from 5.6 million gross tonnage in 2000 to12.2 million gross tonnage in 2006, the cadet intake only increased from 500 in 1999 to 630 in 2006.
Moreover, the flag link requirement in the EU Maritime State Aid Guidelines (2004) is fairly weak. They
state: “… as a matter of principle, tax relief schemes require a link with the flag of one of the Member
States”. So, shipping firms can only benefit from a tonnage tax if there is a link with an EU flag; this “flaglink” is the general rule. Derogation from this general rule is possible if the shipping company that flies a
non-EU flag commits itself to at least maintain the share of tonnage that it operated under the flag of EU
Member States on 17 January 2004. This is called the “share requirement”. This share requirement does
not apply to undertakings that operate at least 60% of their tonnage under the EU flag. Derogation of theflag link is only “exceptionally granted” and comes with requirements for information to be provided every
year that all the conditions for the derogation from the flag link have been fulfilled. In practice, derogations
have become the rule rather than the exception (ITF, 2019b). This implies that strong uptake of a maritime
state aid programme, like a tonnage tax scheme, does not necessarily translate into strong uptake of thenational flag.

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Ships in second registries are eligible for state aid

An increasing number of countries provide subsidies to shipowners that use these international registries.
For example, ships registered at the Danish International Registry can apply for tonnage tax in Denmark
but reportedly have no Danish/EU seafarers employed on their ships. The link of maritime subsidies, suchas tonnage taxes, with national seafarers risks weakening when maritime subsidies are extended tointernational registries. An additional concern is that trade union representation on these ships is often
not allowed.
Despite deduction schemes for seafarers’ wage and non-wage costs, ships with EU/EEA seafarers arearguably still more expensive than those with non-EU/EEA seafarers. One of the reasons for this could bethat the schemes are not necessarily limited to EU/EEA seafarers. In 2004, the EU Maritime State aid
Guidelines were extended to include non-EU/EEA seafarers in labour-related maritime subsidies. The
justification of this expansion was that preventing Member States from granting tax relief to all seafarers
active in international freight transport would have “very negative effects on the competitiveness ofEuropean shipowners, which would be encouraged to flag out” (EC, 2004). As a result, some of the labour
cost reduction schemes also apply to non-EU seafarers. For example, the Dutch wage reduction also
applies to non-Dutch (and non-EU/EEA) residents liable for wage tax in the Netherlands. However, thededuction is smaller (10% instead of 40% for Dutch, EU or EEA residents).

Minimum labour standards in territorial waters
An alternative approach is to define minimum standards for seafarers that operate in territorial waters.
This is the idea behind the “European maritime space” concept launched by the European Transport
Workers Federation in 2019 (ETF, 2019). The objective of such a maritime space would be that seafarers
working in European waters should be treated like shore-based workers. In other words, shipping
companies operating within EU waters should abide by EU social acquis regarding employment conditions
for their workers. The concept was also linked to improving the framework for the maritime industry
relating to quality training and job creation and better enforcement and monitoring of the guidelines.
Similarly, Norway is considering introducing new pay and working conditions requirements for seafarers
operating in Norwegian waters, regardless of the vessel's flag state. Such a reform would encourage hiring
locally, as Norwegian shipping companies would no longer be incentivised to choose cheaper foreignlabour (Lunestad, 2021).

Coherence of governance frameworks
Although open registries have become an integral part of the institutional framework in which the shipping
industry operates, they are embedded in a set of international regulations. Article 91(1) of the United
Nations Convention of the Law of the Sea (UNCLOS) acknowledges the right of every State to “fix theconditions for the grant of nationality and for the right to fly its flag.” The same article provides that there“must exist a genuine link between the State and the ship.” The “genuine link” requirement in UNCLOS isto secure more effective implementation of the duties of the flag state. There is currently no binding
international framework to regulate the registration process itself. The 1986 UN Convention on Conditions
for Registration of Ships establishes international standards for registering vessels in a national registry,including references to the genuine link, ownership, management, registration, accountability and the roleof the flag state. However, the Convention has not entered into force (IMO, n.d.-c.). To improve the safety
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and labour standards on board ships, governments will have to ensure that the “genuine link” requirement
is applied in their shipping registries, including the open and second registries.
The justification for second registries and maritime state aid – such as tonnage tax regimes – is that thiswould support a European maritime transport sector and, with this, maritime skills and competencies,
considered strategic capabilities. Yet, European countries' second registries and maritime state aid aredesigned in such a way that they do not stimulate European maritime skills and competencies. Althoughstatistics on EU/EEA seafarers do not exist, there are indications that their number has decreased, despite
European companies’ growing demand for seafarers. If European countries are serious about supporting
maritime skills and competencies, they should consider reforms in three areas.
First, maritime state aid could be directly linked to maritime transport employment. There could be astricter link between maritime subsidies and using EU/EEA seafarers, particularly when the ship operates
mainly in European waters, such as ferries, cruise ships and short-sea shipping. For example, the flag linkrequirement in the tonnage tax – largely circumvented in practice – could be substituted or complemented
by an EU/EEA employment requirement. Therefore, providing maritime subsidies – such as the tonnage
tax and wage cost reductions – exclusively for ships with a certain share of EU/EEA seafarers. Anotheroption would be to link it to the active involvement of shipowners and operators to support EU/EEA
seafarers. For example, this could be via participation in seafarers’ education, assistance with stipends,
provision for mentoring at nautical schools, programmes for cadets and ratings.
Second, the link between national flag and national (or EU/EEA) employment could be strengthened.
This could take the form of more stringent manning requirements or abolishing the exemptions of themanning requirements.
Third, the eligibility for state aid of ships registered in second registers could be reduced. The justificationof state aid is the assumed positive effects concerning maritime cluster development, seafarer
employment and supposed safety benefits. Second registries have copied open registries regarding light
regulatory approaches on manning; some of them have been declared flags of convenience by theInternational Transport Workers Federation. Because of their nature, they will not be able to provide theassumed public benefits of first registries, so it is questionable to use maritime state aid to stimulate theuse of second registries. Governments could restrict the eligibility of maritime state aid to ships registeredin a first registry, but decide not to extend it to those in a second or international registry, especially thosedeclared flags of convenience. The EU Maritime State Aid guidelines could be adapted to indicate thesecond registries for which the registered ships would not be eligible for state aid.

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NOTES

Notes
1
These refer to Certificates of Competency (CoCs) consistent with the 1978 International Convention on Standards of Training, Certificationand Watchkeeping for Seafarers (STCW) adopted by the International Maritime Organisation (IMO). A CoC is usually valid for five years unlessstated otherwise.
Note by Türkiye: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single
2
authority representing both Turkish and Greek Cypriot people on the Island. Türkiye recognises the Turkish Republic of Northern Cyprus(TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Türkiye shall preserve its position concerning
the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union: The Republic of Cyprus is recognised by all members of
the United Nations with the exception of Türkiye. The information in this document relates to the area under the effective control of theGovernment of the Republic of Cyprus.

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Water Transport Employment
in Europe
The Role of GovernanceInternational Transport Forum
2 rue André Pascal
F-75775 Paris Cedex 16+33 (0)1 73 31 25 00
contact@itf-oecd.org
www.itf-oecd.org

Published: 08/2023 | Photo credit: curraheeshutterShutterstockThis report assesses the current state of water transport employment
in Europe and links it to water transport governance. Authorities
generally consider the skillset required by employees in watertransport strategically important. However, evolving governanceframeworks might have undermined the possibility of maintaining
these skills in Europe. This report assesses incoherence in government
policies and provides recommendations for reform to ensure therelevant skills needed in water transport can be maintained.