Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Cyprus' shipping community can survive its economic turmoil

Cyprus' shipping community can survive its economic turmoil
Cyprus’ shipowning and shipmanagement industries will survive the island’s economic turmoil according to leading players.  

Though it will perhaps be months before the full extent of the fallout of the deal struck 25 March between the Nicosia government and its creditors begins to solidify, leaders of the Cyprus Shipping Chamber (CSC) do not believe the crisis will wreck the island as an international shipping hub.

With details of the agreement which opens the way for a Euro 10bn ($13bn) rescue plan to be activated and so avoid the island's economic meltdown, still to be finalised, it is certain an overhaul of the island’s bloated banking sector is underway.

It is expected the country will experience severe recession in 2013 and the agreement will cost larger depositors dearly.

According to the CSC, an understanding with the Central Bank of Cyprus has been entered into which covers national-flag vessels and ships managed by the island’s ship management sector trading internationally.

Further, Cyprus president Nicos Anastasiades has assured the Cyprus Union of Shipowners (CUS), the country’s shipping tonnage tax system, which applies to both owners and managers, will not be touched in a panic to raise funds. 

Many of the companies in Limassol, heart of the island’s shipping community, have affiliates abroad, mainly in Germany, Greece and Russia, and banks accounts are held outside Cyprus. However, cash for day-to-day expenses is held locally, and CSC president, Eugen Adami, says the release of funds is “tightly controlled” to ensure all payments are legitimate, adding “just as it should be”.

In the longer term, Adami believes Cyprus will have “a smaller” but “stronger, well-funded and well-governed” financial sector.

Dirk Fry, managing director of Columbia Shipmanagement, and a CSC and InterManager past president, does not think “there will be a traumatic long-term effect for the ship management industry” nor for his company’s status on the island.

However, the CUS’ chairman, George Mouskas, has expressed concern the traditional "it's safe in Cyprus" could now be harmed. While it seems companies are likely to stay put and not leave Limassol, Mouskas fears new people could be deterred from moving to the island.

Shipping companies located on the island, employ some 4,500 staff and 60,000 seafarers. In 2011, the sector’s contribution to the economy, on the basis of gross receipts, was estimated at 6% to 7% of GDP.