2020 Cyprus Country Report
The 2020 Cyprus Country Report features in-depth articles on the economy, foreign direct investment, international trade and headquartering as well as detailed sector profiles and insights from Cyprus’ 100 most influential political, economic and business leaders shaping the future of their country and its industries.
The 2020 Cyprus Country Report features in-depth articles on the economy, foreign direct investment, international trade and headquartering as well as detailed sector profiles and insights from Cyprus’ 100 most influential political, economic and business leaders shaping the future of their country and its industries.
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Maritime & Shipping<br />
Sector Profile<br />
OPPORTUNITIES AND CHALLENGES<br />
The last few years have seen opportunities arise for<br />
<strong>Cyprus</strong> shipping in the wake of Brexit and natural<br />
gas exploration in the Eastern Mediterranean,<br />
however, the biggest trends that are already impacting<br />
the sector are rapid tech development,<br />
environmental challenges, dealing with decarbonisation<br />
and finding alternative fuel options to<br />
power global shipping in the future. Ship owners<br />
are also facing a predicament of whether to buy<br />
ships at this point, when in less than 10 years the<br />
tech and other spec requirements could be completely<br />
different – making it a costly and perhaps<br />
redundant investment.<br />
The next five years will be most exciting in<br />
terms of satellite communication developments<br />
and disruptive tech being introduced to improve<br />
safety and efficiency in the industry. Much of<br />
core tech being used by shipping companies will<br />
be replaced by new smart tech, such as smart<br />
weather foresight, smart performance analytics<br />
and report alarms. Digitalisation is key to staying<br />
competitive, but industry experts say tech and AI<br />
will not replace humans anytime soon.<br />
Speaking of the human element, shipping executives<br />
have voiced concerns that finding competent<br />
crew is a growing problem worldwide. It<br />
is increasingly difficult to attract young people of<br />
high calibre and ambition to choose a career at<br />
sea. Seafarers are both the heart and soul as well<br />
as the Achilles heel of the industry, and companies<br />
are acutely aware that all the tech in the world<br />
will never replace a well-trained and experienced<br />
crew. Shipmanagement giants such as Columbia<br />
Marlow have highlighted the industry’s need for<br />
more care and support of crew members whether<br />
on- or off-shore, to introduce more perks and<br />
better training opportunities and to create a safer<br />
working environment.<br />
Fintech is also set to bring new ways to raise<br />
capital in shipping and introduce better ways of<br />
risk profiling for both investors and investments,<br />
and growing ship financing possibilities available<br />
through <strong>Cyprus</strong> banks will support the future<br />
growth and diversification of the sector.<br />
Although the banks’ portfolios are still comparatively<br />
small, this development will not only<br />
increase the size and scope of the maritime<br />
cluster and create opportunities, but expand the<br />
expertise in this area within <strong>Cyprus</strong>’ financial services<br />
sector. Following the financial crisis of 2013,<br />
shipping finance virtually stalled in <strong>Cyprus</strong>, but<br />
there are signs of a revival. The gap left by the<br />
once-dominant foreign banks is being filled by<br />
local banks, Greek banks with subsidiaries, and/<br />
or independent entities based in <strong>Cyprus</strong>.<br />
Due to the smaller size of these banks, their<br />
focus is on providing a close, relationship-based<br />
service and being carefully selective of the clients<br />
they onboard. For example, local banks consider<br />
how the prospective client behaved during the<br />
downturn and assess the quality of the clients’<br />
so-called soft assets, such as management and<br />
ownership history, with equal precision to assessing<br />
the quality of the asset itself. The majority of<br />
owners that <strong>Cyprus</strong> banks deal with are small-tomedium<br />
companies with a limited fleet of vessels,<br />
as larger companies are well catered to by big US<br />
and European banks, or Chinese leasing companies.<br />
One improvement that shipping executives<br />
have been calling for to help <strong>Cyprus</strong> strengthen<br />
its maritime centre is to improve flight connectivity<br />
and establish more direct flights to other<br />
key hubs around the world. One historical challenge<br />
of significant impact remains for <strong>Cyprus</strong>.<br />
The size of the world fleet has doubled over the<br />
last two decades, but currently the <strong>Cyprus</strong> industry<br />
is prevented from realising its true potential<br />
by the Turkish embargo, which was unilaterally<br />
imposed in 1987 on <strong>Cyprus</strong>-flagged ships calling<br />
at Turkish ports. A settlement of the <strong>Cyprus</strong><br />
problem would immediately resolve this and dramatically<br />
boost the size of the country’s commercial<br />
fleet. Pending a settlement, Cypriot officials<br />
continue to press for the lifting of the Turkish<br />
embargo to be included in any package of confidence-building<br />
measures in reunification talks.<br />
RIDING OUT THE STORM<br />
Although a small economy, <strong>Cyprus</strong>’ shipping<br />
sector punches well above its weight, expertly<br />
navigating through economic storms and market<br />
fluctuations and evolving with new tech coming<br />
on stream. Recognised for its competence, safety<br />
and multiple advantages, <strong>Cyprus</strong> is clearly capable<br />
of competing on a global scale. Although the fullscale<br />
impact of the Coronavirus pandemic is yet<br />
to be unveiled, what is certain is that global trade<br />
and shipping will not emerge unscathed.<br />
However, there is always a silver lining to<br />
every storm cloud. Maritime industry observers<br />
say these developments could also be a blessing in<br />
disguise for the <strong>Cyprus</strong> shipping sector, forcing it<br />
to fast-track reforms and speed up the introduction<br />
of advanced communications services, thus<br />
beefing up the cluster to become more efficient in<br />
a shorter period of time. With its growing registry<br />
and reformed procedures, <strong>Cyprus</strong> will emerge<br />
as a more competitive shipping hub once this<br />
storm passes – and quite rightfully stand strong<br />
as an EU jurisdiction and maritime centre full of<br />
potential and ambition. n<br />
Discover more at www.cyprusprofile.com<br />
Shipping accounts for<br />
7%<br />
of <strong>Cyprus</strong>’ GDP<br />
1 in 5<br />
vessels under thirdparty<br />
management are<br />
controlled from <strong>Cyprus</strong><br />
3rd largest merchant<br />
fleet in Europe<br />
11th largest merchant<br />
fleet in the world<br />
200+ shipping<br />
related companies<br />
based in <strong>Cyprus</strong><br />
EU’s largest<br />
shipmanagement<br />
centre<br />
120 <strong>Country</strong> <strong>Report</strong> CYPRUS <strong>2020</strong>