IN TRADE, all barriers are ultimately permeable in the end.

Where there is demand, trade finds a way.

Sometimes trade osmosis happens so gradually that few notice it is happening until it is too late.

Sometimes the trade barriers create a more dramatic rerouting.

When it comes to where ships are flagged and where companies are based, the same rules apply.

Ultimately such arrangements are informed by many different factors, but when barriers are erected, shipping will always move around them.

An exodus of vessels from Hong Kong to Singapore likely has quite a lot to do with the looming threat of the US Trade Representative’s port fee scheme.

Whether those controversial fees are delayed as part of the US-China negotiations is an open question, but such things are not exactly conducive to strategic planning.

If there is a chance to sidestep the threat, any sensible owner will.

But this is not just about the “will they, won’t they” plot of the current trade drama. This is about where shipping can find sufficient stability to base its operations and right now not all maritime hubs are created equal.

All the usual requirements for a modern maritime hub are there. Shipping wants a dynamic ecosystem that integrates shipping, logistics, trade, innovation and professional services, etc.

Some hubs are touting for business harder than others right now. Shipowners feeling ignored in one jurisdiction where maritime is perhaps not top of the priority list, will be aggressively schmoozed by pro-shipping governments elsewhere at the merest hint of itchy feet.

But there is a geopolitical element to this equation that is now informing the best and the worst of shipping’s nomadic search for the most favourable hub.

As trade is increasingly informed by geopolitical constraints, the question of where your ultimate beneficial ownership allows you to base yourself is increasingly a determining factor alongside the usual questions of tax breaks and access to talent.

As scrutiny and compliance checks are ratcheted up at the bottom of the market, an absence of such checks becomes ever more alluring for those heading ever further into the shadows.

The increasing emergence of barriers to shipping’s trading norms will ultimately require all businesses to adapt and make decisions about where they are based and how ships are flagged.

It would be nice to believe that will result in a flight to quality, but in an increasingly polarised political climate that may not always be the case.

Richard Meade,
Editor-in-chief, Lloyd’s List

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