Cyprus ship management sector generated half a billion in 6 months

Cyprus’ revenues from ship management rose to €516 million during the second half of 2021, corresponding to 4.2 per cent of Cyprus’ GDP in terms of turnover, according to the Central Bank of Cyprus’ ship management survey released on Friday.

This marks a steady recovery from the effects of the coronavirus pandemic and the accompanying decline in economic activity observed during 2020.

According to the report, ship management revenues are broken down by country of payment.

Germany’s contribution decreased from 45 per cent in the first half of 2021 to 43 per cent in the second half of 2021.

This is followed by Norway (7 per cent), Switzerland (4 per cent) and the United Kingdom (4 per cent), who all experienced increases.

Conversely, Singapore, Japan and the United States all experienced a decline.

During the second of the year, 37 per cent of companies managed to generate revenues between €1 million and €20 million each, while only 22 per cent of companies managed to record revenues between €20 million and €50 million.

Moreover, during this period, 32 per cent of larger companies were responsible for 96 per cent of all industry revenue.

This is similar to the first half of 2021 when 32 per cent of larger companies generated 95 per cent of all revenue.

Furthermore, the share of full management services in the second half of 2021 decreased to 43 per cent of the total amount of income generated.

Similarly, crew management services decreased from 49 per cent in the first half of 2021 to 43 per cent of revenue in the latter half of the year.

Nevertheless, these percentages are similar to the levels observed during the second half of 2019, the last year before the pandemic.

The report notes that the choice of flag is a strategic decision for shipowners, especially in the case of open registers that provide significant advantages over the legal and regulatory framework of the ship.

Meanwhile, in contrast to the previous period, the share of revenues resulting from the provision of ship management services to foreign-flagged ships increased to 93 per cent of total revenues in the second half of 2021.

The same figure stood at 59 per cent of the first half of 2021.

Cross-border expenditure, as it relates to the activities of the ship management sector in Cyprus, increased to €457 million during this period.

“Historically, the industry has a relatively stable spending structure”, the Central Bank said in its report.

“The majority of these concerns crew costs, which accounted for 63 per cent of the total amount in the second half of 2021,” the report added, explaining that most of these payments concerned the remuneration of seafarers of non-EU origin (46 per cent).

Moreover, administration costs represented 12 per cent, while ship management costs (such as spare parts, lubricants, and tanking) corresponded to 25 per cent of the total amount.