articles | 18 April 2022

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% 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% in the first half of 2021 to 43% in the second half of 2021.

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

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

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

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

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

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

Similarly, crew management services decreased from 49% in the first half of 2021 to 43% 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% of total revenues in the second half of 2021.

The same figure stood at 59% 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% 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%).

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

Source: Cyprus Mail

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