Yesterday evening I attended the Lord Mayor’s Annual Gresham Event which was entitled “London: The Global Maritime Centre in a Changing World”. This is a pet subject of the current Lord Mayor apparently, as he is actively involved in shipping. He addressed the well populated Guildhall Library looking like an ageing Beastie Boys fan with his rather large medallion hanging round his neck. True to form, he was as unintentionally entertaining as you may recall Lord Robertson had been at another Gresham lecture last year.
Although quite difficult to understand due to his very strong Greek accent, Prof Costas Th Grammenos and his acolyte Dr Nikolas Tsakos were clearly experts on the subject of what they call the London Maritime Cluster, which is to say the integrated network of companies and support services that are the maritime industry in London. It brings in £20bn a year, so it’s no small fry when you consider that we do about £1bn a week in business with Ireland, which is one of our major trading partners.
However, London is no longer the ‘go-to’ place, since the tax advantages that attracted the shipping companies here have been removed. I spoke to some shipping peeps after the talk, and it seems clear that since all they need to have in a particular port, it seems, is little more than a Portacabin for an office, they can put it anywhere in the world that is tax advantageous to do so. Being into shipping, they’re not in one place but rather everywhere. They like London and would be back in a heartbeat if we reinstated the previous state of affairs.
The problem is you can’t tax these guys any more than they are willing to pay as they are everywhere else and will simply play their Talisman card. In fact we have no maritime fleet at all but if you consider the flags of convenience which are basically British then we do have masses of ships. If only we would admit we are a tax haven, then we could get down to business.
28% of all maritime insurance comes through Lloyds of London. But there are always going to be competitors trying to take all business of any kind from us and shipping, which is literally offshore, is easy prey logistically speaking. They come to you. And it’s really big business, as the vast majority of goods are shipped, not transported as air cargo.
The thing I took from the talk is that you can try to make the world what many would describe as a ‘fairer place’, but there will be a huge cost in doing so. Only three shipping companies are listed on the London Stock Exchange. This contrasts with 52 in New York, 35 in Oslo and 18 in Singapore. We are getting it wrong. There is nostalgia for London among shipping people, but it won’t last forever, and they’re not going to pay for the privilege of being here. Tax is always negotiable no matter what people on PAYE may believe.
James Fisher & Sons (FSJ) is the most important of the London listings. What a price chart. It outstripped its 2007 high years ago and has been almost three times higher since. You might think that the lower highs there over the last two years are a sign of weakness, and they might be. But they also might be a Bull Flag. A move up from here, and break above £12.50, and that’s exactly what it is. I really like the bounce off the cloud top as well – a very positive sign.
Let’s not discourage money like this from parking itself in London.