Brexit – To be, or not to be
Shifting leadership on both sides creates the possibility of a deal being finalized.
Although the battle for Tory leadership, and thereby also the prime minister position is ongoing, both candidates seem determined to deliver Brexit. The leading candidate Boris Johnsen has sat an exit deadline of October 31, where he will leave with or without a deal. The most likely scenario is that the possibility of an actual Brexit has increased and will be a reality in the near future. What impact will this have on the shipping industry.
The shipping industry involves many sectors, and they will experience the impact from Brexit differently. For conventional shipping as the “roll on roll off” the impact will be greater than for other segments. This is because a large portion of the trade between the UK and the EU crosses the English channel. However, the support industry, mainly the marine insurance industry can be affected across all segments, due to the UK being one of the greatest providers of marine insurance, with names like Lloyds, British Marine etc.
On the other hand, we have the more international sectors like the Tanker and Dry bulk markets, which it seems that will be more unaffected of a possible Brexit. Euronavn`s chief executive was quoted saying: “It should be largely speaking some of a non-event in terms of impact on global trade of crude oil”. It will more likely be a short term boost for international companies that do their business in dollars and particularly if they have expenses in sterling or euro. Others also speculate that a Brexit could impact the availability of financing, which would help constrain new build programs and help prolong an upturn in the market.
European countries impose tariffs on imports from countries outside the EU. So in case of a no deal Brexit could potentially result in tariffs on both British and EU products, which in turn would benefit “ton mile demand” when the respective unions have to look further away for their trading.