Chief of the Royal Swedish Navy has say on competitiveness in shipping
What is the value of a Swedish flag on a ship, and how can we boost the competitiveness of shipping?
Chief of the Royal Swedish Navy, Ewa Skoog Haslum, and the Swedish government’s investigator for the competitiveness of Swedish shipping, Rikard Engström, share their thoughts.
IN RECENT DECADES, many Swedish shipping companies have registered their vessels under foreign flags, usually for economic reasons. This development means Sweden may end up with a merchant fleet that is inadequate for the supply of necessities in the event of a crisis. It could even affect national security. Chief of the Royal Swedish Navy, Ewa Skoog Haslum, is among those raising concerns in the debate about Swedish flagged vessels.
“The great importance of the merchant fleet for Swedish total defence was made clear during both World Wars, and we’re hardly less dependent today considering the increase in trade and our lower degree of self-sufficiency,” she says.
If Sweden joins NATO, the need to safeguard maritime transport will likely increase. As a member, Sweden may not only have to transport NATO formations across the Baltic Sea, but also assist warships from other member countries with services such as bunkering and towage.
Shipping is especially important in wartime, due to the uncertain availability of functioning rail networks, bridges and ships from other countries. Even in peacetime, Sweden is utterly dependent on shipping. Ewa Skoog Haslum emphasizes the necessity of a strong Swedish merchant fleet for both military purposes and national supply.
“In the event of war, we can only count on Swedish flagged vessels,” says Skoog Haslum, before adding:
“The RoRo and RoPax vessels that connect Sweden with other Baltic Sea states, and the coastal tankers needed for industry along the Norrland coast are very important. For military defence, merchant vessels are not only needed both as auxiliaries, i.e. ships temporarily converted into naval vessels, but also for shipping fuel and transporting ground combat units.”
The Chief of the Navy also highlights an additional reason in favour of the Swedish flag, namely that ships flying it are under the protection of Swedish warships even during peacetime – both in Swedish national and international waters. This does not apply to foreign-flagged vessels.
The Government has also highlighted the crucial role shipping plays in Sweden’s security of supply.
In June 2023, Rikard Engström was tasked with investigating and proposing measures regarding stamp duty and tonnage tax, among other ways to strengthen the competitiveness of Swedish shipping. The results will be presented on 29 December 2023, after which it will be up to the government to decide on how to proceed with the proposals.
“When a vessel is entered in the Swedish register of ships, there is a charge equivalent to 0.4 percent of the vessel’s mortgage. Even though this charge may seem small both in terms of percentage and the amount, it sends an important signal,” says Rikard Engström.
Since the tonnage tax was introduced in 2017, the decrease in Swedish-flagged vessels has slowed a little.
“Now we need to get the trend on the rise, and I regard the chances as positive. When we saw the rush to flags of convenience, no one ever thought we would see a war in our own neighbourhood, nor a pandemic. But now we’re in an entirely different situation.”
It’s easy to see that further flagging-out would not be good for Sweden LTD”
However, tax system improvements alone will not make Swedish shipping competitive. A healthy Swedish maritime sector not only requires expertise on board ship, but also in its shipping companies, authorities, banks and insurance companies.
“We also need access to our own repair yards and robust logistics infrastructure in our ports. Thus from the Navy’s perspective, it’s important for the entire maritime sector to grow and that we jointly strengthen the sector’s ability to operate in peacetime crises such as pandemics, the risk of war and war itself,” says Ewa Skoog Haslum.
“It’s important to note that Swedish flagged vessels are unevenly spread across the industry’s segments. We have very few vessels, if any at all, in segments such as container ships and pure bulk carriers, and the number of tugs is also a matter for concern. However, things look much better in segments such as ferries and tankers. If this is good enough, I cannot say, but it’s easy to see that further flagging-out would not be good for Sweden LTD,” says Rikard Engström.
