The Rotterdam Maritime Services Community (RMSC) represents the entire cluster of maritime business services providers in the Rotterdam region. We have asked industry experts and RMSC members for a brief overview of developments per sector. You can read about the impact on shipping in general, brokers, legal experts and surveying companies, but also from the financial tax and insurances perspectives.
Inland shipping started to suffer immediately following closures of hinterland factories. So far the short-sea (multipurpose) market has performed relatively satisfactory given the situation and in deep-sea shipping it highly depends on the segment: large tankers are doing well due to demand for floating storage as a result of the crude oil market in contango whilst containers and dry-bulk is performing poorly following collapse in demand from all major consumer centers.
Through the KVNR, the shipowners and banks are in dialogue with the government and politicians to emphasis the Dutch shipping sector should continue to operate since it is key for our supplies and the economy.
The S&P market is pretty dead since most players take a wait-and-see approach and hold cash to cover an uncertain future whilst questioning how long this will last. For the brave and the bold, opportunities will eventually arise through the headwinds if you can adapt your sails and change your course.
Shipbrokers are by nature optimistic species, and their job is to spot the interesting prospects for their clients and inform them promptly about what can be done and where, Facing the headwinds of dwindling global activities related to the sale of ships, and the reluctance of most shipowners to engage in new transactions, this optimistic nature is much needed.
We see good efforts by the Dutch banks to take on a socially responsible role and be lenient towards borrowers (self-employed, SME and corporates) facing financial challenges. We do believe that liquidity shortages will increase in the sector and fund raising efforts will become very challenging for the period up to summer and possibly the rest of the year.
Banks and financial investors with exposures to the maritime sector will face more requests for payment holidays whilst credit will have to be provided to prevent bankruptcies. The urgency for bank support is high but it is to be seen under what conditions financial institutions will grant a payment waivers and at what costs.
The good news is that our government is taking its responsibility by providing emergency measures. The Dutch central bank have temporarily relaxed the capital requirements for financial institutions so that credit remains available.
In ship surveying work has shifted to home office as well and in line with reduced shipping movements, business is slow. The sector is confronted with restrictions of terminals and in some cases it is not allowed to board vessels or accommodations. This might cause delays for shipping companies. Still these restrictions are limited.
People work from home and not only in NW Europe, but across the globe. Most surveying companies have fully stopped international travel for new assignments abroad.
The shipping industry did not stop and continued to operate but it is clear that the Covid-19 drama has a serious negative influence on the workload of surveyors as well. The number of cases in the last 2 weeks dropped and in these times of uncertainties it is the question what will the near future will bring.
Surveying companies are offering desk consult via their offices now when vessels need attention while owners/managers representative are not allowed to travel to their vessels.
There has been discussions surrounding the question on the government effort to limit movement of persons results in force majeure to be called in various agreements. Sometimes there are specific contractual agreements with regards to force majeure, however in case of a fallback on general Dutch law, there is a duty for the involved to commit to limit the financial impact. Conclusion so far: Corona is not automatically a reason to call on force majeure. A recent case calling force majeure for not paying rent on real estate due to corona related income loss was dismissed by court.
Our members in the legal profession have seen numerous cancellations and renegotiations of storage contracts for oil as a result of the extreme demand for storage and subsequent increased storage costs. In shipping there is uncertainty on various port call restrictions and (dis)agreements with cargo owners on discharge locations.
On Tuesday 17 March, the cabinet announced a package of fiscal and economic measures. These support measures are mainly for Dutch entrepreneurs and self-employed persons. The most notable measures are the temporary scheme for the compensation of labor costs, a reduction of the collection and tax interest to practically 0% and the (immediate) replacement of the short-time working scheme by a contribution to the salary costs. Most of the measures apply for the next three months, if necessary an extension is possible.
The Temporary Emergency Measure Bridging for Retention of Work (NOW) is applicable if a loss of turnover of at least 20% is expected. Depending on the actual loss of turnover, the compensation can be granted to a maximum of 90% of the salary costs.
For tax debts a special deferral of payment can be requested for. This special deferral of payment is possible for income tax, wage tax, VAT and corporate income tax. The postponement is granted if there is a motivated payment problem due to the corona crisis.
Recovery interest is normally charged after the expiry of the payment term on the tax assessment. The amount of the recovery interest will be temporarily lowered from 4% to 0.01%. This applies to all tax debts. For taxes to be paid, the tax rate will also be reduced to 0.01%. For comparison, this is normally a rate of 8% for corporate income tax and 4% for personal income tax.
If a lower taxable profit is expected for 2020 we advise to file for a reduction of the preliminary tax assessment for 2020. Also a corona provision can be considered to include in the annual accounts 2019.
Prepare for the future
As the Rotterdam Maritime Services Community, it is key that we cooperate and help the players in our sector who are facing challenges. A helping hand for one, can be an opportunity for someone else. The corona crisis is a global health crisis with major economic impact in all international maritime hubs. When business resumes, Rotterdam can come out stronger than ever if we do the right thing now and prepare for a new future!