Polish fleet under the Polish flag – the beginning of the road

Since the beginning of the political transformation, for almost twenty-five years the Polish fleet under the Polish flag has been degrading. For years, the Polish state was not interested in the fate of Polish shipping. Now it is changing….

At the beginning of the 1990s, the then Minister of Ownership Transformation asked the government to take action to prevent the collapse of the Polish Ocean Lines, and in response he expressed a “deep” thought: “Let them invent something there!” Maybe they would, but the problem is that the rules of the game, according to which economic activity is conducted, are set by the state and not by the enterprise.

When, in 1989, there were still 247 ships and all of them sailed under the Polish flag, as a result of the “let them invent something themselves” approach, at present we have only 94 such ships, including only 21 under the Polish flag. In international shipping, however, there are only four of them under the Polish flag. This statistic is particularly dramatic in the case of Polish Ocean Lines. In 1989 PLO had 85 vessels, all under the Polish flag (in 1976 there were 176 of them). Today, PLO has two 20-year-old ships and both sail under a foreign flag.

We have to be straightforward here. This is not the fault of Polish shipowners.

The fundamental cause of the collapse of the Polish fleet under the Polish flag was the lack of modern legal regulations adequate to the conditions in which international shipping operates.
It is the duty of every company, and therefore also of every shipping company, to conduct its business in such a way that its income exceeds its costs. The source of the shipowner’s income is freight, which shapes the world shipping market. The market, on the other hand, is under the influence of convenient flags, where there are practically no social security costs. Under our current regulations, non-wage labour costs on a ship flying the Polish flag are almost thirteen times higher than under comfortable flags. As a result, it is uneconomic to operate ships under the Polish flag in international shipping. This means that it is practically impossible.

However, this state of affairs has certain consequences. A banner on a seagoing vessel is a sign of its nationality – this is commonly known. The fact that in the economic dimension the flag of a ship also determines the public finances of the state and the maritime economy is less known. The truth is that a Polish ship operating under a foreign flag practically does not bring any benefits to the Polish state. Revenues such as tonnage tax, registration fees, inspection fees, and formal and legal fees contribute to the budget and financial system of the comfortable flag state, not the Polish state.

In order to change this state of affairs,

a thorough reform of the regulations relating to shipping under the Polish flag is necessary. The legislation on taxation and social security for seafarers needs to be amended.

The regulations concerning maritime mortgages, the Chamber of Commerce, the register of seagoing ships and the competences of state authorities regarding inspections carried out on board ships also need to be amended.
The 25-year omissions resulting from the political transformation according to neoliberal philosophy (“let them invent something”) are enormous. And such works on the reform of regulations concerning shipping are carried out both in the Ministry of Economy and the Ministry of the Environment and in the National Development Council attached to the President of the Republic of Poland. The aim is to provide shipowners and shipping companies with stable, economically viable exploitation of ships under the Polish flag. This is the basic objective of the planned reform of shipping regulations.

In addition to the benefits for the Polish system of public finance

resulting from the registration of ships under the Polish flag by Polish (as well as foreign) shipowners, the introduction of maritime-friendly regulations will also stimulate the development of Polish private shipping entrepreneurs.

Shipping-friendly legal regulations will contribute to the development of this branch of the national economy. This is clearly shown by the example of shipping in Germany, where such shipping-friendly regulations are in force. Shipping companies operating no more than one vessel account for more than one third (!) of all shipping companies. Supporting maritime transport, legal regulations – in accordance with the EU Guidelines of 2003. – have been introduced not only in Germany, but in virtually all EU maritime countries.

There is another aspect of the Polish fleet under the Polish flag. This aspect is the shipbuilding industry. The translation is simple, speaking in colloquial terms. If there is a Polish fleet, if there are ships under the Polish flag, Polish shipyards will have jobs. Today, shipyards have to win customers among foreign shipowners. This is not an easy task in the face of competition from German shipyards, for example.

Last week, Polish Government adopted three important draft laws on maritime affairs.

These are: a special law on the construction of external ports, an amendment to the law on ports and marinas, an amendment to the law on personal income tax (with regard to seafarers). The latter opens the way for the reconstruction of the Polish merchant fleet under the Polish flag.

The time when the Polish state was not interested in the fate of Polish shipping has, hopefully, passed.

author: Tadeusz Hatalski
translation: Krystian Wyrzykowski

The author is a captain of the Great Navigation, the initiator of the project of restoring the Polish flag in international navigation, conducted in the National Development Council of the President of the Republic of Poland, to which he belongs.