Viking Line (VL) could move its base from the Åland archipelago inside Finland’s border to Sweden if the new right-wing government coalition in Helsinki proceeds with a planned EUR20 million subsidy cut for passenger ships, Finnish national daily Helsingin Sanomat (HS) has reported.
Jan Hanses, Viking’s CEO told the paper that this would weaken its profitability and endanger jobs. “Transferring to Sweden would be an obvious option, after which (VL’s) taxes would be paid there,” he stated.
VL would be particularly hit as all but one of its seven ro-pax ferries fly the Finnish ensign, thus the company would stand to lose EUR13 million if the proposed saving went ahead. Its main rival Tallink-Silja’s ships are nearly all Estonian or Swedish and not affected.
Viking has battled with high crew costs and bunker rates in recent years that have severely impacted its bottom line.
Shipping is now in focus in both countries currently due to the change in governments, and thus policies.
The Finnish maritime sector has had to bend to official will to keep the subsidy over many years resulting in lower pay, longer hours, and Sunday becoming a working day. “We did what we promised so the government wouldn’t interfere in the subsidy scheme, which is essential for maritime transport,” said Simo Zitting, head of the Finnish Seamen’s Union, who seems fearful of a knock-on effect.
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Finland passed an EU-approved tonnage tax in 2012, but while all cargo-only ships have signed up for it, passenger vessels have not. Sweden has no tonnage tax as yet, because its former right-wing government refused subsidies of any form to any industry on principle. Sweden’s new SDP-led government plans to pass a tonnage tax as early as this autumn to come into force in 2016.
So as HS pointed out: while Finland’s fleet has succeeded in maintaining its merchant fleet compared with Sweden, any benefit for VL could be very short term. While Swedish-flagged vessels have dropped 50% 2008-2013, Finland’s has slipped only 7-5%.
These statistics are important bearing in mind that both countries rely heavily on maritime transport for their exports: 90% for Finland and 70% for its western neighbour.
Sweden’s freighters are more profitable due to flagging out and thus lower crewing costs. This has led to the situation where Finland’s merchant fleet had a combined profit of just EUR18 million in 2013, while Swedish-owned ships flying other flags made EUR200 million in 2013 according to Helsingin Sanomat.