No major cargo ship registered in Estonia

Photo: Liis Treimann

High taxes have caused what few cargo ships remained to leave the Estonian register, whereas it might be too late to bring them back.

Estonian shipowners own 50-60 major cargo vessels weighing in excess of 500 tons. None of them are listed in the Estonian ships register. «Once something has gone astray, it is very difficult to get it back on track,» said head of the Estonian Seamen's Independent Union Jüri Lember.

If in 1995 there were 42 major ships sailing under the Estonian flag, only two remained by the time the maritime issue was put on the agenda in 2009. The 2012-2020 maritime development plan sees potential for 35 vessels sailing under the Estonian flag in four years' time that could grow to at least 50 ships b 2030. However, the plan is slow to materialize.

The last two major cargo vessels left the Estonian register in 2014 with high labor taxes among principal reasons. Cargo ships Kurkse and Kalana received support from Enterprise Estonia to help pay social tax on sailors' salaries. Support instruments were only meant to last a year, however, and no entrepreneur can make plans for such a short span of time. Kurkse was deleted from the register in February and Kalana on April 16.

Labor taxes are lower in both Latvia and Lithuania, while in the field of maritime activity Estonia competes with the entire world. That way 17 Estonian ships are registered in Malta, others in Panama, Liberia, some sailing under the Portuguese flag in the Madeira register, and yet others under the Mediterranean country of Saint Vincent and the Grenadines.

This also means Estonian sailors go to work in other countries. Director of the Maritime Academy of the Tallinn University of Technology Roomet Leiger estimates that there are 3,000-8,000 Estonian sailors working under the flags of other countries and paying taxes there.

«Sailors, who make no use of social insurance benefits for half their lives, have to pay a lot of social tax on their high salaries. Employers buy them additional medical insurance in other countries. It would be sensible to lay down a social tax ceiling,» Leiger said. He also finds that fees charged for keeping a ship in the Estonian register are too high. Leiger feels the registry fee could be between 20,000 and 25,000 euros a year in which case bringing 250 ships to the Estonian register would not be unthinkable.

«Cargo ships opting for registers of foreign countries also lead to loss of other jobs. Owners and operators of vessels that are registered here should be obligated to use other services like banking and accounting in Estonia,» said MP Artur Talvik. It is said that a single job at sea creates three to six jobs on land. A million euros made in the maritime business brings an additional 1.6 million in other economic sectors.

In order to lure ships back to the Estonian register we need to offer better conditions. «Unions need to be prepared for cases where half the crew is from third countries and are paid less. That is what Finland has done. It must be done to stay competitive,» Leiger said.