The UK marine industry is expected to grow by 2025 but not before contracting this year.

This is amongst the findings of research conducted by QBE, Oxford Economics and Control Risks, which points to a contraction of 8.5% in the UK marine industry in 2023 – the sharpest decline since 2016 (aside from 2020 when the industry was grappling with the pandemic).

The report, Navigating Maritime Challenges: Forecast for the UK Marine Sector suggests the industry will decline by just 0.4% this year in 2024 before returning to marginal growth of 0.8% in 2025.

Employing more than 61,000 people on shore or at sea, the marine sector is a critical component of the nation’s economy, with more than 90% of the UK’s freight leaving or arriving by sea. It is widely considered to reflect the state of the UK economy, with the volume of goods traded and passenger numbers usually acting as reliable economic indicators.

Brexit and the conflict in Ukraine have significantly squeezed maritime transport in recent years. Disruption to supply chains and trade flows, and administration burdens linked to sanctions compliance, and customs requirements for trade with EU markets have caused significant delays.

Shipping firms have meanwhile been hit by steep increases in fuel prices sparked by the Russian invasion of Ukraine in February 2022. Output prices of UK fuel manufacturers increased by 66% between Q4/21 and Q3/22, before almost falling back to their pre-invasion levels in Q3/22. Freight and passenger water transport firms put their prices up by 15% and 11% between Q4/21 and Q3/22 and have largely left them unchanged since.

UK supply chains are expected to face even more disruption this year as shipping companies divert journeys away from the Red Sea as pressure in the region intensifies, adding up to 10 days to shipping timetables and costing millions of dollars.

It is also expected that labour issues and regulatory pressures will complicate operations in the coming years, placing additional pressure on maritime routes and supply chains. Ports are crucial components of UK supply chains, but high-profile strikes have crippled ports in recent years, with resulting reduction in calls to those ports and vessels diverted to alternative locations contributing to congestion.

Commenting on the findings of the report, Kevin Shallow, director of marine, QBE Europe said: “The UK marine industry has been hit by Covid-19, the Ukraine conflict and now we are facing conflict in the Red Sea. While headwinds are expected in 2024, opportunities remain.

“The UK shipping community needs to ensure risk assessments are thorough and accurately identify potential perils of the sea. Training, contingency plans and emergency response procedures can all help minimise risk and help the UK’s marine industry return to growth by 2025 and beyond.”

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