European tonnage declined sharply in the 1980s, and vessels were reflagged under other flags. To safeguard European shipping, the EU established guidelines on state aid for maritime transport, enabling national fleets to remain competitive in the global market.

Under these guidelines, crew-related aid is available to all types of vessels engaged in international trade. Claims are sometimes made that aid is not paid, for example, to container ships, but this is not true. In Finland, support paid to container vessels represents only a small share of the total, largely because Finland’s containerised exports and imports are almost entirely carried under the flags of other EU Member States. Those vessels fall under the aid schemes of their own flag states and receive support from their home countries. Overall, only around 10% of Finland’s foreign trade is transported in containers.

Cuts will not generate savings for the state budget

All European maritime nations make use of models based on the EU guidelines to support shipping under their own flags. If one country weakens its system, vessels will simply move under other flags.

In practice, the refund scheme means that shipping companies are reimbursed for statutory employer contributions and related payroll charges paid for seafarers. Employers pay these costs, and the state refunds them. The money flows through the state treasury, but it is essentially the same money that the employer has paid in the first place.

It may be tempting to assume that weakening the scheme would free up funds for other parts of society, but unfortunately that is not how it works. Reducing the refunds would inevitably accelerate the decline of Finnish shipping. It would lead to reflagging and the transfer of tonnage that is critical to security of supply under other flags. In the end, there would be no Finnish-flagged employers left, and no one paying these contributions. There would be no real savings, but Finnish vessels and jobs would be lost to other flags.

“Entertainment cruising” or the backbone of our security of supply?

In Finland, passenger-car ferries regularly dominate headlines. They are among the largest maritime employers and wage payers, and therefore naturally also have the highest amount of employer costs to reclaim. Passenger-car ferry employers are reimbursed the same amount per employee as other shipping companies.

Crew-related aid for passenger-car ferries is sometimes criticised, perhaps because the freight they carry remains largely invisible and the vessels are seen only from a passenger’s perspective. Few people realise that Finnish passenger-car ferries alone carry more than 60% of Finland’s general cargo transport.

Their role in Finland’s exports and imports is significant, and they are especially important in times of crisis and disruption. In 2023, the National Emergency Supply Agency published a report on adequate emergency supply capacity, with a worrying conclusion: Finland simply does not have enough tonnage of its own.

The same report shows that, in a crisis, Finland’s security of supply depends on vessels sailing under the Finnish flag, and particularly on passenger-car ferries, which are highly versatile. It would therefore be reckless to put this capacity at risk.

A high-stakes game worth millions, at the expense of our shipping

When proposing cuts, various actors, without knowing the facts, threw around figures with millions in mind. Some spoke of more than 30 million, others of ten million, and some mentioned numbers in between. Even as an industry professional, it was difficult to understand where these figures came from.

What is clear is that the figures did not relate only to service staff on passenger-car ferries, even though their share received the most publicity. The cuts would either have targeted passenger-car ferry personnel as a whole, or the calculations may have included catering personnel across all Finnish-flagged vessels, including cargo vessels.

Without knowing exactly what was included, it is impossible to assess how drastic the cuts might have been and how damaging they could have been for Finnish shipping. So why does it matter that payroll-related costs can be refunded for every seafarer? Because under the European framework, no distinction is made between roles. Anyone working on board with safety duties is considered a seafarer. Under the EU guidelines, the payroll-related costs of every seafarer can be reimbursed. Those working in the maritime sector must defend this principle and prevent different duties from being ranked against one another.

What would happen if crew-related aid for passenger-car ferries were cut and the vessels were reflagged abroad? The ferries would continue operating on the same routes, but under a different flag, and many Finnish seafarers would lose their jobs. The consequences of weakening the system would be extensive and long-lasting.

Some proposals also suggested reducing support across the board for all vessels in international trade. This approach would be extremely damaging. Finnish-flagged cargo vessels already face significantly higher costs than many competitor countries, partly because Finland employs far fewer non-EU workers than many others. Even a small reduction could trigger reflagging.

Lessons to be learned from Ukraine

We are living through a period of security policy turbulence, and geographically Finland is close to a country at war.

The National Emergency Supply Agency has also examined the lessons of Ukraine’s naval war. The report shows that a country at war can see its maritime traffic come to a near standstill for months. Traffic to Ukraine’s seaports resumed only after the Black Sea Grain Initiative entered into force in July 2022. At present, the volume of maritime transport is around 50% of the level before the war began.

Ukraine has a long land border to the west and is not dependent on maritime transport in the same way as Finland. Nearly 96% of Finland’s exports and imports are transported by sea. Finland must safeguard maritime transport under all circumstances, otherwise we simply will not cope.

Russia’s sea areas, meaning parts of the coastline of our Baltic Sea, were declared a war risk area by the Joint War Committee almost four years ago. Finland is not a party to the conflict, but we must not ignore how quickly the situation in the Baltic Sea could escalate.

We must prepare for a future where our exports, imports, welfare and, above all, our security depend increasingly on Finnish-flagged tonnage. Operating in a war risk area is not viable if insurance or guarantees are unavailable, or only available on unreasonable terms. It is therefore likely that, as a crisis escalates, our transport will depend even more on Finnish-flagged vessels, and that is precisely why we must safeguard this capacity.

Maija Mattila

Työmarkkina- ja lakiasianjohtaja
Reservin majuri

Suomen Varustamot

This text was originally published in Navigator Magazine at www.navigatormagazine.fi.