New figures, released today from climate change NGO Opportunity Green in its latest report Global shipping: mega profits, micro taxes, show the extraordinary scale of the profits being made by leading shipping companies in the years since the pandemic. The world’s 139 largest shipping companies – accounting for 90% of the world’s fleet – made almost US$340bn in profits from 2019-2023, the last year for which full figures are available. Of this huge sum, 93% was grabbed by the top 10 largest companies.
The pandemic created an enormous windfall for shipping companies as the easing of lockdown restrictions caused a spike in global demand for freight, pushing prices up to record levels. But freight prices have soared again since 2023, as a result of disruptions to global shipping routes including drought restrictions on the Panama Canal and attacks by the Houthis on ships in the Red Sea. As freight prices have risen, so have shipping company profits.
Yet despite these record earnings, shipping company taxes have remained catastrophically low and many of the world’s biggest shipping companies are failing to pay their fair share of taxes. The top 10 largest companies paid only US$30bn in tax from 2019-2023, at an effective tax rate of just 9.7%. This is far below the global corporation tax average rate of 21.5%, and below even the new Organisation for Economic Co-operation and Development (OECD) global minimum tax rate of 15% (from which shipping is exempt).
Following intense industry pressure, the OECD granted shipping companies an exemption from its minimum corporation tax rules, which applies a global minimum corporation tax of 15%.
The report shows that the problem is biggest in the largest and most profitable companies, with nine of the top 10 from high income developed economies and four of those headquartered in wealthy OECD member states. Over 2019-2023, members of the OECD have an average tax rate on shipping companies of 4.3%, compared to a rest of the world average of 16.1%.
The top three publicly-listed European shipping companies, Maersk, CMA CGM and Hapag-Lloyd, paid only $4.6bn in taxes in total over five years, despite making nearly half of all profits globally (US$137bn). Had the top 10 largest shipping companies paid the average rate of tax faced by other companies in their home countries, the additional tax raised would have been US$42bn.
James Meadway, Senior Director, Economics at Opportunity Green says:
“This is a shameful set of statistics, and shipping companies must change course, start paying their fair share of taxes and get onboard with the true impact their operations are having on the planet. The international shipping sector is a significant contributor to climate change, producing 1 billion tonnes of GHG emissions each year, but nowhere is this felt more acutely than in the Global South, where frontline countries are bearing the brunt of the climate crisis. Four of the world’s largest shipping companies, headquartered in the richest countries, paid just US$5bn in taxes – an all-time low tax rate of only 3.1%. If these four companies alone were taxed at the same rate as other big corporations where they are headquartered, more than US$38bn extra in taxes would have been raised over those five years – that’s enough to deliver immediate food aid to the 282 million people facing acute food insecurity around the world. This level of undertaxation on such a profitable sector is unforgiveable.”
In March and April, discussions are expected to finalise at the UN’s International Maritime Organization (IMO) on which global measures to adopt to phase out shipping’s greenhouse gas (GHG) emissions. The IMO promised to adopt some form of GHG pricing, in which a levy is the most supported mechanism and which – if adopted – would set an unprecedented example as the first global levy of its kind.
Aoife O’Leary, CEO and Founder of Opportunity Green says:
“These figures should act as a stark warning as Member States from all over the globe gather at the International Maritime Organization (IMO) to discuss the possibility of a levy on international shipping emissions. The shipping industry currently produces 1 billion tonnes of GHG emissions each year, and yet it continues to dodge paying fair taxes. It now has the unique chance to put that right by becoming the first industry to introduce a global levy and raise revenues that could be directed to deal with the worst effects of climate change in climate vulnerable countries.”
Source: Opportunity Green
