Switzerland will incur a further CHF100 million ($101 million) loss as it continues to reduce its merchant shipping fleet. The ongoing bill for selling off ships and meeting their debt obligations has now risen to an estimated CHF300 million, the government has admitted.
Eight more ships, from the Massmariner company, are to be sold off, bringing the size of the fleet down to 20. The government has asked parliament to stump up another CHF128.7 millionexternal link to cover the outstanding debts of the ships. Following their sale, losses are expected to amount to CHF100 million.
In 2017, parliament approved a separate credit of CHF215 million to dispose of 13 vessels with the expectation of incurring a CHF200 million loss.
Relic from the past
Switzerland raised an ocean-going fleet at the outbreak of the Second World War to guarantee supplies to the landlocked country. It agreed to underwrite the debts of this fleet in return for the right to requisition vessels in times of crisis.
But the fall in fortunes for maritime trade since 2008 and the advent of alternative supply mechanisms forced Switzerland to re-think the policy. Since 2016, no further credit guarantees have been issued and the fleet is being gradually dismantled.
At the end of 2016, Switzerland had 47 ocean-going vessels with guaranteed loans totaling CHF794 million. Following the sale of the Massmariner ships, the fleet will be pared back to 20 vessels with debt obligations amounting to CHF374 million.
The Swiss authorities have been criticised for failing to spot the severity of the situation until it was too late to prevent huge losses. In 2016, federal auditors also uncovered the fraud of one shipping company conspiring with a Swiss official to inflate the value of a vessel to get a larger loan.