International shipping services count as exports?

Question

A Greek ship owner transports mouse traps from Albania to Japan, making every year ten million Euro in revenue and one million Euro in profits.

The total value of the mouse traps he transports every year is one hundred million Euro. So Albania is exporting one hundred million Euro every year. The ship owner charges 10% of the value of the goods, making a revenue of 10 million Euro (Albanians are paying him that money for transporting the goods to Japan). After paying his expenses: fuel, food, ship repair, taxes, etc., he gets one million Euro in profits.

The question is: does his revenue count as a Greek export? One can argue that Greece is exporting a transporting service so it should count as Greek export. Also the revenue should count as Albanian imports since they pay an external company for the service.

Answer 1

It's complicated, and it is supposed to depend on where the ships are generally operating from, rather than the country of the firm that owns the ships or the flag under which they are flown. Under the 2008 System of National Accounts (the international standard for calculating GDP), overseas shipping is generally to be allocated on the basis of the ports out of which the fleet is serviced. See 4.13, on page 62. The document to which it refers is the Sixth Edition of the IMF's Balance of Payments and International Investment Position Manual. You'll want to look specifically at Chapter 4, 4.131-4.136.

So if we assume that the ship owner is actually operating out of Greece, in your example he would be considered to be exporting the service for which he is paid 10 million in revenue.