ITALY REPORT At the end of 2001 the Italian-owned merchant fleet consisted of 1,392 ships, for a total of 9,965,897 gt, broken down as follows: over 1,000 gt, 650 ships totalling 9,732,168 gt; from 100 to 999 gt, 742 ships totalling 233,729 gt. The size of Italian-owned merchant fleet still showed growth in the first half of the year, reaching peaks of more than 10.3 million tonnes. In the second half of 2001, however, the size of the fleet decreased, in part because of the difficulties tied to the confirmation of labour cost relief for cabotage, which was reduced under the budget law for 2002. Taken as a whole, the tonnage of vessels flying the Italian flag, at the end of 2001, had risen by 51% compared to the end of 1997. The growth was due in large part to ships entered in the Italian International Register, which accounted for 72% of the Italian fleet by the end of the year. In terms of ownership, the portion of the fleet owned by entities funded totally or predominantly with private capital remained at 94% in 2001. As for the composition of the fleet, the process of specialisation continued, with a gradual shift towards ships of greater value added. In 2001 the Italian fleet once again proved to be a young and technologically advanced fleet: 52% of the ships are less than 10 years old and 31% have not yet completed 5 years of service. The modernisation of the vessels initiated during the last decade has continued. Between 1992 and 2001, 462 ships were delivered, while construction is already underway on 78 other units. In addition, major transformation operations are being carried out on existing ships. In the course of 2001, the balance of payments for Italian shipping grew considerably worse, in particular for marine charters, due mainly to an increase in the exchange rates for the US dollar, the currency in which marine charters are set, as well as to a reduction in Italian market share compared to those of foreign countries and to updating adjustments of service fees (it should be noted that the data for 1999 have been revised). All the same, the strong seagoing orientation of Italian foreign trade was confirmed, as the overall volume of international transactions for the maritime transport alone registered 9.6 billion Euro, compared to a figure of 11.7 billion Euro for all the other systems of transportation taken together. According to the recent results of a research carried out by the Censis Foundation for the Federazione del Mare (Italian Sea Federation) the maritime sector plays a remarkable role in the Italian economic system considering that in 2000 it produced 26.3 billion Euro, equivalent to 2.3% of the GDP, analogously to the agricultural sector. The Censis Report confirms that the most significant portion of the maritime economy is to be assigned to the transport of passengers and of goods, thus, to the merchant fleet which remains the principal supplier of maritime transport services.