- Long hailed as the world’s leading shipowning territory, a recent legislative reform creates new incentivizes for the Greek shipping community to raise the blue and white flag aboard vessels, while creating new job opportunities, thanks to the highly-anticipated liberalisation of the labour and remuneration framework applicable to crew on board Greek-flagged vessels.
- Key additional reforms that are slated for 2020 include a new legislative framework targeting Greece’s yachting industry, with a possible homeporting strategy in the cards, the ushering in of private maritime education, along with the development of ten regional ports through master concession agreements.
- The far-reaching effects of the coronavirus pandemic, escalating trade protectionism, overcapacity, low freight rates, and high bunker costs, coupled with new global environmental regulations are just a few of the headwinds facing the international shipping industry. Enabling the long-term competiveness of the industry along with increased efficiency are key priorities, with the uptake of digitisation and automation set to play a crucial role.
GIG: You have said 2020 will be the year of transformation for Greece’s shipping industry, setting the stage for a major overhaul, particularly from a legislative perspective. What are your objectives in this respect?
Plakiotakis: One thing I would like to highlight is that the global shipping industry is undergoing major changes: from environmental and government related changes across to regulatory frameworks and cybersecurity issues. So, sector stakeholders need to stay alert to retain the competitiveness of the overall industry.
With regard to our shipping industry, throughout 2020 we want to change everything. Just to give you an idea, we are rolling ahead initiatives focused on boosting the Greek shipping registry, creating opportunities for the Greek youth to be employed in the shipping industry, transforming our maritime education, upgrading the legal framework for the yachting industry, along with the development of our ports and marinas.
And this transformation has already begun.
First of all, we recently legislated initiatives for a Flag Gain Policy to make the Greek flag more competitive. This creates incentives for the attraction of more ships to the Greek registry, while also generating new job opportunities for Greek sailors and young people who would like to get involved in our shipping industry.
Thanks to this, it is now possible to sign Greek sailors on ships under the Greek flag based on the current international employment contracts of the International Transport Workers’ Federation (ITF), which is the international union body of sailors.
Ships under the Greek flag will now have competitive wage costs with respect to competing flags, and we feel confident that this will create thousands of jobs for the young unemployed Greek people. Bear in mind that Greek shipowners own approximately 5,000 ships and only 590 are registered under the Greek flag, which translates into 12% of Greek-owned vessels being under the Greek flag. So, this opens up a significant opportunity for us.
In fact, this reform had been a constant request from the Greek shipowning community over the past decade, and something that needed to be changed from an international perspective. We finally managed to pass this law thanks to the fact that we now have a much more mature environment, along with a strong political will to drive the sector forward.
Another major reform that we are going to legislate this year, and is reflected within the initiatives that we are going to present, includes the upgrading of Greece’s maritime education. The new law will completely change the sector’s educational environment, while also introducing the most obviously needed change: private maritime education in Greece.
On the other hand, Greece is the best place in the world for the yachting business. But we need a competitive legal environment if we are going to attract more ships to Greece, and more and better marinas are a must. While the yachting industry is undergoing difficult times, especially this summer, we feel confident that if we implement the right measures, especially if we change the legal framework, we will be in a position to provide more incentives for the attraction of yachts to the Greek territory.
We also have plans to develop 10 major ports, without taking into account the ports of Piraeus and Thessaloniki, which have already been privatised. International tenders for the development of three of our major ports have been launched, and these refer to the ports of Alexandroupoli, Kavala, and Igoumenitsa.
I would like to assure you of the following: we will not lose even a minute, or any investment opportunities. We have a complete strategic plan, we know what we need to do to make the most of this time juncture, and we are aware of the opportunities that are ahead of us.
I believe that our shipping industry, Greek shipping, continues to be a reliable factor in the global economy, and the government of Kyriakos Mitsotakis would like to support this sector with every means possible, as the Greek shipping industry does not only contribute to the social and economic development of this country, it also contributes on a strategic level.
I would like to sum up by mentioning two figures. For the past 15 years, more than 1,000 ships have been built at Chinese ports which have entailed investments of more than USD 15 billion. With this, you can understand the importance of Greek shipowners on a world level and the strategic importance they bestow upon our country, despite this very difficult period. Greek shipowners still rank first in terms of their fleet. This is one of the Greek miracles, maybe the only Greek miracle, which is thanks to the hard work of Greek shipowners, Greek officers, and people within the wider shipping industry.
GIG: Increasing the appeal of the Greek Shipping Registry is clearly one of your key priorities. Bearing in mind the country tops the ranks as the world’s no. 1 shipowning territory, why is it that the Greek-flagged fleet ranks 8th?
Plakiotakis: The Greek-owned fleet ranks first on a global scale with a carrying capacity of approximately 350 million dwt, distributed among 40 different global flags. As a result, the Greek-owned fleet ranks first accounting for 18% and 53%, respectively, of the global and the EU dwt tonnage capacity. However, in terms of vessels carrying the Greek flag we rank 8th. The reason is two-fold:
Firstly, there was a tremendous amount of bureaucracy associated with the Greek Shipping Registry, which is why we are now in the process of digitising all procedures. It is fundamental that we create a competitive registry by taking into account what other international registries are doing well.
The second aspect is related to the need to lower the costs borne by ships. There were certain disadvantages associated with a ship carrying the Greek flag because doing so meant the vessel needed to have at least five officers, including the captain, whereas in other registries, such as the Marshall Islands or the Liberia Registry, these restrictions do not exist.
However, through the recent legislative reform I previously mentioned, we have made considerable strides forward. This law was passed at no economic cost for the federal government, and it opens a room full of opportunities for thousands of people.
Just bear in mind that we have almost 5,000 Greek-owned ships, and each ship has at least 15-20 people, as a minimum. This would translate into the creation of at least 100,000 jobs. And you also need to consider that within a 12-month period, crews are changed two or three times, meaning a potential 300,000 jobs would be created only through Greek-owned ships. But shipping is an international business so everybody in the international business community can apply for these positions.
This was a major reform for the Greek shipping industry, and is just one of many that will see the light. We need to be competitive because the shipping industry is an international business. Strengthening the Greek registry and creating a competitive fleet is a key priority.
GIG: The yachting industry is one of the most severely affected subsectors within the maritime cluster due to the coronavirus pandemic, along with the cruising industry. Bearing in mind Greece harbours one of the largest fleets of mega yachts and is also one of the preferred global destinations for yachting, what scope do you see for the development of a homeporting strategy targeting this segment?
Plakiotakis: In the field of marine tourism, we firmly believe that Greece can and should become the centre of global yachting. It is one of the strongest sectors of the country. Within 2020 we are planning to adopt a modern, simple legislative framework. Open seas for everyone with simple canvas frame implementation within the framework of national and Community law.
But the development of a yachting homeporting strategy is a challenging issue because, on the one hand there are the yachts registered with the Greek registry and, on the other hand, there are the big mega yachts that are registered in a different European or third country registry. So, these two registries need to have a level playing field. There’s huge potential but we need to find the most appropriate solution to not disturb the market.
At the same time, we need to be flexible and competitive. The development of this kind of strategy requires dialogue and communication with the real economy, and with all major stakeholders in the sector in Greece. We are well aware of the importance of pushing this forward and will do our best because it’s a sensitive topic.
GIG: Another priority you’ve highlighted is the development of 10 additional ports, following the privatisations of the ports of Piraeus and Thessaloniki, with three slated to be awarded later this year. What is the wider strategy in this regard?
Plakiotakis: A huge investment of €611.8 million planned by the Piraeus Port Authority (PPA) will upgrade the port facilities, create thousands of new jobs and contribute to growth. This project is in the process of being implemented after overcoming significant obstacles, and it opens a new page in the excellent relations between Greece and China.
At the same time, the approval of the master plan proves that our country is now friendly to investments that are both visionary and realistic, while creating real added value. The further development of Piraeus as the centre of Greek shipping is a major priority of our ministry.
A similar procedure was followed for the Thessaloniki Port, which is the second largest Greek port. In 2017, the Hellenic Republic Asset Development Fund (HRADF) sold 67% of the Thessaloniki Port Authority’s shares to the Southeast Europe Gateway Thessaloniki (SEGT) consortium, providing them with the port’s operational rights until 2052.
Because of its location, Thessaloniki has a strategic position in the European transportation system, serving not only Northern Greece, but also the whole Balkan Peninsula, Central Europe and the states of the Black Sea Economic Cooperation (BSEC). The investment plan is advancing swiftly and upon its completion – along with the supplementary investments in the broader area – the Port of Thessaloniki will turn into a trade hub to and from the Balkan region as well as a transport hub connecting Balkan countries with the Mediterranean Sea.
As for the other ports, international tenders have been launched for the development of the ports of Alexandroupoli, Kavala and Igoumenitsa, while steps are being taken with respect to the remaining seven regional ports.
Our plan is to develop our ports through master concession agreements because, for the most part, they have an excellent geographic and geostrategic positioning, at the crossroads of three continents. This is the key strategic advantage of Greece.
And this will give us an opportunity to attract significant investments. The reality is that major investors, particularly port operators, are looking forward to these tenders. Each port has its own competitive advantages.
For example, Alexandroupoli is an energy hub and it can serve complex projects: railway, commercial, yachting, etc. With respect to Kavala, we are going to proceed with a sub-concession agreement. And in the case of Igoumenitsa, it is a major entry point from the West, through Italy, into Greece. It is strategically located while also being at the centre of the Egnatia and Ionian highways. Its position is very crucial. I believe that there will be great competition for these tenders moving forward.
GIG: What kind of interest have investors expressed so far?
Plakiotakis: There is a clear American interest in investing in the Port of Alexandroupoli. Italy’s Grimaldi Group are interested in the Igoumenitsa Port as well as in the development of Heraklion. There are many other investors, but we’ll have to wait and see how things develop as we’re in the process of international tenders.
GIG: Let’s move on to focus on the Ministry’s role within the management of the coronavirus pandemic. What are the biggest challenges you’ve had to face?
Plakiotakis: The lockdown was a very challenging period for us because 15% of the total Greek population lives on the islands and we had to guarantee the continuous operation of the ferries to and from the mainland to ensure the country’s connectivity. Therefore, we made a decision early on to provide the ferry sector with a total of €30 million through a government grant.
Our ministry does not own ships; we deal directly with private companies. Fortunately, we succeeded in maintaining the continuous operation of ferryboats to and from the islands, albeit with reduced flows. That was the biggest challenge.
Nowadays, the ferry industry is doing well but they are going to face significant challenges. I think the sector’s turnover this year will suffer more than a 50% cut.
On the other hand, we continue to face challenges with crew changes and the repatriation of seafarers trapped on ships due to blockades and flight bans. Greece raised the issue very early in the IMO through my letter to the president of the organisation, and we have made appeals in every way possible in an effort to find a way to solve this situation. From our side, more than 2,000 Greek sailors have returned to their families.
As for our ports, the Port of Piraeus, which is our biggest and most commercial port, was in continuous operation and there were no disruptions in terms of its day to day business, with the exception of the cruising industry. We expect they will suffer a fall in their turnover ranging between 20-30%, but it won’t be high.
GIG: As Greece looks towards economic recovery and the activation of the EU Recovery Fund, how is the Ministry planning to support the wider maritime cluster?
Plakiotakis: One thing that is clear is that this is the right time to invest in the Greek economy.
We have €72 billion earmarked from the EU Recovery Fund that needs to be absorbed over the next four to five years. There is plenty of room for a total transformation of the Greek economic model during this period, which is why we feel that this is the right moment for Greece.
The EU Recovery Fund is a great opportunity to fully digitalise our ministry. This refers to our registry, our ports, and our daily communication with our community.
Beyond this, we aim to overcome any obstacle hindering the development of healthy entrepreneurship and competitiveness in the maritime tourism industry. As such, the work of the National Coordinating Cruise Committee will be intensified to achieve an immediate promotion of measures and incentives concerning infrastructure and superstructure, shipping logistics, operation of archaeological sites, traffic regulations, passport controls, navigation, waste management, water airports, home-porting targeted development, and environmental protection, in a bid to maximise benefits for the Greek economy.
As for the yachting sector, our priority is to introduce legislative provisions to regulate the sector. The digitisation of mooring services and those provided to maritime companies of pleasure yachts, the implementation of the e-charter party application, the reduction of formalities surrounding yachts’ arrivals and departures, along with the acceleration and simplification of yachts’ professional registration procedure will lead to yachting’s qualitative and quantitative development.
GIG: What are the key challenges that lie ahead for the sector and how can it best prepare for future shocks based on the lessons derived from this pandemic?
Plakiotakis: The global economy is undergoing a period of change and this has, during the recent years, had a significant effect on the demand side of shipping services. Generally speaking, the shipping industry has been under pressure stemming from overcapacity, low freight rates, and high bunker costs, altogether influencing the economics of the industry. It is remarkable that in such challenging times, the figures of Greek shipping remained virtually unaffected. This is due to the professionalism and adaptability of the Greek shipping industry which, in constant support from the Greek government, managed to respond to the challenges and look with optimism towards the future.
Maritime transport services require a free and stable global regulatory framework guaranteeing the unrestricted and non-discriminatory access of vessels to the worldwide movement of cargoes in a genuinely competitive environment, which is not only to the benefit of the carriers but also of consumers worldwide. It also requires uniform global rules about safety and the protection of the marine environment.
Recognising the contribution of shipping to the national economy and to our society, Greece consistently supports shipping activities through a coherent institutional framework with positive measures aimed at fostering the competitiveness of the maritime sector and cluster in the international scene. For the same reason, the Greek State has entrusted our ministry with the administration and support of Greek shipping.
Furthermore, the Greek Maritime Administration attaches great importance to further expanding maritime know-how, and taking advantage of the talent of Greek seafarers and their high professional expertise. Their efficiency in the provision of shipping services along with their adherence to the international IMO standards on safety, security, and environmental performance underline the quality characteristics of the Greek shipping industry. These elements constitute solid foundations for the future of the sector.
As far as the future challenges are concerned, the potential game changers include:
Firstly, emerging and escalating trade protectionism, which puts at stake the efficiency of the shipping sector to serve and facilitate global trade. Our guide should be the acknowledgment that efficient world trade is strongly dependent on a rules-based global-trading system.
Secondly, the realistic implementation of the IMO’s initial strategy on the reduction of greenhouse gas (GHG) emissions from ships. The strategy constitutes an important milestone in the IMO’s efforts to achieve the appropriate international solutions for the international shipping industry. In the years to come, we look forward to the constructive cooperation with other IMO Member States and maritime stakeholders in order to realistically implement the strategy, in a way appropriate for different ship trades.
Thirdly, the consistent and smooth implementation of the new 0.5 % sulphur limit from January 1, 2020 through global availability of safe compliant fuels. We should always keep in mind that the responsibility for this lies with the bunker fuel supply chain.
Fourthly, the preservation and further expansion of Greek maritime expertise, since the role of the human element is essential in any strategic reflection about shipping.
Last but not least is the uptake of new opportunities from digitisation and automation, which can reduce operational costs and increase efficiency.
From our part, we are closely following international developments within these areas to adapt our strategy with a view to secure the long-term competitiveness of our maritime industry.