Greece’s shipping industry plays big role in global sea transport
The Cyclades island of Andros has been long known for its maritime tradition, with an estimated 30% of Greece’s maritime fleet today being owned by Andriotes. Copyright: Giannis Giannelos

Maritime

  • Maritime Stats Icon 1
    18%

    Worldwide tonnage capacity owned by Greek shipowners (2019)

  • Maritime Stats Icon 2
    4,536

    Number of vessels owned by Greeks worldwide (2019)

  • Maritime Stats Icon 3
    670

    Number of vessels that fly Greek flag (2019)

  • Maritime Stats Icon 4
    $14 bn

    Amount Greek shipping interests raised between 2004 and 2018 in new equity money

The shipping industry has always been a source of pride for Greeks. Possessing an estimated 18% of the worldwide tonnage capacity, Greek shipowners are successors to the Homeric adventurer who is unafraid of odysseys into uncharted waters. Challenges in the sector are growing, however, in a fresh test for Greek shipowners already operating in a highly competitive market. At the same time, Greece is moving both to revamp its network of ports to better serve the maritime industry and also to improve its connectivity with the global transport market.
Shipping Sector Opener-secondary
© Copyright by Aun Photographer / Shutterstock.com

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Charting a Course For Success

While Greek shippers build on a leading position in the industry, the development of ports is seen as a major boost to the country’s role in global sea transport.

Greek shipping has thrived since ancient times thanks to the unparalleled skills of its seafarers. Their modern-day successors have proven that Greeks have the sea in their blood, evolving successfully despite the highly cyclical nature of the global shipping industry.

Today, the Greek shipping industry continues to successfully navigate one of the most competitive sectors in the world. This, along with the ongoing development of Greece’s national network of ports, is boosting the country’s role in global transport.

“Greeks have long ago stopped being the marginal tonnage provider of the market, and they now run large shipping conglomerates setting the tone in highly demanding sectors including LNG vessels and containerships,” says Nikos Veraros, Partner at Investments and Finance Ltd, a shipping finance consultancy.

According to the United Nations Conference on Trade and Development (UNCTAD), the fleet controlled by Greeks represents about 18% of the worldwide tonnage capacity. This is impressively disproportionate considering Greeks make up just 0.15% of the global population.

According to Yiannis Plakiotakis, Greece’s Minister of Maritime Affairs and Insular Policy, the Greek-flagged merchant fleet counts more than 670 ships and ranks 8th in size on a global level. In addition to the national fleet, Greek shipowners control a total of more than 4,536 vessels of various categories, with a carrying capacity of about 349 million deadweight tonnage (DWT)distributed under different flags around the globe. Taking these vessels into account, the Greek-owned fleet ranks first, accounting for 18% and 53% of the global and EU DWT tonnage respectively.

Greek Ship
Copyright: Leszek Glasner / Shutterstock

Based on statistics by VesselsValue, in 2019 the value of the Greek fleet exceeded $100 billion. That’s the highest among all nations worldwide. To put things into perspective, Greek shipowners control of global shipping fleets is estimated at 29% of all crude oil tankers, 22% of the totality of dry bulk carriers, and 15% of the world’s chemical and products tankers.

Nonetheless, the global shipping industry has rapidly transformed in recent decades, with economies of scale bearing increasing relevance. Mitigating the industry’s environmental footprint is also among the sector’s key challenges.

The current generation of Greek shipowners has been busy modernising their fleets along with their onshore supporting operations. In the first eight months of 2018, Greeks invested more than $3 billion in vessels, buying 200 ships. Currently, according to industry officials, their orderbook stands at an estimated 250 vessels.

Partnering with the Greek shipping community is one of the most efficient and promising ways for a new investor to enter the sea transport market, on a worldwide scale.

Data from Petrofin Research shows that about $53 billion had been advanced to Greek shipping interests by international banks

by the end of 2018, compared with only $16 billion in 2001.

“Even more prominent has been the participation of Greek interests in maritime capital raising in the international capital markets. In the U.S., Greek interests raised about $14 billion in new equity money in the period between 2004 and 2018, accounting for 44% of total maritime equity raisings. It is worth noting that this participation is more than double the share that Greeks have in the worldwide fleet,” Veraros says.

Shipowning territories based on number of vessels greece maritime infographic

Big Impact

Shipping plays a crucial role in the Greek economy.

Apart from boosting the country’s international standing, it is Greece’s second biggest source of export revenues, earning the country approximately €9 billion per year. The sector is also a major employer, accounting for 1 in 10 jobs.

Shipowning territories based on tonnage greece maritime infographic
Copyright: By Hill International - Port of Piraeus

The Greek shipping cluster has traditionally been centred in Piraeus, which is still seen as a worldwide maritime centre with expertise in the technical and commercial management of vessels. Greek shipping companies offer direct employment to over 16,000 professionals and are the driving force for the maritime cluster, which is estimated to employ 190,000 people directly and indirectly.

Previously shunned by many young Greeks who preferred to work closer to home, shipping now represents a market full of opportunities and removed from Greece’s economic woes.

Based on data presented by mathematician and analyst Stratos Stratigakis, demand for shipping studies soared in 2018. The number of applicants seeking to enter the shipping course offered by the Athens University of Economics and Business leapt an impressive 247% to 746, up from 215 applicants in 2009.

The sector, though, is heading into choppy waters.

Trade tensions between the United States and China are weighing on investment prospects and have sharply increased downside risks to world economic growth forecasts. This is taking a toll on shipping, particularly the container segment.

“Risks related to negative developments on demand for shipping services due to protectionism, the slowdown of the global economy, and international geopolitical risks may have a negative impact on transport revenues,” says Governor of the Bank of Greece Yannis Stournaras in his annual monetary policy report released in July.

Other challenges faced by the sector involve keeping up with changes on technical and regulatory fronts. ‘In a bid to maintain the large size of their fleet amid increasingly strict environmental regulation in the form of the International Maritime Organization (IMO) 2020 sulphur cap, Greek shipowners are required to improve the environmental performance of their vessels. This is expected to run them around $50 billion.

Piraeus on The Rise

The port city of Piraeus has traditionally been the hub of the Greek shipping community; the shipping cluster there is estimated to number some 3,273 enterprises, according to Ernst & Young (EY).

Though some shipping companies do operate from the southern Athenian coast and other parts of the capital, Pireaus’ popularity has prompted plans for significant upgrades of the commercial sector. Also, there are proposed investments to improve local infrastructure and transportation access. Together, these moves will further increase the importance and reputation of Piraeus as a leading international maritime cluster.’

In a sign of Piraeus’ growing weight in the maritime world, BIMCO – the largest of the international shipping associations representing shipowners – set up offices in the port city in May 2019.

The move is expected to give BIMCO a stronger presence in Greece, along with a much closer dialogue with its existing and potential members.

BIMCO sees services offered to members such as the Support & Advice Hotline, Shipping KPI, and SmartCon as being valuable because of the increase in regulation in the industry and an increasingly complex shipping environment.

“With a local office we will be able to service our members better and have a closer dialogue and cooperation for the benefit of our members and for the work of BIMCO,” says Angus Frew, BIMCO Secretary General and CEO.

“The office will focus on servicing and building relationships and will not engage in policy work, which will still be handled by the head office in Copenhagen,” he adds.

Copyright: TAIPED

The successful privatisations, coupled with future investment plans, for Greece’s two main ports – in Piraeus and Thessaloniki – along with expectations to further exploit potential at a number of other Greek ports, bolster the country’s ambitions to become the main international transportation hub in the region, and further afar.

The major investment in the Piraeus Port Authority (PPA) by China’s COSCO Shipping has engendered a dramatic turnaround in the port’s once-beleaguered fortunes, with improved profitability, productivity, capacity, and throughput surging since the Chinese takeover.

After the successful privatisation of PPA, Greece approved the sale of a 67% stake in the Thessaloniki Port Authority (OLTH), the country’s second largest port – a deal worth €232 million.

Parliament ratified the concession agreement through to 2051 in a deal that was signed in December 2018 with the consortium South Europe Gateway Thessaloniki. The consortium is comprised of Germany’s Deutsche Invest Equity Partners GmbH, Greek-Russian Belterra Investments, and the Franco-Chinese Terminal Link SAS.

OLTH’s management expects a significant improvement in its financial and commercial performance through the attraction of container ships from major international shipping companies and the increase of conventional cargo traffic.

The port authority’s management plans an extension of port infrastructure, new equipment at the container and bulk cargo terminals, and also a general improvement of facilities.

Although Piraeus is the country’s major shipping hub, changes at the Port of Thessaloniki are transforming the latter into a growth driver for the northern Greek city and the country, says Giorgos Konstantopoulos, President of the Greek Exporters Association (SEVE).

“The addition of the Port of Thessaloniki to international networks is a chance to create direct transport links between production in the east and consumption in the west,” says Konstantopoulos.

“At the same time, it is possible for production and manufacturing businesses that operate in the broader region of northern Greece to increase their value-added products, for their own benefit and the benefit of the local and national economy,” he says.

Port Overhaul

More changes in the country’s ports are expected.

“Building on the strong momentum achieved by the privatisations of the Piraeus and Thessaloniki ports, we have an ambitious plan to develop through private stewardship our portfolio of ten regional ports. First in the pipeline are activities in the ports of Alexandroupolis and Kavala in northern Greece, and the ports of Igoumenitsa, Corfu, Volos, and Elefsina will follow suit,” says Riccardo Lambiris, CEO of the Hellenic Republic Asset Development Fund (HRADF).

“These ports, coupled with the developments in the railway space, will help contribute strongly to Greece becoming a transportation and trade gateway to Europe,” he adds.

Greece has changed the way it is developing its ports.

A senior official at Greece’s Ministry of Shipping and Island Policy points out that the country is using a model commonly seen in Europe, which prevents all of the port’s shares from going to one investor. Instead, specific activities or facilities at the port are taken on by the investor.

“With this method, specialised investors are attracted to invest and develop the activity that has been assigned to them. This way, more than one investment can be made at a port by several investors. There will no longer be the monopoly of one investor,” says the official.

Other ports that are also slated for development are those at Patras, Heraklion, Lavrio, and Rafina, the official added.

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