Greek shipping – challenges ahead

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Greek shipping – challenges ahead! Greek shipping enjoys a relatively stable and leading position yet with some clouds in the sky. In the areas of technology, services, education and financing efforts have to be made to stay competitive in the future

Remarkably yet reasonably the evolu-tion and growth of the Greek mari-

time sector is not linked with the course of the Greek national economy. The deep-sea segment, i.e. the fleet under ownership and management of Greek interests, is steadily growing and improving and the contribu-tion of the ocean-going ships in the nation-al economy is undisputed. Apart from this well explored segment, Greece has the po-tential to expand further in various mari-time segments that could offer substantial differentiation of offered services, thus making the Greek shipping cluster more sustainable and profit-making. Neverthe-less any positive development in the future depends at large on the policy makers in Piraeus.

Despite the weak freight markets and global economy, the Hellen-ic Registry retains its dynamic course. Briefly, 1,484 ships of 78 mill. DWT are registered in Greece; this implies that the Greek fleet corresponds to circa 24.5% in terms of DWT and 11.1% in terms of num-ber of ships of the EU-28 fleet. Notably, the fleet has grown by almost 2% in terms of DWT in the last 5 years (2011-2015) while at the same time a 3% decline in terms of numbers was reported. A look at the aver-age age figures reveals a rather young fleet of big vessels; an average age of 12.3 years is estimated. Comparing the statistics of the registry with the ones of EU-28 and of the world fleet, it can be effortlessly concluded that the Greek registry enjoys a rather sta-ble market-share in the last years. The bulk-er fleet has gained an impressive 163 ves-sels, its age is down to 8.6 years, and its tonnage is circa 19.5 mill. DWT, while the

tank-er fleet is more or less stable. In addition, the con-tainership fleet has gained an extraor-dinary 2.9 mill. DWT, while the LNG fleet has expanded notably with the addition of more than 20 vessels.

Generally, Greek shipping is go-ing through a period of evident growth in terms of tonnage under control, and of consolidation in the number of com-

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393 ships of 39 mill. DWT for Greeks are currently in the orderbook. Roughly 61% of them are »wet«, i.e. tankships, LNG-carriers etc.


HANSA International Maritime Journal – 153. Jahrgang – 2016 – Nr. 6 23

panies, with almost 650 active enterpris-es. The above trends of consolidation are expected to continue over the next years.

Nevertheless the picture is not complete unless including the reported statistics of beneficiary owners and of the orderbook. Greek interests control 15-16% of the glob-al fleet in terms of DWT (8% in terms of numbers) as beneficiary owners. Moreo-ver, 393 ships of 39 mill. DWT are current-ly in the orderbook. Roughly 61% of them are »wet«, i.e. tankships, LNG-carriers etc., 38% are »dry«, mainly bulkers, and only few specialized vessels, such as drillships (data by Clarksons and UNCTAD).

The recipe for this success story is known in the industry: fair and stable regulatory

regime, prudent financing and man-agement of the ships as well as a deep market full of many small and medium actors. It would be fair to say, that the Greek shipping is based on its size and the contin-

uous effort of improving the ratio of quality and cost; few investments in

risky niche markets are only proclaimed. However, there are signs that the Greek

public and private actors should not ig-nore. It is a personal opin-ion that the fol-lowing challenges are at the same time opportunities and threats and will sub-stantially influence any future plans:• Decarbonization of the shipping opera-tions• Loss of market shares in the passenger/ro-ro markets• Cruise industry – Homeporting• Education and training

Technological leaders benefitDecarbonization is the new holly grail and refers to the reduction of the carbon foot-print per ton-mile offered, which implies a substantial reduction of the consumption of energy. In other words, the use of envi-ronmental friendlier fuels, such as LNG, and of technology that can improve the energy efficiency of the ships offer the ob-vious yet risky path towards decarboni-

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24 HANSA International Maritime Journal – 153. Jahrgang – 2016 – Nr. 6

zation. The Greek own-ers should now prove their agil-ity in tech-nology selec-tion, as the cost of the wrong deci-sion might be detrimental. These risks are closely associated with the financing of new projects as well as with any renew-al plans of existing fleets. Apparently, all owners worldwide face these risks, yet in the Greek case, one should take into ac-count the lack of synergies and coupling schemes among local technology providers and ship owners. Clusters such as the Ger-man and the Dutch one, whose technology providers are globally active and in leading positions, might benefit from the request-ed technical leap ahead.

Potential in the AegeanThe Greek Coastal Shipping System (GCSS) is a distinct market segment, where passenger/ro-ro ferries serve the extended network of islands in the Aege-an as well as the Adriatic corridor. The co-nundrum of GCSS is a difficult puzzle for policy-makers and investors as it depends on the course of the national economy and on touristic flows. Extreme seasonality, ir-rational cost structures and recession of the economy resulted to losses and dimin-ished market shares.

Policy-makers should consider more elastic operating conditions for the ships engaged in these trades and particularly to consider leveling the manning and the re-lated costs to the average European ones. The Greek Flag becomes expensive and the result is no other than loss of compe-titiveness. Considering the refugee-flows in the last years as projecting higher num-bers for the future, the ships operating in the GCSS could offer vital services for the safe transport of people and of humanita-rian aid. So far, few foreign investors have penetrated this segment; however the re-covery of the local economy, the increase of touristic streams, the chance of huma-nitarian support and the financially weak position of Greek companies active in the GCSS, could offer an interesting mix for investment in a niche market.

Closely linked with the GCSS another segment that draws attention is the cruise market. Till 2012 the national legislation was not fully compatible and leveled with the European one; therefore few operators considered Greek ports as homeports.

0 100 200 300 400 500 600 700 800

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Greek merchant ships by age and number of ships

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Greek merchant ships by age and tonnage (GRT)

2015 2014 2013

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500 - <3.000

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Greek merchant ships by tonnage (GRT) and number

2015 2014 2013

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HANSA International Maritime Journal – 153. Jahrgang – 2016 – Nr. 6 25

However, the benefit to the cluster is linked with homeporting. Currently Greece is en-joying a ratio of circa 19:1 visitors per ar-rival, while Spain and Italy enjoy 4.3:1 and 3:1, implying a huge potential for improve-ment that will benefit the local cluster. Ev-idently, the development of homeport ser-vices depends also on the local business and investment environment, yet it offers one more chance for fresh capital and ide-as to enter the market. Both GCSS and the cruise market offer the backdoor opportu-nity for foreign participation in the Greek cluster.

Demand for more officersFinally, the level of education and training of onboard and onshore personnel should be considered further. It is not a cliché but education and training is the ultimate in-vestment and critical factor towards suc-cess. The challenges mentioned above, such as the decarbonization and the prof-it-resulting ventures in GCSS and in the cruise markets demand high-skilled and competent personnel ashore and onboard. Rephrasing Clemenceau, education is too serious a matter to entrust to the State; pri-vate interests should actively embark onto this specialized service sector. The risk is twofold: the lack of competence and skills that will also lead to higher operating costs as well as the lack of fresh and innovative ideas that are usually generated by well ed-ucated and experienced personnel.

Greece is still educating many officers and there is demand for even more. Official reports suggest that more young people can follow a maritime or marine career as the Greek market can accommodate them. However, the State cannot easily cope with the demand and any disinvestment in this sector will backfire in the industry. In con-clusion, a formula for a long-term public-private cooperation should be considered in order to retain the necessary expertise. This is also another field of potential part-nerships.

Opportunities and threatsConsidering the above data and challen-ges, Greek shipping enjoys a relatively sta-ble and leading position yet with some clouds in the sky. The regulatory demand for decarbonized operations offers op-portunities and threats simultaneously. The proper mix of technology and finan-cing should be realized otherwise the ef-fect could be deleterious. The cluster will not get any benefit from the decarbonizati-on as no significant Greek technology and service provider is active. This is a point

that should upset and arouse the interest of Greek pubic and private actors towards new ventures and ideas.

Furthermore the segments of cruise- and passenger/ro-ro shipping should be reconsidered given the contemporary fis-cal and geopolitical conditions. Both seg-ments offer opportunities for fresh invest-ments of local and international investors. These demanding sectors could also offer paradigms to the deep-sea operators for the decarbonization as well. Last but not

least, the Greek dominance will not last unless a substantial investment in educa-tion and training materializes soon. Ships are complicated and sophisticated assets indeed yet the key decision-making is left to experts.

Author: Orestis Schinas Hamburg School of Business Administration (HSBA) [email protected]

Greek shipping – challenges ahead

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