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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 evolution and growth of the Greek maritime sector is not linked with the course of the[ds_preview] 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 contribution of the ocean-going ships in the national economy is undisputed. Apart from this well explored segment, Greece has the potential to expand further in various maritime segments that could offer substantial differentiation of offered services, thus making the Greek shipping cluster more sustainable and profit-making. Nevertheless any positive development in the future depends at large on the policy makers in Piraeus.

Despite the weak freight markets and global economy, the Hellenic Registry retains its dynamic course. Briefly, 1,484 ships of 78mill. 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 number 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 average 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 stable market-share in the last years. The bulker fleet has gained an impressive 163 vessels, its age is down to 8.6 years, and its tonnage is circa 19.5mill. DWT, while the tanker fleet is more or less stable. In addition, the containership fleet has gained an extraordinary 2.9mill. DWT, while the LNG fleet has expanded notably with the addition of more than 20 vessels.

Generally, Greek shipping is going through a period of evident growth in terms of tonnage under control, and of consolidation in the number of companies, with almost 650 active enterprises. 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 global fleet in terms of DWT (8% in terms of numbers) as beneficiary owners. Moreover, 393 ships of 39mill. DWT are currently 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 management 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 continuous 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 ignore. It is a personal opinion that the following challenges are at the same time opportunities and threats and will substantially influence any future plans:

• Decarbonization of the shipping operations

• Loss of market shares in the passenger/ro-ro markets

• Cruise industry – Homeporting

• Education and training

Technological leaders benefit

Decarbonization is the new holly grail and refers to the reduction of the carbon footprint per ton-mile offered, which implies a substantial reduction of the consumption of energy. In other words, the use of environmental friendlier fuels, such as LNG, and of technology that can improve the energy efficiency of the ships offer the obvious yet risky path towards decarbonization. The Greek owners should now prove their agility in technology selection, as the cost of the wrong decision might be detrimental. These risks are closely associated with the financing of new projects as well as with any renewal plans of existing fleets. Apparently, all owners worldwide face these risks, yet in the Greek case, one should take into account the lack of synergies and coupling schemes among local technology providers and ship owners. Clusters such as the German and the Dutch one, whose technology providers are globally active and in leading positions, might benefit from the requested technical leap ahead.

Potential in the Aegean

The Greek Coastal Shipping System (GCSS) is a distinct market segment, where passenger/ro-ro ferries serve the extended network of islands in the Aegean as well as the Adriatic corridor. The conundrum 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, irrational cost structures and recession of the economy resulted to losses and diminished 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 related costs to the average European ones. The Greek Flag becomes expensive and the result is no other than loss of competitiveness. Considering the refugee-flows in the last years as projecting higher numbers for the future, the ships operating in the GCSS could offer vital services for the safe transport of people and of humanitarian aid. So far, few foreign investors have penetrated this segment; however the recovery of the local economy, the increase of touristic streams, the chance of humanitarian 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. However, the benefit to the cluster is linked with homeporting. Currently Greece is enjoying a ratio of circa 19:1 visitors per arrival, while Spain and Italy enjoy 4.3:1 and 3:1, implying a huge potential for improvement that will benefit the local cluster. Evidently, the development of homeport services depends also on the local business and investment environment, yet it offers one more chance for fresh capital and ideas to enter the market. Both GCSS and the cruise market offer the backdoor opportunity for foreign participation in the Greek cluster.

Demand for more officers

Finally, 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 investment and critical factor towards success. The challenges mentioned above, such as the decarbonization and the profit-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; private 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 educated 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 conclusion, 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 partnerships.

Opportunities and threats

Considering the above data and challenges, Greek shipping enjoys a relatively stable and leading position yet with some clouds in the sky. The regulatory demand for decarbonized operations offers opportunities and threats simultaneously. The proper mix of technology and financing should be realized otherwise the effect could be deleterious. The cluster will not get any benefit from the decarbonization 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 fiscal and geopolitical conditions. Both segments offer opportunities for fresh investments 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 education and training materializes soon. Ships are complicated and sophisticated assets indeed yet the key decision-making is left to experts.


Orestis Schinas