Long-known as the most extroverted of Greece’s industries, shipping has managed to weather the Greek economic crisis, charting a continued path to success, growing in size, while also paying 800 per cent more tax revenues to Greece in 2018 compared to 2010, the start of the crisis – according to a July study by the Bank of Greece.
A source of pride, Greek shipping exudes power on the world stage, as Greek-owned ships travel the high seas mainly conducting trade between third countries, and – in an industry known for its cyclical nature – they have found ways to persevere, staying competitive and on top.
Though Greece makes up just 0.15 per cent of the world’s population, Greek-owned ships represent almost 21 per cent of global tonnage according to the Union of Greek Shipowners, which represents the interests of Greek-owned shipping. Greece’s merchant fleet is the biggest fleet in the world, with 4,936 vessels (ships over 1,000 gross tonnes) of 389.69 million deadweight tonnes (dwt) – an increase of nearly 7 per cent from the previous year, while it owns more than half (53 per cent) of the European Union’s fleet in dwt.
To boot, Greek ship-owners more than doubled the carrying capacity of their fleet between 2007 and 2018, with the biggest chunk of their activity in Asia (31.5 per cent), where they serve the mushrooming Asian nations, while 22.5 per cent and 20.3 per cent of activity are centred on US and European trading respectively.
Greeks are the biggest players worldwide – owning 32 per cent of the world’s crude-oil tankers fleet, 23 per cent of the global dry bulk carriers fleet, 15 per cent of the world’s LNG and LPG tanker fleet, and 15 per cent of the global chemical and product tanker fleet.
At home, shipping contributes close to 7 per cent of GDP, one of the twin engines of growth alongside tourism. It is also a major employer, and has maintained its vigour despite the economic crisis.
Abroad, markets believe in the success story of Greek shipping. According to Petrofin research, international banks had advanced close to $327 billion to Greek shipping interests by the end 2017. Greek interests in the maritime capital were also able to raise capital on international capital markets. In the US, Greek interests raised close to $14 billion in new equity money in the period 2004 – 2018, accounting for 44 per cent of total maritime equity raisings, according to Petrofin.
Attracting more ship-owners to Greek Flag
Today, though the Greek fleet is flagged-out by more than three quarters (mostly under developing-nation flags), this is not just a Greek phenomenon, but a worldwide one, say the authors of a the Bank of Greece July report “Tonnage Tax Revisited: the Case of Greece during a shipping crisis and an economic crisis period,” which compares different registries and tax frameworks.
Despite this flagging out, however, Greek shipping contributed 17 billion euros in 2018 in foreign exchange earnings to Greece, according to official figures, while the report highlights that Greece’s state coffers benefited from an 800 per cent increase in maritime tax revenues last year compared to 2010 – mainly thanks to a voluntary tax scheme between the state and ship-owners etched out by previous governments – as well as a widening of the tax base in 2013 to include all ships managed from Greece and not just those flying the Greek flag.
The study by the Bank of Greece also showed that the shipping tax revenues increased despite a very steep decline in freight rates during part of the crisis years.
The newly-elected conservative Greek government of Prime Minister Kyriakos Mitsotakis has said it hopes to attract more Greek and foreign ship-owners to the Greek Registry, by introducing a more favourable business climate.
Currently, the Greek Registry is made up on 720 vessels (over 1,000 gt) amounting to 39.61 million gt, ranking 8th internationally and second in the EU (in dwt). It has become one of the most expensive EU flags, comparable only to the German one, and “twice more expensive than that of the UK or The Netherlands,” with the exception of the liner-container, according to the July report on Tonnage Taxation by the Bank of Greece.
Mr Mitsotakis and his Greek Shipping Minister Ioannis Plakiotakis have pledged to announce measures to transform Greece’s maritime tax and legislative framework in order to increase it competitiveness, as well as plans to boost the education and training of officers and seafarers, enhance Greece’s maritime cluster, and also deepen the country’s standing as an international maritime hub.
Greek ship-owners are all ears and… suggestions.
“Greek ship owners have not yet established a relationship of trust with the new government,” Theodoros Chouliaras, president of the London-based shipping think tank Institute of Maritime & Economic Strategy (IMES) told Neos Kosmos.
“There is a positive climate and Greek Shipping Minister Ioannis Plakiotakis is listening to them and knows the issues,” he said, adding that “if there are substantial motives and assurances of stability, we will see many Greek ships flying the Greek flag. The main issue is that the Greek Registry requires Greek-flagged ships to have 8 Greek officers on board. Are there that many officers? The merchant marine academies in Greece are struggling to find students…”
Irene Notias, a newly-elected governor of the International Propeller Club of the US, Port of Piraeus and founder and MD of Prime’s Bunkersplus Services, agrees, adding that “to ensure the sustained vibrancy of Greek shipping, we need to take a holistic approach. To attract more ships to the Greek registry, it’s not enough for it to be competitive price-wise, it also has to have the desired flexibility on who companies can hire, for example. There needs to be open communication between the stakeholders, so that we can agree on the best steps forward regarding shipping matters – such as educating and training shipping personnel, employment and internship policies, and in effect, we need to look at the big picture.”
One of the most surprising problems in the industry is attracting Greek youth to shipping. According to the most recent survey by Ernst & Young dealing with youth perceptions on shipping in Greece, “despite the high levels of unemployment in Greece, the majority of young people feel detached from the shipping industry and do not find the prospect of employment there attractive.”
Recognising the need for Greek youth to embrace shipping, Ms Notias has introduced ‘Adopt a Ship’ to Greece (a concept that hails from Cyprus) – which spearheads classes in elementary schools that encourage children to ‘adopt’ a ship – providing their earliest contact with shipping in an educational setting.
The Union of Greek ship-owners (UGS) has also come up with concrete initiatives to spark interest in the profession and boost the education of officers and seafarers in Greece, which it says are at the disposal of the Greek state.
“The revitalisation of the seamanship of our people remains a priority for the UGS, in order not to lose our national maritime capability and know-how,” UGS President Theodore Veniamis said, stressing the need to boost the image of the seafaring profession.
Mr Veniamis also called for “the improvement of the maritime training system” and of ways to attract “competent and suitably-trained new staff to ships and companies” He also announced that the UGS has “a comprehensive action plan based on realistic proposals, at the disposal of the Greek state.”
The Greek government, on its part, has signalled it is aligned with these goals announcing a three-point plan to boost shipping – the first focuses on making the Greek flag more attractive to Greek and foreign ship-owners, and yes, making professions linked to shipping and the maritime industry popular to Greece’ youth, not least through boosting state merchant marine academies and creating private ones as well. The second pillar calls for a new approach to investment in the country’s ports – with Piraeus getting the green light in late September for Chinese giant Cosco’s updated billion-euro master plan for the upgrading of the country’s major hub, which is already largely operated by Cosco. The two new plans the company submitted in the summer are pending final approval.
The third prong is to promote marine tourism, such as yachting and cruises, while the government has also announced an increase of 45 per cent in funding for its remote-island transport policy, and plans to boost the country’s coast guard.
Given the scope of Greece’s shipping and maritime sector, experts agree that there is vast potential in realising the government’s plans for shipping. All eyes are now on the government to see what convincing measures it comes up with.
In the meantime, Greek shipping faces a number of challenges, such as fallout from international trade disputes, oil market instability following tensions in the Middle East, the prospect of Asian markets catching up, technological and environmental upgrades that must be made to ships in order to meet international regulations – and even Brexit, which may if pulled off produce a more competitive advantage for London-based companies in the long term.
Greek Shipping Future
“Greek-owned shipping has, by its very nature, continued to be recognised as a national asset, above political parties,” Mr Veniamis said, adding “maintaining its close ties with the country remains a common goal of both the state and ship-owners. The prerequisite is that it must continue to be internationally competitive and therefore sustainable.”
Finally, Mr Veniamis, who has called for a stable level playing field internationally in respect to both commercial competition and environmental regulations – especially in light of the International Maritime Organisation’s sulphur cap requirement coming in 2020 – says the aim should be “the achievement of better regulation and this is a prime and major challenge for maritime policy makers,” while adding that a wider, business-friendly environment for growth in Greece will only deepen its position “as an international maritime hub and boost the value of the sector for the economy.”