Such is Greece’s position in global shipping that the biennial Posidonia exhibition in Athens is one of the industry’s “must attend” events. But it is not all sun, sea, and ships. Greece is slowly emerging from economic collapse, which forms the background for the largest tanker fleet in the world.
According to Eurobank of Greece, shipping accounted for 3.7% of the country’s economy between 2000 and 2013. By way of comparison, the more familiar sector of tourism, contributed 4.2%. Therefore, changes in world trade, and the demand for shipping, has a direct impact on the Greek economy.
Greece enjoyed a GDP growth as high as 5.7% in the recent past, according to the World Bank. But in 2008, the financial crises sucker-punched both shipping and the Greece economy, and the country was plunged into a long, drawn out bailout.
Maybe economic turnaround is too strong a phrase, but there are signs of a definite improvement. Unemployment has dropped below 20% from 30% in 2013, and the economy is forecast to grow by 2.5% in 2018. In February 2018, Greece issued a new seven-year bond and raised €3Bn (US$3.72Bn) at a yield of 3.5%. The issuance proved to be oversubscribed, a positive indicator of overseas investor confidence in Greece.
This was the term used by the Yanis Varoufakis, the shaven-headed, leather-jacketed, motorbike-riding, former finance minister, to describe the third bailout from the Trioka of the EU (represented by the European Commission), the International Monetary Fund, and the European Central Bank, representing the countries that use the euro as a currency. The third and last bailout, which commenced in 2015, was a loan of €85Bn, with around 100 key deliverables required by the Trioka for the release of the bailout. Some of these deliverables were felt by many to be anathema to the traditional way of business in Greece; they included changes to Greek shipping law.
Greek Shipping Law 27/1975 status
The European Commission “invited” Greece to better target its tonnage tax and related support measures in the maritime sector, as the Commission found that certain current provisions on the taxation of ships (for instance, Law 27/1975) may breach EU state aid rules, as specified in the Maritime Guidelines. This is one of the deliverables required as part of the bailout, and while some of the issues have been addressed, it remains an ongoing issue.
Greece number one in tankers
Such is the quantum of Greek shipping, in almost every category, Greek owners will be at the top of the list, or at the very least in the top 10. Tankers is no exception. Greece is the global number one provider of tankers, with over 1,500 vessels in its tanker fleet; second-placed Japan, and third-placed Singapore are a long way behind with a third fewer tankers. In total deadweight terms, the difference is even more stark. The Greek tanker fleet totals over 161M dwt, more than that of China, Japan and the USA combined. This reflects the prominence of the larger tanker sectors preferred by Greek owners.
According to VesselsValue, the Greek tanker fleet is also the most valuable (as at March 2018), with a total value of US$35Bn. This translates into an average value of US$23M per tanker. In terms of the average value per tanker, this is only beaten by the US-owned fleet, which is the fourth most valuable tanker fleet. However, the US figure reflects the higher replacement value of US-built tankers sailing under the US Jones Act.
Greece number one in VLCCs
As noted above, the Greek tanker fleet is skewed toward larger vessels in deadweight terms, with a quarter of the tanker fleet in the VLCC sector. Indeed, 75% of the tanker fleet lies in the post-Aframax sectors. The VLCC is the favoured sector, worth just under US$9Bn.
Angelicoussis number one in Greece
Top of the tanker ownership tree is Angelicoussis, with a tanker fleet value of US$2.7Bn, according to VesselsValue. Not far behind is the Dynacom Tankers group, but all the top 10 Greek tanker owners have substantial fleets, valued at US$1Bn or higher. On the trading side, tankers with a value of around US$2Bn have changed hands, with Olympic Shipping and Management being the most heavily involved in the sale and purchase market since the start of 2017 (2017 is used as the reference point, due to the low level of sale and purchase activity since the start of 2018).
According to VesselsValue, 66 tanker newbuildings have been ordered since the beginning of 2017, with Maran Tankers holding contracts valued at US$560M on seven VLCCs on order at Daewoo. These VLCCs are due for delivery in 2018 and 2019. Kyklades Maritime also has two VLCCs on order, at Sundong, plus five Aframax and Suezmax tankers, worth nearly US$400M in total.
Greek shipping and technology
Speaking at the 9th Annual Capital Ling Greek Shipping Forum in Athens in February 2018, Nikos P Tsakos, chairman of Intertanko, and managing director of Tsakos Energy Navigation pointed out that Greek shipping, especially tanker owners, were not afraid to adapt.
“We have an example from the 1990s,” he said, “After the Exxon Valdez incident, the double hull design was accepted by the tanker industry. In the space of 10 to 15 years, the whole tanker fleet was replaced, at a cost of around US$250Bn, without any subsidies.”
In his opinion, it proved to be the correct decision and led to a 98% reduction 98% in oil spills. Nor does he fear Sulphur Cap 2020, which he considers an opportunity: “There will be a movement of low sulphur fuel from Asian refineries to regions that do not have the refinery capacity. This will be good news for the tanker fleet,” he said. However, it does seem somewhat ironic that carbon emissions will be increased in order to lower individual ship emissions elsewhere.
Still, Mr Tsakos warned of dangers to Greek shipping that cannot be immediately fixed by technology (see below). “The danger I see is that we are becoming a non-seafaring nation…30 or 40 years ago in Greece, we had about 150,000 seafarers, and now we are down to around 10% of that.” He likened the future of Greek shipping to a giant without legs and questioned how it will be possible to support a huge body of ships, without the fundamental knowledge of what it is to be a seafarer.
One suggestion is for the EU to use the Guidelines on State Aid to limit the growing influence of Asian shipping. Of course, the Guidelines on State Aid are being used against certain elements of Greek shipping policy, including Shipping Law 27/1975, so it seems only right and fair that it should be applied in both directions.
Along with the large tanker owners and operators located in Greece, there are a number of substantial shipmanagement companies. BSM Hellas has been established in Athens for 13 years, and managing director, Theophanis Theophanous, served on VLCCs. He too sees a need to provision for a new generation of seafarers, notably through effective training: “I strongly believe that a vessel is undoubtedly only as good as the crew who sails on her. The implementation of a structured integrated training programme for life-long learning is the ideal way forward in developing and retaining skilled seafarers,” he said.
Developing strong IT skills is also important, as digitisation enters the mainstream in shipmanagement. “It is important to focus on ‘soft skills’ development for our leading crew members, apart from their strict operational duties,” said Mr Theophanous.
Greece and IT
Indeed, the unavoidable pressure of digitisation is now a key concern among the industry, and Greek shipping is not immune.
“Digital technology rules everything and data is generated by almost every system on board,” said Navios Group IT director Katerina Raptaki, one of the new generation of Greek managers. Collecting the correct data and using data analytics can lead to shipping companies becoming more competitive, efficient and safe for seafarers. “Charter rates during the last six years have dropped and shipping companies are searching for new ways of improving margins and making extra profits. Without deep knowledge of the exact figures, this is not possible,” she said.
Navios is using digitalisation and data analytics to reduce fuel costs and improve voyage planning and on-board machinery maintenance. “Even the slightest deviations on a vessel’s route can make a huge difference in bunkers consumption and hull fatigue,” Ms Raptaki explained. “Modern systems used in bunkering operations can result in tremendous savings through the accuracy of bunker supply and invoicing,” she added. However, digitisation is not a one-way street; Ms Raptaki concluded that seafarers “tend to consider the company as family and give their utmost potential and capacity” if they have internet access for social media and to remain in contact with friends ashore.