Greek Shipping

The roots of the so-called miracle of Greek shipping go back many centuries.  It started when Themistocles was elected Archon of Athens in 493 BC, and laid the foundations of the Athenian Merchant Marine, by enacting laws, rules, and regulations for the industry that amazingly are very similar to how people operate today.  One of them was that he made it mandatory for all able Athenian citizens to serve onboard the Triremes, the Greek warships of the day, thus creating a pool of seamen that began one of the longest traditions in seamanship in history.

The Greeks served onboard the Athenian Merchant Marine, and then the Roman, Byzantine, Venetian, and Ottoman navies as well as their Merchant fleets.  The other characteristic was the amazing entrepreneurship of the Greeks, going back many centuries.  They were traders and merchants during the Byzantine and Ottoman periods and were thus well prepared when Greece became independent.

Both of the above attributes, plus the fact that because of their tradition and their centuries involvement in shipping, they were hands-on operators, it helped them become successful businessmen.

In the 18^th and 19th-century ships were purchased by family members as a group, each having a different share, i.e. not always the same, and in the early years, they also invited other mariners to participate from different families.

In the latter part of the 19^th century, this model changed somewhat, and it became more of a family business, i.e. belonging exclusively to the brothers and sisters of one family.  For the younger generation growing up in this environment and with such a tradition, it was a given that they would most likely follow a career in shipping.

Throughout the centuries, the contribution to the Greek State of Greek mariners and Greek owners has been immense.  From the battle of Salamis in 480 BC, to the War of Independence in 1821, and through to the First and Second World Wars, Greek shipping played a very important role.   Greek owners spent all their fortunes during the War of Independence, and Greek shipping has been contributing very large sums of money to Greece over many years.  It reached $25 billion and more at times, and about $180 billion over the last ten years.

In addition, many shipping families have quietly been involved in many land-based projects in Greece and have done much charitable work which is not very well known to the wider public.

Unfortunately, Greek politicians, especially during the last thirty years, have been very hostile to Greek shipowners, and they have cultivated a class-war attitude amongst the Greek people.  This was for their own short-sighted political aspirations, but they have done enormous harm in the process.  No one is perfect, there are always bad eggs amongst any group, but as an industry, and the great majority of shipping entrepreneurs, have benefited Greece and the entire Greek population to a very great extent.  This type of attitude amongst politicians has to change if the full potential of the Greek shipping industry vis-à-vis their country is to be realized.

It is really sad, but it is hoped that someday politicians will change their stance, appreciate the role that Greek shipping has played throughout history for the benefit of Greece, and work hard, diligently, and in an organized fashion to pass this message to all of the Greek people, whilst continuing to work with the owners and the shipping cluster in Greece to strengthen the industry even further.

Regarding the financial crisis, Greek shipowners, as previously mentioned, are very hands-on operators, and they remain very flexible.  These two attributes have helped them to adapt to the crisis.  It is true to say that credit is not readily available, by banks or through the stock exchanges, but depending on the investment, and depending on the company, certain banks will still lend, and the Stock Exchange will support new offerings.

The International Industry

The contribution of the shipping industry to the global population has been huge.  The Shipping industry is the biggest industry in the world, and it is the only one that is truly international.  It transports over 90% of all raw materials and finished goods that the world’s citizens need. Characteristically it is said that, without shipping, half the world will freeze, and the other half will starve.  Globalization would not have been possible without shipping, and this has helped to create wealth and to improve the standards of living of millions of people throughout the world.

The most important issues that concern the international shipping industry today are the following.

• Piracy – It is very unfortunate that governments have not done more to combat the scourge of piracy more effectively, and ultimately to eliminate it. Governments are responsible for protecting ships, their crews, and international trade, and they should take whatever extra steps are required.

Over 4000 seamen have been taken hostage in the last three years, and about 60 have been killed.  This is unacceptable. It is the governments’ responsibility to do whatever is needed to eradicate piracy, not just in Somalia, but throughout the world.  Whatever measures the shipping industry has taken up to now, were done in an effort to protect their seafarers.  These measures are temporary.  They do not offer a solution to the problem, only governments can do that by taking the fight to the pirates, by freeing the captured seafarers, and at the same time, work on a final solution in Somalia itself.

Shipowners have increasingly become more and more concerned and anxious about their seafarers, and thus with great trepidation, they began employing private armed guards.  However, this is not a solution, but only a temporary measure in which shipping companies had no alternative but to employ.  Crews were very pleased to have such protection, and in fact, a great majority of them asked for such protection.  Ideally, governments should have offered to provide armed military guards.

• The Environment – Governments are not handling this properly. IMO which is the regulatory body for shipping has already decided on measures to further reduce emissions from ships, which is a very good thing, but shipping is but one industry, and it is already the most environmentally friendly form of transport.  Yet governments are discussing penal measures for shipping, as if though shipping is the worst performer. Governments intend to propose measures to raise enormous amounts of money, reportedly, way above the 2.7% which is the shipping industry’s share of emissions, and even worse, measures that have nothing to do with benefiting the environment; they would be there simply to raise money for governments coffers, using shipping as a cash cow.

Shipping has always stated that they will do all they can to benefit the environment even further.

• Regulators – Regulators are sometimes politically motivated, but this is not acceptable, there is no room for politics in shipping. Almost all regulation does or may impact safety because ships are out at sea in a hostile environment, thus any regulation has to be compatible with this premise, but also with the realities of what is demanded of ships due to the characteristics of various trades.  Accordingly, there has to be a much better and more efficient interaction between regulators and the shipping industry.  Governments should not rush into producing regulation without due consideration to all of the above and more.  Shipping is not against regulation, it is against bad regulation, against knee-jerk reactions, against the lack of proper consultation from the outset, and against the lack of a proper cost-benefit analysis.

 

• Financial Crisis – The responsibility for the financial crisis lies squarely with the Banks. They were in certain aspects unregulated, they employed unacceptable leverage, and in certain respects, they were unprofessional in investing in instruments, which they did not fully understand, whose value they did not really know, and whose creditworthiness was obscure. They also threw money at people and at companies, thus pushing the envelope and indebtedness to unacceptable levels.  If something was to go wrong; if the bubble were to burst, banks would not have been able to cope, neither would the people.

The bubble did burst, and thus the worst financial crisis in a lifetime became a reality.  Subsequently, governments were of course right in their efforts to save the financial system, but they did not make it mandatory for banks to continue to lend.  Without credit, trade slowed and the crisis spread throughout the world.

Before the crisis, China had created the conditions, for what some people say, was an explosion in trade.  Today however China alone, together with India and Brazil cannot sustain international trade volumes on their own.  Globalization became possible through and because of the Shipping Industry and such globalization created wealth and helped improve the standards of living of millions of people across the globe.  However, in the process, countries become so interdependent, that all economies in the world will have to improve more or less together before one can see an appreciable growth in trade, and an end to the crisis.

• The Market – Because of the financial crisis, the shipping market was affected immediately. Rates fell overnight, and ship values also fell sharply. Quickly there was mistrust between banks, and letters of credit were not readily acceptable by various entities, thereby impeding trade even further.  Soon, all sectors found themselves in great difficulties.  This situation with certain ups and downs has continued since 2008 until today and it is likely that another two or three years will pass before the market improves to more acceptable levels.

 

• Over-supply – Unfortunately during the boom years of 2003 – 2008, too many ships were ordered. This fact, together with the sudden collapse of the market in 2008 has produced a great imbalance between supply and demand.  This imbalance will have to be corrected to some degree before the market can improve. Thus shipping companies should avoid ordering more ships.  Of course, new ships will be needed in the future, primarily because of environmental considerations.  However, these new designs are not yet available, with new hull shapes, new more efficient engines, and other improvements.  The ships being built today are still using old technology and are only marginally more efficient.