Regional Focus: A steady ship in the ‘richest poorest country’

Despite Greece being in the grip of economic uncertainty and facing mounting debts following three bailouts, the country’s maritime industry is still a steady ship it seems.

Well-known shipbroker Basil Mavroleon, Managing Director of  WeberSeas (Hellas), who hails from an eight-generation shipping family, says the shipping industry remains pretty much isolated from the economic woes which have seen huge unemployment and higher taxes for the working man.

“Greece is the richest poorest country in the world,” he told SMI. “Things are tough here for a big segment of the population. There are no jobs to speak of, the salaries are terrible, taxes are very high now. The Government is trying to claw back money to pay its massive debt and that, of course, hurts people by cutting their pensions. 

“The young are all leaving because they can’t get jobs. Anybody that is educated leaves, so it is a problem but in terms of the shipping industry it is still the major employer along with tourism and these two businesses contribute a great deal to Greece, and tourism has never been better.”

Indeed, last year there were 29 million visitors to the country which has a population of just over 11 million. It also reportedly owns around 30% of the world’s tanker market and 22% of bulk carriers.

The shipping community remains optimistic and as Mr Mavroleon pointed out: “Shipping is fortunately basically an offshore industry here. It does pay tax here on dividends and certain things but it doesn’t pay a big tax. However, it does contribute and there’s a voluntary shipping tax as well which contributes, so the Government has left shipping alone for the most part because they will drive it away if they don’t and they don’t want to chance that.”

Does he think there is a risk of that happening at some point further down the line?

“There doesn’t appear to be any chance of that happening at the moment,” he said. “Shipping is still a very integral part of the economy even though it is not tax-based – the employees, businesses and all the activities related to shipping are a huge part of the economy.”

The economy is said to have improved slightly in recent times – data from the Foundation of Economic and Industrial Research (IOBE) predicts 2.1% GDP growth this year and there has also been a tiny fall in unemployment. The Hellenic Statistical Authority reported in April that unemployment had eased in January from 20.8% to 20.6%.

Greece has been receiving financial support from euro area countries and the International Monetary Fund (IMF) to cope with its financial difficulties and economic challenges since May 2010. In August 2015 a new stability support programme was launched under the European Stability Mechanism (ESM) framework but this is due to end in August this year.

IMF Managing Director Christine Legarde says the IMF is still committed to providing support to the country and Mr Mavroleon believes the Greek government “will sign whatever they have to sign to carry on”.

“I don’t think there will be any abrupt changes. The sad thing is that this can never change because we are never going to come out of this – unless they forgive some of the debt. It’s crushing the people because now the working man is highly taxed and they say jobs are at a minimum. There is no new business development here. Nobody wants to invest here – no major industry – and that’s a problem. They don’t have any confidence in the Government.”

Mr Mavroleon said the shipping industry – although still strong in Greece – had faced problems in the last few years in the dry cargo market, which had now partially recovered and was “far more reasonable” today.

However, the tanker market is still in a depressed state and this was proving a real challenge, he said. There are also other issues facing the shipping market in general such as emissions and the ongoing problem of overcapacity , particularly with a rise in new orders for VLCCs.

“Overcapacity always plagues the shipping industry because you can’t tell one person to order a ship and another one not to, so consequently everybody orders,” he said.

“We have seen a considerable amount, despite the poor tanker market of VLCC ordering which is a little bit scary. Those owners who order VLCCs are very substantial and in it for the long haul. They believe the price they are paying up until now justified the investment even if it takes some time to materialise in terms of a good market.”

“In the dry market it is looking better but as we see this market get better all of a sudden we see people go to the shipyards. Our biggest fear is that that will accelerate and as the market continues to improve or maintains itself, people will consider newbuildings.”

Other issues currently facing the Greek market include the impending global sulphur cap, which comes into force on 1st January 2020.

Mr Mavroleon said he was not as nervous about this as some people as there were many options available to owners. However, the option of fitting scrubbers was not realistic unless installed on newbuildings due to the huge cost of retro-fitting.

He also said the option of converting to LNG was also not a viable one for many Greek vessels and believes Greek owners will go down the low sulphur fuel route instead.

Digitalisation too is of paramount importance for many owners but with the tanker sector in bad shape due to the poor rate environment he said companies had to look at options to stay in the business that were sometimes costly. “That is a challenge, but if you are in it for the long-term you have to find a way.”

Overall he said Greece was still a good place to do business despite the threat from the rise of other maritime clusters such as Singapore and Dubai.

“Greece, I still believe, has a wealth of people in all levels of the business and it has a wealth of young people who graduate from the Piraeus Maritime College, who could be the future,” he said.

“Singapore is a very interesting option but it’s a different world and Dubai is also coming and they are options that once didn’t exist.”

Is there a worry that Greece will fall behind?

“I don’t think so – there is too much to lose,” said Mr Mavroleon.  “The Greek community wants to stay here and if they are driven out they will go reluctantly.”

The fact that the shipping industry is isolated from the rest of the economic woes in Greece has attracted shipmanagement company GMZ Ship Management to open a Greek office in Piraeus.

The company has been trading in Beirut, Lebanon for 10 years and opened the new office of GMZ Ship Management last July.

“We do have some connections and clients and we already knew the market,” explained Richard Medawar, Business Development Manager for GMZ Ship Management (Hellas).

“As you know, Piraeus, and Greece, are a hub for maritime affairs and a lot of companies, including us, have always had some interest to open up here. It took us a while to get here but before that we were able to deliver our expertise through our connections with clientele and several classification societies to facilitate relations in the daily job.”

Of the economic problems in Greece, was it difficult to open in such difficult times?

“The economy in Greece doesn’t affect us directly as such,” said Mr Medawar. “You see a lot about it on the news but not especially in the maritime field because most of the work is for offshore units or ships trading with foreign flags, so we don’t have to deal a lot with the Government in Greece on a daily basis. The maritime sector has always managed to survive. They have had bigger ups and downs in previous decades.”

He added: “There is a lot of activity going on in Greece. I don’t know about the overall economics of the country but in the maritime sector you don’t have the sense of hesitation from investors or foreigners or even Greeks. It is doing quite well.”

GMZ Ship Management (Hellas) currently manages four vessels – dry bulk carriers and general cargo – and a further 35 ships are managed from the Beirut office. Mr Medawar said the company was capable of having a worldwide presence, providing clients with custom-made solutions within management whether technical, crew or full management.

But what makes Greece special as a maritime hub?

“In Greece, anything you need in shipping you can make happen. That’s a big advantage for Greece and not many countries have such facilities, from shipyards to repair to crew. There is also a wide presence of all the classification societies, major flags, P&I Clubs and law firms.”

He said GMZ Ship Management (Hellas) did not have much competition in Greece because it did not have the typical management systems adopted in Europe. 

“Although it is the context of international management, we are offering a new view on how to do things and support the weak points so neither the client nor our management has problems with any third party.”

He added: “We are looking to expand our company’s knowledge and experience through targeting a few more clients and our current fleet.”

However, he says the company is not just restricted to Piraeus and Beirut as it “offers a worldwide presence”. 

“We are not focused on one area specifically but we do consider that Greece gives us the ability to expand to the rest of the maritime community because it is one of the major hubs and even geographically it is very well-situated.”

Despite the positivity in the Greek market, new Government measures could increase business even further for the country’s ship supply market, according to Nikolaos Mavrikos, President of the Hellenic Association of Ship Suppliers & Exporters.

The total turnover of the ship supply sector in Greece last year was €260 million but this could be nearly doubled, he said.

“It could extend to €500 million if our requests to the Ministry of Finance, with regard to widening tax exemptions, and removing bureaucratic obstacles according to European standards were fully satisfied in due time.”

He said the Association had 118 ship suppliers who employ around 1,500 people, contributing to the employment rate of the country.

One of the biggest issues facing Greek ship suppliers is the economic framework and the problems this presents. Since 2009 there has been no banking system and so Greek suppliers have to finance themselves – not just with the cost of products but with operating expenses since Greek companies have 60 days to pay.

Mr Mavrikos said competition was also another huge issue for Greek suppliers – not just within the country but with nearby countries too.

“Competition is fierce taking into account that, in the Mediterranean zone, there are many harbours where ships can easily find the necessary supplies. So every day Greece is compared to the quality, price and the response on behalf of the ship managers, ship owners and Captains.

Despite all the difficulties encountered by Greek ship suppliers, Mr Mavrikos said Greek ship suppliers were managing to survive. Three years ago the Association started a joint effort with the Piraeus Chamber of Commerce and Industry and the Panhellenic Exporters Association in cooperation with the Customs Directorate General for reducing bureaucracy.

Mr Mavrikos said they had already seen some results such as the reduction of customs guarantees and the appointment of a working group dealing with the institutional framework regarding ship supplies. 

“Our Association will keep on trying to solve various problems that arise in the field of supplying as well as to simplify procedures and generally to carry our various actions to assist the development of logistics,” he said.

Greece will be showcased as a maritime hub with the biennial Posidonia shipping exhibition, which takes place at Athens Metropolitan Expo from 4th to 8th June.

Organisers say it will be the largest ever show attracting around 1,850 companies from a wide range of maritime sectors from around the world.

Spanning an exhibition floor space of some 40,000sqm, the biennial event features some 20 national pavilions including the world’s leading shipbuilding nations of China, Japan and South Korea.

There will also be a packed programme of conferences, seminars, workshops and panel debates which have an international flavour as they are organised by companies and organisations from around the world, from Brazil to France, Panama to Poland and South Africa to the UK.

The programme will tackle a wide range of issues from shipping policy, trade and finance to ballast water treatment, scrubbers and the environment.

Top of the agenda is the TradeWinds Shipowners Forum which, as usual, will be an insightful and thought-provoking debate. This year’s focus will be on how advances in technology and alternative business models are rewriting the rules over how ships are owned, operated and traded.

A similar topic will be covered during BIMCO’s Power Panel which will debate key developments impacting shipping business today, with a focus on challenges and future prospects for the dry bulk and oil tanker shipping markets including the 2020 global sulphur cap.

Among the new highlights in the 2018 exhibition will be the Greek Pavilion organised by HEMEXPO the association of Hellenic Marine Equipment Manufacturers and Exporters, which will promote Greek engineering and maritime solutions for the shipping industry. 

Posidonia is organised under the auspices of the Ministry of Maritime Affairs & Insular Policy, the Union of Greek Shipowners and the Hellenic Chamber of Shipping with the support of the Municipality of Pireaus and the Greek Shipping Co-operation Committee.

“It will be another interesting Posidonia,” remarked Basil Mavroleon, of WeberSeas (Hellas), while Richard Medawar, of GMZ Ship Management said there was “a lot of enthusiasm” for the event.

President of the Union of Greek Shipowners, Theodore Veniamis, said: “We are particularly proud that, amidst significant challenges both for the shipping industry and Greece, Posidonia 2018 is once again here, manifesting the resilience, commitment and potential of our industry and our country. The achievements of Greek shipping are important, not only for Greece but also for Europe and for the welfare of all nations. The Greek-controlled fleet continues to hold the first position internationally, representing about 20% of the global fleet in dwt terms, including a 30% share of tankers and 22% of bulk carriers, while approximately half of the total European Union fleet capacity is Greek-owned.

“The achievements of Greek shipping are further reflected in the way it is welcomed, appreciated and respected by its trading partners around the world. It is this legacy of commitment and reliability that the Greek shipping community continuously strives to uphold and honour. This is also the legacy that the Posidonia Exhibition carries forward, as an established international institution of outstanding excellence.”

He added: “Posidonia will soon open its doors to exhibitors and visitors from all over the world who will participate in what constitutes a celebration of the maritime industry but also a unique opportunity for presenting the latest technological and other maritime innovations and for initiating solid partnerships. It is without doubt the most highly acknowledged international event for the global shipping industry and we are particularly pleased that our country is its birthplace.

“The Union of Greek Shipowners, as the institutional representative of the Greek shipping community, will remain at the forefront of efforts to forge strong alliances and establish constructive cooperation with stakeholders for sustainable shipping policies and for the benefit of international shipping, global trade and growth.”