STRONG GROWTH POTENTIAL

 

As described by Ernst & Young, over the last decades, the global shipping industry has been one of the significant factors of the globalization process. At the same time, the shipping industry is itself being transformed by growing international trade, market integration, and the shifting balance of economic power from developed economies to rapidly growing lower-wage economies. As shipping- related economic activities are also becoming more globalized, cities and states have to compete to attract international maritime companies. Traditional shipping clusters in Europe are being successfully challenged by countries and cities in the developing world, primarily in Asia.

 

The Greek shipping industry has weathered the storm and the Greek-owned fleet, with over than 5,272 vessels and a value approaching USD 86 billion, remains the largest in the world, in terms of tonnage capacity, and has enhanced its dominant position in terms of value, in many of the sector’s segments. The inflows from shipping activities account for approximately 6.5% of Greek GDP and also have a substantial indirect multiplier effect on the Greek economy through cross-industry organizations gathering all or part of the maritime subsectors.

 

The multiplier effect is channeled into the economy primarily through shipping clusters, consisting of all related and downstream industries and associated institutions, which advance the competitiveness and increase the value input of shipping in the economy. The shipping clusters constitute a key tool in the effort of a country. Some of the shipping clusters, such as Singapore, were nurtured with government support. In contrast, others, like Piraeus, have developed on an ad hoc basis with limited government support, developed mainly by the shipping industry entrepreneurs.

 

The shipping clusters constitute a key tool in the effort of Greece to increase its attractiveness for the global shipping community and strengthen its role as a global shipping center. The Athens-Piraeus maritime center is key in this context, with Thessaloniki playing a minor, more specialized role, primarily due to the importance of its port as a gateway to Southeast Europe and the prospects created by the privatization of the port. The overall business environment, the stability of the regulatory framework, tax regime and political institutions, transparency of the legal system, and the willingness of the local government to support the industry is vital in securing the attractiveness of a maritime center.

 

The role of Greece as a global shipping center has the potential to be strengthened in the face of increasing international competition with shifting world trade patterns from West to East. Over the coming years, competition among the major global maritime centers will intensify. As the shift of global trade towards the Far East continues, it is very likely that, in the next twenty years, none of the top maritime capitals of the world will be located in Europe. London, Hamburg, Oslo, and Rotterdam, each with its own strong competitive advantages, are struggling to emerge as the leading maritime center within Europe. Greece (Piraeus) will need to work hard if it is to retain or strengthen its standing as a maritime capital in the world.

 

 

PORTS INFRASTRUCTURE

 

In 2016, China’s shipping firm Cosco purchased a majority stake in Piraeus port. Situated in the Saronic Gulf, Greece’s largest harbor — and Europe’s seventh biggest — is at a strategic location between the Asian and European continents. Chinese President Xi Jinping and Greece’s Prime Minister Kyriakos Mitsotakis announced in 2019 that Cosco would be investing about €600 million euros in developing Piraeus further. China is looking to transform Greece’s Piraeus port into the biggest harbor in Europe — making it the most crucial transit hub for trade between Asia and Europe. China is the EU’s biggest source of imports and its second-biggest export market. China and Europe trade, on average, over 1 billion euros a day, according to the European Commission.

 

The Port of Thessaloniki is one of the largest Greek seaports and one of the largest ports in the Aegean Sea basin, with a total annual traffic capacity of 16 million tonnes. A long port privatization process that lasted almost 13 years, was concluded in 2018, with the Greek state handing 67% of the shares of the Thessaloniki Port Authority SA to the new owners of the port, the South Europe Gateway Thessaloniki (SEGT) Ltd. SEGT is composed by 47% to Deutsche Invest Equity Partners GmbH, a German fund; 33% to Terminal Link SAS, an international terminal operator, affiliated with CMA-CGM; and the remaining 20% to Belterra Investments Ltd, a holding company owned by the Russian entrepreneur and active investor in Greece Ivan Savvidis.

 

The Greek government is taking measures including revising a relevant legal framework so that procedures for the privatization of 10 state-owned regional ports would begin in 2020. The ports of Rafina, Elefsina, Lavrio, Volos, Patra, Igoumenitsa, Alexandroupolis, Irakleio on Crete, Corfu and Kavala, are expected to be privatized either through partial concession deals or full management schemes. First on the list for immediate development are the ports of Alexandroupolis and Kavala, both of which have attracted significant investor interest from Greece and abroad.

 

 

SHIPPING SECTOR

 

The contribution of Greek shipping to the country is as important as it is diverse, going beyond the receipts in the Services Balance of Payments from maritime transport services. It ranges from indirect economic investments, to employment opportunities and to raising the profile of the country internationally by being an essential and strategic trade partner of major economic and political forces, with 22.5% and 20.3% of the Greek-owned fleet’s activity being dedicated to the U.S. and the European trade respectively and with the greatest share of the Greek-owned fleet’s activity, with 31.8%, taking place in Asia serving the fast growing Asian economies.

 

According to the Union of Greek Shipowners, Greek-owned ships represent almost 21% of the global tonnage. The Greek merchant fleet is the biggest fleet in the world, with 4,936 vessels (ships over 1,000 gt) of 389.69 million deadweight tonnes (dwt) - an increase of approximately 6.63% from the previous year. Greek shipowners more than doubled the carrying capacity of their fleet between 2007 and 2018 and the Greek-owned fleet represents 53% of the EU fleet in dwt14 and 20.9% of the world fleet in dwt15.

 

Moreover, Greek shipowners control 31.99% of the world’s crude oil tankers fleet, 23.12% of the world dry bulk carriers fleet and 15.17% of the world chemical and products tankers fleet Being served by entrepreneurs who mainly own small and medium-sized private companies, mostly family businesses, Greek shipping has great flexibility and adaptability to changing economic environments and can, thus, readily respond to changing trade patterns and flows effectively and efficiently.

 

Newbuilding orders by Greek interests amounted to 223 vessels (over 1,000 gt), representing 25.03 million dwt of diverse ship types from a total of 2,578 orders of 189.78 million dwt at the beginning of 2019. Of these vessels, 139 are tankers corresponding to 31.86% of tankers world tonnage (dwt) on order, which include 51 LNG / LPG tankers, 26 chemical products tankers, 71 dry bulk carriers and 13 containerships.