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Greek shipowners feel the shipping crisis and the consequences of increasing consolidation. But they perform much better than competitors in other countries, writes Krischan Förster

Many Greek shipping companies ceased to exist like those of other seafaring nations in 2017: 41 owners had to give[ds_preview] up, which corresponds to a decrease by 6.43%. This is contrasted by eleven start-ups, experts of Petrofin report in their most recent analysis. In total, there are still 597 shipping companies calling Greece their home.

The changes in tonnage are even more distinct. As in the past 20 years, the Greek fleet continues to grow – despite the dwindling number of shipowners. Besides, the operational fleet is getting younger and younger, and the trend towards larger business units is a lasting one. For the first time, the smaller shipping companies, once the backbone of Greek shipping, hold less than 40% of the total number of ships. In contrast, the 50 largest Greek owners now control a good 67% of the fleet.

It is even more revealing to look into fleet capacity. Accordingly, Greek managed ships have now a total tonnage of 387mill. dwt compared to 362mill. dwt in 2016. This corresponds to an increase of some 25mill. dwt or 7%. By comparison, it was 328mill. dwt in 2015, 303.5mill. dwt in 2014 and only 281.5mill. dwt in 2013. In terms of tonnage, 75 shipowners now each hold more than 1mill. dwt and approach a combined share of 80% of the entire Greek fleet.

According to Petrofin, the growth is mainly due to the inflow of young second-hand tonnage. Purchases on the S&P market increased by 30% from around 200 to 260 units last year, benefiting from the comparatively low price level and the low acquisition costs compared to newbuildings. The Greek order book, on the other hand, fell from 502 to 326 ships, as the owners preferred to buy second-hand rather than longer-term deliveries in anticipation of improved market conditions.

Average vessel age is now at 11,85 years compared to 23 years in 2005. Thus, the Greek fleet has strategically improved and gained a competitive edge without flooding the market with newbuildings, Petrofin analyzes.

The recent buoyant activity on the S&P market, however, has led to a shift within the age segments, as comparatively few newbuildings were faced with numerous purchases of second-hand tonnage. As a result, the number of very young ships decreased. On the other hand, older ships of more than 30 years leave the Greek fleet. Their share fell from 24.5% in 2011 to only 6% in 2017.

The trend towards larger and younger ships is continuing. »Every owner has recognized that small, older fleets have disadvantages compared to larger, newer fleets,« they say. Smaller owners would therefore bear the brunt of the bad markets and lack of credit, making their operations increasingly uneconomic.

Economies of scale not only affected Greek shipping in terms of operating costs, savings on procurement and insurance, but also in ship financing. Greek owners played on the sale of bank ships, especially as German owners and banks were still under heavy pressure. En bloc sales of entire loan portfolios, however, were not done to the extent expected by the market.

The financing of newbuildings is according to the data increasingly based on leasing offers from the Far East. Especially in the tanker segment and in the bulker market, private investment funds have come into play. On the stock exchanges, on the other hand, there were hardly any activities in the face of weak profit expectations and lasting impairment.

With the brightening of nearly all markets, notably in dry bulk and LPG segments, but also in container shipping and product tankers, financing costs would become a key factor for this capital-intensive industry. It should be noted that leasing models as well as other alternative sources of capital are more expensive than the classic bank financing. An increase in U.S. interest rate levels is another complicating factor.

In stable or even attractive markets, rising costs could probably be shouldered if the overall financial exposure remains moderate. Without further deterioration, Greek shipping is likely to continue to grow and the decline in the number of shipping companies will slow down.


Krischan Förster