Why Greek shipping will continue to thrive

Simon Ward from Greece’s Ursa Shipbrokers takes issue with a recent column penned by Andrew Craig-Bennett.

About this time last week, as I was preparing to go out and break all the rules in my Posidonia survival guide I had just written about, I read an article in Splash 24/7 by Andrew Craig-Bennett called Why Greek shipping might struggle this century. I have long admired Mr Craig-Bennett, ever since I joined the industry in 1990 and was desperately devouring everything I could read about it. I looked forward to his columns in Lloyds List for their wisdom, irreverent humour and industry insight, particularly as I was working in liner shipping then, and we seemed – however far removed – vaguely kindred spirits. It seems that now, over thirty years later I have to nail my own – slightly grubby – colours to the mast and not only respectfully disagree with him, but hopefully educate him a little about shipping in my adopted country, Greece.

The gist of his article is as follows:

• Greek shipping is mostly tramp rather than liner shipping, but is threatened because there may not always be a market for these ships (a market with a very low entry premium) and cross trading will become more difficult
• International tax regulations – or the lack of them – created with Greek shipowners based in London and New York in mind, will tighten as politicians seek to expand the tax base
• Finance for Greek start-ups will be more difficult to obtain
• The geo-political environment will restrict Greek shipowners from cross-trading as was seen as Iran seized two Greek tankers in retaliation for an Iranian cargo being sent to the US, at the request of the US

The article repeats a few assumptions and myths about Greek shipping which I hope I can correct.

Firstly, let us once and for all dismiss the assumption that Greek tramp shipping comes from a natural development of inter-island trades outgrowing their home markets. I recognise the romantic temptation to think that this is the case, but in fact Chiot owners – from the 1830’s and the emergence of the independent Greek state following liberation from the Ottoman Empire – were not only trading ships in and out of the Black Sea and the Aegean, and beyond, but trading cargoes as well, and set up agencies and offices not only in Constanza and Odessa, but Livorno and Marseilles as well. The sons of these owners were kind of commercial diplomats, representing the interests of their family companies. Admittedly the model changed to becoming simple tonnage providers for the tramp market as time progressed, especially once owners from the Ionian islands of Kefallonia and Ithaki got into the game in the later part of the nineteenth century, but there have been Greek members of the Baltic Exchange representing their owners’ interests since the 1860s. This is not a recent story.

It is true that apart from the ferries criss-crossing this part of the world Greek shipping is not into liner trades, but this is hardly the fault of a small, unindustrialised nation tucked away in the south-east end of Europe with no empire or captive market to serve, at least not since Alexander the Great was making the rounds in Asia almost 2,500 years ago. In the more ‘advanced’ shipping nations of the world – nations that no longer have a significant merchant fleet by the way – the view of tramp shipping as rather dirty, disreputable and dodgy is an attitude I was very familiar with during my days at Harrison Line, and is as old as the trade itself as any reader of Conrad will know. Likewise, flags of convenience – that rather unfortunate phrase – have existed and been used for centuries in places where it was necessary to have a different flag to trade, in fact even before Greek flag existed.

And this leads us to tax. The mistaken assumption by non-Greek shipping is that Greek shipping is only successful because they do not pay tax. Mr Craig-Bennett also labours under the misapprehension that the “whole offshore world was first developed to benefit Greek shipping, and for as long as only Greek shipping was using it, nobody minded”. This is wrong on many levels. Firstly the offshore system was not developed with the sole intention of Greek shipowners, but by American financiers for their own ends, which once the Greeks found out about it thought it was a great idea. Is it any accident that Panama used to be a de facto US colony, and the Liberian and Marshall Islands flags are administered in the United States? Secondly, is it really only Greek shipping that has used it? I really don’t think that stands up to too much scrutiny.

Lack of finance for new entrants into the shipping market is a perennial problem, and as most people more familiar with the Greek shipping market will know, has always been more or less impossible for new owners. It is only when a company is established both operationally and commercially and their reputations in the market place – for good and bad – are assessed that bankers will consider lending money to them. Otherwise it’s good old fashioned cash, and there never seems to be a shortage of that when the projects and the time is right. In my experience Greeks do not really like debt, not just in shipping but generally, especially as unserviceable debt is usually the main reason that Greek shipowners go out of business. I only wish that Greek governments had the same attitude. I, for one, do not think the desire and appetite to invest in shipping, even when it does get more expensive for environmental as well as legislative reasons, will diminish.

Finally, the two tankers that have been recently seized by the Iranians were flying the Greek flag, a national flag, and as such were of course going to be noticed. And anyone who has been making the rounds of Athens in the last week or two will know that Greek shipping is anything but a shrinking violet.

Greek shipping has had a lot to deal since the beginning of the twentieth century. The Balkan Wars prior to and during the First World War, the Catastrophe of 1921, the decimation of both the country and the merchant fleet (in the service of the Allies) during the Second World War, the Civil War that immediately followed it, the Junta of the late sixties and early seventies, and the crisis from 2009 until only recently. This is not to mention the various crises that the shipping markets have suffered – and which at times the Greeks have been complicit in – during the same period. Each time there is a crisis, to the nation or to the fleet, Greeks have bounced back, and stronger, leading it to be the predominant shipowning nation – of privately owned ships that is – in the world.

I think that the reasons for this are not immediately obvious to those unfamiliar with Greece and tramp shipping, but here are a couple of my suggestions:

• Greeks have a longer investment horizon, and don’t have to make money every quarter as long as the investment itself pays off eventually
• Greeks are control freaks – or if you like exercise extreme hands-on management – for their ships and their companies (even when the technical management of their fleet is not in their hands alone), and this means that they can react quicker to a swiftly changing world, essential in tramp shipping
• Greeks have managed to persuade their government – of whatever colour – to stay at arms’ length, thus ensuring a world-beating maritime cluster in Athens
• Greeks are not generally early adopters of new ideas and technologies, they prefer to see it proven, by others, before they invest in it
• The well-deserved reputation of Greek seamanship existed long before the Greek state did, and does not rest on its laurels
• Greeks share a great deal of knowledge and information with each other, and value highly the relationship side of business development and deal making, which puts them at a natural advantage to the more spreadsheet and corporately obsessed competitors elsewhere in the world
• Greek shipping, despite the exhortations of others, is almost entirely impervious to consolidation, mainly because of the family-owned nature of the businesses
• Greeks have a longer investment horizon because they are investing in their families, usually the next generation but one

Of course, this approach and these attitudes also carry the seeds of destruction for many companies, which is a fact of life in tramp shipping. They also accept that their prized independence does not make them natural candidates for hand-outs when times get tough. But it is this very independence and adaptability that means that Greek shipping will not only ride out the cycles but take advantage of them.

It may seem strange that an Englishman based in Greece has risen to the defence of his chosen home, but I have gained much from Greek shipping, and Greece, over the years, – opportunities, and joys, and fun, and pain, and heartache, and profit – that I owe it to my hosts to do what I can to repay them.

It’s never been plain sailing, and probably never will be, but that perhaps is the point.

Greek shipping will continue to exist whatever political weather is blowing at the time because Greek shipping knows, perhaps instinctively, that – just like the tramp markets – they have no control over the wind, but have to trim their sails and adjust their course to make sure they navigate it safely. And it seems to me – at least from my life as a shipbroker – that at the end of the day nothing much in life is worth achieving without a struggle.