Quite a “political naval battle” was the one that broke out between the government and the opposition on the future of Greek economy during the 2nd Naftemporiki Shipping Conference, which was held on Tuesday January 26th, 2016, at Divani Apollon Palace & Thalasso, in Vouliagmeni.
Representing the Hellenic government, Minister of Economy, Competitiveness and Tourism Giorgos Stathakis reckoned in his address that in 2016 Greece’s economy will register a significant growth rate, whereas recession will remain much lower than expected. New Democracy (N.D.) vice-president Adonis Georgiadis stepped up to the challenge and reminded all that in 2015 “we expected a 2,7% growth rate” and stressed that “even if it is assumed that we will achieve 0%, we are still -2,7% of what we would have had”. Minister of Shipping and Island Policy Theodore Dritsas came to support Mr Stathakis vis-à-vis the attack by Mr Georgiadis and said, when talking about the “dashing” N.D. vice-president: “When one is so stressed to register successes or identify failures and deconstruct opposing initiatives and government policies, then one must be more restrained”.
Earlier, the President of the Union of Greek Shipowners Theodore Veniamis stressed that “we stated, right at the onset of this crisis, that shipping might be the way-out in a society ridden by unemployment, since it creates new jobs under terms always compliant with international standards. We were however faced with narrow-minded trade unionism and political confrontations depriving our fellow-citizens from their right to work“.
Both Greek government and shipowners, in excellent collaboration, say “no” to changes in the tax regime of Greek-owned shipping that will undermine its competitiveness. That was something made crystal clear during the conference by Alternate Minister of Finance Trifon Alexiadis and the President of the Union of Greek Shipowners Theodore Veniamis. “If shipping taxation in Greece goes beyond the point its competitiveness may endure, then this will be to the benefit of other interests”, said Trifon Alexiadis.
LAMBROS KARAGEORGOS – ANTONIS TSIMPLAKIS
(NAFTEMPORIKI 27, 28/01/2016 & 01/02/2016)
In his introductory remarks, Naftemporiki’s General Manager Yannis Perlepes commented on shipping’s multifaceted contribution to national economy, since, in his own specific words, “it involves investments by shipping companies on various activities, not limited to their industry’s domain” and “thus, it is both a necessity and a task of ours to enable its representatives to be heard”.
In her welcome to all attendees, Naftemporiki’s President Irini Athanasiadou made reference to the overwhelming developments on both Greek and international shipping in the 12-month period since the previous Naftemporiki shipping conference. She also talked about the efforts made by Naftemporiki “to promote the role of sound entrepreneurship as an integral tool for growth and prosperity”.
The President of the Union of Greek Shipowners Theodore Veniamis, after making clear that the Hellenic government provides consistent and daily evidence that they fully acknowledge this strategic, as well as financial dimension of Greek-owned shipping, and the need to preserve its close ties with our land, he attacked those who suggest that if Greek-owned shipping is hit, then their own national economies and shipping industries will benefit as a result of relocation.
“This is a short-sighted policy”, Mr Veniamis pinpointed, “since Greek-owned shipping is a European one and, therefore, this will be a hit on European economy... This reiterated argument that our tax regime, allegedly, is particularly favorable, it collapsed when we presented the government with comparative financial data showing that taxation on vessels and ship management in Greece is more expensive, particularly in recent years following voluntary doubling of the tonnage tax. In fact, it is nothing but outright hypocrisy for European law-making and auditing bodies to accuse the Greek tax system, which themselves used as a model –and developed furthermore- to save European shipping and not let it end up like the European shipbuilding industry. Certainly, such actions will compromise the competitiveness of European shipping as a result of their legal uncertainty and directly undermine overall European policies for the creation of a competitive, business and investment environment that will greatly benefit member-state economies”.
“European politicians, perhaps as a result of erroneous and uncoordinated political moves, do offer another gift to hospitable Far East countries. In any case, I would like to inform our competitors and all those undermining Greek-owned shipping about the following: Greek-owned shipping has been, is and shall remain the top one in the global shipping arena”, Mr Veniamis stressed.
Representing the Hellenic government, Minister of Economy, Competitiveness and Tourism Giorgos Stathakis said that the Greek economy registers zero recession and, ipso facto, it will display significant growth rates in 2016. He also stressed that “during the past 6-7 months, this government has elaborated a specific roadmap, which looks forward to a sustainable way-out of the crisis for our economy and to its adaptation to the new international economic standards, with medium-term return to sustainable growth”.
“Since the July agreement, this roadmap, as implemented by our government, features four key points.
- First was detailing the July agreement, which was done in August.
- Second was the completion of the two-round negotiations on 48 prerequisites and on the 14 points deriving thereof, as well as the first significant transfer of funds to Greek economy, which was done.
- Third key point is the imminent discussion and agreement on the first review, which we aspire to complete in the month to come.
- Fourth point is debt renegotiations given that, according to the July agreement, the Greek sovereign debt problem for the period 2015-2022 took a positive turn.
“Following completion of the first review, the stake will be debt negotiations for the period after ’22 and up to ’48, which will also have to become sustainable".
Then, he made reference to some positive developments in the economy, such as bank recapitalization, in which the Government had to add just €5.5 b. in a total of €25 b., turning that into a success story. Another positive development, last week, was Standard & Poor’s upgrade -after many months- of Greece’s economy in relation to its sovereign debt.
Mr Stathakis also made mention to those points that will be of major importance in the period to come; in particular:
- The new development law that has been fully drafted and will be soon tabled in the Parliament.
- Proper management of new NSRF funds is quite important.
- Rationalization of a key area of Greek economy: public procurements.
In reply to the Minister of Economy, New Democracy Vice-president Adonis Georgiadis stressed, amongst others, that "according to Mr. Stathakis everything goes well, there is no reason to worry. If you have missed something, then it is just virtual reality". Mr. Georgiadis reminded Mr. Stathakis that “we expected a 2.7% growth rate in 2015. So, even if it is assumed that we will achieve 0%, we are still -2.7% of what we would have had”.
He also gave an answer on the issue of bank recapitalization by underlining the following: "Perhaps, from the viewpoint of the money needed, it was successful; however, from that of bank share price, given that in one-year time the National Bank has lost 98% of its value, something is going wrong, Minister"..
As for the upgrade, Mr. Georgiadis said it was welcome, yet he was quick to note that it was the outcome of policies implemented, yet not owned by the government and imposed on it, like privatization of the Piraeus Port Authority and airports. "This upgrade takes place because, according to these rating houses you hailed, we started applying a policy of privatization and a liberal approach", Mr. Georgiadis stressed.
As per the shipping industry, Mr. Georgiadis pointed up that it represents a fundamental and key part of the economy and drew attention on the need to deflect this attack launched by other European centers.
The Minister of Shipping and Island Policy Theodore Dritsas took the floor and said: "There has been no sustainable economy in the long-term, in the long history of societies, across the world that has failed to secure one thing: reduction of social inequalities. There has been no record of a long-term development course that was concurred with escalating social inequalities".
Mr. Dritsas, when talking about the “dashing” N.D. Vice-president, stressed: “When one is so stressed to register successes or identify failures and deconstruct opposing initiatives and government policies, then one must be more restrained. We have to be greatly concerned in a country that witnessed growth and painfully suffered in the past and still suffers from such an unsustainable growth. This is exactly what one should not overlook so light-heartedly just to rip temporary and petty opposition benefits and to challenge an opponent's rhetoric".
"We encourage every effort to the direction of signing a new collective labor agreement that involves a steep rise in the number of Greek mariners on Greek-flagged ships and Greek-owned fleet", Minister of Shipping Thodore Dritsas underlined in relation to the need to increase employment of Greek mariners on Greek-owned ships.
"This government is open to all initiatives and I think your conference will contribute to that", added Mr. Dritsas, who also noted that public naval education has played a major role on that.
Shipping and Employment – Shipping industry’s contribution to the reduction of unemployment
It was the need to lift all obstacles that stop young people choosing a career in shipping to go on-board that emerged following a very insightful discussion on the shipping industry’s contribution to higher employment, which developed during the first panel of the 2nd Naftemporiki Shipping Conference moderated by Naftemporiki’s General Manager Yannis Perlepes.
All participants agreed that the government, trade unions and Greek shipowners must launch a substantive dialogue, so as to set the context that will allow an increase of employment of lower level Greek crews and officers in Greek-owned ships.
The assistant professor of the National Technical University of Athens and IOBE’s (Foundation for Economic & Industrial Research) scientific adviser AngelosTsakanikas presented an Institute’s study, which suggested that shipping may offer more than 300,000 jobs on board and ashore.
George Gratsos, current Chairman of the Hellenic Chamber of Shipping (ΝΕΕ), underlined that there are still many things to be done in order for the shipping industry to offer more to society. “In Greece, we have an abundance of shipping offices, but no shipping hub”, Mr. Gratsos emphatically stressed before adding that we lack the organization of other international hubs. The President of the Hellenic Chamber of Shipping also stressed that “this drop in the numbers of Greek merchant marine officers will turn out a calamity for Greek shipping since it will lose this know-how that others now start to acquire. According to Mr. Gratsos, revenues per Greek officer during his career in merchant marine exceed 2 mil. euros, whereas the cost for his/her studies is approximately €20,000.
The President of Eugenides Foundation and President & Managing Director of Eugenides Group of Companies, Leonidas Dimitriadis-Eugenides said that Greek graduates of Merchant Marine Academies have nothing to envy from their foreign colleagues, although he did mention that it is required to support academies in terms of infrastructure and maritime educators. Mr. Dimitriadis-Eugenides assessed that “a target of 25,000 to 30,000 jobs is feasible, as long as honest dialogue takes place”.
Capt. George Vlachos, former President of the Pan-Hellenic Union of Masters and Mates of the Greek Merchant Marine, commented on the outlook of maritime professions and the opportunities for career development for Greek officers both at sea and ashore.
Mrs Laskarina Karastamati, Chairwoman of Eletson Holdings, presented her company as a case-study of a firm running solely Greek-flagged ships and using only Greek officers. She also noted that “she proudly represents a shipping company that since its foundation, 50 years ago, up to now engages solely Greek officers, with minor exceptions as a result of actual shortages, and Greek low-level crews to the extent we could do so”. “An overwhelming majority of our high-level officers, that is more than 65%, have been with us since they were cadets”, said Mrs Karastamati, stressing also that results vindicate this corporate policy. She didn’t omit to say that Eletson is one of the few companies employing female officers on board.
For his part, capt. Panayotis Tsakos, founder of the Tsakos Group, stressed that Greek shipping will maintain its leading position for as long it relies on Greek crews. “The more crews will become scarce, the more our industry will become weaker. We are forced to employ foreigners because our schools produce a limited number of officers”, added Mr Tsakos; he also made a concrete proposal: “to abolish the practice of two 6-month training voyages and replace them with a single 1-year one”. “Instead of having young people leaving abroad to offer manual labor, they could go on board, start their career as apprentices and become seafarers within a couple of years getting a salary of €1,400 net”, said specifically capt. Panayotis Tsakos. “We have to find those youngsters with that sense of morale, courage and pride to spend 2 years as apprentices for a fee of less than €1,000, so they can evolve later on. There is such people and we have to find them; because the more we employ foreigners on-board, the more currency and expertise will flow out of our country and into their hands and, on top of that, the more our children and grand-children will have to compete with them in the future”, he stressed.
Moderator: Yannis Perlepes , General Manager, NAFTEMPORIKI
Leonidas Demetriades-Eugenides, President, Eugenides Foundation, President & Managing Director, Eugenides Group of Companies
Dr George Gratsos, President, Hellenic Chamber of Shipping
Laskarina Karastamati, Chairwoman, Eletson Holdings
Angelos Tsakanikas, Assistant Professor, National Technical University of Athens, Scientific Adviser, Foundation for Economic & Industrial Research
Capt. Panayotis Tsakos, Founder, Tsakos Group
Capt. George Vlachos, f. President, Panhellenic Masters & Mates Union (PEPEN)
The Head of BCA College’s Bsc on Maritime Business, former Professor at the University of Piraeus and former General Secretary in the Ministry of Shipping, Dr. Alexandros Goulielmos made reference to the benefits of asynchronous learning for seafarers and middle managers of shipping companies.
“Currently, organizations are learning entities, since they have developed the skill of learning, adapting and changing all the time. Greek shipping community includes 1,300 organizations that employ approximately 12,000 qualified individuals, give a job to roughly 250,000 employees and contribute €17 b. in foreign currency (2007). Asynchronous distance learning relies on using internet-based technologies to transfer knowledge from its holder to the one who wants and needs it; such knowledge is prepared in an asynchronous way and delivered remotely, at a time and place of the learner’s choice, as many times as he/she wishes, using a dedicated communication channel. The EU found, in 2011, that lack of on board access to the internet is an actual impediment, especially for younger generations of seafarers and makes it more difficult to attract young people to maritime professions. The Task Force on Maritime Employment & Competitiveness (TFMEC) identified the obstacles to young people joining maritime professions; in particular:
- No further improvement of working conditions on board.
- No shore leaves.
- Fears of abandonment and criminalization.
With respect to the performance of maritime education in Greece, total figures for the period 2010-2015 show that out of 23,402 school applications, a mere 1/3 (7,392) has been approved and only half of the students (4,096) reached graduation at the end of 5 years. In other words, we do attract people, but applicants fall short of the standards.
Impediments to the shipping industry – the global aspect of the industry, its competitive international frame of operation and the regulatory settings
In the second session, during the panel discussion moderated by Naftemporiki shipping correspondent Lambros Karageorgos, it was time for EU DG MOVE (Transport) Fotis Karamitsos and the participating representatives of shipping associations to cross words.
Shipping could consent to enforce market-based measures for the reduction of greenhouse emissions, after all other possibilities are exhausted, under two conditions. First, to opt for a levy system on fuels and, second, to ensure that funds collected from this measure will be managed by the International Maritime Organization (ΙΜΟ) with the aim to finance additional environmental measures.
Mr Fotis Karamitsos, Deputy Director - General Coordination of Directorates C & D, European Commission, made reference to the principles of European shipping policies, emphasizing on the fact that “the EU desires to play a leading role in setting the institutional context of international shipping. However, EU initiatives to date do not always satisfy shipping stakeholders, as it was displayed during the conference”. Mr Karamitsos also stressed that the EU had set more ambitious financial targets for the emissions trading system that were not met, which necessarily led the EU, after collecting nothing out of it, to review the whole system. Moreover, he did not deny that a levy system might be a solution. However, while presenting the key principles of European shipping policies, he defended EU’s standpoint and noted that the European Commission wants a strong ΙΜΟ. He also compared shipping with the airline industry, noting that, as for air transports, member-states share a common stand, which is not the case in shipping; this results in the member-states being unable to come to terms both amongst them and within the IMO.
As explained by Panos Laskaridis, Managing Director of Laskaridis Shipping Co. Ltd. And Vice- President of the European Community Shipowners’ Association (ECSA), the shipping industry acknowledges that it must also contribute in this global effort to reduce greenhouse emissions. Of course, he did not omit to wonder “what were the interests served by these tens of environmental organizations dealing with shipping that generates as much as 2% of global emissions and not getting their teeth into those producing the remaining 98%”. In any case, however, he stressed that “the shipping industry contributes in a quantifiable, wise, effective and truly environmentally-friendly way in tackling climate change. Moreover, all regulations issued by IMO will be implemented worldwide, and thus no-one will be left to do as he pleases in their own backyard".
"If we reach to the point of market-based measures," he continued, "then the shipping industry will be in favor of a specific system, the famous "levy system", and in no way will it agree on other measures". "Given that I am aware", said Mr Laskaridis, "of a move by the European Parliament's Environment Committee, the shipping industry will never accept an emission trading system for 3 simple reasons: First, it is not transparent; second, it cannot be applied on shipping and, third, it represents a tax that will end up in the hands of Ministers of Economy, not the environment. The “levy system” is a transparent, effective and easy-to-apply system and the funds to be raised will benefit the environment. International shipping industry has proposed to collect payments of this levy in an IMO Fund that will finance environmentally-friendly investments".
John Platsidakis, Managing Director of Anangel Maritime Services and Chairman of Intercargo, made a meaningful comment when saying that Greek and European shipping altogether accounts for 40% of the global fleet, so it is not right for the EU to pass laws without considering the large part of international shipping. "Regulations have to apply on everyone and be effective", noted the Chairman of Intercargo and made reference to examples of regulations that never took effect since they were not applicable.
Mr. Platsidakis added that international shipping operates in a fully competitive environment, carries 90% of world trade and has great respect for the human environment, human life and the large sums invested in ships, while honoring consumers and low costs. "However, this contribution has not been properly appreciated by governments and politicians. I am proud that my country represents 17% and the EU 40%, but we should not see that as if we carry an additional burden and thus unilaterally apply rules to the detriment of the others", he added. "Regulations are most welcome, they help us improve the quality of services, but with the condition that they are subject to dialogue beforehand and that they are applicable", he said. Mr Platsidakis gave the example of the ballast water management convention, in which targets have been set, yet not served, since there was no adequate technology.
In reply to Mr Karamitsos with regard to his remarks on the airline and shipping industries, he noted that "the airline industry, given the freight it transfers, is heavily polluting, whereas ships carry 90% of world trade and generates 2.2% of emissions". "Moreover, the airline industry is intensely national, since there are many airliners receiving subsidies, contrary to shipping's more international character; and shipping, in particular the Greek one, has never asked to be subsidized", he stressed.
Anastasios Papagiannopoulos, Principal of Common Progress Co Na SA and Bimco President Designate, underlined that regional arrangements are fruitless for shipping and only via the International Maritime Organization (ΙΜΟ) may measures be taken to promote freedom of trade and free competition. He stressed that the IMO is perhaps cumbersome, however it deals exclusively with shipping.
Mr. Papagiannopoulos also commented on the three challenges for shipping: in particular, first, the need for open and free markets; second, facing regional or unilateral arrangements and, third, the need for better legislation. "As an international business, shipping needs an international consensual context and this may be ensured only via the IMO", said Mr. Papagiannopoulos and railed against unilateral initiatives taken on various issues by the USA and EU. "Such initiatives create problems, incur additional costs on shipping and, ultimately, turn to be to the detriment of free trade and consumers".
Last, Mrs. Sadan Kaptanoglou, BoD Member in the Turkish Chamber of Shipping and Bimco, referred to the efforts by Turkish shipping to enhance education and improve its image to younger generations. Moreover, she agreed with previous speakers on the need to consider shipping as an international business. Additionally, she stressed the need for the regulatory framework to be fair vis-a-vis the industry and underlined the fact that shipowners worldwide face the same problems.
Concluding, Mrs Kaptanoglu noted that regulatory authorities must comprehend what exactly the shipping world asks for. "We do want regulations to exist, but they have to rely on an utterly safe technology", said Mrs Kaptanoglu.
Moderator: Lambros Karageorgos, Journalist, NAFTEMPORIKI
Sadan Kaptanoglu, Board Member, Turkish Chamber of Shipping, Board Member, BIMCO
Fotis Karamitsos, Deputy Director-General Coordination of Directorates C & D, European Commission
Panos Laskaridis, Managing Director, Laskaridis Shipping Co. Ltd., Vice-President, European Community Shipowners’ Association
Anastasios Papagiannopoulos, Principal, Common Progress Co Na SA, President Designate, BIMCO
John Platsidakis, Managing Director, Anangel Maritime Services Inc., Chairman, Intercargo
"We shall not touch the taxation regime of the shipping industry", stressed the Alternate Minister of Finance Trifon Alexiadis. Prompted by the European Commission's decision on Competition, according to which some aspects of Greek taxation on shipping is not compatible with community rules on state aids, Mr. Alexiadis made clear that Greek shipping will accept no compromise of its competitiveness as a result of doubtful interventions". "Let me be clear: we currently plan no new taxes on agriculture and shipping. This is crystal clear", stressed Mr. Alexiadis; he added that one main criterion for taxing shipping in Greece should be whether such taxes affect its competitiveness or not.
“If shipping taxation in Greece goes beyond the point its competitiveness may endure, then this will be to the benefit of other interests and the whole discussion will not be targeted to increase revenues, since we will be losing even existing ones. It will be about providing benefits to other countries and shipping industries", added Mr. Alexiadis.
"And here we have the paradox with the case of countries coming down on us for tax-evasion and tax competition: if one carefully examines these countries' tax provisions for shipping, one will see that these countries accusing Greece of a favorable tax regime, apply even more favorable tax arrangements compared to Greece", said Mr. Alexiadis.
Trends and perspectives – Freight markets, shipping finance from credit institutions and alternative sources, technology & innovation as pillars of the shipping industry
Mr Stavros Ioannou, Deputy CEO, Group COO & International Activities of Eurobank, addressing the floor in the conference's 3rd session on the course of freight markets, noted: "Eurobank has been proven the most resilient Greek bank". As per Eurobank's relation to shipping, he stressed that the volume of their shipping-related portfolio amounts to $1.2 b., evenly split between all three key pillars of ocean shipping (dry bulk, containers, tankers). Eurobank is in close collaboration with Greek shipowners, in order to help Greek-owned shipping cross the shallows of this unprecedented crisis that hit dry bulk freight markets with as less damages as possible.
"Taking into account the current unparalleled circumstances, mainly on the dry bulk marketplace, we work closely with our clients, so as to adjust their loan payments and support them, without departing from our bank's credit policy and generic banking practices", he stated.
"We are particularly satisfied by the fact that in 2015, in a world of adverse economic circumstances and unexampled difficulties for the banking system, we developed our clientele with more than 15 new clients, making also use -to some extent- of the serendipitous departure of major foreign banking institutions, as a result of specific developments, from Greek shipping. The outcome was that, within a year, we concluded new loans of more than $150 m., supporting thus our clients' investment plans", he pinpointed.
As mentioned by Mr. Ioannou, "Eurobank Private Bank Lux and Eurobank Cyprus have assisted in developing our shipping-related clientele; they offer complementary services, expanding thus our customers range of options, and, in 2016, they will foster this effort" and he concluded saying that "for Eurobank, on-going support to Greek shipowners has been a strategic decision: we believe in, we offer support and we invest in shipping".
Technology and innovation in the use of integrated ICT solutions for shipping has been the topic of Mrs Katia Stathaki, Head of Corporate, VGE& Enterprise Solutions of Vodafone Greece. In a world of rapid and unforeseen change, business pragmatism currently calls for agile IT systems accessible to all devices, anywhere, anytime, and for a wealth of strongly performing applications for businesses that know no borders. Mrs Stathaki said that data volumes will increase by 300 times between 2005 and 2020. 90% of businesses deem data security and protection to be a critical business goal, whereas just 22% of them believe to deliver in managing their data safety. The Cloud may help businesses meet new requirements. Vodafone provides the most comprehensive ICT services. We enable all our corporate clients, professionals and businesses to face the current challenges of the market with flexibility and efficiency.
In particular, the shipping industry, which is also one of the main pillars of the Greek economy, finds to Vodafone a partner with global presence that can meet the daily needs of shipping companies with leading security, personalized services and customized customer experience.
Moderator: George Xiradakis, CEO, XRTC Business Consultants Ltd.
Basil M. Karatzas, CEO, Karatzas Marine Advisors & Co
Leonidas Polemis, Managing Director, Remi Maritime Corporation
Eva Tzima, Head of Research, Intermodal
Harry Vafias, President & CEO, Stealthgas Inc.
Ion Varouxakis, Chairman & CEO, FreeSeas Inc.
Kostas Vassiliou, General Manager, Head of Group Corporate & Investment Banking, Eurobank
In the panel, moderated by CEO of XRTC Business Consultants George Xiradakis, shipowners and shipping executives made extensive reference to the enormous difficulties caused by the collapse of dry bulk freight markets and the opportunities that emerge.
Eva Tzima, Head of Research for Intermodal, delivered a full review of the course of specific shipping sectors in 2015, and the 2016 market forecast, focusing on both drawbacks and strengths, particularly for LPG cargo. As specifically stressed, LPG trade grew by 8.3% and it is expected to go beyond 11% this year. She underlined that the tanker market will remain strong also in 2016, given the drop in oil prices has led to steep increase in demand, mainly from China. As per LNG, she said it will keep going fine in 2016, while the drop in freight rates registered last year was due to the fact that demand by countries such as China, Japan and South Korea, decelerated after it reached a plateau. The shift in China’s economy, from an export-based one to an economy driven by domestic consumption and services, is the main reason of the drop in rates of container carriers, whereas no change is expected in this market during 2016. Last, China once again is mainly to blame for this record low in dry bulk freight rates. This drop is expected to go on during 2016 as well and, as of early this year, we are already considering a case of well below OPEX earnings for all ship sizes.
"Do not even think of ordering new ships, because the orderbook is appallingly large in dry bulk". These have been the words used by shipowner Harry Vafias, President & CEO of Stealthgas, to describe the situation in the dry cargo market, stressing also that even really big companies face financial problems. With an index crashing for the first time in history below the frightening limit of 300 points, Mr. Vafias underlined that, unless banks give a helping hand, we may witness the collapse of top players in the shipping industry. In his analysis of how we reached this point, Mr. Vafias mentioned that in the current conjuncture, market balance has been heavily shaken by the combination of weak China and feeble Europe, powerful dollar and an excessive number of orders, especially in cargo ships, and the only way to make things straight is to deliver many ships for scrap demolition.
Similar was the viewpoint of Ion Varouxakis, Chairman and CEO of FreeSeas, who thinks that in 2016 the situation in bulk carriers will become worse, mainly due to the shift in Chinese economy. Mr Varouxakis said that 2015 was a transitional year, as predicted one year earlier, during the 1st Naftemporiki Shipping Conference. Finally, things went really bad in dry cargo and the future seems to be dire. "In China, there is talk about a 6-7% growth rate of the economy in 2016, but some say that figures are false and claim that it will be 3-4%, which means an utter disaster", said Mr. Varouxakis. He then added that "Shares of companies operating in dry bulk, that used to be sought after, as a way to invest in Chinese economy, are now being sold by investors as a way to «sell out China»”. He went on saying that, generally, there is turmoil in both the actual marketplace and capital markets. However, despite the crisis in shipping, Mr. Varouxakis pointed out that opportunities also emerge. "Particularly for those who have the "guts"and may buy ships at low prices for the coming two years. Moreover, opportunities are being created within listed companies for alternative ways of financing, because investors join the game when things are going bad".
The third shipowner in a row who participated in the panel on freight markets, Leonidas Polemis Managing Director of Remi Maritime, also shared his concern about the course of BDI. "My viewpoint is that there is great difficulty in cargo ships. Tankers are better off for the time being. Oil, this year, given that Iran is entering the marketplace, will remain low, which is positive. I reckon that if oil prices had been high, things would have been even worse since low oil prices secure low transport costs. On the other side, however, low oil prices create a problem to countries heavily dependent on oil revenues, such as Russia primarily, which has been heavily affected both by that and the sanctions imposed, Venezuela and Nigeria. These problems have an impact on the market and then the shipping industry, so it is difficult to foresee a way-out of this vicious cycle". As for LPGs, he said that things are better, but there are many orders and freight rates are expected to drop. Summing up, Mr. Polemis said that what we have seen in the past 10 years is lots of money flooding the market, coming particularly from the US, many new orders, and this has brought us to this point.
Basil Karatzas, CEO of Karatzas Marine Advisors, stressed that, indeed, there are difficulties in the shipping industry and the freight market, especially that of dry bulk, but equally big are the hardships in capital markets, including -in the broader sense- banks, private equity funds, mezzanine funds, etc. There is currently a great concern about the course of interest rates. Funds have lost money both in shipping and in the commodity and energy markets, so the risk premium has increased. Consequently, there is reluctance to invest and large interest for debt financing, at rates that vary from 8% upwards and under terms and coverage that often reach the point of upside participation or profit sharing. Mr. Karatzas added that there is indeed some degree of mobility because, on the one hand, there are shipping companies in need of money under any terms and, on the other, only US-based funds have $1 tr. available that they cannot invest due to lack of proper projects. The outcome is a number of funds ready to finance mature projects.
Kostas Vassiliou, General Manager, Head of Group Corporate & Investment Banking at Eurobank, stressed that, after 8 years of crisis in Greece, we have learnt one thing or two. "In Eurobank, we believe that, in times of crisis, there are too many threats one should efficiently handle if one is firstly to survive, but also great opportunities do arise. In the case of shipping, we reckon that numerous good opportunities currently exist for both our clients and us. In fact, it was during 2015, a year unparalleled to any other for the Greek banking system as we all know, that the shipping industry turned out to be for Eurobank one of the very few, if not the only one, to register positive credit expansion; more specifically, we granted new financing of $150 m. in total. What we have learnt during this 8-year crisis is that risk #1 is the 'counter party risk'. So, the reply for us is very specific and represents a strategic choice. We believe that opportunities are here and we are here to help those clients, whom we already know and who are ready to co-invest their own funds to this direction, make full use of such opportunities".
The shipping hub of Piraeus - coastal shipping, cruise industry, ship broking and the port industry
Policies to attract ships in Greek ports, and particularly the issue of our country's high costs, have occasioned a number of judgements and proposals to be put forward during the 4th panel of the 2nd Naftemporiki Shipping Conference, moderated by Naftemporiki Shipping Correspondent Antonis Tsimplakis. A common point of all speakers is that ship docking charges in the Elefsina bay are nothing but prohibitive.
A proposal was addressed to attending Mayor of Piraeus Mr. Yannis Moralis to take on an initiative for the return of major international maritime exhibition "Posidonia" to the country's largest port during the panel in Naftemporiki Shipping Conference, by the President of the Union of Cruise Ship Owners & Associated members Theodore Kontes. This invitation has been accepted by Mr. Moralis, who called on for all stakeholders to collaborate in order to upgrade the city into a maritime hub. Mr. Kontes underlined that "geopolitical turmoil and terrorist attacks in the wider area provided a short-term boost in Greek cruise. However, in the long run, this is not to the benefit of the industry, since all companies redesign their routes, so such unrest is far from positive for our neighborhood in the long run". As for the port of Piraeus, the marketplace expects the new majority shareholder of PPA (Piraeus Port Authority), the Chinese Cosco, to implement policies that will bring in more ships. As stated by Mr. Kontes, the Chinese have undertaken the commitment to invest in the cruise industry and will extend the Piraeus passenger terminal pursuant to investment plans elaborated by previous PPA Administrations. "We believe that this is something positive", he said.
The President of Hellenic Shipbrokers Association, and Sales manager in Intermodal, John Cotzias, set the scene a few kilometers away, at the port of Elefsina. Mr. Cotzias defined the fees charged by the port for docking ocean-going ships as too expensive, taking into consideration the crisis in freight markets. "Prices are more expensive by at least 40% compared to Turkey and deprive the wider area of ships that employ tens or maybe hundreds of shipping-related firms for work", he stressed. "We have been told about charges between 10,000 and 12.000 EUR per month for a small one or a handy; the larger the tonnage, the higher the cost reaching even the amount of 15,000 EUR per month for a supra. We have the largest and safest natural bay - the Elefsina bay. Let us not forget that in the 1980s, even the 450-metre long VLCC Hellas Fos had docked there. There are no limitations. So, we must not be narrow-minded, because we hear that docking costs in Turkey is ⅓ of that. When a ship docks, then works will be performed on board and engineers will be employed. Why not having Greek technicians? Why can't a shipowner keep his ship close to his office?", he noted amongst other things. Mr. Cotzias added: “I appeal to all competent bodies to take action and, if (this price) is true, to swiftly remedy that".
At this point, CEO of XRTC George Xiradakis intervened to express his disagreement and underline that docking a ship somewhere requires local supply of technical services to facilitate its departure when due. "Perama is long gone already. So, have no illusions that Perama will be back in business if ships come here to dock", noted Mr. Xiradakis. Mr. Cotzias, however, disagreed with this remark saying that "nothing is gone or lost".
For his part, Mr. Cotzias said that Greek shipowners are in need of a Greek broker. "We stand by the side of shipowners and try to give them what they want, that is a 24/7 supply of trustworthiness, knowledge, advice and service", he noted.
The President of the Association of Passenger Shipping Companies (SEEN) Michael Sakellis talked about the important role of the port of Piraeus and made clear that it is identified with passenger shipping, and all plans to develop the port of Lavrion are null since it is not operations-friendly port.
The speaker made reference to some discriminatory treatment in favor of air transports by the State, resulting in distortions of competition. As clarified by Mr. Sakellis, he had nothing against air transports, yet SEEN simply asks for passenger shipping to be treated as "private sector". Contrary to passenger shipping, in air transports no routes are imposed, no obligatory discounts are provided for and no specific manning is mandated. Also, public service short sea routes calling on 44 islands receive an annual grant of 75 mil. EUR, whereas air and land transports receive aids of 300 mil. EUR". "At this point, we must stress", said Mr. Sakellis, "the problem lies in the fact that it is not the companies, but the islands suffering, since less services are made”. SEEN recommends to abolish mandatory 10-month routing and, instead, we ask for a 12-month routing, under the condition that such obligation is incurred by the company, not the ship itself. "Moreover, we have to discuss about being able to announce services for more than one year", he stressed.
"If our proposals above are implemented, companies will become agile in their ship management, economies of scale will be achieved, routing new ships will be greatly facilitated and available capacity will be increased in peak season", underlined Mr Sakellis.
Additionally, he noted that the significance of passenger shipping has not been duly assessed and acknowledged. Transports carried out by Greek passenger carriers amounts to 36,000,000 passengers and 10,000,000 vehicles and it is the biggest in Europe.
Mr. Sakellis dedicated large part of his remarks on the state of ports, stressing that 86% of our ports have problems. "It is thanks to our skillful seamen that our islands are being serviced seamlessly and with no delays", said the speaker and added that "ports may be a serious source of negative developments for short sea shipping; we have already found that no further improvement and upgrade of short sea transportations is feasible given the existing ports ".
Last, Mr. Sakellis said that the Association expressed its satisfaction for the port concession, since this secured the interests of passenger shipping. "The passenger terminal will maintain its character, and there will be some control on routes timetable".
In his capacity as PPA Managing Director, Mr. Stavros Hatzakos stressed that the port of Piraeus is one of the largest passenger terminals in the world and certainly the biggest in Europe. PPA has been always trying to improve port services and this has been significantly achieved in recent years. This enabled both cruise and short sea shipping to grow. As per the cruise in particular, Mr. Hatzakos pointed out that it represents great part of the work done in the PPA. According to Mr. Hatzakos, events in the region, which culminated with the recent decision by cruise lines to leave Constantinople, will have an impact on Piraeus as a destination. This year's target, however, is for the Carnival Vista cruise liner, which may carry up to 5,500 people and will perform 6 voyages starting from Piraeus, to act as a precursor of similar liners.
Moreover, Mr Hatzakos said that the biggest problem PPA faces is the complicated legal framework governing its operations. "PPA is a societe anonyme (SA), whose majority of shares are owned by the State and then the HRADF (Hellenic Republic Asset Development Fund). Everyone comes to us for solutions to their problems; and we have to deal with this legal framework generating problems and bottlenecks in the process”.
Moderator: Antonis Tsimplakis, Journalist, NAFTEMPORIKI
John Cotzias, Sales Director, Intermodal, President, Hellenic Shipbrokers Association
Stavros Hatzakos, Managing Director, Piraeus Port Authority S.A.
Theodore Kontes, Director, Majestic International Cruises, President, Union of Cruise Ship Owners & Associated members
Michael Sakellis, CEO, Blue Star Ferries, President Association of Passenger Shipping Companies
Cocktail reception offered by FreeSeas Inc.