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Hellas: Shipping Fleet’s Tonnage up by 22% as Greeks’ Share of World’s Fleet Rises to 19.63%

Despite the especially unfavourable economic environment in Greece and worldwide, Greek shipping has more than held its ground. Greek-owned tonnage holds the first position internationally (Figure 2). The fleet amounts to 4,585 vessels (ships over 1,000 gt) of 341.17 million deadweight tons (dwt) – an increase of approximately 22% from the previous year -, representing 19.63% of total world dwt and 49.96% of the total European Union (EU) fleet 3 (Figure 3). Both figures indicate an increase compared to previous years. In 2015, the Greek Register accounted for 770 vessels (over 1,000 gt) amounting to 41.37 million gt 4.

The Greek flag fleet ranks seventh internationally (Figure 4) and second in the EU (in terms of dwt) (Figure 5). Moreover, Greek owners control 30.14 % of the world tanker fleet (crude oil tankers), 21.18% of the world bulk carrier fleet and 16.61% of the world chemical and products tanker fleet (Figure 6). Against shrinking ship finance and a depressed freight market, newbuilding orders by Greek interests amounted to 407 vessels (over 1,000 gt), representing 44.83 million dwt in total of 3,507 orders of 260.35 million dwt 5 placed for newbuildings by the end of 2015. Of these vessels, 221 were tankers corresponding to 25.88% of world tonnage (dwt) on order, including 63 LNG / LPG tankers amounting to 19.72% of world tonnage (dwt) on order, 153 bulk carriers corresponding to 14.39% of world tonnage (dwt) on order, 30 containerships corresponding to 6.12% of world tonnage (dwt) on order and 3 other vessels.

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Greek shipowners continue to renew their fleets by investing in modern, technically advanced, efficient and environmentally friendly ships gravitating towards larger ships on average. In 2015, they were also active in the sale and purchase market of second hand tonnage as they were involved in nearly 50% of all reported tanker and bulker deals either as buyers or sellers6 . The prolonged period of extremely low freight rates, especially in the dry bulk sector, has resulted in a substantial increase of laid up ships. The age profile of the Greek flag fleet in 2015 was 13.2 years and of the Greek-owned fleet 11.2 years, whilst the average age of the world fleet was 14.4 years7 . The Greek fleet remains on the US Qualship 21 list, the International Maritime Organization (IMO) White List and the Paris Memorandum of Understanding (MOU) White List, while it is one of the safest fleets worldwide with less than 1% minor accidents recorded in 20158 .

The Greek-owned fleet is the world’s largest cross-trading fleet with 98.5% of its trading capacity carrying cargoes between third countries, thus, rendering an indispensable service to the world. The Greek-owned fleet is highly responsive to shifts in trade patterns, such as the rise of Asian demand, while its importance for Europe is twofold: in relation to securing its import / export needs and boosting the EU maritime cluster. Shipping’s largest ‘shipowner’ zone in the world is the Athens / Piraeus cluster, closely linked to its national ownership base, contrary to other such owner zones, like Singapore and London, with an owner base attracted from around the world9 . 2016 is expected to be exceptionally trying for world shipping.

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The shipping industry is expected to remain depressed with stagnating growth in large economies and the need for rigorous capacity discipline in order to manage the supply-demand imbalance. Geopolitical tensions, higher operating costs and cost of compliance with regulations, increased cost of lending and restricted access to finance add to the depressing picture. Additional challenges include the aftermath of the December 2015 Paris Conference agreement (COP 21) on climate change regarding CO2 emissions and the economic restructuring of China and of other developing nations’ economies as they become increasingly service-oriented.

In the context of an informal investigation procedure since August 2012, the European Commission (DG COMP) sent a letter (21/12/2015) to the Greek government alleging that some provisions of the shipping taxation regime (law 27/1975) are in breach of the conditions set out in the EU Guidelines on State Aid to Maritime Transport (SAG) and requiring the Greek state to amend the Greek tonnage tax scheme in several respects. The Union of Greek Shipowners (UGS) reacted to the European Commission’s decision in defence of the status quo, highlighting the shipping industry’s strategic, economic and commercial significance and underlining the detrimental consequences that any fundamental changes to the Greek institutional and fiscal shipping framework will have for Greece and the EU.

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The Greek Government’s response to the European Commission’s allegations coherently invoked and provided solid legal grounds defending the legitimacy of the Greek shipping taxation regime and stressing that the Greek shipping industry is an important part of the national identity, a fact which is reflected in the Constitution. In addition, the response maintains that the Greek shipping institutional regime is compatible with the Maritime State Aid Guidelines, as in force. In fine, the Greek submission repudiates the claim that the Greek tonnage tax system constitutes preferential treatment and that it distorts EU competition. The SAG have been successful in stemming de-flagging from EU registers and meeting intense international competition through the provision to Member States of a flexible framework of support, recognizing that the shipping industry is an inherently global and mobile sector. In fact, the Greek institutional regime for shipping taxation and the Greek model of tonnage tax for ships – introduced in 1953 and re-established in 1975 with constitutional guarantees – became more or less the precedent for the development of the SAG and other tonnage tax regimes in the EU and internationally. The Greek shipping institutional regime by far predates both the introduction of SAG as well as the accession of Greece to the European Economic Community (EEC) in 1981. The Greek shipping taxation regime has been successful in repatriating the Greek-owned fleet and attracting inward investment in the maritime sector, without, at the same time, causing distortion of intra-EU competition.

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In fact, DG COMP’s present investigation and decision are neither the result of a formal complaint nor of a substantiated assessment that there is indeed effective distortion of intraEU competition in the ocean-going maritime sector. The European Commission should not lose sight of the strategic, commercial and international dimension of the EU shipping industry in its diversity and its mobility. By concentrating on the nominal or juridical aspects of compliance with the letter of the SAG within the EU, the European Commission jeopardizes the spirit and success of the SAG. The UGS is concerned that the negative climate created by the decision regarding Greece risks severely undermining one of the Greek economy’s primary pillars at a time of exceptionally high unemployment and urgently needed growth prospects. It equally runs the risk of the EU losing a substantial part of its fleet and maritime cluster. Such developments are not in line with the Commission’s declared policy agenda for growth, employment, improved competitiveness and better regulation. They will also undermine the confidence of shipping entrepreneurs and may encourage relocation of companies outside the EU.

In the run up to 2017, the “European Maritime Year”, the European Commission has launched wide ranging consultations. The UGS participated in consultations of the European Community Shipowners’ Associations (ECSA), while its views on the European Maritime Strategy were included in the final text presented to Transport Commissioner Bulc. The European shipping industry seeks to emphasize the manifold importance of European shipping as a global leader for the EU and to highlight its proposals on four pillars that should be shipping strategy priorities: shipping as a sustainable transport solution, promoting short sea shipping, European leadership for a global business, promoting life-long careers in shipping. The four priority sectors are in line with President Juncker’s initiative for growth, jobs, competitiveness and better regulation in the EU.

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Shipping continues to improve its environmental performance over the last years through improved energy efficiency, reduction of oil spills and of air emissions. It has a positive role to play in sustainable transport with its superiority in energy efficiency. Short Sea Shipping is an efficient and environmentally friendly alternative mode of transport to the congested land transport. It remains high on the EU agenda of priorities for the European Maritime Strategy. Despite a series of proposed measures for years, it is still facing administrative and legislative impediments weighing it down when compared to the other modes of transport, for instance, the existence of National Single Windows of EU member states instead of a harmonized EU Single Window. The UGS believes that a modal shift from land to sea transport will only be achieved through internalisation of external costs of the other modes of transport and the real facilitation, i.e. simplification and harmonisation of procedures.

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Free trade and non-discrimination ensure greater prosperity within the EU and the UGS has constructively participated in consultations for on-going negotiations of Free Trade Agreements in order to ensure that access to shipping markets is not restricted due to protectionist measures. To this effect, monitoring by the European Commission of application of Regulation 4055/1986 (arts 2-5) is needed to ensure that unilateral cargo reservations in EU member states have been abolished, existing bilateral agreements on cargo sharing of EU member states with third countries have been phased out and new agreements of this type have not been adopted.

In order to increase attractiveness of working at sea, one important initiative that should be undertaken by the European Commission is in relation to the issue of “criminalisation of the maritime profession” which acts as a disincentive negating the campaigns for attraction of seafarers. The recent Supreme Court judgment (2016) against Captain Mangouras in the “Prestige” case is most unfortunate in this respect and an undesirable state of affairs. To mitigate this situation, the EU should render compulsory the application of the ILO10 / IMO Guidelines on the treatment of seafarers in the event of an accident causing maritime pollution (2005).
Source: Union of Greek Shipowners (Annual Review)

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