Shipping Still the Locomotive of the Greek Economy, with 136 billion euros contributed during 2007 – 2016 period
In its 2017 Annual Report, the Union of Greek Shipowners (UGS) reiterated that 2016 was another tough year for both the Greek economy and Greek shipping. Delays in notable improvements in the economic fundamentals of Greece coupled with a prevailing economic uncertainty effected a gloomy environment for investments in the country. The capital controls have had a disastrous impact on the foreign exchange account balance and especially the foreign exchange earnings from shipping since July 2015 when they were first imposed. The first half of 2016, receipts in the Services Balance of Payments that come from maritime transport services were €3.60 billion, a decrease of 42.42%, compared to the same period in 2015, which was €6.42 billion.
The Greek shipping industry, which was never part of the debt crisis of the Greek state, experienced substantial disruptions to its daily operations due to the restrictions on capital movements. Consequently, a significant number of shipping enterprises has been forced to redirect vessels’ earnings abroad in order to fulfil promptly and effectively their international financial responsibilities. On a positive note, in the period July – December 2016 foreign currency inflow from maritime services reached €4.22 billion, an increase of almost 20% compared to the same period in 2015 which was €3.54 billion. In total, the foreign currency inflow from shipping in 2016 was €7.81 billion, a decrease of 22% compared to the same period in 2015 which was €9.97 billion (Figure 1). In fact the foreign currency inflow from maritime services in the last two years (2015-2016) was reduced by 29.4% in comparison to the years 2013-2014 owing to the effect of the capital controls.
Yet despite such negative developments shipping remains one of the two stalwarts of the Greek economy as, over decades, it has consistently contributed to the Greek economy in more than one ways while at the same time raising the profile of Greece internationally. The receipts in the Services Balance of Payments from maritime transport services are estimated at approximately €136 billion for the years 2007-2016. That is 16% more than the other important Greek economic sector, tourism, which has contributed around €117 billion over the same decade. The industry employs around 200,000 people, while the Union of Greek Shipowners (UGS) has repeatedly underlined the potential of the industry to provide further employment opportunities to Greek nationals for a career at sea within an internationally competitive framework.
In the face of the aforementioned adverse global and domestic economic conditions, Greek shipping once again showed resilience retaining the first position internationally (Figure 2). The fleet amounts to 4,585 vessels (ships over 1,000 gt) of 342.75 million deadweight tons (dwt) – an increase of approximately 0.5% from the previous year – representing 19.19% of total world dwt and 48.29% of the total EU fleet). In 2016, the Greek Register accounted for 759 vessels (over 1,000 gt) amounting to 42.38 million gt.
The Greek flagged fleet ranks seventh internationally and second in the EU (in terms of dwt). Moreover, Greek owners control 27.76% of the world crude oil tanker fleet, 21.53% of the world dry bulk carrier fleet and 15.94% of the world chemical and products tanker fleet (Figure 6).
Against shrinking ship finance and depressed freight markets, newbuilding orders by Greek interests amounted to 288 vessels (over 1,000 gt), representing 29.06 million dwt from a total of 2,717 orders of 192.66 million dwt placed for newbuildings by the end of 2016. Of these vessels, 187 were tankers corresponding to 25.33% of world tonnage (dwt) on order, which include 49 LNG / LPG tankers amounting to 19.21% of world tonnage (dwt) on order, 77 dry bulk carriers corresponding to 9.44% of world tonnage (dwt) on order and 22 containerships corresponding to 5.13% of world tonnage (dwt) on order. The age profile of the Greek flagged fleet in 2016 was 13.2 years and of the Greek-owned fleet 11.3 years, whilst the average age of the world fleet was 14.6 years.
Greece remains on the Standards of Training, Certification and Watchkeeping International Convention for Seafarers (STCW) White List of the International Maritime Organization (IMO) and the Greek flag is included in the Paris Memorandum of Understanding (Paris MOU) White List, while it is one of the safest fleets worldwide with only 0.76% of the fleet (based on number of ships) or 0.16% of the fleet (based on tonnage) involved in minor accidents in 201610. Although the road to a full recovery is expected to be long and trying, there are signs that some improvement is likely for 2017, mainly due to a gradually narrowing of the gap between supply and demand.
“Global growth is projected to be 3.4% in 2017 with expected increased economic activity in emerging market and developing economies11 and expanded seaborne trade volumes, while there are also positive developments to the supply side fundamentals with high levels of demolition – also in view of upcoming regulatory requirements – beginning to have a sizeable impact. Indeed, positive developments in the freight rate market have already been noted with the Baltic Dry Index recording in March 2017 a 29% increase from the start of the year, representing a 324% increase from its record low in February 2016. Any recovery, however, will remain fragile subject to a number of factors: the volatility of the geopolitical environment, potential trade disruptions and obstruction of trade lanes due to regional power, rising protectionism and risk of consequent trade wars, rising regionalism, especially with regard to environmental issues and risk of adoption of unrealistic and ineffective regulations, contracting bank financing and increased cost of lending. In light of the above, the Greek shipping community, which comprises mainly small and medium-sized private companies and embodies the true spirit of entrepreneurship, firmly supports the existence of free trade and access to markets and of an efficient international regime for a vital international industry, such as shipping. Representing the biggest crosstrading fleet in the world, the Greek fleet has a strategic role in the transportation of the trade and energy of many regions in the world, and of the EU, which relies on international shipping for 75% of its external trade and of which it is an integral part”, UGS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide