Savvy owners use their expertise in handling a crisis to grow their share of the world’s fleet and prove again that they are the standard bearers in the shipowning business, particularly in dry cargo, writes Harry Papachristou in Athens
June 7th, 2017 18:02 GMT
Published in Weekly
Former England soccer star Gary Lineker’s famous dictum about football and the Germans has been paraphrased several times to fit many different contexts.
One way it can be adapted to shipping goes something like this: it is a simple game in which vessels chase cargoes and, at the end, the Greeks win.
The industry’s latest crisis is proving that homespun truth once again: as one of the longest downturns in shipping history abates, the Greek-controlled fleet is emerging stronger, expanding steadily and cementing its position as the world’s largest.
In January 2015, Greek-controlled ships totalled 180.6 million gross tons (gt) and accounted for 15.4% of world tonnage, according to figures by Clarksons. By last month, it had grown to 209.4 million gt and 16.4% of the world’s fleet.
As the Greek fleet increased, that of key competitors declined. Greece’s lead over Japan, the world’s second-biggest shipowning nation, widened by two percentage points — to 3.6% — during the same period. The German-controlled fleet saw its market share drop even faster than Japan’s — from 7.9% of total world tonnage to 6.7% (see graphs, above right).
“Greeks have performed better than most other shipping nations, especially in dry cargo,” shipping veteran Lou Kollakis told TradeWinds in an interview. “They had better liquidity and more expertise in how to handle a crisis. They knew their limits — what to do, what not to do and what steps to take to avoid extreme situations.”
Greeks’ continued ascendancy is due both to newbuilding deliveries and secondhand tonnage. They have been the biggest recipients of newbuildings by far, accounting for 17.4% of the total throughout 2016 and for 19% in the first four months of 2017.
Their predominance as buyers on the secondhand sale-and-purchase (S&P) scene was even starker. Greeks were the top buyers of such tonnage last year, spending about $2.5bn in acquiring more than 9.2 million gt — about one-fifth of the total, according to Clarksons’ figures. They have kept buying at an even faster rate in 2017, spending about $1.6bn alone in the first four months. At that pace, they are on course to spend $4.8bn over the entire year.
That is still below the $5.2bn they spent in 2015 and the $6.1bn in 2014, when plenty of private-
equity money was still flowing into the industry. However, the sums spent over the past 18 months are still remarkable, given most of the industry is licking its wounds and keeping a tight hold on cash.
“There were times during the crisis in which only Greeks were buying, especially in dry bulk, ” said Anastasios Papagiannopoulos, another Greek owner who begins as head of Bimco this month.
Greeks have grasped the opportunity to lower the average age of their fleets. They were the busiest demolition sellers last year, accounting for 17% of total scrapped tonnage measured in gt. However, according to available numbers, Greek demolition sales decelerated in the first four months of this year, accounting for just 6.7% of the total — below the 8% scrapped by Chinese owners but still on a par with the Germans.
Greeks replaced the ships they demolished with newbuildings or modern secondhand tonnage. According to Clarksons, the average age of ships that Greeks have been buying on the S&P market since early 2016 was a little more than eight years — far below the average of about 12 years for all vessels that changed hands over the same period. On average, the ships that Greeks have purchased were 2.5 years younger than the ones they sold.