THE LEADING ROLE OF THE HELLENIC MERCHANT SHIPPING

Transcription

1 THE LEADING ROLE OF THE HELLENIC MERCHANT SHIPPING at the Global and European Level by G. Samiotis, Lecturer - G.P. Vlachos, Professor - B.S. Tselentis, Associate Professor University of Piraeus The sea and Greece have always been closely related and thus the fact that today Greece is a worldwide leading power in merchant shipping, is easily explained. The very existence and evolution of Greece as a nation has been, throughout its history, strongly associated and dependent upon activities in the marine environment. It is well known that in ancient times, the creation and maintenance of naval and merchant fleets, in addition to developments in naval architecture and institutions (e.g. Rhodian sea law of the 9th century B.C.), rendered Greece a dominant maritime power in the Mediterranean. It is a well known historical fact that shipping, during the 1821 uprising of the Greek nation against the Ottoman Empire, was the backbone if its success and played a significant role in the creation of the contemporary Greek state. about BRAND GREECE 67

2 BRAND GREECE THE STATUS AND ROLE OF GREECE IN THE INTERNATIONAL MARITIME MARKET The Greek owned merchant fleet continues to lead in the early part of the 21 st century. The national flag, on the other hand, maintaining one of the highest places globally, as far as tonnage is concerned. The Greek owned fleet, according to recent figures, accounts for more than 3,600 ships and its transporting capability being at 218,000,000 DWT (ships over 1,000 gt), covering 16.5% of world transportation needs. In terms of investment these figures correspond to about 40 billion US $. FIGURE 1 GREEK OWNED FLEET 59 modern vessels were added to the 910 ships already under the Greek flag. Greek ship owners as thus, in a leading position in world shipping maintaining 8.5% of the global fleet and 16.5% of world tonnage. Greek ship owners own 24.1% of the tanker fleet, 20.4% of the dry cargo fleet and 9.6% of the chemical tanker vessels. Recent evidence (2007), suggests that Greek ship owners are also leading in the field on new buildings and providing increased quality further services to sea trade. Many of these newly commissioned ships were placed under the State flag. In particular, during January and February of 2007, 300 new buildings, covering all types of vessels, were added to the Greek owned fleet, whereas, It is interesting to note that the commissioning of new buildings, due to increased demand for transport services, has bettered the average age of the 3,699 Greek owned vessels (2006) from 15.3 to 14.3 years. This development obviously supports the positive image which the Hellenic Merchant Shipping community has gained throughout the years, by providing quality services, especially in the fields of safety of navigation and at sea, in the traditional and the recent form of security, as well as the protection of the marine environment. It is a well known fact, however, that Greek ship owners prefer foreign flags, including open registry ones. This tendency is more apparent with firms based in London (City) and 68 about BRAND GREECE

3 THE LEADING ROLE OF THE HELLENIC MERCHANT SHIPPING at the Global and European Level N. York. According to recent data from the Greek Shipping Cooperation Committee based in London, the Greek owned vessels are registered as follows: Panama 583 ships, Malta 502, Liberia 361, Cyprus 360, Bahamas 298, Marshal Islands 281, Isle of Man 63 vessels and others with much smaller numbers. This situation is to be expected, as it parallels similar characteristics and long term trends shown by all major maritime nations with a long shipping tradition which maintained large fleets for long periods of time, often with extremely complex and contradictory qualitative and quantitative features. These fleets need versatility and flexibility in order to survive and transform over the years. Both foreign and open registries seem to provide such advantages, and thus are very popular amongst ship owners. The commercial fleet owned by Greeks shows particular characteristics that differentiate it from fleets of other traditional maritime nations. These characteristics include its specialization and spatial activities, its financial sources, etc. In particular, Hellenic shipping consists of ships that are mainly specialized in bulk transportation of dry and liquid cargo (crude oil and its products, coal, grain, minerals, etc.), as well as in transportation of traditional general cargoes. These ships account for approximately 95% of Hellenic owned fleet, while the remaining 5% include cruisers, commercial and coastal ships. Being a worldwide leading power in maritime transportation, Greekowned shipping operates on a world scale covering the transportation needs of countries well beyond the Greek state. Indeed, this fleet serves the trade needs of many countries throughout the world. In addition, a series of activities associated to Greek owned shipping, take place abroad (e.g. shipbuilding credits, financing, chartering, marine insurance, shipbuilding, repairs, maintenance, conversions, ship scrapping etc.). Furthermore, even nowadays, the management of Hellenic owned shipping is performed within the administrative framework of foreign countries such as the City of London about BRAND GREECE 69

4 BRAND GREECE in Great Britain, contributing to the development of these important business centers. It is thus obvious that Greek shipping associates its leading role and its development globally, to the very basics of world trade, such as: the charters international market, the international stock market, and other relevant economic activities. Greekowned shipping survives and develops thanks to the flexibility, knowledge and adaptability of Greek ship operators and ship owners, in relation to a series of international variables that affect the industry and influence business decisions in a number of choices (flag, specialization, markets, etc.). HELLENIC SHIPPING AND THE EUROPEAN UNION The Hellenic maritime industry is influenced both positively and negatively by developments in the European Union (EU), since Greece has been a full member of the Union from the early 1980s. The EU, only recently (mid 1980s) formed and modulated a discreet European policy on shipping. Within this framework of discussions (Council of Merchant Marine Ministers), Greece has had a decisive role, since, in addition to its worldwide leading influence on sea transport, it is also the dominant maritime power in the EU, owning 50 % of the total EU commercial fleet. This leading role, in combination with the fact that 90% of all foreign trade and 30% of intra European trade is performed by sea, is further strengthened, allowing Greece to play an active role in shipping centers and fora where policy and other issues, relevant to the industry, are discussed. Greece, as an active member of the EU, especially in matters of commercial shipping, has often joined forces with other countries supporting a Community shipping industry, based on fair and free competition, without governmental interventions, that will ensure safety and protection of the marine environment. It is unfortunate that often these endeavors are hindered by mishaps that threaten the competitiveness of EU shipping. This last point seems to be the main reason why the EU has been so unsuccessful in developing and apply- FIGURE 2 WORLD FLEET BY COUNTRY OF OWNERSHIP (total fleet) 70 about BRAND GREECE

5 THE LEADING ROLE OF THE HELLENIC MERCHANT SHIPPING at the Global and European Level ing effective and efficient policy decisions, concerning important shipping matters, even though Greece responded positively to all these efforts. A prominent case is the stalemate reached during the negotiations for establishing the European Registry called EUROS. These developments seem to have increased the trend towards establishing international and parallel registries by countries of the EU, as a separatist way of maintaining their country s competitiveness in the maritime sector. These practices, however, have both formal as well as substantive problems with the E.U. legal framework. It must be pointed out, that Greece has not moved along a similar legal and procedural line, despite the serious problems, of competitiveness and losses from its national registry, it is facing. Despite the fact that the EU has not as yet adopted of a discernible and strong maritime policy, many positive steps have, in general, been made, especially concerning the impacts of shipping on the marine environment and the safety of navigation. Navigation safety and the European marine environment have been subject to serious incidents, due to the lack and/or the deficiency of protection and safety institutions (e.g. Torrey Canyon 1967, Amoco Cadiz 1978, Haven 1991, Aegean Sea 1992, Braer 1993, Estonia 1994, Sea Empress 1996, Erika 1999, and Prestige 2002). Greece, as a member-state of international institutions, has supported all attempts aiming at the protection of the marine environment (IMO, UNEP, etc.), as well as developed a modern national institutional framework. Greece and Greek shipping have contributed to international attempts concerning the development and adoption of relevant measures and have always been prompt in harmonizing and applying this legislation within its national boundaries. Another important issue that has been at the top of the agenda for Greece and the EU over the last years has been the issue of lifting protectionism of sea transportation within territorial waters of member states, known as cabotage. This has been an extremely important as well as a particular issue for a county like Greece, where coastal shipping has developed to serve over 3,500 small and bigger islands (about 19% of mainland Greece), on which about 14% of the total population resides. Greece also possesses one of the largest shorelines in the world, amounting to over 15,000 km in length. It is clear that within this context, Hellenic coastal shipping functions as a critical communication and trade link, between the mainland and insular areas. Furthermore, it provides a basic tool for the development and implementation of legal, social and regional strategies and policies of the state, for this particular island environment. One of the most important problems facing the Greek State still is the lack of business interest in a totally liberalized internal transport market, after the lifting of cabotage, in providing services to a number of small islands with few inhabitants, especially during the winter period. Problems, concerning this liberalization, however were confronted in a positive manner by Greece (both public and private sector) as well as the EU, within the newly negotiated adaptation period (until 2004) that about BRAND GREECE 71

6 BRAND GREECE was agreed upon after lengthy but constructive discussions. Negotiations concerning maritime issues within the E.U. are always a complex and complicated process, leading to difficult situations such as, for example, issues concerning insurance and environmental protection as well as cabotage, in which, major maritime nations, such as Greece, often face serious economic and social repercussions. On the other hand, such structural and operational difficulties are to be expected within an international organization as the E.U., which has only recently expanded to include 27 Nations and striving to attain its political integration. Developing an overall maritime policy which combines an integrated, cross-sector analysis with effective policy coordination, is difficult if one considers many of the 27 E.U. member states have limited or even no maritime interests, while others have a vital interest in all aspects covering the framework, range and consequences of such policies. CONTRIBUTION TO THE NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT The leading position of the Hellenicowned commercial fleet, obviously plays an important role to the development of a country with a small population and territory, such as Greece. The positive impact of the Greek shipping industry on the Hellenic economy and state development is based mainly on the foreign currency entering the country, attributed to the fact that this transport sector has an autonomous development based on its globalized activities. It is interesting to note that Greek ship oper- FIGURE 3 FLAGS OF REGISTRATION FOR E.U. COUNTRIES (end of 2006) 72 about BRAND GREECE

7 THE LEADING ROLE OF THE HELLENIC MERCHANT SHIPPING at the Global and European Level ators and owners have registered their ships in about 40 different national registries, over the past years. It is true that transport services, shipbuilding and repair, vessel purchase transactions, scraping, etc., associated with Hellenic owned shipping, mainly takes place in countries The amounts of foreign currency from shipping, comprising of amounts transferred by ship owners and seamen, show a high degree of consistency over the years, contributing greatly to the improvement of the National Balance of Payments, which has been deficient ever since the end of the 2 nd World War. FIGURE 4 FOREIGN CURRENCY FROM SHIPPING other than Greece. In these countries large amounts of capital are deposited, while the Greek State is not affected by economic, social and environmental costs that are associated with these activities. Part of the positive impact arising from shipping is the important contribution of imported foreign currency, to the National Balance of Payments, as well as the vivification of the national economy and local communities (recipients of this foreign currency), the creation of employment at sea and land, the development of activities associated with the industry and associated sectors, the national economy etc. Foreign currency arising from shipping over the past years, has risen to 2 billion US dollars per annum, and represents about 6% of the Gross National Product (GNP). Taking into account the relevant economic indicators, almost the entire net national product created abroad arises from the maritime sector. The abovementioned inputs, apart from the positive impacts to the national economy (diverse positive effects), are also a vital part of the prosperity of local communities, which actually receive this foreign currency (see also Figure 4). Furthermore the maritime sector contributes decisively to the economic and social development of the about BRAND GREECE 73

8 BRAND GREECE country, by employing, in recent years, a total of about 55,000 people. In particular about 30,000 are employed aboard ships and 15,000 on land, serving the maritime enterprises as well as associated industries (see also Table I). It must be noted, however, that employment numbers and opportunities in Hellenic owned shipping, during the last decade, have been decreasing. This seems to be a wider problem facing most traditionally important shipping nations and is associated directly to the high international competition, inevitably leading to the employment of cheaper foreign labour, in order to minimize operational costs. The decrease in employment figures is also attributed to the fact that the shipping sector is evolving into a high capital intensive industry. necessary cooperation between the Hellenic owned shipping (ship operators and owners) and the Greek State (appropriate maritime policy and relevant economic planning), was not developed. Thus up to the 1960s, the development of shipping related services such as banking insurance and brokerage services, shipbuilding and technological infrastructure, shipping business management etc., was extremely slow. During the 1970s the situation improved, due to the efforts of all parties involved, leading to a steady improvement in all sectors. Thus, during the last decades, the competitiveness of maritime business, ship repair, building, refurbishing industry, banking and insurance, brokering and supply services, TABLE I EMPLOYMENT IN THE SHIPPING SECTOR EMPLOYEES YEAR No of Companies DOMESTIC FOREIGNERS TOTAL , , , , , , , , , , , , , , , , , , , , , , , , ,045 8,774 1,340 10, ,067 8,717 1,350 10, ,902 1,390 10, ,884 1,653 10,537 Even though Hellenic shipping still maintains its leading role internationally, there has not been an equivalent development in other shipping related sectors within Greece. This can be accounted for, by the fact that the as well as the vessel purchase transactions, has evolved striving for better standards. There are obviously differences in how each sector attains higher standards, but as a whole these advances are definitely in- 74 about BRAND GREECE

9 THE LEADING ROLE OF THE HELLENIC MERCHANT SHIPPING at the Global and European Level sufficiently low compared to the vitality of the Greek shipping industry. STRIVING FOR QUALITY IN SHIPPING AND MARINE ENVIRONMENTAL PROTECTION As has been pointed out above, Hellenic owned shipping is by far a globalized activity, which develops and operates within a defined business and institutional framework. This framework influences the industry directly, but can also be influenced, in some ways, by the Hellenic maritime community, due to its leading international status. It is true that recent trends in international shipping, especially within the EU and Organisation for Economic Cooperation and Development (OECD) countries, focus on the development of a free and competitive maritime market, where transport services strive for quality, at the lowest possible price. At the same time, efforts to ensure vessel and navigational safety, as well as the protection of the marine environment, are also high in their priorities. It is important to note that the 9/11 incident initiated, with the USA taking the leading role, institutional changes in safety and especially the security sector of the maritime industry. These changes were well beyond the framework and practices known to that day. In particular, with the implementation of the International Ship and Port Facility Security Code (ISPS Code), the Code of Practice on Security in Ports issued by the IMO/ILO in 2004, the ILO s Seafarers Identity Documents Convention (revised 2003, No 185), as well as the IMO s Convention for the Supression of Unlawful Acts Against the safety of Maritime Navigation (1988, revised 2005), novel approaches were introduced to the established understanding of security and related issues. These new approaches have led to an integrated system of multilateral governance in issues of safety and security for the maritime industry. To date it has proved to be especially complicated and costly to all parties involved (countries, shipping firms, employees on ships and ports, the international community etc.) and does not seem to fully justify the significantly increased costs and increased work burden inflicted on the parties involved, when the overall status of world security and the industry are taken into account. The above mentioned goals have been adopted by the Hellenic State and shipping community, both within the domestic legal and institutional framework, as well as in international fora ( EU, UN, UNEP, IMO etc.), in which Greece s leading position allows for further improvement and influence. Greece has inevitably proved that, as a member of the OECD and the EU, has worked positively and constructively towards attaining a high quality level in worldwide shipping. It is important to note that the Greek ship owners set up, as early as 1982, a non governmental organization for promoting quality in shipping mainly through the protection of the marine environment. This organisation known as Hellenic Marine Environment Protection Association (HELMEPA), has been very active both within Greece as well as in international institutions (IMO etc.). Also initiatives from the port sector have led to increased environmental protection and management options. about BRAND GREECE 75

10 BRAND GREECE In collaboration with ESPO and the ECOPORTS Foundation, the major ports of Piraeus and Thessaloniki have been certified for their environmental management systems by the PERS accreditation system. It must be stressed, however, that attaining a high quality level in the shipping industry, is an extremely difficult and painstaking process, since it involves international cooperation and is affected by many factors. Major maritime nations, in particular, face these difficulties within the globalization process that the industry is going through. Intense and often vicious competition in freight trends to compete with quality in shipping services. The numerous legal opportunities open to shipping firms allowing them to spread out their activities in different parts of the world (different registries, headquarters, company holdings etc.), leads to anonymity and increased difficulties when investigating pollution incidents, breaching of contractual duties etc. The ease with which a shipping firm can change registries, nowadays, selecting those that allow increased profits while minimizing running and maintenance costs, appears to be one of the most serious problems facing the industry. As pointed out previously, Greece is highly active within many open registries, as many other OECD countries are. In addition many EU countries resort to international as well as parallel registries, aiming at minimizing losses to their national registries. This situation affects not only the stability and improvement of the maritime sector, but also poses a serious threat to maritime safety and the marine environment. Quality shipping, today, appears to be a difficult objective achievable only through international cooperation within which OECD and EU countries play an important role. So, it seems reasonable to suggest that the only way forward is to strive for quality shipping throughout the world, avoiding the split that exists in the maritime sector between first class shipping, serving OECD and EU countries, and second class, comprising of substandard ships under flags of convenience mainly owned by firms originating from EU and OECD states, serving the rest of the world. SELECTED BIBLIOGRAPHY AND SOURCES E. Raftopoulos, Multilateral Governance and the Emerging Status of Maritime Security. Environment and Law, No 2, 2005, (in Greek). G.P. Vlachos, International Maritime Policy, Stamoulis Publications, Athens, 2007 (in Greek). G.P. Vlachos, Merchant Shipping and the Marine Environment, Stamoulis Publications, Athens, 2007 (in Greek). El. Georgantopoulos and G.P. Vlachos, Maritime Economy, J & J Hellas Publications, Piraeus, 2003 (in Greek). C.F. Wooldridge, B.S. Tselentis and D. Whitehead, Environmental Management of Port Operations and the Ports Sector s Response to the European Dimension, in Maritime Engineering and Ports, pp , Eds C.A. Brebbia and Sciutto. Wessex Institute of Technology Press, 1998, Southampton UK. SOURCES Hellenic Ministry of Mercantile Marine Greek Shipping Cooperation Committee, London. USEFUL LINKS Ministry of Mercantile Marine Hellenic Chamber of Shipping 76 about BRAND GREECE