How Greek shipowners have adapted to survive crisis

Indeed, with some light now being seen at the end of the tunnel, more and more Greeks are talking of “positioning the company for opportunities, to expand and upgrade their fleets”. In addition, new companies are emerging as the buyers of ships in the s&p market, previously reported as being sold to “unidentified Greek interests”.

Within this group, there are a number of well-known names trying something different.

Of course, moves by Petros Pappas, of Oceanbulk and US-listed Star Bulk Carriers, have been widely reported, following his link-up with Oaktree Capital Management and more recently CIT Maritime Finance. The Gourdomichalis brothers, George and Efstathios, have always been doing something different, from their days at FreeSeas to most recently Blue Wall Shipping, which having gone out and raised $80m in equity recently purchased its fifth ship, a 46,700 dwt bulker built in 2004, paying just on $16m.

According to consultant and analyst, and shipowner, Ted Petropoulos, Greek owners have proven themselves adept at staying afloat, in many cases by manoeuvring around the limits of traditional ship finance.

He notes some companies have laid off staff and reduced salaries but generally they have found other ways to limit their cash outflow to enable them to achieve longevity and stay afloat until the recovery of the market, and many of them are doing it very well” contend Petropoulos, head of Athens-based Petrofin Research.

Petrofin’s latest in-depth look at the ability of Greeks to ride out market turmoil, shows that over the past 15 or so years the actual number of Greek shipowning companies has declined 25% as economies of scale and market conditions drive forward the consolidation process.

At the same time, Petrofin Research reveals there has been a dynamic growth of the Greek controlled fleet, especially in deadweight terms, displaying the Greek ability to take advantage of change.

The overall number of ship-operating companies making up the Greek shipping cluster declined by 28 in the 12 months to autumn, or 3.9%. In other words, there are still 720 Greek shipping companies. Twenty-five of the lost companies ran fleets of fewer than four vessels, whereas there has been an increase in the number of companies running five to 15 vessels, while the number of larger companies remained static.

Mid-year Naftilaiki Greek Shipping Review gave details of some 66 companies running fleets of over 1m dwt and 51 running fleets over 20 ships.

Commenting on the fleet now the Petropoulos-led Petrofin says, there is "reasonable resistance to negative influences, with Greek shipping displaying the ability to grow regardless”.

Petrofin says: "In good market years, like 2004-2009 the long term trend was overwhelmed by short term market influences and the total numbers of operating companies rose. However, in the last five years, the combined shipping recession and lack of appetite by banks to support the small to medium owners has added pressure to the long term declining trend.

"In short, small owners of average vessels have not been able to obtain finance to finance new purchases," says Petrofin. However, taking up the theme already referred to, Petrofin notes: "Against the trend, a number of ex-owners and shipping families have exploited the market opportunities to re-enter shipping or to set up on their own."

Overwhelming evidence of the consolidation trend is presented by the fact the 10% of the companies now own close to 75% of the total dwt. Companies running fleets of over 1m dwt have "invested massively", with "their fleets increasing from 178.5m dwt to 201.3m dwt in just two years".

At the same time, Petrofin notes smaller company numbers are approaching their lowest since 2005 and 2006, while companies running nine to 15 vessels are getting stronger.

"This was achieved in part by Greek owners' ability to adapt and take advantage of change, as well as massive new capital injections, demonstrating a profound commitment to shipping and investment in new eco and green vessels. Moreover, there has been considerable diversification into LNGs, LPGs and offshore vessels," says Petrofin.

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