July, the first month of capital controls, posted a remarkable drop in shipping earnings, as a significant number of shipping companies were forced to return revenues from chartering and ship transactions to foreign accounts in order to meet their international trading obligations.
Bank of Greece data showed foreign currency inflows from transportation services, of which over 90% come from shipping services, amounted to EUR470.7m ($514m) in July, a massive dive from the EUR1.17bn recorded a year earlier. Receipts for the first seven months of the year were EUR6.9bn, down 7.1% on the same period in 2014.
Given the vast majority of foreign currency takings concern oceangoing shipping, it is clear the capital controls will have a profound effect on the current account balance and the liquidity of Greek banks.
In fact, credit sector sources estimate July will likely prove to be the month with the smallest decline after the imposition of the capital controls, as their maintenance and the evolution of the crisis are expected to see the drop expand further.
“Capital-intensive companies such as shipping firms cannot respond to the internationally competitive environment they operate in with the required speed when they are in an economy burdened by capital controls,” said one financial analyst.
Returning Shipping Minister, Thodoris Dritsas has stated one of the priorities of the ministry is the strengthening of the Greek flag, but newly published data by the Hellenic Statistical Authority (Elstat) shows the Greek merchant fleet, keeps losing vessels, decreasing 1.3% in July compared to July 2014, when the Greek fleet had recorded a decline of 2.3% compared with July 2013. The monthly-published statistics indicate a constant rate of loss of vessel number of between 1% and 2.5% in the last two years.
On the other hand the Greek-controlled fleet gets bigger and bigger in tonnage as the new vessels are younger and bigger. The gross tonnage of the fleet, increased 1.2% in July compared to July 2014, which in turn was up 0.5% on July 2013.
Meanwhile, though under mounting pressure from its international creditors to increase taxes on all aspects of shipping, the government’s Finance Ministry, aware of the importance of maintaining the Piraeus shipping cluster and the strength of the Greek flag is trying to find alternative sources of income to avoid saddling owners with more taxes.
Officials from the Finance Ministry admit, however the exercise is proving very difficult. The Ministry is expected to come up with its final decision before the end of October.
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