Greek Shipping News Cuts
Week 35 - 2004


Piraeus port now in competition with London

---Piraeus's prospects as a shipping hub have considerably improved with projects in preparation for the Olympic Games.
London is in danger of losing its prime status as the largest services hub to the international maritime community, according to a new study published by the city port's public relations advisers, Maritime London.
In comparison, other port cities, such as Shanghai, Singapore and Piraeus, seem to be gaining ground at the expense of London, as they upgrade their facilities and the quality of their services, the report said.
Maritime London refers to such factors as the high cost of living, the problematic transportation system of the city as well as uncertainties regarding the tax status of those using its maritime services, as responsible for its steadily sluggish performance.
Shipping circles tell Kathimerini that the British government has yet to present its intentions concerning the tax status of foreign companies, creating a climate of uncertainty.
According to the report, 14,000 people are employed in the maritime services sector in London, and the government needs to intervene to prevent an exodus of shipping companies to other hubs, either in the Far East or Piraeus. It is noted that New York lost the vast majority of the members of its foreign shipping community when US tax laws were unfavorably amended.
Referring to the port of Piraeus, Maritime London notes that its infrastructure and communications networks have been greatly enhanced, that the cost of living in the area is comparatively low and that the local maritime services industry has become much more supportive. This means that Piraeus, considerably upgraded in the framework of preparations for the Olympics, can look forward to a further improvement once all infrastructure projects are completed, and to attracting more shipping operators now based in London or other traditional maritime hubs.
Such a prospect enjoys the support of the Greek government. Merchant Marine Minister Manolis Kefaloyiannis has said he is promoting the preparation of a complete legal framework regarding maritime arbitration, the establishment of a maritime court, the enhancement of the role of Greek insurance companies in the maritime market, as well as the creation, with the cooperation of the local shipping community, of a reliable reinsurance agency (P&I Club).
Shipping executives argue the ministry's immediate plans should include tax breaks, which have to be considered together with all other measures under consideration to attract shipping offices to Piraeus.
Source: By Nikos Bardounias - Kathimerini, 25 Aug 2004

On the crest of a wave?
---Things have been so good in the bulk-shipping market that it is hard to believe they can stay that way
BY THE pool, overlooking the wine-dark waters of the Aegean, the champagne flowed as the cream of the world's shipping industry gathered to watch the fireworks at one of many lavish parties thrown during Posidonia, a recent trade show. Thanks to the greatest boom the industry has seen since the closure of the Suez Canal in 1967, the mood was buoyant. But strong winds blew ash from the fireworks on to the guests, driving the many women in low-cut dresses to shelter under the jackets of obliging males.
No sooner was the party over than it seemed that the industry itself might have to run for cover, as the price bubble that had seen bulk-shipping rates more than double since September 2003 suddenly lost air. Fears of a slowdown in China's economy, and a temporary ban on its imports of soya from Brazil, halved the Baltic dry-cargo index, which covers bulk-cargo rates on the world's 23 busiest sea routes. Rates have since recovered somewhat (see chart on next page), but worries abound that a more fundamental correction in rates may be coming soon.
Now is clearly a moment to keep a close eye on the behaviour of the Greeks, who - despite departures from the business of the heirs of Aristotle Onassis and, late last year, those of Stavros Niarchos - remain the savviest in the industry. Greece, a country of some 11m people, controls by far the biggest share - nearly 20% - of the world's merchant fleet by tonnage, even if many Greek ships fly flags of convenience. The Greeks specialise in oil tankers and carriers that transport bulk commodities.
According to Martin Stopford, an economist with Clarksons, the world's largest shipbroker, the secret of the Greek success is not, as you might expect, that Greeks are good at running ships. They leave the grind of finding cargoes to specialists: they excel, instead, at managing risk. The Greek shipping fortunes are based on buying ships cheaply and selling them dear. They have an impressive record of spotting the tops and bottoms of the market.
Foolishness to the Greeks
That is in sharp contrast to certain other perennial investors in shipping: on the waterfront of Piraeus, where owners and their agents mingle, they say that, while God gave the Saudi Arabians oil, he fortunately gave the Greeks the Norwegians. Needless to say, Norwegians disagree. After all, the world's largest tanker owner is a Norwegian company. Nor is it just Norwegians who are the fall guys. The price of second-hand bulk carriers started to fall this spring as freight rates declined, catching out some firms. On July 21st, Jinhui, a Chinese shipping company listed in, er, Oslo, issued a profit warning for precisely that reason.
Greeks buy and sell ships far more often than others in the industry. Naftiliaki, a trade magazine, says that of 535 ship trades from January until mid-May 2004, 264 involved Greeks. Most of the 733 Greek shipowning firms are small, with only a few ships. But the industry is consolidating fast - which may limit the ability of firms to time the market so well in future (at investment vehicles such as hedge funds, bigger generally means worse). The 46 largest Greek shipping firms now control 70% of the fleet. Although the fleet has grown, the number of firms is down by 25% since 1998.
The past few years have also seen the emergence of the publicly-traded Greek shipping company, an idea that would have been anathema to the likes of Onassis and Niarchos, who had little time for the transparency or accountability involved in being public. It is still a comparatively limited phenomenon, but it involves some big companies. For instance, Tsakos Energy Navigation (TEN), a subsidiary of the second-largest Greek shipowning firm, is listed on the New York Stock Exchange.
Soon there may be many more, combining the trends of listing and consolidation, and increasing internationalisation - signs, perhaps, that the Greeks think the market is near a top. Another Greek shipping line already listed in New York is Stelmar, founded by Stelios Haji-Ioannou (of easyJet airline fame), and floated in 2001. This week it reported second-quarter profits that had swelled to $15.8m from $4.5m in the same period in 2003.
Mr Haji-Ioannou, who with his family owns 27% of Stelmar, is attacking its board for not letting shareholders consider a couple of takeover approaches. One is from OMI, an American shipping firm listed in New York; the other is from the GEM group, owned by the Greek Restis family and rumoured to be seeking a listing in New York. Argonaftis, the first shipping firm to float on the Athens stock exchange, announced in February that it would also get a New York listing.
The urge to go public has been accompanied by a move into market niches; TEN, for instance, signed a $170m contract to buy a liquefied natural gas carrier (LNG) in early June - a sector that the Greeks have historically steered clear of, but which is now starting to boom. Because the LNG trade is expected to grow significantly in the next decade, many more ships are being built. This is a niche once dominated by energy groups themselves and shipping companies from big oil-importing countries such as Japan: now everybody is piling in, perhaps over-enthusiastically.
As well as becoming more diversified, risks are also being managed by making the Greek fleet younger (and thus in better condition) - the average age of a Greek ship is now 16.8 years, down from a bit over 20 years in 2000. But the Greeks, who traditionally trade only second-hand ships, have now placed orders for new vessels, taking them into new risk territory.
One side-effect of the increase in transparency has been to attract more outside investors into the industry. Traditionally, shipping finance came from plain vanilla bank loans, secured against ships. Bankers such as Royal Bank of Scotland are still prominent on the Piraeus waterfront, but new sources of finance are emerging. Financial instruments, such as asset-backed securities, are increasingly popular, especially in Germany, where investors (chasing a local tax break) have a lamentable habit of entering a market just as it becomes a bubble. According to Lloyd's Shipping Economist, such new sources now account for 60% of global ship-financing.
The most dramatic growth has been in shipping futures, which allow shipping companies to lay off risks. The most popular futures are forward freight agreements (FFAs) to deliver goods on a particular route at some point in the future. They have grown, in the past year, to be roughly the size of the physical market, according to Bill Lines of the Baltic Exchange, a shipping bazaar in London that sells FFAs. Many in the industry have been suspicious of such futures, because they have been averse to hedging their bets - risk-taking is, after all, part of the game - and averse to complicated financial instruments that they do not really understand.
But, says Mr Lines, the desire of outsiders to get into a booming ship industry has fed the growth of futures. In September 2003, the Baltic Exchange launched a "paper ships" index, which trades on the future cost of ships themselves, rather than future freight rates and, this autumn, they plan to launch a "demolition assessment" index, which will trade on the future scrap value of ships. The International Maritime Exchange, in Oslo, a competitor, estimates that the futures market will grow by another 80% by the end of 2004.
More use of hedging should, in theory, reduce the volatility of shipping rates, and thus mean smaller swings between market peaks and troughs. That would limit the ability of Greek investors to make a killing by timing their purchases and sales. On the other hand, they will see opportunity aplenty in the rush of new, inexperienced money into the industry - especially if they suspect that prices could once again crash. Beware Greeks bearing ships?
Source: Europe Intelligence Wire,, August 26, 2004 11:45am

EFIC support for Austal contract
---EFIC has announced its support for Austal Ships $60 million contract for construction of an 85-metre catamaran ferry to Hellas Flying Dolphins (HFD), Greece's largest domestic ferry operator.
EFIC provided an Export Finance Guarantee to ABN AMRO Bank NV in support of a loan to HFD for the construction of the catamaran.
Austal currently has four of its vessels operating in Greece. With capacity for 810 passengers and 154 cars, the new vessel 'Highspeed 5' is scheduled to be completed in time for the 2005 summer season and will operate between the Greek mainland and islands in the Aegean Sea.
Craig Scullin, director of Structured Trade and Project Finance, said EFIC had worked with Austal and its overseas buyers on a number of transactions over the past decade.
"We are pleased that we were able to assist Austal continue its strong performance in the Greek market.
"With a large fleet of ageing vessels, it is a market that we feel will provide further opportunities for Australian exporters in the coming years."
EFIC's Export Finance Guarantee facility acts as a guarantee to banks and other commercial financiers to lend directly to overseas buyers, encouraging them to provide financing solutions for the export of Australian capital goods and services, supported by an EFIC guarantee.
Source:, 26 Aug 2004

Goerlitz tries to 'do a Rehhagel' at Hellenic
---For years, Hellenic Shipyards has frustrated the efforts of management, both Greek and foreign, to set it on a healthy track. Has Germany's HDW Group finally set the yard on a firmer course? Nigel Lowry finds that the yard's new boss thinks so- Friday August 20 2004
Since coach Otto Rehhagel led Greece to an improbable win in football's Euro 2004 a few weeks ago, the idea of Germans combining successfully with Hellenes suddenly seems less odd.
Old stereotypes may say it is a coupling of Europe's most organized nation with its most chaotic - but it appears that Greeks and Germans can combine very effectively after all.
Dieter Goerlitz, currently trying to 'do a Rehhagel' of his own, as chairman and chief executive of Hellenic Shipyards, looks likely to be a good test case.
Privatized two years ago when it was sold to a company controlled by Howaldtswerke Deutsche Werft and Ferrostaal, the Greek yard in the past wore a tag similar to the old image of Greece's footballers - troublesome and underachieving.
Recently, the yard has come back into the public spotlight with a string of reports that have conjured up a picture of Hellenic falling back into the ooze - heavy financial losses, disputes between management and unions, rows between the yard and local officials, a legal war brewing between the new owners and the government.
But Mr Goerlitz defies anyone to suggest in his presence that the German parent's gambit in Greece is wobbling off course.
Clearly irked by what is portrayed as a wave of local misinformation and rumour, he instead draws a positive picture of progress during the last two years and he is adamant that Hellenic is seen as a permanent part of the HDW group.
Achievements include a dramatic modernisation of the shipyard - visible to the eye in the creation of an advanced submarine-building hall and, adjacent to it, the sprouting of a new piping shop and administration block.
"In view of such investment, it is ridiculous to think we would walk away from this," Mr Goerlitz says. "We are 1,000% committed to the yard", he states.
In its recent history, Hellenic has given the impression of being mainly interested in defence contracts for the Greek navy. This was certainly so under previous Greek management and, to a certain extent, also true a few years ago when a British line-up from Brown & Root was managing the facility on behalf of the Greek state and the work force.
Unsurprisingly, the yard has been steadily churning out a trickle of warships in the last two decades, and maintaining a ship repair business, while failing to build a merchant vessel anywhere near on time and on budget for more than 20 years.
Mr Goerlitz does not deny that the primary focus remains on naval construction, particularly submarines, but he is adamant that plans are much more extensive than settling into a comfortable role as a supplier to the Greek navy.
The yard's current major project is building three of a series of four 214 Class fuel cell submarines, said to be the most advanced conventional submarines in existence, for the Greek navy. The first of the series was recently launched at HDW Kiel, while the entire series is scheduled for delivery between 2005 and 2010.
"Submarine production here is very good - among the finest and most modern in the world," says Mr Goerlitz who has been involved in submarine construction in numerous countries. He says that the Greek facility "came up to a quality standard never expected here and the productivity achieved is also very high, close to what is done in Germany."
With Hellenic's workforce rapidly moving along a learning curve for this specialised sector, he says that the group plans to use Hellenic in the future for further submarine contracts - "not just for the Greek navy".
He comments: "The value of the asset here for the HDW group is enormous and costs are reasonable. For the time being wages are lower than in Germany."
On the defence side, Hellenic has just delivered the last of a series of gunboats for the navy and is bidding to build a further two, while it is poised to commence an overhaul of six Greek S-Class frigates.
"Everything is going well but there is a continuing need for new orders," says Mr Goerlitz.
Contradicting one of the main jibes levelled at German ownership of Greece's largest individual shipyard, he explains: "Sub production and sub repair is not enough to keep us busy throughout the year.
The present submarine construction project is due to run until 2012, but with peaks and troughs in the building cycle, while income- and job-bringing ship repair is good, as Mr Goerlitz puts it, for the shipyard's "basic load".
Commercial manager for the division, Alex Koutsorodis, agrees that project was a good advertisement for Hellenic, but says that, in general, the yard has succeeded in winning back customers who had deserted Hellenic for many years due to a lack of reliability in the era when it was under state control.
"We are fast and deliver quality," he claims, saying that even in August, substantial repairs were keeping the yard busy. Top Greek shipping names that have been wooed back to using the yard include the likes of the Alafouzos and C.M. Lemos groups, while among recent contracts are new clients such as the rising tanker and container operator Magnus Carriers.
Mr Koutsorodis admits that the yard will need to maintain its performance in the face of a modernisation of the tanker fleet since the Prestige disaster, a change that has had a negative impact on the climate for repair.
While shiprepair seems very much on the agenda for a revitalized Hellenic, Mr Goerlitz seems clear-eyed about the prospects for a return to merchant shipbuilding. "For construction of commercial ships we cannot compete but no-one in Europe can compete.
"There have been a lot of inquiries for tug boats and small tankers and we could build vessels up to gunboat or frigate size but we don't have the right facilities for larger merchant construction and it would be a wasted investment," he states. "We are fighting for [small orders] - seismographoic vessels and other special ships. We are responding," he pledges.
The yard is confident that the debris of a last disastrous flirtation with civil shipbuilding will soon be removed when two partly completed ropax ferry hulls are sold. The yard has signed a pre-agreement with a ferry line, thought to be Greece's Hellas Flying Dolphins, to acquire the two hulls, one of which is in pieces.
Perhaps the biggest disaster of recent years, however, has been the yard's much-stalled railway car building orderbook.
"At the time, contracts were agreed, the yard was under government ownership and they totally underestimated what building a railroad car involves. We have turned it around and we are trying to get new delivery schedules agreed with OSE [the railways organisation]," claims Mr Goerlitz. "We are now on a good track and I am optimistic for the future. Having done this it would be a shame not to build more."
Mr Goerlitz declines to say much about the rights and wrongs of the case but emphasizes that any monies that are forthcoming in compensation will be paid directly into Hellenic's finances. "The money will definitely come to this shipyard - this has been committed in writing," he says.
Source:, Friday August 20 2004

Royal Olympic protection extended
---ROYAL Olympic Cruises, the Greek cruise line facing bankruptcy, has been granted a 90-day extension to its period of protection from creditors. A Piraeus court this week was persuaded that ROC's hopes for financial recovery were realistic and extended the six-month protection period it had granted to the company on 27 February under Article 45 of the Greek bankruptcy law. Throughout that period, NASDAQ-delisted ROC has been operating in the East Mediterranean with two ships, the 1966-built World Renaissance and the Triton, built in 1971. The latter is currently in Piraeus as a hospitality ship for the Athens 2004 Olympics.
Source: Fairplay Daily News, 25 Aug 2004

OLYMPIA's future in the lap of the Gods?
---Efforts are underway to preserve the former Greek Line OLYMPIA (REGAL EMPRESS). Rhode Island State Senator Leonidas Raptakis and Connecticut State Representative Demetrios Giannaros have launched an effort to begin the process of securing the support necessary to preserve the liner and consider cultural/historical alternatives for her future use. Their commitment is to ensure that the OLYMPIA is not consigned to the scrap heap and instead remains a living part of Greek history. Senator Raptakis recently met with the President of Imperial Majesty Cruise Lines' Arthur Pollack to discuss the future of the ship. During a recent visit to Greece, he also met with officials from the Greek Ministry of Mercantile Marine to gauge their support for bringing the ship back to Greece. Anyone interested in supporting this project should contact Senator Raptakis at
Source:, 24 August 2004

TOP reaches halfway
---TOP Tankers has reached the halfway stage in its delivery of the ten product and suezmax tankers acquired from Russia's Sovcomflot.
The owner has confirmed that it has just taken possession of the 47,084-dwt Relentless (built 1992), which was built by the former Halla Engineering & Heavy Industries.
As with all TOP Tanker's handymax tankers, the Relentless has commenced a two-year profit-sharing employment contract with a major oil trader.
The delivery of the Relentless represents the fifth of ten double-hull tankers TOP Tankers expects to acquire using the proceeds from its July initial public offering.
It has already taken delivery of the 47,084-dwt Victorious (built 1991), the 47,076-dwt Doubtless (built 1991) and the 47,084-dwt Vanguard (both 47,084-dwt, built 1992).
This fifth delivery increases the size of its fleet to twelve tankers, consisting of two suezmax, seven handymax and three handysize tankers.
Delivery of all ten ships will lift TOP Tankers' fleet to 17 tankers, consisting of four suezmaxes, ten ice-classed handymax and three handysize tankers of 1.14mdwt.
Source:, by Dale Wainwright in Singapore, published: 09:10 GMT, 25 August 2004 | last updated: 09:14 GMT, 25 August 20