Greek Shipping News Cuts
Week 15 - 2005
---Alogoskoufis touts new investment law, promises further pro-business measures
Economy and Finance Minister Giorgos Alogoskoufis yesterday called on shipowners to invest in Greece, acknowledging the importance of merchant shipping for Greece's economy and its contribution to the country's current account.
Alogoskoufis addressed the shipowners in a meeting at Piraeus Marine Club.
Introducing Alogoskoufis, club president Yiannis Xylas had insisted on the shipowners' desire to invest, but which was thwarted by red tape and the state machinery's slowness to respond, inefficiency and corruption.
"It would be an unforgivable mistake for the country to miss this chance. Of course, we did not expect all those things that were not accomplished over a number of years to happen within 12 months [the period the conservative government has ruled]. But, we think it is now time to implement a more efficient economic policy," said Xylas.
Alogoskoufis said the government was making an effort to put the economy back into shape without seeking publicity or making flashy moves to elicit approval for transient results.
"We are attempting deep and widespread reforms, we are looking forward, we have no illusions and we do not wish to live on borrowed money by mortgaging the future of young people. The actions taken by the Karamanlis government are future-oriented and do not aim at keeping things as they are for the sake of keeping power. We want to count on the help of shipowners, who have adapted smoothly to the challenges of globalization and do not fear competition because they have been used to being the best globally," Alogoskoufis said.
The minister said the Greek economy ought to rid itself of its inward-looking mentality and limited competitiveness, elements encouraged by an ideology that put too much emphasis on reliance on the state and bred entangled interests and corruption.
"The vague legal framework in place until recently was a strong counterincentive (to investment)," said Alogoskoufis, adding that the new law on investment incentives was "clear, simple and effective."
Asked about the forthcoming law on public-private partnerships, Alogoskoufis replied that ports will fall under its purview, but that some special legal provisions concerning the Piraeus and Thessaloniki port authorities - both of them listed on the Athens Stock Exchange - needed to be made.
The minister also referred to several changes soon to be made in laws that would further help "serious investors." These include a further simplification of the tax code and important changes in bankruptcy law. He also hinted at changes in the status of offshore companies.
"We do not promote companies, but investment projects," said Alogoskoufis, calling on shipowners to invest in tourism, real estate, sports installations built for the Olympics, marinas and golf courses.
Shipowners remarked that they were not asking for special treatment or tax breaks, only for a business-friendly environment.
Source: By Dimitris Kapranos - Kathimerini, 15 Apr 2005
Ship Owners Increase Fleet Sizes in Greece
---More than $20m is coming into the coffers of shipowners in Greece every day, most of which is being invested in building new ships that will be cheaper to run from Piraeus.
The Greek shipping industry is developing at a healthy pace. Last year, the biggest shipowners attempted to strengthen their position in the international arena by building new ships. The Greek commercial fleet, comprised of old ships, had about 20 per cent of the world market in 2003. With the shipping industry's sudden development in the last two years, ship owners decided to renew their fleet.
There were 326 orders for new ships last year alone -- a total of 26.8 million dead-weight tonnage. The majority of orders were for tankers and bulk carriers, the markets that the Greeks are more prone to service, leaving out ships for niche markets like vehicle carriers, refrigerator vessels or multi-purpose ships.
Every two days, a new ship is being paid for in full due to new business booked with multi-year contracts before the ships are even out of the shipyard. The industry brings in $20m a day in revenue.
In the meantime, the Greeks are selling their old ships to smaller firms abroad that did not predict the rise of demand in time to order new vessels. Global demand for ships is high and as the shipyards struggle to service existing clients, many are left with no other option than to pay handsomely for some of the old vessels in the Greek fleet.
With the new orders, the biggest shipowners in Greece -- the Tsakos family that holds Tsakos Energy Navigation -- will increase their fleet from 53 to 76.
The demand in the industry is not only affecting the fleet sizes -- The Port of Piraeus is en route to becoming a fully modernised port. The plan envisions upgrades in hardware, software and procedures of the port. The aim of the European Commission (EC) is to build the infrastructure for a pan-European network of sea transport at the port that will compete, in terms of time and cost, with terrestrial transferring of goods.
The new system will allow the port to reduce the amount of time a ship spends ashore for loading and unloading. It will also cut the cost of using port facilities for handling of goods. According to the EC, the programme will mark the start of a revolution in the shipping industry. The project will be presented in June and Piraeus is expected to be the first port in the Mediterranean to adopt the programme.
At the base of the system, there is new loading and unloading machinery that automates these procedures, making them faster, cheaper and less error-prone. Older ships will not benefit as much from this because of their configuration -- a fact which further justifies the need to update the fleets.
Source: http://www.setimes.com, By Vassilis Vassiliou for Southeast European Times in Athens - 12/04/05
Greek fleet: smaller but younger and still tops
---The Greek-controlled fleet is getting younger and smaller, but ships are getting bigger, according to the 18th annual information paper prepared by the London-based Greek Shipping Co-operation Committee and based on information provided by Lloyd's Register of Shipping and Fairplay.
On the back of massive investments, Greek ship operators have lifted their combined cargocarrying capacity to the dominate position in the world's the key trades. These younger high-spec ships have replaced much of the aged tonnage traditionally, though often quite wrongly, associated with Greek shipping with the result that while the domination has grown the fleet is smaller.
According to data prepared by the GSCC, as of March, Greek interests controlled 3,338 ships (of over 1,000gt) of 182.5m dwt including 338 ships of 26.6m dwt on order. The fleet has decreased slightly but in terms of dwt is up 2.4m compared to 12 months earlier.
Greeks now control 7.8% of the world's ships in service and on order and 16.5% of the deadweight. Greek interests have 7.8% of ships on order, 16.5% of the deadweight. The age of the fleet stands at 15.9 years an improvement of 11 months on last year. The fleet is still older than the world average of 15 years but the gap is being narrowed.
March 2005 Greeks were using 45 flags, the Greek flag flying over 969 of some 67m dwt, up 64 ships and an impressive 5m dwt. After the home flag comes Panama with 582 ships (25.4m dwt), Malta, 547 ships (26m dwt), Cyprus 411/21m dwt, while the Bahamas 232/11.4m dwt is the big improver.
Orders for 104 chemical and products tankers lead the way when it comes to newbuildings. Also in the energy sector there are 78 orders for crude carriers and 12 liquid gas carriers are on order. Bulk carriers account for 86 ships on order, while there are 24 container ships and 23 cargoships and two passengerships.
Source: www.newsfront.gr, 15 April 2005 Vol. 6 / No. 14
Banks trust Greek shipowners as loans fund ship purchases
---Greek shipping companies' credit expansion has had an average 25 percent yearly rate since 2001, with the total amount of loans reaching $32.35 billion at end-2004, a 95.8 percent rise compared to 2001, according to a recent survey by Petrofin SA regarding local shipping companies' funding last year. From 2003 to 2004, the increase reached 26.6 percent, from $25.554 billion to $32.55 billion.
The rate of this credit expansion is directly related to the development of Greek shipping, as there is an increase in sales and purchases of used ships along with many orders for new vessels, mainly in 2002 and 2003 and fewer in 2004. The fact that just a handful of companies are listed on international stock markets means that their main funding comes from the banking sector.
Which banks are leading the way? Traditionally, the lion's share belongs to foreign institutions, most with a physical presence in Greece. Within 2004, their portfolios increased by 37.67 percent, or $3.814 billion to $13.98 billion. Sailing ahead of the rest is the Royal Bank of Scotland, controlling $6.77 billion, with Deutsche Schiffsbank following at $3.1 billion.
In 2004, Greek banks had a portfolio of $6.34 billion, of a total of $32.55 billion, up by 12.45 percent since 2003. That is about half the growth of the funding rate, at 24.22 percent. Last year, the number of domestic banks involved in funding shipping companies was reduced from 15 to 14, after the departure of Geniki Bank.
Local banks are represented in the top 10 of domestic shipping funding by the National Bank of Greece (with $1.4 billion) and Alpha Bank (with $1.35 billion). Some distance behind NBG and Alpha, Emporiki follows with a portfolio of $870 million, with Piraeus Bank fourth ($867 million) and Eurobank fifth ($567 million).
Although Greek banks are now competing on equal terms with foreign ones, the latter benefit more from the shipping sector's development, showing a higher rate of expansion of their loan portfolios. Yet as Petrofin's report suggests, this could also be attributed to greater reservations by Greek managers to increase their exposure due to the high prices of ships at the moment. They therefore focus on lending to their best and most reliable clients.
As bankers (Greek and foreign) admit, the size of risk in the past was smaller compared to returns, while today the risk is greater, as are the returns. In any case, the banking sector's degree of trust in Greek shipping is high thanks to the high revenue flow and the considerable personal deposits of shipowners themselves, who are able to pay back previous debts and prepay new funding.
After all, loan structure has changed in the last few years. In the past, payments were at low levels in the loan's first two years and gradually increased. Nowadays, large parts of payments are made in the first years of the loan so that today's high chartering prices can cover the loan much sooner.
As a result, the size of the risk diminishes (provided, of course, that the market remains at its current levels for at least two years) or alternatively the shipowner secures long-term time-chartering contracts guaranteeing a steady flow of income.
Several shipowners choose the method of bank funding to purchase newer used vessels or to order new ships, despite the good cash flows they enjoy. This is because they prefer to maintain this flow for the future or for other purposes (e.g. for investments outside shipping). Loan interest rates are low anyway, rendering bank funding a low-cost choice. Furthermore, their ships' value is much greater than their loan percentage.
What lies ahead then for 2005? As Petrofin's report stresses, the scheduled listing of several Greek companies on the New York Stock Exchange, combined with those already listed, could work against their credit expansion as they will be able to draw funds from the stock market.
On top of that, there is a decline in the new ship order rate, which, along with greater reservations by companies about the future, are expected to limit the rate of lending increase in the next couple of years, which can only be considered a healthy development.
Source: http://www.ekathimerini.com, 12 Apr 2005, NIKOS ROUSSANOGLOU
Banks put faith in new-look Greek operations
---Public equity activity dwarfed by surge in traditional borrowing, writes Nigel Lowry - Friday April 15 2005
BY THE standards of Greek shipping over the past year or so there has been near-frenzy levels of interest among the nation's shipowners in public equity offerings.
In recent months, TOP Tankers, Angeliki Frangou's International Shipping Enterprises, DryShips and Diana Shipping have all made their publicly traded debuts in the US and a number of other shipowners are expected to follow suit.
While the funds Greeks have raised through initial public offerings over the year remain shy of $1bn, though perhaps not for long, the total amount is dwarfed by a surge in traditional bank lending for the Greek fleet.
Fresh figures produced by Petrofin Bank Research, mostly in direct consultation with the banks themselves, show that total lending ballooned by 26% in the course of last year, leaving a total portfolio of $32bn.
That includes loans committed but not drawn at December 31.
Petrofin's managing director, Ted Petropoulos, does not necessarily see portfolios growing at quite the same startling pace in future, although the average expansion of overall lending over the past four years now has been an annual 24%-25%.
"There is some evidence of banks, especially Greek banks, becoming increasingly cautious as to increasing their exposure at today's high vessel values," he says.
"The recent IPO activity may result in significant loan reductions as equity is used to substitute bank debt."
He adds that the pace of newbuilding orders has slowed.
Combined, these factors, together with an element of "natural caution", could result in "a slowdown in the rate of growth of shipping loans to Greek clients over the next couple of years", Mr Petropoulos reasons.
But the overall message is clear. "It is evident that Greek ship lending has been going from strength to strength," the just-released study states.
"Irrespective of the number of banks that have entered or left the sector, the overall picture of the past four years is one of continuous commitment and growth."
Petrofin sees the impressive increase in lending as "associated with the development of Greek shipping" generally, especially a widespread conversion to modern tonnage. Despite questions over the longer-term health of shipping markets, Mr Petropoulos says experienced banks are analysing all factors and "are quite happy with their results so that the high prices of such volatile assets as vessels are not considered a prohibitive lending factor.
"It is important to observe that the loan structure has been altered fundamentally compared with previous lending policies...
"This time round loan repayment is heavily front-loaded so that the high charter incomes can repay the loan almost down to scrap very quickly."
Among individual lenders Royal Bank of Scotland remains far and away the largest backer of Greek owners with a total Greek portfolio of $6.77bn after a 50% increase last year.
Citibank now ranks eighth among the largest providers to the Greek market, says Petrofin, but is dubbed the market leader among lead managers for syndications and club deals, with control of a further $1.47bn in loans for third party banks.
Other prominent lead managers include Aegean Baltic, Deutsche Schiffsbank and ABN-Amro, according to the study.
Not surprisingly, Greece is the country represented by the most banks involved in Greek ship financing - 14 out of the total of 50 institutions active in the market.
But other European institutions, and German banks in particular, are also very prominent in supporting the fleet.
Only four banks out of the total, three from the US and one from Asia, are said to be based outside Europe.
Source: www.llouydslist.com, Feature, Friday April 15 2005
Ensuring Grecians earn
---Panagiotis Tsakos is trying to keep afloat the ancient Greek tradition of seafaring. Many modern factors work against him, but perhaps cash can win the day, he tells Petros Aivatzidis
Captain Panagiotis Tsakos believes in putting his money where his mouth is. And here is proof of that pudding: "We offer double of what the collective owners-unions pay agreement stipulates to find good officers for our ships," he asserts. Tsakos Shipping & Trading, which he set up in 1970, is trying to keep afloat the long tradition of Greeks going to sea, which is out of fashion these days. Tsakos cites several reasons why young Greeks tend now to shun the sea: life ashore has become easier, offering more employment alternatives for school-leavers; the romance of seeing the world through working on a merchant ship has gone; replacing that is rising criminalisation for events entirely beyond a seafarer's control. Another key factor has to do with job satisfaction and real authority. Tsakos, 69, notes that seafaring has changed dramatically since he became a ship's captain at age 26. "Whereas in the past, calling at a port was a pleasure and time for fun, nowadays it has become a nightmare, with a multitude of heterogeneous inspectors, much paperwork and irresponsible bureaucrats who treat the master with disrespect," he laments. Also, modern communications systems have shifted much of the decision-making from the ship to the office, Tsakos tells Fairplay. This has down graded the role of the master, with a negative impact on such an officer's prestige. All this is a far cry from Tsakos's own origins in Chios, the northern Aegean island with a centuries-old shipping tradition. What is indicative of the impact of the tradition on the island community is the fact that today's Chians own almost as many ships as do the rest of Greeks collectively. They still make up much of the Greek seagoing workforce, despite changing maritime conditions. The Tsakos family has been involved in shipping for generations. Panagiotis's son Nikolas, CEO of Tsakos Energy Navigation (3 June 2004 Fairplay profile), is something of a poster child for a new breed of Greek shipowner: US-educated son of a self-made man at the helm of a NYSE-listed multinational, a subsidiary of his father's group. Given the Chios connection, for young Panagiotis Tsakos to follow the tradition "was not so much a matter of choice as of destiny", he declares. He acquired his first seaman's book at the age of 13. After becoming a captain at 26, Tsakos served for several years on ships of Aegis Shipping, one of the largest shipowners at the time.
First ship financed by his family Then he was invited to step up to the management office as superintendent, rising finally to operations manager in charge of about five dozen ships. Having gained experience in every aspect of ship operation and management, Tsakos went independent with his own company in 1970. Tsakos Shipping & Trading's first vessel, a 2,500dwt general cargo ship, was bought using contributions of family members, relatives and friends. Today that one-ship company has evolved into a shipping group with diversified business interests in several countries. The current Tsakos fleet of 72 vessels aggregates more than 6.8M dwt and ranges from bulk carriers and container vessels to tankers. The list includes 20 tankers under construction (chemical, products and crude oil carriers, plus one LNG carrier), which are scheduled for delivery until August 2007. Other activities of the group include crewing, shiprepair, oil trading, offshore energy exploration, agriculture, real estate, travel agency and information technology.
From the top of the Greek shipowners' list, Tsakos in particular points to the scarcity of Greek maritime officers, which has caused the salaries of those still at sea to shoot upwards. Echoing the Union of Greek Shipowners' view, he predicts that the increasing shortage of Greek seafarers will "de-Hellenise" the country's shipping sector which, he tells Fairplay, is the most "abominable" development to take place during his tenure. The urgency of the problem, Tsakos declares, requires that unions, owners and government exert themselves even more to attract more quality recruits for seafaring. "My fellow owners and I will find ways to carry on our business, but the next generations will be deprived of something that has enormously supported the country and the nation for many centuries," he observes. Still, Tsakos hopes all this represents a passing phase, at the end of which the sector will be changed for the better. He thinks that Greek ship will remain ambassadors of the Hellenic spirit to the world and writes in the group's latest brochure: "I visualise shipping in the next century as an international, self-regulated and respected industry with rationalised and standardised types of vessels, operated largely on a joint-venture basis by shipyards, owners, charterers and cargo interests, managed and crewed by highly motivated, well-qualified, trained and experienced personnel with high standards of education and high morale, who are accorded due social respect and professional recognition." Could Tsakos duplicate his success if he was just starting out in shipping today? "The conditions have not changed over the years, nor is the required start-up capital prohibitive," he tells Fairplay. "I am glad to see a steady flow of new colleagues joining the long list of Greek shipowners."
The Uruguayan connection
THERE'S a decades-long history between Panagiotis Tsakos and Uruguay. He visited South America in the early 1970s while working as superintendent for Aegis Shipping. Tsakos tells Fairplay he fell in love with the country and its people, "who responded enthusiastically to everything Greek." His first business deal in Uruguay, as independent entrepreneur in 1975, was to buy the former Regusci y Voulminot Ingenieros shipyard in Montevideo, which he refurbished and renamed Tsakos Industrias Navales. Encouraged by the success of that investment, Tsakos extended his activities to farming and forestry, being also involved in the downriver transportation of logs for export. In 2000, he launched a ro-ro service between Uruguay and Argentina. The venture included investment in port development at Juan Lacazas on the Uruguayan leg of the service. Tsakos's commitment to Greek civilisation prompted the establishment in Montevideo of the Maria Tsakos Foundation in 1978. This nonprofit institution is named for his late mother. Its main mission is teaching Greek and fostering cultural and educational links between Greece and Uruguay.
NAME: Panagiotis N Tsakos
BORN: 1936 in the town of Kardamyla on Chios island, Greece
MARRIED: To cardiologist Dr Irene Saroglou; two children, Nikolas and Maria
POSITION: Founder of Tsakos Group of shipping companies
OTHER ACTIVITIES: Has served on many industry boards and committees, the latest being chairman of the Lloyd's Register Hellenic Committee in November 2004 Founding member of Helmepa (environmental protection group)Former VP of the Union of Greek Shipowners Honorary consul of Cyprus in Montevideo and consul-general of Ghana in Greece
AWARDS: For his contribution to national and international causes, citations (among others) from the Orthodox Ecumenical Patriarch, mayor of Athens and the Athens Academy for disseminating Greek culture and spirit abroad
INTERESTS: Enjoys relaxing on his sailing caique
Source: Profile, Fairplay International Shipping Weekly, 14 Apr 2005
Samos Steamships said to have made big profit
---Samos Steamship of Greece is reported to have made a big profit selling its142,000-dwt combined carrier Eirini (built 1982) but a company representative says no deal has been sealed yet.
The ship is said to have gone to Hebei Ocean's North China Lines for $25.5m. Samos reportedly bought the ship for only $10.25m from Ceres Hellenic Shipping in March 2001 as Eirini L.
If the deal is concluded at this level it will be slightly higher than the last comparable transaction. In January, the one-year younger,155,000-dwt OBO Behemoth (built 1983) was reported sold to Oldendorff Carriers for $25.5m in a deal that included a one-year time charter at $34,000 per day.
Samos also recently sold its 5,000-cbm LPG carrier Sweet Dream (built 1997)to the Vafias group for a reported $13.5m. The ship is bareboat chartered back to Samos until the end of December.
The sales come as Samos gears up to start taking delivery of newbuildings. In June it is slated to take the first of a series of three 105,000-dwt tankers from Sumitomo Heavy Industries and in July it s due to receive a 47,000-dwt products-carrier newbuilding from Onomichi Dockyard. It also has a 207,000-dwt bulk carrier on order at Universal Shipbuilding for delivery in 2007.
In another deal, Oak Steamship has reportedly sold the 149,000-dwt bulker Bao Shan (built 1994). The CSBC-built vessel is said to have gone to a South Korean buyer for between $53m and $54m.
The ship has been in the company fleet since it was new. The deal is said to include a time charter until August this year at an undisclosed rate.
If North China Lines turns out to be the buyer of the Eirini, it will be the sixth major purchase of large bulk tonnage made by the Hebei-based company in the past three months. Hosco chairman Gao Yanming said last month the group was acquiring such vessels because they were more affordable than younger ships.
Source: www.tradewinds.no, Trond Lillestolen and Gillian Whittaker Oslo and Athens published: 15 April 2005
EU pollution "interference" will harm trade, says Greek shipping chief
---European Union pressure on shipowners to shoulder progressively stricter anti-pollution safeguards will end up undermining a vital EU industry and encourage law-abiding operators to skirt regulations, the Union of Greek Shipowners warned in a statement Tuesday.
In a speech to an Independent Association of Tanker Owners (Intertanko) conference released Tuesday, union chairman Nikos Efthymiou also said the EU's toughening stance and increasing antagonism with the International Maritime Organisation (IMO) risks driving operators from European shores.
"The critical question is who will be involved in (shipping), and in what parts of the world. The answer is in these parts of the world ... that support the competitiveness of their fleet," Efthymiou said.
Most EU member-states advocate tough action in the wake of the November 2002 Prestige tanker disaster, which caused the worst oil slick Spain has ever known.
But in November, Greece aroused the ire of environmental groups by saying it would block a key European Union agreement aimed at cracking down on ships that dump pollutants into the sea.
In his speech to the Intertanko conference, Efthymiou argued that the EU's new legislation on pollution "criminalises crew members and others in cases where ships are involved in incidents of accidental pollution."
"Criminalisation will discourage seafarers from co-operating fully ... with casualty inquiries or accident investigation," he said.
The Greek shipowners' chairman charged that the EU initiatives "seem to be driven by people who are not familiar with the practical operation of ships at sea and take a simplistic view of pollution incidents," and argued that the EU should follow the IMO's lead on such matters.
"Some quarters in Brussels forget that the European shipping industry is a respectable and vital sector of the European economy," Efthymiou said. "The EU depends exclusively on ships for the transportation of its oil trade and for the continuity of its energy supply ... Those who interfere should be aware that in the end, it is not just shipping but world trade that will be disturbed," he said.
Hosted in the port of Piraeus, the Intertanko conference concludes Wednesday.
Source: http://www.eubusiness.com, 12/04/2005
UGS President's speech at Intertanko Athens Tanker Event 2005
Address by Mr. Nicos Efthymiou, President of Greek Shipowners Union, at the Intertanko Athens Tanker Event 2005
"Ladies and Gentlemen, Dear Colleagues,
First of all, I like to thank all of you in Intertanko for inviting me to participate in this event and giving me the opportunity to share some thoughts and concerns about the future of the shipping industry, which all of us have the honour to serve. I wish on behalf of the Union of Greek Shipowners to welcome you all in our country and I hope that the Intertanko Athens Tanker Event is a successful and a productive one.
The last 3 years have been remarkable for the international shipping industry. It was a period of records: Freight markets reached unprecedented levels both in dry / liquid bulk trades. It was also marked by an all time low in laid-up tonnage and a massive world fleet renewal. Concerning the tanker sector, since 1993 tanker owners have invested more than $100 billion (based on Figures from Clarkson Shipyard Monitor, tanker contracting 1993 - October 2004) in modern tonnage. In January 2005, 64% of the tanker fleet above 5000 dwt was double hull and another 7% double bottom or sides. The above figures prove that shipowners continue to invest their profits wisely despite the hostile legislative atmosphere. The question is until when we will continue to believe in this business with the unprecedented liability exposure that hangs over our heads.
The above trend is fully followed by my Greek colleagues. In particular, Greece is now controlling the world's largest tanker owning community for around 30 years. The Greek-controlled tanker fleet last year stood at more than 900 tankers of various types, with a fleet aggregate of over 80m dwt. From being mainly identified with second-hand and predominantly elderly tankers in the 1990s, we have returned to the habits of industry leaders back in the Onassis era. Well over half the fleet is double-hulled and modernization is continuing at a fast pace. The appetite for modern tonnage more immediately has been reflected in the second-hand and newbuilding resale market. Brokers estimate Greek owners spent about $4bn buying second-hand and tankers under construction last year, although the overall strength of the Greek-controlled fleet might have influenced by some stunning recent deals where owners have been cashing in on the sky-high values of their tankers.
It is obvious that shipping and the tanker sector more particularly is making a leap forward in terms of quality.
These positive figures are well-known to you and I am sure that the next speakers, as experts, will analyse further and forecast the future of tanker markets. I would like to take advantage of this gathering of distinguished shipping experts to express our strong opposition to the unreasonable legislative and political bias vis a vis our industry.
Some quarters in Brussels forget that the European shipping industry is a respectable and vital sector of the European economy which supports economically, politically and strategically the EU. The EU depends exclusively on ships for the transportation of its oil trade and for the continuity of its energy supply. However, recent EU policymaking indicates that it is driven by the perception that the industry is a slightly shady, regional activity in need of severe correction and reprimand. Such an attitude on behalf of an important regional regulatory authority is the worst possible state of affairs for a globalised business sector such as our industry. Moreover, it contradicts with the recent statement of President Barroso, in his revised Lisbon strategy "partnership for Growth and Jobs" whereby he pledged to make Europe a more attractive place to invest and work. He further states that "we need a better environment for European small and medium size companies" and "we need better assessing the effect of new legislative / policy proposals for competitiveness". Needless to say, that the large majority of the shipping industry is operated by small and medium size private and independent shipping companies. Policies like the recent ones followed by the EC in the shipping sector undermine precisely President Barroso's objective.
As a service to world trade, shipping is irreplaceable and will always exist. The critical question is who will be involved in it and in what parts of the world. The answer is in these parts of the world that maintain a living maritime tradition and support the competitiveness of their fleet. Moreover, people on board and ashore are the bearers of the industry's specialized know -how and remain the industry's most valuable asset. Capital without the necessary knowledge is useless.
Following the incidents of Erika and Prestige, the European Union has taken an independent line on maritime regulation, convinced of the rightness of its cause and its belief that the rest of the world is wrong. Such initiatives seem to be driven by people who are not familiar with the practical operation of ships at sea and take a simplistic view of pollution incidents. As most ingenuously stated "ships are not elastic entities able to conform to different standards in different ports of the world". Impediments to the operation of ships through a proliferation of different requirements are indirectly impediments to world trade. It is hard to believe that policy makers in Europe are failing to take account of these facts.
The IMO must remain the forum for the advancement of global regulations affecting shipping and it has in recent years demonstrated that it is able to react speedily and effectively and to adopt international standards at the highest practical level.
Nowadays, whilst we all regret the undermining of the role of the United Nations, we cannot remain silent witnesses of the undermining of IMO. The wider problem is one in which the international consensus (reached at IMO successful Conventions) is threatened by the emergence of unilateralism, regionalism and power blocks and especially by the major detractor of IMO, i.e., the EU. It is unacceptable for the EU to adopt regional measures deviating from the relevant international legislation and later to pursue their approval by IMO through a revision of the respective Convention. This is a tactic going against the democratic procedures of IMO. At the same time, EU willingly ignores the fact that its nations have failed to implement aspects of IMO Conventions which they have nevertheless ratified. This syndrome is best exemplified by the recent pointless saga of the Criminal Sanctions Directive and its harmful implications for the shipping industry and our seafarers.
The new Community legislation, which criminalises crew members and others in cases where ships are involved in incidents of accidental pollution, pits the European Union squarely against the IMO as custodians of the MARPOL Convention. No one could doubt that MARPOL is an international Convention which works well and has been largely responsible for a drastic reduction in marine pollution. The EU law constitutes a significant departure from the established philosophy of IMO. Moreover, it contradicts with the UN Convention on the Law of the Sea (UNCLOS), which limits sanctions to monetary penalties in the case of accidents.
Criminalisation will discourage seafarers from co-operating fully and openly with casualty inquiries or accident investigation. And I would like to pose a question to the European Commission: Why the entire shipping community, shipowners and seamen's organisations, port organisations and oil interests, states of major maritime interests are all united in an unprecedented coalition to oppose the Directive? Yet, the European Commission preferred to ignore the strong message of the stakeholders, who have the knowledge of the needs of the sector and the experience to serve it.
It now remains for us to see the final form of the Directive. What is already clear, however, is that this Directive will constitute a breach of international law, being contrary to the EU Member States obligations under the MARPOL and UNCLOS Conventions.
EU measures indiscriminately penalizing the whole industry (the good along with the "rogue") will have as a result that well qualified operators and committed personnel or seamen will be discouraged from continuing their shipping careers or from investing in shipping. What the industry needs is able, adequately trained and motivated seafarers, aware of and willing to assume their responsibilities. Shipping needs a climate of understanding, cooperation and respect for the seafarers given the arduousness and complexity of their work. If the EU is interested in keeping its shipping industry instead of "hitting the 5% villain culture" it would be better off by "encouraging the 95% respectable operators".
"Master mariners" have been turned into "master criminals" and shipowners are called "voyous de la mer". None has forgotten the prolonged imprisonment without trial and the exorbitant bail settlement required from Captain Mangouras. This treatment was an indictment to basic human rights and is tarnishing the image of the seafaring profession at a moment when Europe is lacking seafarers and the shipping industry is deploying campaigns for attraction to the seamen's profession.
Ladies and Gentlemen,
I return to the old now, but still hot, issue of double hull design. In the case of the Prestige incident the European Union, whilst preaching for international solutions, pursued again unilateral measures, ad hoc driven by public pressure and political expediency. It is generally accepted that by amending the phasing out dates of single hull tankers twice in three years, the principle of legal certainty was being violated due to the fact that the tankers in question represent considerable investments for the shipowners as well as for the banks which finance them. Therefore, such interventionist policies and hasty regulations with frequent and unpredictable changes in technical specifications act as counterincentives for the smooth operation of shipping as they adversely affect the security of investment. The banking sector which has strong interests in shipping should join forces against those who interfere with the delicate parameters of finance and risk of investments. The aim should surely be the balance between safe and commercially sound shipping. If shipping investments become uncertain in this environment, it will be difficult to reverse the tide. Shipping, like any other investment, must offer investors an acceptable level of risk together with a reasonable chance for profit. Those who inadvertently interfere should be aware that in the end it is not just shipping but world trade that will be disturbed. I am afraid that the way of taking commercially serious decisions like this one on single-hull tankers, will drive responsible entrepreneurs away from investments in shipping, especially in developed economies, where there is a variety of alternative attractive choices.
Another area of strong criticism and political exploitation is the new dimensions of the liability of ship-operators. During the last few years new liability proposals have emerged asking for the increase of the operator's exposure and requiring shipping companies to combine commercially viable operations with absolute respect for vessel safety and protection of the marine environment. The need to set reasonable limits for vessel liability and compensation for injured parties and pollution damages from marine accidents was recognized early on and international regimes were put in place. Associated with the notion of reasonable liability is the ability of the shipowner to obtain insurance for such liability, which I would emphasize, is obviously in the interest of any potential claimant but also of any responsible shipowner. Unfortunately, due to the recent over-publicized accidents, there is a trend in favour of unlimited liability which is a source of concern. The fact that such liability is not insurable will operate to the detriment of claimants. The very people against whom liabilities are hardest to enforce are rogue operators of the kind who are responsible for sub-standard ships. If they are involved in an incident and are deprived of the right to limit liability, they are least likely among all in the shipping industry to have traceable assets available for satisfying substantial compensation claims. Holding the Damocles sword of unlimited liability over the heads of all shipowners, including the great majority who operate responsibly quality ships does nothing to drive sub-standard ships from the seas nor to offer prompt compensation to claimants.
In this context, we follow with interest the recent discussions in the IOPC Fund 92, where participants remain divided despite protracted negotiations on the necessity or not for a revision of the CLC/Fund Regime. Our message is that before proposing new liability regimes and entering unchartered waters through the opening of Pandora's Box, largely again for political reasons, we must ensure that these regimes would be workable. I hope that the revisionist states do not want to destroy such a successful liability regime worldwide only for political exploitation.
Ladies and Gentlemen,
In conclusion, accidents cannot be entirely eliminated in shipping. This applies to all modes of transport. Concerning the tanker sector, I do not have to enumerate the uses of oil and petroleum products carried by sea for the maintenance of the standard of living we either aspire to or are accustomed to around the world. Would it then be preposterous of me to suggest that part of the price we pay for this and it is very occasionally an infinitesimal fraction of the total quantity of this transported oil unfortunately ends up in the wrong place, namely, in the sea or, worse still, on some of the world's coasts? Would it be even more preposterous if I suggested that it is far cheaper, easier and politically popular to castigate and penalize the shipping industry when this happens rather than put in place adequate shore based contingency arrangements including the provision of areas of refuge for distressed ships to deal with such relatively rare occurrences which are nevertheless statistically probable?
Sub-standard shipping can be eliminated by an honest and concerted effort of all parties involved in the maritime adventure. However, sub-standard is not tantamount to old. Neither should the existence of a small minority of sub-standard operators provide an alibi for states, failing to provide a safer and more rewarding operating environment for responsible quality operators.
May I suggest that the shipping industry participants on the one hand and the industry's regulators on the other realize that the establishment of a sustainable long-term shipping policy based on stable principles and high standards of performance is the necessary prerequisite for the continued vitality of shipping.
On behalf of the shipowners, there is the will and the commitment as proved by a number of proactive behaviours in the past and more recently with the voluntary proposals of increased participation in the international compensation schemes (STOPIA or TOPIA) as well as the concreted efforts by Intertanko and the International Group of P & I Clubs to eliminate sub-standard operators from the market and most important, our strong request for robust ships. Do not fight us but co-operate with us? is the clear message. We have a common goal: a sustainable and efficient shipping sector.
Thank you for your attention."
Nicos Efthymiou, President of Greek Shipowners Union
Source: Union of Greek Shipowners, Piraeus, 12.4.2005