Greek Shipping News Cuts
Week 16 - 2007
By Nikos Bardounias - Kathimerini
What is the image of coastal shipping today and how far is it from its potential had full liberalization been applied in practice?
The current image of coastal shipping is positive and we have nothing to envy from any other European country. In the eastern Cyclades, 85 percent of traffic is served by newly constructed vessels that are among the best in the world in their category; the same is true on the routes to Crete, the Dodecanese, Chios and Lesvos, where newly constructed ships have market shares that exceed 40 percent. On Aegean routes, 60 percent of traffic uses newly built ships and this is expected to rise to 90 percent by 2009.
Finally, there is the need for bolstering island interconnections. The EEA will table specific proposals for some solutions to be found.
Can companies make steady business moves toward renewing the Greek coastal shipping fleet with the existing institutional framework companies?
Some steps have been taken toward liberalization, which is encouraging us in new investment moves and I believe that soon we shall hear good news in this direction. The needs for new investment and upgrades of the fleet are not fleeting but long-lasting and are dictated by the requirements of the passengers. We estimate that every year more than 50 million euros are invested by coastal shipping companies for the upgrade of ships already in operation. Additionally, every year new ships start operating, either newly constructed or of a young age, while after 2010 we must plan for the substitution of ships that are still new today; and 2010 is not far off at all. Fleet renewal never ends.
What are you planning to do about the non-compensative levies for third parties, which make up 30 percent of ticket fares, the compulsory 10-month-per-year operation and the 3 percent primage to fund unpopular routes?
We all have to realize that abolishing these charges would mean a reduction in ticket prices. There is no reason why passengers should pay social security funds or various unions that receive money for nothing. Even port charges are non-compensative, as they are not invested in services that concern passengers. The state must stop treating coastal shipping fares as a means for cashing in. Why, for instance, is value-added tax for vehicles at 19 percent and not 9 percent?
As far as the 10-month operation is concerned, we stress that the vast majority of conventional ships operate on routes for more than 10 months per year. There is, however, a limited number of vessels that can operate for only a specific period. If they are not allowed to do so, they will have to be sold. In 2005-2007 seven ships were sold. Given the seasonal character of the service, the withdrawal of those vessels and the banning of seasonal operation are a hampering factor for the development of our islands, while also cutting jobs instead of creating them.
We hear protests about the late announcement of services. What is your comment on that?
These complaints are mostly heard from local authority representatives. Part of the blame for their insufficient information belongs to us indeed, as we do not promote our services well enough.
The services operating this year have been announced since June 2006. Booking charts for most companies are available up to October 2007. As regards 2008, the services of all companies have been announced since last January.
These services cover 97 percent of transport needs and their timely announcement allows the Merchant Marine Ministry to schedule for the coverage of any transport requirements, either by proposing to change certain routes or by signing public service provision contracts.
Long-term contracts have been signed for the coverage of the so-called unpopular routes. For Amorgos, Astypalaia, Donousa, Iraklia, Schinoussa and Koufonisia, the services are known up to and including 2009.
On top of the above, coastal shipping operates one of the most up-to-date booking systems and any travel agency around the world can link up with all companies for the booking and issuance of tickets within a few minutes through a simple and cost-free process.
One can even book confirmed tickets from home via the Internet.
Bank funds flow back into Greece
---Their total loan portfolio may have grown but Greek banks still lag behind their international counterparts.
International and domestic banks continued to shower money on Greek shipping in 2006, with the total loan portfolio growing to a massive $46.4bn from $36.1bn in 2005.
International banks without a presence in Greece hiked their total loan portfolio by 41.7% to $14.8bn, while international banks that are represented in Greece grew their total portfolio by 24.11% to $24.25m.
But seasoned Athens analyst Petrofin, presenting data for the sixth year, notes that Greek banks grew at a relatively slow 12.6%, showing increasing caution and an unwillingness to lower their minimum spreads and fees. At the end of 2006, their total portfolio reached $7.35bn.
Dominating the Greek bank shipping-finance sector with a total portfolio of close to $10.5bn is Royal Bank of Scotland (RBS). The bank has drawn down loans totalling $6.2bn and undrawn and committed funds of $4.3bn. Petrofin notes that RBS now holds a market share of more than 22.5%.
"This means that almost one in four loans is provided by RBS," the analyst said.
HSH Nordbank - which to date has not had a Greek presence but announced last year that it would open a representative office in Athens during the first quarter of this year - is the second-biggest lender with a total portfolio of $4.2bn, of which just over $3bn is outstanding loans and the remainder committed funds.
Out of the total 16 banks without a presence in Greece, four grew their portfolio in excess of 100% last year, with Dresdner Bank jumping by an amazing 300.57%.
Out of a dozen Greek banks lending to shipping in 2006, National Bank of Greece regained the lead with a total portfolio of $1.6bn, of which $1.1bn is outstanding loans.
Altogether, 14 banks from a total of 39 that lent to Greek shipping during 2006 have portfolios in excess of $1bn, while the top 10 banks accounted for 68.14% of the total exposure.
Despite their smaller total lending, 12 Greek banks are engaged in shipping financing, followed by 10 German banks.
Syndicated or club loans also rose by 46.2% during 2006 to $10.6bn. But Petrofin's data on banks acting as lead managers on syndicated loans shows a considerably different picture of the main players.
Citibank, whose own portfolio totals $1.14bn, acts as lead manager on $2.6bn loans, while the second-highest is Aegean Baltic Bank, managing $1.85bn in syndicated loans from a portfolio of just $148m, according to the data.
In 2006, derivative products and hedging lines, which Petrofin notes are not always perceived in the same way across the banking industry, developed at an impressive speed, the analyst says.
RBS, also dominant in this sector, logged an enormous increase to almost $11.5bn in 2006 from $3.77bn in 2005. The next closest was Fortis bank with $1.2bn.
But while other banks lagged behind RBS, they are rising fast as they see this line of business as one way to enhance their falling loan yields, Petrofin says.
In 2005, Petrofin says banks were increasingly relying on front-loaded repayments to secure their exposure to rising values but comments that 2006 had seen a further shift in bank cautiousness. Front-loaded payments became the norm to the extent that all available cash flow is occasionally demanded for the first one to two years in order to reduce residual exposure, while often a secure one to two-year time charter is often cited as a requirement.
Gillian Whittaker Athens
VIP speakers bolster line-up for Bunkerworld Forum
The inaugural Bunkerworld Forum: Mediterranean and Black Sea, May 10-11, continues to gather pace, augmented by opening addresses from Greek shipping representatives - Christiforos Tzouvanakis, Managing Director, Vestalco Group and George Gratsos, President, Hellenic Chamber of Shipping.
Gratsos has been in the news recently in calling for a 'holistic approach' to reducing shipping emissions in light of calls for an international switch to distillate fuels.
A switch to distillate fuels did "not appear to be a solution" because production would itself create substantial emissions that should be taken into account, he was quoted saying this month.
Tzouvanakis is renowned in Greek shipping circles for building one of the most diverse shipping groups. Vestalco Group's portfolio currently includes ship management, vessel supplies, ship building and general repairs, chartering and bunkering in the form of Vestoil.
The Bunkerworld Forum is part of the Bunker Summit - Greece 2007, May 8-11, a new concept offering a a comprehensive four-day programme of conferencing and high-level workshops. To register for the forum, click here .
Attendance for the forum, held at the InterContinental Hotel, Athens, now exceeds 110 with around 150 delegates from over 80 companies expected to attend the first bunker event in Greece for four years.
Other prominent speakers include representatives from: Jetoil, Cepsa Marine, Morgan Stanley, O.W. Bunker, Platts, DNV, Maersk, INTERTANKO, IBIA, Lloyd's Register and Krystallon. For a full list of speakers, click here .
In addition to the Bunkerworld Forum, the Bunker Summit includes an Advanced Bunker Course, a high-level Emissions Workshop, and the Bunker Arbitration Experience. To register, click here .
Bunkerworld and partner Bunkerspot are delighted to announce an exciting new initiative designed to highlight the need for solid educational grounding in the international shipping industry.
The specialist shipping and law university in Greece, BCA, has this week announced that it will award a two-year scholarship to one lucky delegate attending the Bunker Summit: Greece 2007.
Source: Press Release | Thu Apr 26 13:15:0 GMT 2007