Organizational and Financial Challenges for the Typical Greek Shipping Company

by  Dr. Anastasios Aslidis, Marsoft Inc.

The Greek shipping industry has successfully operated under a “low cost” strategy model. Will new trends in shipping put it under pressure and require adjustments to it, if Greek shipping companies are to take advantage of the new realities?

The Greek Shipping Industry
The average Greek shipping company is a family owned entity with about 5-6 vessels with an average age between 15 and 20 years. In fact, 71% of the Greek owned companies have less than 5 vessels representing 25% of the fleet in DWT terms. There are also about 100 companies of Greek ownership with 5 or more vessels – amongst them are some of the world’s largest independent shipping companies. All together, they combine for a total of more than 2,100 vessels above 10,00 DWT. Continue Reading

The OECD Shipbuilding Agreement: What Does It Mean for the Shipping Industry?

by Tanya Rickard and Edward Olive, Constant and Constant, London

In December 1995, the European Union ratified the “Agreement Respecting Normal Competitive Conditions in the Commercial Shipbuilding and Repair Industry” brokered by the OECD (Organisation for Economic Co-operation and Development), the aims of which are to prevent unfair pricing and eliminate state aids in the world’s shipbuilding and repair industry.

The Agreement has now also been ratified by Finland, South Korea and Norway. Only Japan and the USA remain.  Japan is expected to ratify by 15th June 1996, and the USA during the first quarter of the year, though there may be problems as this is an election year. Once ratified, the Agreement will cover approximately 80% of world shipbuilding. Continue Reading

OECD Obsession

As shipyards enjoyed a short period of well deserved self-congratulatory celebration in New Orleans in mid-April. At a conference and exhibition intended to showcase the potential of US shipyards, yards and yard suppliers spoke largely among themselves about their glorious potential. There were few if any customers – at least of the owner operator variety – in evidence.

Only Eletson’s Gregory Hadjieletheriades made himself widely available. While the efficient relationship between yards and suppliers requires discussion  in the effort to reduce costs, owners are ultimately critical.

So, to a great extent, the shiny booths and glossy giveaways had the impact of a tree falling in the woods with no one around to hear it. Continue Reading

“Informating” vs. Automating the Maritime Industry

by Vassilis C. Papakonstantinou

Once again this year, Piraeus is hosting Posidonia. Many people will rush through the doors of the Piraeus Exhibition Center but, thus far, only a handful have visited the World Wide Web site that hosts Posidonia 96 web page1. Its presence on the web may not be as fancy as some would have expected; however, it officially marks the beginning of a new chapter in the history of the shipping industry. What is different about this new chapter is the important role that information technology (IT) is about to assume.

Some people may argue that such a chapter started a long time ago and that the IT has been offering important services to the shipping industry for more than a decade. Arguments of this kind may possess some truth. However, their exact interpretation depends on how people define IT. The former argument does not intend to diminish the value added to the shipping industry thus far. Instead, it attempts to give a better insight about what is out there and how it can be used to leverage the business processes within the industry. It is the role of IT that is expected to make the difference, not the presence itself. Continue Reading

The Greek Market at a Glance

Greeks developed a keen interest in shipping very early, as Greece is surrounded by sea and hundreds of islands lie in its two major seas, the Aegean and the Ionian. For many years, shipping was the primary source of income for the native people of the islands and or others living on the coast of mainland Greece. In the process, the Greeks developed a relationship with the shipping activities that goes beyond business. Shipping has become part of the Greek culture, and this may be the best explanation of why Greece, a small country, owns the largest fleet in the world for the past decades.

Greek shipowners have been renowned for their ability to time the market in the best possible way and to take advantage of its cyclical fluctuations to expand their fleets. Besides the owners with the large fleets and a dominating presence in the industry, there are hundreds of smaller owners who own from one to ten vessels. Continue Reading

Greece as a Shipping Centre: Myth or Modern Legend?

by Bridget Hogan

Piraeus is changing – and it’s changing into more of a maritime centre, as banks flock in to do business in the lucrative Greek home market. But the trend begs the question: is it truly a shipping centre?  And, to that, the answer must be no.

Some shipping companies are boosting the already considerable operational base by moving in and relocating from London in particular.  This is mostly in anticipation of tax changes expected from Prime Minister John Major’s government. These have not yet materialised, but Greek shipowners may have the public image of being tough workhorses, they also have the nervous dispositions of thoroughbreds. So, under this presumed threat, they are moving operational activities back into Piraeus or, in the case of their commercial operations, into the leafier and more alluring suburbs in Northern Athens or along the coast at Vouligmeni. Continue Reading

The 1990-1995 Tanker Market at a Glance

by Marsoft, Inc.

After a prolonged downturn that started in 1991, the tanker market experienced a reversal of fortunes in 1995. A combination of slightly higher demand and a noticeable shrinkage of the overall fleet laid the groundwork for the tanker market’s recovery. This took place mainly in late 1994 and early 1995, when scrapping greatly exceeded deliveries. For 1994 and 1995, tanker removals exceeded additions by 5.23 million dwt (27.42 million dwt vs. 22.19 million dwt). In the second half of 1995, OPEC oil production rose taking advantage of maintenance cutbacks in the North Sea and hurricane damage to Mexican oil facilities. Combined with the reduced fleet size, this was the catalyst that sent VLCC spot rates soaring to WS 65 – equivalent to earnings of nearly $30,000 per day for a modern vessel. VLCC time charter rates also climbed sharply in the second half of the year, as did Suezmax rates.  Meanwhile, Aframax rates, as well as product tanker rates, rose steadily throughout the year.  Even with these increases, however, most rates remained below their 1990-91 peaks. Continue Reading

The Far East

by Bridget Hogan

It’s a huge area of different cultures and needs from communism to dictatorships, from archipelagos to huge land masses, from concentrated urban areas to wide stretches of unpopulated land. Growth rates are high – at 5% to 7% in the region, higher than in the US and Europe.

There is a great deal of uncertainty in the region too, which is reflected in shipping. Traditionally, most of the ship finance business for the region has been centered on Hong Kong and, as a ship finance centre, the Crown Colony is booming. No one, it seems, is concerned in shipping terms about the handover to China next year. At least one estimate of the number of banks moving into Hong Kong in order to tap into shipping potential for finance is eight or ten – in the last 12 months alone. Continue Reading

STOLT-NIELSEN S.A. Bigger-Stronger-Better (?)

The “Global Offering”
In January 1996, Stolt-Nielsen S.A. (“the Company” or “Stolt”) (Nasdaq-STLTF), in its effort to broaden the company’s equity base, completed the “Global Offering” of 7,500,000 American Depositary Shares (ADSs) at $18.75 per share. Each ADS represents one of Stolt-Nielsen’s Class B Shares which are listed on the Oslo Stock Exchange (SNIP). The ADSs are listed on NASDAQ (STLBY). On March 15, the Class B Shares were trading at NOK 117 and the ADSs were trading at $17.20.

Net proceeds from the offering exceeded $130 million. The proceeds will be used to repay part of the company’s debt and possibly to finance part of the company’s parcel tankers currently under construction. The Class B Shares are not entitled to vote on matters requiring shareholder action and they therefore didn’t dilute Mr. Jacob Stolt-Nielsen’s and his immediate family’s voting rights which reach 67.4% of the company’s total voting rights. Mr. Jacob Stolt-Nielsen Jr. is the founder (1959), CEO and Chairman of the Board of Stolt-Nielsen S.A. Continue Reading

The Shipping News from Germany

Hamburg-based ship finance company Nordcapital has launched a share floatation in the 2,800 TEU container ship Pan Divinity currently being built by Korean yard Halla Engineering and Heavy Industries for long-term charter to Korean line Hanjin.

Buyers of the shares can use their investment to reduce their German income tax bills although the ship is not being built by a German yard. The ship has been ordered by a company set up to handle the project, MS Pan Divinity Shipping Company Ltd, registered in Cyprus. Ship manager/operator will be Friedrich A. Detjen (Deutschland), a leading Hamburg-based line. Nordcapital said the ship was ordered at a price of $44 million including all equipment, construction supervision and interest charges for down payment. Continue Reading