The Greek shipping community remains confident about the role of Greece as maritime center in the coming years and believes that its enhancement would strengthen their business – in spite of the the growing attractiveness of competing maritime centers,
PortEconomics members Thanos Pallis and George Vaggelas collaborated with Ernest & Young in a study focusing on the ‘repositioning Greece as a global maritime capital”.
The study, which was presented during a press conference held in Athens, Greece, includes a survey and an in-depth analysis of the maritime clusters of Piraeus and Thessaloniki, a detailed survey of the Greek fleet, and a survey of the views of the Greek shipping community, and concludes highlighting four main areas where concerted effort could potentially improve the competitiveness of Greece, as a whole as a maritime center.
The study is brought to you by PortEconomics and can be freely downloaded following one of the following links:
Repositioning Greece as a global maritime capital
(Extract from the executive summary)
Οver the last decades, the global shipping industry has been one of the major factors of the globalization process. At the same time, the shipping industry is itself being transformed by growing international trade, market integration and the shifting balance of economic power from developed economies to rapidly growing lower wage economies. As shipping related economic activities are also becoming more globalized, cities and states have to compete to attract international maritime companies. Traditional shipping clusters in Europe are being successfully challenged by countries and cities in the developing world, primarily in Asia.
As a result of the recent global economic turmoil, the decline in global growth rates and the drop in demand for both consumer and industrial products, accompanied by the deliveries of the new-built vessels, have had a negative impact on the shipping industry, leading to substantial tonnage overcapacity, and a dramatic decline of freight and charter rates.
The Greek shipping industry has weathered the storm and the Greek-owned fleet, with over than 5,272 vessels and a value approaching USD 86 billion, remains the largest in the world, in terms of tonnage capacity and has enhanced its dominant position in terms of value, in many of the sector’s segments
The Greek shipping industry has weathered the storm and the Greek-owned fleet, with over than 5,272 vessels and a value approaching USD 86 billion, remains the largest in the world, in terms of tonnage capacity and has enhanced its dominant position in terms of value, in many of the sector’s segments. The shipping industry is by far the most extrovert sector of the Greek economy. The inflows from shipping activities account for approximately 6.5% of Greek GDP and also have a substantial indirect multiplier effect on the Greek economy through cross-industry organizations gathering all or part of the maritime subsectors.
The multiplier effect is channeled into the economy primarily through shipping clusters, consisting of all related and downstream industries and associated institutions, which advance the competitiveness and increase the value input of shipping in the economy of a country. Some of the shipping clusters, such as Singapore, were nurtured with government support, while others, like Piraeus, have developed on an ad hoc basis with limited government support, developed mainly by the shipping industry entrepreneurs.
The shipping clusters constitute a key tool in the effort of Greece to increase its attractiveness for the global shipping community and strengthen its role as a global shipping center
The shipping clusters constitute a key tool in the effort of Greece to increase its attractiveness for the global shipping community and strengthen its role as a global shipping center. The Athens-Piraeus maritime center is all important in this context, with Thessaloniki playing a minor, more specialized role, primarily due to the importance of its port as a gateway to Southeast Europe and the prospects created by the eventual privatization of the port.
Four main factors are the main contributors to the attractiveness of a city or region as a global maritime center:
- The presence of substantial local ship ownership and ship management activity
- Well established financial, legal and other sophisticated business services
- The existence of significant port and logistics infrastructures
- A tradition of maritime technology associated with R&D, innovation, education and availability of talent
In addition, the overall business environment, the stability of the regulatory framework, tax regime and political institutions, transparency of the legal system and the willingness of local government to support the industry are vital in securing the attractiveness of a maritime center.
Over the coming years, competition among the major global maritime centers will intensify. As the shift of global trade towards the Far East continues, it is very likely that in the next twenty years none of the top maritime capitals of the world will be located in Europe. London, Hamburg, Oslo and Rotterdam, each with its own strong competitive advantages, are struggling to emerge as the leading maritime center within Europe. Greece (Piraeus) will need to work hard if it is to retain or strengthen its standing as a maritime capital in the world.
Our survey among leading members of the Greek shipping community sheds light on the shipping industry’s perceptions of the competitive advantages and disadvantages of Greece as a basis for ship management functions, the attractiveness of competitive maritime centers and the ways in which the competitiveness of the Greek maritime cluster could be improved. The related issue of the perceived advantages and disadvantages of the Greek flag is also examined.
Our survey revealed that human capital, the seamanship, along with geographic location and obviously, ship-ownership, are the main competitive advantages of Greece as a ship management center, while the lack of a stable regulatory environment governing the cluster, lack of access to financial institutions, poor infrastructures and tax issues are the main disadvantages. As a result, more than half of the respondents would consider a potential relocation of their ship-management function outside Greece, with Singapore, London and Dubai identified as the most attractive alternative destinations. Three out of four respondents singled out Singapore as the likeliest leading maritime center within the next ten years. Cyprus is also emerging as a close by to Greece, competitive maritime cluster.
In spite of the perceived disadvantages of Piraeus and the growing attractiveness of competing maritime centers, the Greek shipping community remains confident about the role of Greece as maritime center in the coming years and believes that its enhancement would strengthen their business.
The survey, and the in-depth analysis of the maritime clusters of Piraeus and Thessaloniki that was performed by Ernest & Young with the contribution of PortEconomics members Thanos Pallis and George Vaggelas highlights four main areas where concerted effort could potentially improve the competitiveness of Greece, as a whole as a maritime center.
- Education: Marine and maritime educational institutions need to be strengthened while young Greeks need to be encouraged to consider the option of a career in the shipping industry.
- Regulation: A more business-friendly regulatory environment which will facilitate establishing and operating a shipping-related business in Greece is urgently needed.
- Infrastructures need to be upgraded in order to improve the ports’ accessibility and connectivity.
- A closer coordination of private sector initiatives aimed at establishing a competitive Greek shipping cluster will also help in promoting its image globally.