Sunday, 9 January 2011

Greece has the bigest merchant marine fleet in the world,despite crisis

The Greek owned fleet is the largest in the world as it was recently restated in the “Posidonia international Maritime congress” 2010 ( a festivity around maritime affairs that is being organized every year in Athens since the mid-60’s. The Greeks hold today 16.1% of world’s tonnage which is by far the largest international merchant fleet the world has ever witnessed.
Greece is way ahead than its nearest competitors when it comes to modernizing fleets. In 2006, Greece sunk a total of $8.7 billion in ship investments, followed by the Norweigens at $3.5 billion and the Germans $3.2 billion. Second to Greece is Japan, which manages vessels with a capacity of 183.2 million dwt, followed by Germany with 104.1 million dwt, China with 101,9 dwt and Korea is fifth with 44.4 million dwt.  
Why is it that members of a small European nation of eleven million people operate the biggest fleet in the world surpassing economic giants like Japan or the United States? And why would a fleet sailing under various flags and carrying cargoes for many nations is identified as `Greek-owned'? What does being Greek have to do with the operation of such multinational shipping enterprises?  

Networks, strategy and opportunism.
Greek maritime history cannot be conceived as anything less than the history of the actions of Greeks dispersed in various ports, following the patterns and the cyclical nature of the international trade. The merchant fleet owned by Greeks nowadays was based on commercial and maritime networks consolidated in the Mediterranean and northern Europe after the 1830's. It became an international `tramp' fleet engaged in the cross-trades carrying bulky, cheap cargoes and meeting the demand for transport in an increasingly integrated international economy. In the nineteenth century the main offices of Greek commercial and shipping enterprises were found in Odessa, , Braila, Galatz, Constantinople, Smyrna, Syros, Cephalonia, Piraeus, Alexandria, Trieste, Livorno, Marseilles and London; their ships flew the Ionian, British, Russian, Moldavian, , Egyptian, French, Italian, Ottoman and Greek flags, as well as those of Malta, Jerusalem, and Samos.
In the twentieth century the head offices of fishing companies with Greek interests(  were found in Piraeus, London, New York, Montreal, Buenos Aires, Monte Carlo, Paris and Zurich, and Greeks used the flags of the US, Egypt, Greece, Britain, Panama, Liberia, Canada, Cyprus, the Isle of Man, Vanuatu, Bermuda, Honduras, Costa Rica, Lebanon, Malta, Bangladesh, the Cayman Islands, the Marshall Islands, Saint Vincent,  Singapore, the Bahamas and Hong Kong. In the last two centuries the choice of flag used by ships under Greek control has been highly opportunistic - hence the term `Greek- owned' rather than `Greek'. This distinction is more than semantic: members of nineteenth- and twentieth-century commercial and ship owning communities who lived all their lives abroad and were Russian, British, Italian or American subjects retained their `Greekness', which was pivotal for their success and preserved by tight kinship and social circles. The successful progress of Greek-owned shipping was partly based on the fact that this identity guaranteed access to the informal `club' of Greek merchants and ship owners abroad.
On the eve of the First World War the Greek merchant fleet was the eleventh largest fleet with 2% of world tonnage. And if in 1914 there were about 200 Greek shipping offices, in 1958 there were 350, in 1975 the topped 800 and in 2005 more than 1100.
But what makes talk about an international Greek maritime network is a common business strategy of all the Greek-owned shipping firms whether in Piraeus, London, New York or Singapore. The first leg of the business strategy concerned the organization and structure of the companies and the second leg their entrepreneurial practices. (See the Figure above)
The second half of the twentieth century was characterized by confusion over the amount of Greek ownership and the location of the headquarters of Greek-owned firms. The difficulty stemmed from the extensive adoption of flags of convenience and the fact that many Greek-owned shipping firms had two or more agencies in different cities. The purchase of a new ship by a Greek shipping management firm meant the creation of a new Liberian, Panamanian, or Honduran company which had to be operated by an agent situated, for example, in London. The agent, who was actually the ship owner, appeared as the representative of the managing company in Piraeus or New York. Conversely, the supposed managing company of various Liberian, Panamanian or other companies in Piraeus appeared as the delegate of the managing company in London or New York. This organizational scheme was geared towards the avoidance of taxes and various other claims, as well as the mineralization of legal problems.
The Greek merchant marine in the 20th century
After The First World War Greek-owned shipping firms continued to use Piraeus and London as their main centers, but numerous others were added as the network expanded from Europe and the Mediterranean. `Shipping firm' is here defined as the decision- making body which engages in the provision and sale of maritime services. [1] . Each such firm had its headquarters in one of the nodes of the network and branches in one or more of the others.
The headquarters of each firm is synonymous with the operational or decision centers in which decisions were made and in which the ship-owner resided most of the year.
The attitude and practices of the traditional ship owning families in the twentieth century resembled those of the nineteenth century. Intermarriages were used extensively to keep the business within the closed circles. Respect for tradition continued to be very important and beliefs were passed on carefully to new generations. Each firm was run by one man, who controlled the greatest part of ownership and decision-making, occasionally a firm was run by a group from the same family, usually brothers. The most closed circle of all was the so-called `London Greeks'(  and particularly the Chiots.. It is interesting to note that the Greeks who were born and have lived all their lives in England speak Greek with the particular island accent, follow the local customs, and return to get married or to be buried. Many Chiots, Kassians, Cephalonians and Andriots who were born and raised abroad come back to Piraeus to run the family shipping agency. Others may not speak good Greek - especially those brought up in the US - but still are aware of the family's traditions and work in the family firms abroad. Males are still brought up within closed circles where discussions are always about shipping. To this day apprenticeship starts at an early age and the young heirs are sent on board for at least a few months every summer [2] .
The new blood in Greek ship owning after 1945 were non-traditional ship-owners, who in 1958 formed half of the Greek-owned shipping firms yet owned about 30 per cent of total tonnage. 1975 accounted for three-quarters of the number of firms and about half the tonnage [3]. Those that entered the business after the mid-1960's were the so-called `Piraeus Greeks'( because, in contrast to the London Greeks, they operated from Piraeus. In fact, within twenty years Piraeus(  grew from a parochial port to a world-class maritime centre operating the world's largest fleet.
The organization and structure of the new shipping firms closely followed the pattern of the traditional ship-owners. The typical Piraeus shipping firm was an agency of various Panamanian, Liberian or other `foreign' companies, and other branch offices were opened in London or elsewhere. Family members or close friends were recruited to man the offices.
In this way kinship, island and ethnic ties ensured the cohesion of the international Greek maritime network. The unofficial but exclusive club of these cosmopolitan entrepreneurs clung to its Greek character; `Greekness', beyond any cultural or patriotic aspirations, was extremely important for their economic survival. It provided access to all the expertise of shipping: market information, chartering, sales and purchase, shipbuilding, repairing, scrapping, financing, and insurance and P & I clubs. It also provided consultancy from older and wiser members and information about the activities of the most successful members of the group. Imitation proved an extremely useful `rule-of-thumb'.
Apart from common organizational and structural patterns, the second most important part of the business strategy of the Greek maritime network had to do with entrepreneurial methods.
The first is to achieve access to the main world maritime markets, London and New York; the second, to specialize in bulk cargoes; the third, a particular pattern of sales and purchases; and the fourth, to continue the high productivity of Greek crews.
The practice of establishing Greek ship-owners in London was already 100 years-old by the mid-twentieth century. Greek membership in the world's biggest freight market, the Baltic Exchange( , goes back to the 1850's. In 1886 there were ninety-eight Greek members of the Baltic, or 7 per cent of the membership, by 1993, there were 263 representatives of Greek companies, 18 per cent of the total. The Greeks had long- standing connections with all other facets of British maritime infrastructure: insurance companies, financial institutions, P&I clubs and the other entire services ancillary to shipping. In fact, the establishment of Greek shipping companies in the City of London(  has provided such an important source of income for the British maritime infrastructure that any attempts to tax them have always been resisted.
The second factor that has contributed to the spectacular success of the Greeks was the kind of transport services they offered and the type of cargoes they carried: in other words, their specialization in tramp fishing and bulk cargoes. Greeks developed this tradition in the nineteenth century by forming commercial and maritime networks to carry the bulk trades from the eastern Mediterranean and Black Sea to the western Mediterranean and northern Europe. Tramp shipping provided the flexibility to carry any country's cargoes and not to be dependent on the economic health of a particular nation, as fleets like the British were. In this way, when the First World War presented the opportunity the Greeks moved into the Atlantic and in the interwar period became the second most important tramp shipping fleet. In the post-1945 era, they transferred their activities from the Atlantic to the Pacific and Indian Oceans according to existing demand. In this way, the same ship owning family that had carried grain from the Black Sea to Marseilles, London and Antwerp in the early twentieth century, hauled grain from Buenos Aires to London in the interwar period, and from Australia, the US, Argentina to China and India in the post-Second World War years.
Involvement in tramp shipping also enabled the Greeks to adjust to new demands in international markets, whether this involved new types of cargoes or ships. For example, when there was increased demand for oil, Greeks brought the appropriate ships to carry it; when there was increased demand for the five main bulk cargoes, Greeks brought bulk carriers to transport them.
The other main factor in the successful business strategy of the Greeks is a systematic method of sales and purchases. This can be described simply as `buy when everybody sells, and sell when everybody buys'. This has been described as the `anticyclical method of Greek ship-owners' who, following this golden rule, buy when freight rates and ship rates are low and sell when they are high. [4] . This method started during the transition from sail to steam became clearer in the 1930's crisis when the Greek-owned fleet, unlike the merchant marines of other traditional maritime nations, exhibited a positive rate of growth. It continued during the post-1945 period when medium and small ship-owners followed the methods (and the instinct) of their big and most successful colleagues. In fact, there are many small ship-owners who use shipping exactly as a stock exchange, entering the market when prices of ships are low and leaving when prices rise. The other side of this method involves the kinds of ships they buy. Greeks are known to be major purchasers of secondhand vessels that they keep in good repair and operate as long as possible. In fact, purchasing secondhand vessels has been the backbone for a large segment of Greek ship-owners. [5] .
The last - and by no means least important - factor concerns the efficiency with which this second hand tonnage is operated to keep fixed and variable costs low. There is still the belief among officers and ship-owners, whether in Piraeus, London or New York, that `Greek seamen are the best in the world'. And it is this way of thinking, closely related to Greek seafaring traditions and inherited by young officers from the older generations that have lead to a productivity that cannot only be measured in numbers. As recently as 1980 almost 40 per cent of Greek seamen came from the islands and two-thirds of the crews on Greek-owned vessels were Greek.
The success of Greek ship-owners and the myth of Greek tycoons have led to paroxysms of pride in a nation that has developed an inferiority complex by comparing its poor modern face with its glorious past. The fact that the Greek owned fleet has maintained its position in international shipping in the second half of this century has provided reasons for a number of maritime economists and historians to think that this parallel can be drawn. In this way, more often than not, modern economic analysis of twentieth-century Greek maritime activities begins with the Trojan War or with the triremes of the 5th century BC.
The success of the Greeks in the maritime field of course has its metaphysical explanations and many a time `the Greek postwar shipping miracle' is justified by the `maritime nature' of the Greek race or by the fact that `the sea is in the blood of the Greek'. In more down to earth analyses it seems that small nations can do a lot if they consider themselves as asymmetric forces within the international economic-political system and try to activate their resources according to their innate strengths and to those skills that have been proved historically viable.

1 comment:

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    Merchant Navy