Shipping Finance 2020

30 January 2020, Divani Caravel Hotel

The IMO Goodwill Maritime Ambassador of Greece and President of the Eugenides Foundation Mr. Leonidas Dimitriadis-Evgenidis addressed the Slide2Open conference:

“Ladies and gentlemen,

Distinguished guests, speakers, attendants.

There is no doubt that we are in a period during which the core of the world’s economy sustainability factor, namely GWP target of about 4 pct., is at stake.

Financial markets – after enjoying a phenomenal bullish period – presently are before high uncertainties with rather bearish foresights. Although a global recession for 2020 is not highly likely, a number of potential mis-happenings are around us. 

Tariff disputes are undermining one of the pillars of our contemporary world Economy system: open markets and free trade.

Trade wars, although there are signals of calming down, are not over; the Brexit impact is still unknown; geopolitical issues – no comments here required – are now accompanied by the sudden appearance of the coronavirus of which we cannot really foresee its impact and dynamics at this stage.

We should not forget at the same time that central banks almost reached their monetary policy limits, yet more financial stimulus may be required, which again is not so simple to happen.

Let us come now to Greece and Greek Shipping.

Greece accounts for 0.16% of world population, 0.26% of gross world product, yet Greek Shipping representing more than a hundred times its world population share controlling 18% of world dwt tonnage, 53% of total EU ownership capacity with a 22% Growth since 2014, growth exceeding the worldwide one. During the crisis period in Greece, employment in the rest of the sectors decreased by 15.5% whereas shipping industry employment increased by 8.8% for 2009-2017.

Sea transport maintained to the level of its contribution to the Services Balance of payment of Greece, while the Gross Production Output of water transport Services increased from 11.6 bn € (2013) to 12.3 bn € by 2019, meaning a total contribution of 12.9 bn € or 6.6% of our GDP.

According to Deloitte’s recent scheme, Greek Shipping is responsible for 29.500 direct jobs and while creating o sustaining more than 130.000. Our Greek Shipping family has a very strong presence in Social Responsibility activities (Syn-Enosis, Foundations, Families, etc.), without mentioning direct investments in hotels, Real estate, Prime and Secondary sector of the economy, whereas it provides great support to innovation and startups.

Well, this is bringing us to the Future! There is great potential in Greek Shipping for increasing its positive impact on the Greek economy, through many direct and indirect ways. Greek Shipowners are keen supporters of an enhanced shipping eco-system in Greece. The strengthening of the Greek flag is one way, provided that we shall be in a position to produce more officers for Greek Flag Ships (16.000 in 2017 versus 100.000 in 1970, though things recently are looking up).

Our industry is actively engaged into the fight to mitigate climate change alongside environmental, social and governance issues, however, “Render unto Caesar the things which are Caesar’s, and unto God the things that are God’s!”! Shipping alone cannot save the planet neither can it be blamed for all that has befallen us.

2020 is not only the beginning of a new decade, but also the year of 0.5 Sulphur, the Sulphur cap, for which apparently the world system, and I am not only referring to shipping, was not and is not yet prepared to respond effectively.

The future has already started yesterday: yesterday! We are looking at only another ten years ahead of the 2030 targets and ahead of the UNITED NATIONS 17 Sustainable Goals. We already live in the era of Digitalization while the one of Autonomous Ships is dawning. Artificial intelligence is rising and teasing already our natural intelligence; these are really great challenges. I honestly believe that shipping, while maintaining its key role as the transport mode which carries about 90% of world trade, may have a somehow reduced strategical importance within the future supply chain as an independent link and especially so in the case of liner shipping.

Shipping is expected to be affected by more regulations and vast structural changes. In that process of increased regularity, all entities associated to shipping activities should work hand in hand aiming at shipping taking its part of responsibility in a fair and equitable world, whereas, taking advantage of the knowledge and showing a proactive attitude to prepare itself for tomorrow. SOLAS is a case study for how technical solutions were properly prepared before politically agreed and enforced. I honestly believe that we have lessons to learn from these cases in respect to Sulphur cap 2020.

In terms of financials, the scarcity of traditional bank credit and further pressure on medium size shipowners is there and shall continue to increase. It is commonly acknowledged that the owners who need more assistance in such transition are the ones with smaller, older and less efficient vessels and believe me, this is the bulk of shipping in terms of numbers and has to be considered for whatever transition we have to confront. They have to be through adaptability a part of the solution and flexibility and not of the problem.

Someone may argue that this gives a very bleak shipping outlook. Well, shipping, and in any case Greek Shipping, was, is and shall continue to be there, but not for everybody.

In a changing world the lessons of the past, our own tradition, matched with forward vision and skills, shall create the opportunities for the ones who read the message and take a pro-active view to be there, in the future, and I honestly believe that Greek Shipping shall be there maintaining its leading position.

However, the shipping ecosystem will become more complex, more aggressive with its dynamic favoring, at least in the mid-term, bigger and more integrated entities.

Greek Shipping needs a more holistic approach to meet challenges. We need a healthy shipping Eco-system, with the right hardware and software. Good and competitive ships, efficiently run and manned, ships closely linked with the office (hybrid relation), and the intelligent shore systems.

In the meantime, Knowledge, Education, Skills generation, shall be a prerequisite in striving success. I am looking – and I believe we all are – to the input of all the distinguished guests in this very helpful event organized by SLIDE2OPEN and congratulations are owned to the Ministry of Shipping and Island Policy, to the Maritime Chamber and for all the sponsors for supporting such an event.

The future is there, let us prepare ourselves for it. Success or failure are like war, they are gained or lost before they start.