Balkanalysis.com

By Ioannis Michaletos

The Greek-owned fleet is the largest in the world. This notable fact was recently restated at the Posidonia International Maritime Congress, an event focusing on maritime affairs that has been held in Athens annually since the mid-1960′s. Today, the Greek fleet accounts for some 16 percent of the world’s tonnage- an amazing number that makes it far and away the largest single international merchant fleet that the world has ever witnessed.

Being a rather small European nation, it might seem surprising that Greece seems to have some innate capabilities in the maritime field, even though if it is difficult to clearly pin-point them in the most accurate and crystal-clear manner. But there is something intangible, something about the Greek spirit and long connection to the sea, that might just account for it.

In this article some important aspects of the synthesis of the Greek merchant marine activities are going to be presented, as well as some historical background information for the past two centuries especially.

Networks, Strategy and Opportunism

Greek maritime history is the history of the activities of Greeks living and working in various far-flung ports, following and exploiting with ingenuity the patterns and the cyclical nature of international trade. The merchant fleet owned by Greeks nowadays originated in the commercial and maritime networks of the Mediterranean and northern Europe, built up in the years following independence after the 1830′s.

The first modern Greek fleet became an international `tramp’ fleet; it was distinguished for cross-trading in 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 a diverse and distant collection of great cities in Europe and the Near East: Odessa, Braila, Galatz, Constantinople, Smyrna, Syros, Kefalonia, Piraeus, Alexandria, Trieste, Livorno, Marseilles and, of course, London.

Circumnavigating all these ports, Greek 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 headquarters 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 a wide variety of nations: 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. Indeed, to this day virtually everywhere in the world there is a presence of the Greek shipping capital in the form of offices, offshore companies or shipping agencies.

During the last two centuries, the choice of flag used by ships under Greek control has been clever, even opportunistic – hence the term `Greek- owned’ rather than `Greek’. From the early 18^th century, when Greece was part of the Ottoman Empire and Greeks held high positions in the imperial administration, the Greek Diaspora was already vibrant and established across Europe, where a large percentage of the ship owners had numerous nationalities.

What united these seafaring men in an age before the nation-state was the fact that most came from the same sort of place in Greece — usually, an island — and their home territory fired their imagination just as the Jewish Diaspora, for example, looked to Jerusalem for inspiration.

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. Since the shipping industry can be a volatile one, characterized by chronic flux and uncertainty, knowing the right people at the right moment is key; hence the practical aspect of the Greek merchants’ informal networks and bonds.

As WW1 began, the Greek merchant fleet was the world’s eleventh-largest (2 percent of world tonnage). In 1914, there were about 200 Greek shipping offices. By 1958, there were 350; by 1975, they had topped 800 and in 2005 there were more than 1,100.

But what created the image of an international “Greek maritime network’ is the fact of a common business strategy, outlined below, which has been employed by all the Greek-owned shipping firms- whether in Piraeus, London, New York or Singapore. The first aspect of the business strategy concerns the organization and structure of the companies. The second involves entrepreneurial practices.

The post-WW2 period was characterized by some amount of confusion over the amount of Greek ownership and the location of the headquarters of Greek-owned firms, an opaque situation in an ever-burgeoning world market where international security, and not just business, began to play a role.

By tradition, the Greek ship owners tend to disperse their business activities, and quite often operate in a global scale. This means that the headquarters, offices and official locations are decentralized. Further, today’s globalization has encouraged the creation of massive shipping conglomerates, a status amenable to cutting costs, taxes, and national bureaucratic restraints.

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 chief headquarters; however, numerous other locations were added as the network expanded beyond 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 a central node and branches throughout the network. The headquarters of each firm was naturally the operational or decision-making centers where command strategy was decided and executed, and where the ship-owner usually lived.

The traditional ship-owning families in the twentieth century kept the customs of their ancestors. Intermarriages kept the business within closed circles. Respect for Greek tradition continued to be very important and beliefs were passed on carefully to new generations. Each firm was run by one man, who would control the ownership and decision-making; occasionally a firm was run by a familial grouping, usually brothers. The most closed and exclusive circle of all was that of the so-called `London Greeks’.

Many Chiots, Kassians, Cephalonians and Andriots who were born and raised abroad return to Piraeus to run the family shipping business. Others, especially Greek-Americans, may be deficient in their knowledge of Greek — though they remain of course aware of the family’s traditions and business operations. Males are still brought up within closed circles where the conversation is inevitably about- shipping. To this day, apprenticeship starts at an early age and the youthful heirs are dispatched to a ship for at least a few months every summer (2).

The “new blood’ in Greek ship-owning after 1945 came from non-traditional ship-owners. In 1958, about half of Greek shipping firms were in their hands, yet they owned about 30 per cent of total tonnage. By 1975, they 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 Piraeus was their base of operations. In fact, within twenty years Piraeus grew from a sleepy Athenian port to a top-notch maritime centre operating the world’s largest fleet.

The organization and structure of the new shipping firms was based on that of the traditional ship-owners. Piraeus shipping firm’s were depicted as agencies of various Panamanian, Liberian or other `foreign’ companies. Branch offices were opened in London or elsewhere. Family members or close friends manned the offices.

The main reason for employing relatives and fellow islanders in the Greek shipping sector stemmed from the issue of trust and fidelity. Greek ship owners are very content to deal with loyal collaborators that speak the same tongue and are apt in understanding the local mentality and “Modus Operandi.”

As was stated earlier, the shipping industry is a truly global one that operates in a variety of areas and in numerously unpredicted situations. Having “your people” in the right positions provides for the bonding of the team and in parallel is an excellent factor of testing people’s credentials and reputation.

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 historically 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 98 Greek members of the Baltic, or 7 per cent of the total membership; by 1993, there were 263 representatives of Greek companies, some 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 other shipping-related services. In fact, the establishment of Greek shipping companies in the City of London has provided such a vital source of income for the British maritime infrastructure that taxation instincts from the government 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. The specialization in tramp fishing and bulk cargoes was a Greek tradition developed in the 19^th century. Then were formed crucial 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 allowed any country’s cargoes to be conveyed, and thus to be independent of any particular nation’s economic situation. Fleets like the British suffered the latter disadvantage. Even nowadays the domestic Greek cargo market is insufficient for the needs of Greek ship owners. To retain their international position, they have had to engage in international commerce as much as possible.

In this way, when the First World War presented the opportunity, the Greeks moved into the Atlantic. In the inter bellum period, they became the second most important tramp shipping fleet in the world. In the post-1945 era, Greek shipping activities spread from the Atlantic to the Pacific and Indian Oceans, to satisfy new demand.

How do shipping magnates make strategy? In simple terms, the ship owners calculate their strategy by carefully monitoring international commerce trends, to know where to allocate their ships. For instance, the past decade has shown rapid growth in the East Asian trade, and in parallel the Greeks managed to pay increased attention there.

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 began when sailing ships have way to steamships, and became clearer in the 1930′s economic crisis when the Greek-owned fleet, unlike the merchant marines of other traditional maritime nations, experienced positive growth. It continued during the post-1945 period when medium and small ship-owners followed the methods (and the instinct) of their bigger and more successful colleagues.

The other side of this method involves the kinds of ships they buy. Greeks are known to be major purchasers of secondhand vessels which they keep in good repair and operate for as long as possible. In fact, purchasing secondhand vessels has been the backbone of operations for a large segment of Greek ship-owners (5).

The last key factor concerns the efficiency with which this secondhand tonnage is operated, in order to keep fixed and variable costs low. Still today, the leading Greek shipping firms rely on Greek officers — some of the best in the world — and rely on their trust for the continuation of the growth in the industry.

On the other hand, since the early 1980′s the main bulk of the crew has started to be recruited mainly from the Philippines and India, in order to lower labor expenses. The success of Greek ship-owners and the myth of Greek tycoons like Onassis and Latsis are in a way reference points, so far as Modern Greek economic success is concerned, especially since there is no other Greek sector so successively energetic in the international field.

The success of the Greeks in the maritime field of course has quite logical explanations that mainly steer from the archetypical qualities most Greeks seem to have had since ancient times. Flexibility, a sense of adventure and an ability to create long-lasting international networks- these are all aspects of the Greek psyche, from the era of the Argonauts and the creation of the Greek colonies (apoikies) right across the Mediterranean.

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Footnotes

1. Metaxas, Basil, Flags of Convenience, London, Gower, 1985.

2. Matheos, D. Los, “Les Armateurs Grecs et les Transports Maritimes Internationaux des Merchandises en Vrac’, Thesis, l’Ecole des Hautes Etudes Commerciales, Universite de Lausanne, 1981, Part Three, Ch. 1.

3. Harlaftis, Gelina Greek Shipowners and Greece 1945-1975, London, Athlone Press, 1993, Ch. 2.

4. Harlaftis, Gelina, A History of Greek Owned Shipping, London, Routledge, 1996, Ch. 6, and Hellen Thanopulou, “The Anticyclical Behaviour of Greek Ship-owners, 1974-1989′, unpublished manuscript, University of Piraeus, 1992.

5. Thanopulou, Hellen, Greek and International Shipping. Changes in the International Division of Labour in Shipping. The Case of Greek Fleet, Athens, Papazissis, 1994, pp. 133-65.

Synopsis: Business Strategy of Greek-Owned Shipping Firms

A.1 Organization

B.1 Entrepreneurial methods

A.1.1: Agencies in various ports-cities

A.1.2: Kinship bonds-Islanders

B.1.1: Access to the main maritime markets

B.1.2: Specialization in bulk shipping

B.1.3: Sales & purchases

B.1.4: Greek crews