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The Hellenic Merchant Maritime Sector: A Historical and Business Overview

November 25, 2005


by Ioannis Michaletos in Athens

This fascinating synopsis by Greek consultant Ioannis Michaletos, prepared exclusively for, gives an overview of Greek sea power and shipping from ancient to modern times, and also includes vital statistics on the modern Greek merchant marine fleet, as well as predictions for future activity in the sector. The study grew out of an oral presentation made in March 2005 before the European Network of Technology Brokers, an independent consultancy based in Athens.

Since around 1000 B.C, the Hellenic world – then composed of numerous city-states, small kingdoms and tiny principalities – was united by a common tendency to invest in the merchant navy, and thus expand its commercial activities through the navy. From that period and onwards many structural, historically-determined changes have occurred; nevertheless the importance of Hellenic naval power has remained. Today as in ancient times, the Greek fleet is the largest in the world.

A Reliance on the Sea: Historical and Geographic Factors

There are fundamental reasons for the specialization and staying power of the Hellenes in terms of maritime activities. First of all, consider the geographical composition of their country. Punctuated by high mountains, small plains and thousands of islands and islets, shipping has always been of paramount importance. It acknowledges the importance of reliance on the sea for communication, import and export of necessary material, and finally as a means of bringing together hundreds of disparate territories, which at many times in history represented different political units. It is well known that the most cost-effective way of transporting large amounts of goods has always been by the sea; this also gives a very big incentive for anyone to rely on sea transportation lines.

Another important historical factor was the emergence of large empires – the Persian, Egyptian, Roman, etc – on the borders of the Hellenic world. These empires tended to rely heavily on infantry power and centralized power structures. The only defensive advantage enjoyed by the Hellenic world was a superb navy that could offset the disadvantages of a small and geographically scattered population. The ancient Greeks could best project military force into the opponent’s territory through sea power.

Indeed, the famous Athenian democracy builds its power upon its navy. With a population of only 40,000 “free citizens,” it commanded some 300 triremes and 200 auxiliary ships, an armada that gave them full control of the Aegean Sea and a large influence in the eastern and central stretches of the Mediterranean Sea. All the fine monuments that were constructed in that era, such as the Parthenon, were in fact financed by capital imported from the merchant navy’s activities.

The value of naval power was never more aptly illustrated than by Pericles’ words in his Epitaphios speech to his fellow citizens: “we are therefore strong because of ships,” he stated. “We are like a well fortressed island and we can expand in our will, whilst remaining completely unapproachable from our enemies, who don’t have this advantage.”

During the long centuries of the Byzantine era, the naval advantage was temporally lost for the Hellenic world, because it was absorbed within the administration of a vast empire. Under the Byzantines, who kept an eye to both Anatolia and the Balkans, the navy was not seen as important as it was before in the more compact sea-oriented ancient Greece.

The unfortunate effects of this oversight become glaring in the 11th-13th centuries, when Venetian and Genoese fleets gradually took over large sectors of the economy. Successive Byzantine emperors following Alexios I Komnenos in the late 11th century began to offer more and more trade incentives to the Italians, who were busily expanding their maritime commercial empires across the Adriatic, Mediterranean, Aegean and Black Seas. The ensuing reliance on importing finished goods from Italy led to a huge trade imbalance which weakened the Byzantine economic position. By the time of the Fourth Crusade of 1203, in which the Venetian Doge Dandolo masterminded the take-over and dismemberment of the Byzantine Empire with the help of its Western allies, Byzantium had no appreciable naval force with which to defend itself.

Although the empire was restored to some extent in 1261, when the Latins were driven out of Constantinople, key Greek islands and strategic points of shipping such as Crete, Rhodes and Monemvasia in the southern Peloponnese remained under foreign control. By the fifteenth century, when the danger of an Ottoman Turkish conquest of Constantinople was very real, weak Byzantine rulers had to depend on Venetian ships for their foreign transportation needs.

The reliance on Venetian and Genoese naval defense in the final siege of Constantinople in 1453 proved that Byzantium had grown too weak to protect itself. So while the Turks might have destroyed the Byzantine Empire in the end, in the bigger picture the real culprits were the crafty Venetian merchants whose gradual transformation from a commercial to a military superpower led the once-great Byzantine Empire into servitude.

Fortunately for the Greeks, the Ottoman Empire was not particularly interested in sea power. The Turks had come from Central Asia, far from the sea, and were not experienced in maritime affairs. To guarantee westward expansion they thus had to give many privileges to their Christian subjects, especially the seafaring Greeks, in order to get involved with the shipping sector and benefit from the capital inflow this meant for the Sultans treasury. When the empire expanded to the west, and the Ottomans had to become a sea power, it was largely due to Greek technology and expertise that they were able to do so.

Because of the Ottoman reliance on Greek naval abilities and shipbuilding skill, an indigenous industry was cultivated – making Greek ship barons very rich in the process – on islands like Chios, across the straits from Smyrna (modern-day Izmir). In fact, the Istanbul neighbourhood of the Fener (Phanari in Greek) lying on the south-western shores of the Golden Horn became well known as a fashionable place of residence for Greek maritime merchants during Ottoman times.

Moreover the people involved in the shipping sector had the advantage of feeling free from the Empire’s restraints to some degree, and were easily drawn into absorbing foreign influences and thus later came into the position of being agents of political change.

During the Greek Revolution of 1821 the navy – at the time, the merchant and military fleets were all but the same – was capable of taking control of the Aegean Sea and thus secured the birth of the modern Greek state. The Greeks got a big boost, though, from the Battle of Navarino in 1827, in which a combined force of British, French and Russian warships decimated an Egyptian-led Ottoman armada. This battle brought about the near total destruction of Ottoman sea power.

During most of the 19th century, the only state capable of expanding its naval sector in the Eastern Mediterranean sea was Greek. The Ottoman Empire was crumbling and the Balkan states, having neither the relevant traditions nor access to the sea, remained largely uninvolved.

However, Greece gradually came under almost total British influence, and thus benefited greatly from the unrivalled expertise of the then superpower of the sea. The young state gained a lot of benefits from this British “cooperation.” British and Greek commercial relations were also cemented during this time, which helped Greek ship owners establish a presence in the United Kingdom.

During the Balkan Wars of 1912-13, Greece played a pivotal role in securing control of the Aegean Sea and thus preventing the Ottomans from reinforcing their troops in Macedonia, when the Greeks blocked the sea routes from Egypt. In the brief but very significant wars, Greece gained back some of the Turkish-occupied islands of the eastern Aegean and dramatically extended its northern borders.

With sea control secured, subsequently came the expansion of Greece’s status as the primary naval power in the Eastern Mediterranean. Following World War I and the disastrous Anatolian campaign of 1922, Hellenic ship owners like Stavros Livanos and Gouladris Eugenides managed to build a strong base for their businesses in London with the help of small shipping empires. They also got involved with parallel shipping activities like chartering, factoring and other pursuits.

The Second World War was a catastrophe for the Hellenic merchant fleet, which lost around 70 percent of its vessels. In the aftermath of the war, Greece was given 100 Liberty type ships from the new naval superpower, the USA. Replenishing the Greek fleet was of strategic interest to the Americans; according to NATO sources from the Cold War era, the Greek fleet was viewed as a “fifth weapon” to be used in case of a third world war, for transportation of troops and materials around the world. The other four NATO weapons were the armies, navies, air forces and nuclear weapons of its respective members.

In the direct aftermath of the war, those who could cash in on insurance claims, like the legendary Stavros Niarchos flourished, while others fell by the wayside. The post-war period was a new era that saw an emerging breed of aggressive and flamboyant businessman such as Niarchos, Aristotle Onassis and John Latsis, entrepreneurs who were known for their conspicuous consumption and who were able to create very large and well-organized shipping fleets, especially in the area of oil transport. Their dynasties continue to this day and have now become sophisticated and diverse, branching out into numerous other economic sectors.

The profits of their activities truly benefited Greece, which was at the time making the transition from a rural, agriculture-based country to a top tourism destination. These shipping magnates invested in tourism and industrial development, and contributed to what can almost be called the “Hellenic economic miracle” of 1953-1974.

Afterwards and through the mid 1980’s most of the old ships were taken out of circulation and the fleet was replenished with new ships, built mostly in Japanese shipyards. At the same time a large number of foreign workers, mainly from the Philippines, India and Egypt were put to work in the fleet, thus helping to reduce operational costs. The great upward direction of international trade in the 1990’s that continues today, owing not a little to the ever-expanding volume of trade with China trade, has given a further boost to a shipping sector that is today the largest in the world.

Reach and Diversity of Shipping Interests in the Greek Economy and Society

Large parts of Greece depend on a strong shipping industry for sustenance and growth. The Aegean and Ionian seas, dotted with over 2,000 islands and islets (and around 8,000 dangerous rocks!), could not be sustained and developed without the existence of a well organized and developed merchant navy and ferry service.

The tourism, banking and real estate sectors of the Greek economy rely heavily on merchant marine capital. A lot of the actual owners of companies of these sectors are ship owners. Further, a large percentage of Hellenic cultural institutions, scholarship programs and relevant activities are being financed by the shipping sector. Influential media groups in Greece are also partially financed by shipping capital, and this is one of the ways shipping barons have of exercising political clout.

A recent trend of Greek shipping companies has been to finance their activities through the stock market. During the period 2000-2005, around $6 billion have being extracted from stock markets around the world, including the ones in Oslo, London, Amsterdam, Geneva and New York. The third biggest proprietors of Swiss sales, and amongst the largest depositors in Swiss banks, especially UBS and Lombard Odier, are Hellenic ship owners and their companies.

The investment trend for shipping companies in the past few years has seen increased investment in the neighboring Balkan states. In Romania and Bulgaria, both located on the Black Sea, the real estate and banking sectors have especially been developed. There is also notable investment in China in shipping-related activities.

Did You Know? 9 Facts about the Greek Merchant Fleet Today

1.) In 2004, 13.5 billion Euros were absorbed by Greece from the merchant fleet.

2.) Approximately 23.5 percent of the world’s oil tankers of 73.8 mil. Tn. Dwt belong to Greek ship owners. This is as large as the US and Japanese fleets combined.

3.) Some 20 percent of the world’s ships in gross tonnage over 1000 tn. Dwt belong to Hellenic ship owners. This is around 60 percent of EU 25 combined fleets.

4.) The largest Hellenic shipping conglomerate nowadays, that of the Tsakos family, has a fleet of around 8 million tn. Dwt. This is two times larger than the entire French fleet.

5.) Greek ships transport 70 percent of Chinese imported oil and natural gas.

6.) Around 50,000 professionals work for Hellenic shipping companies in the City of London.

7.) Around $20 billion were spent in Japanese shipyards for the construction of new ships for Greek shipowners, only for the period 2001-2005.

8.) Around 450,000 employees and their family members depend on the merchant navy and related activities in Greece nowadays.

9.) The port of Piraeus is the third largest in the world in terms of passenger transportation. In 2004, some 15 million passengers were transported to the islands via Greek ferries.

Forecast: Trends in Greek Shipping in the Near Future

For the Greek merchant fleet in the year 2006, the major trend will be selling off ships that have been in service for over 10 years old, which will result in a great number of sales. Look to shipping interests to invest their new capital in non-shipping related activities, as well as in repaying loans made in the booming 90’s era. It is widely assumed that the “righteous circle” of shipping will end around 2010 and the main interest of those involved will be to divert their profits soon enough in other sectors, while discarding older ships that accrue maintenance costs and can contribute to a future surplus.

The maritime sector in Greece is the first truly globalized part of the economy and one of the few that operates more or less according to a laissez faire model of supply and demand. The assumption that the cycle will be completed in a few years means literally that the analysts have predicted a slowdown of world trade. By closely monitoring the shipping industry, very illuminating highlights can be made regarding wider economic and political affairs.

Two of the many successful Greek shipping interests to watch in the future can be noted for their superb business structures and shipping influence: the Martinos brothers, owning Thenamaris, Eastern Mediterranean Maritime and Minerva Marine, and Diamandis Diamandisis, of Marmaras Navigation.

The former manage maritime companies boasting assets of around 6 million tn. Dwt, and are constantly investing in maritime technology, as well as in new managerial practices in respect to the international trends. They are from the “old school,’ meaning that they have kept their main assets at sea, and not diverted into unrelated industries. It can thus be said, from the shipping point of view, that the Martinos Brothers have sailed into the 21st century on a strong wind.

Basically the same can be said for Diamandis Diamandidis who is also a pioneer in Greece in applying state-of-the-art business practices at the managerial and office level. In gross terms, after 2010 the main players in the Greek maritime industry will remain pretty much the same in the upper echelons especially. Yet it is certain that a lot of smaller established ship owners will partially or fully withdraw from the industry, leaving space for new blood to keep Greece’s most important industry vital and capable of handling the new challenges of the 21st century.

Recommended Links

Some of the material in this survey, as well as much more interesting and not widely known information, can be found on various websites.

For historical background you may want to read the article, The History of Greek Shipping and visit the website of the International Maritime Economic History Association. Industry-oriented groups include the Hellenic Shipbroker’s Association and the European Community Shipowners’ Association, while industry news and statistics can be found at the Greek Shipping website and on the aggregator site, Infomarine.

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