Tuesday, November 25, 2008
Tuesday, 25 November 2008
In the sparkling blue waters off Greece's bustling port of Piraeus, dozens of hulking carrier ships loom out of the haze of a retreating thunderstorm. After spending several boom years racing across the world's oceans, they swing idly on their anchors, waiting for cargo. The global financial crisis has hit the shipping industry hard, reducing volumes and sending charter rates for dry bulk cargo such as iron ore, coal, steel, grain and other commodities plunging by about 90 per cent. And Greeks, who control nearly 20 per cent of the world's merchant fleet and whose shipping tycoons such as Aristotle Onassis and Stavros Niarchos gained near mythical status in the 1960s and 1970s, are feeling the pinch.
"The shipping industry is at the forefront of the free economy, and we're the first ones to feel the recession as well as the boom," said shipping broker Francois Savaricas of ACE Chartering. "In this case, what we're going through is not so much a shipping crisis as a whole financial crisis."
With the international financial crisis leading banks to sharply cut back on lending, and consumer spending contracting in many places, it is much harder to move goods, and there are fewer goods to move.
The crisis means that "fewer consumer products are sold because people don't have money to buy them ... therefore this has a knock-on effect on our sector, which is particularly globalised and prone to all these fluctuations," said Nikos Efthimiou, head of the Union of Greek Ship-owners. Efthimiou said there had been "a violent drop from June to today" in the dry bulk and container sector, with oil and gas tankers weathering the storm the best so far.
Shipowners, brokers and analysts say ships that earned $50,000-$100,000 a day a few months ago are now struggling to take in $5,000-$10,000 a day. The Baltic Exchange Dry Index, an indicator of dry bulk freight rates, has plunged from a record high of 11,793 points in May to a nine-year low of 815 on November 4.
Analysts and brokers say the scene outside the gritty port of Piraeus, with ships anchored and awaiting orders, is being replayed across the world, particularly outside Asian ports such as Singapore and Shanghai. Savaricas says that about 25 per cent of the world's fleet is at anchor because it is unecon-omical to trade.
"The lack of liquidity in the banks meant there's no cargo moving, and so from one day to the other there's been no volume, no cargos and no movement for the ships," he said.
It's no small matter for Greece. Shipping makes up about 7.6 per cent of gross domestic product and brought 16.9 billion euros (Dh77.68 billion) into the country in foreign exchange last year, 18 per cent more than the previous year, according to the Union of Greek Shipowners. The wider shipping industry employs 160,000 people, or roughly four per cent of the Greek workforce.
The Greek-controlled fleet, counting vessels of more than 1,000 tonnes under Greek and foreign flags, came to 4,173 ships and more than 154.5 million gross tonnes in February.
Just a few months ago, the picture was completely different. Shipping had enjoyed four or five years of burgeoning trade that had seen companies ordering new ships while still keeping old vessels in service, reluctant to decommission and sell them for scrap.
"Everyone knew that the shipping market was going to downturn, and they prepared for it. But when it hit, it hit so hard and so fast," says David Glass, managing editor of the Greek shipping publication Naftiliaki. "One morning, everything was a few clouds on the horizon. By evening, the thunderstorm had flooded. It just happened so fast."
Industry experts say it can't last forever.
"Trade can't stop," Efthimiou said. "People don't stop needing goods, needing food, needing certain things. All the world's industries haven't stopped working, thankfully. Therefore there is demand, it's just very much reduced."
As adapted from Hellenic News