Inside Opinion: The Greek Masters

by Inside Opinion, Ship & Bunker's anonymous maritime experts
Wednesday September 18, 2013

We've been used to watching the Greeks lead the world pretty much since shipping began in knowing when to buy, when to build, when to scrap and when to sell.

They have been vastly successful at it, and have predicated their success on the notion of all things being cyclical. Of embracing the spot risk. No matter how bad things got when the markets were poor, the Greek owners always seemed chirpier than most when discussing possibilities for when the markets picked up. And even when the markets were bad, the cash was always there for savvy distressed asset purchases, again pointed squarely at when the markets picked up.

We think we know them because we've talked about them our whole careers. The names read like a shipping who's who; evoking a certain romance of yachts, effortless style, champagne parties, of daring do and of the blueness of the Aegean Sea.

Onassis. Niarchos. Livanos. Goulandris. Lemos. Polemis. Restis. Vafias. Latsis. Georgiopoulos. Angelopoulos. Lyros. Hadji-Pateras. Economou. Tsavliris. Chandris. Tsakos. Frangou. Rethymnis and Kulukundis.

As a shipping professional its hard not to look at those names and the hundred or so more I could have mentioned and not be a little starstruck.

But are those stellar names starting to lose their lustre in the face of the unprecedented double whammy of a basket case Greek economy and the worst sustained shipping market downturn we've probably ever had?

End of the Greek Era?

The recent and extremely well-publicised travails of Peter Geogiopoulos and Victor Restis may resonate with some here. People have been predicting (with varying agendas it has to be said) of the likelihood of some impending demise of the Economou empire. As with any super rich and fabulously successful family, people love the jealous idea that they are brought crashing down to the levels of us mere mortals.

For all the money, it must be difficult to hear people say such things if you are head of such a family. The families themselves have always been a notoriously secretive lot for just this reason. Even so, I've seen mentioned a couple of times recently the idea that we're probably coming to the end of the "Greek era".

I'd guess that ego aside, such assertions probably suit the Greek shipping families.

History teaches us that when the markets pick up, and they will, the Greeks are often the ones who are best placed to take advantage. Their strategy is (grossly over-simplified) to order at the bottom of the market, sell at the top and set up to survive the lean periods by way of huge capital cushions secreted away.

So might we make some interesting observations about the markets and whether they are coming back, Lazarus style, or whether another period of intensive care awaits?

Well, people talk. People love to prophesise salvation almost as much as they love to foretell grim doom. So forget the polemic and hand-wringing for the moment; ignore the words and lets take a look at the actions.

Newbuilds

We've seen a flurry of newbuilds reported the last couple of weeks and months after bullish statements from a couple of brokers that things may, as I alluded to a few weeks ago, be starting to pick up in a meaningful way. But how many of them were ordered by Greek owners?

That is an interesting and subjective question.

I'd suggest you take a look at the figures and judge for yourselves. Its too early to make an accurate judgement, but to this commentator at least, the newbuild flurry such as it is, seems to be interestingly un-Greek in origin.

Are we headed for a sustained period of low rates which will come to be regarded as the average baseline? And if that is the case, might the jealous talking heads actually be right?

Are we seeing an end to the ages of maverick Greek shipping success, and a move toward a new dominance of the supposedly more risk averse and hedge happy Scandinavians perhaps? Companies run and administered transparently who are not just set up to survive in a low-rate environment but able to be profitable in it by virtue of some serious mathematics?

My personal view?

Never count out the Greeks.

I'll wager that in ten years time we'll see a large number, perhaps the majority in fact, of the Greek shipping families heading lean, transparent organisations that release consolidated financial statements, have sophisticated hedging instruments in use for freight futures, currency and bunker prices etc, and super-modern, super-efficient fleets able to eke out profits in the low rate environment.

There will be a far smaller reliance on family funds. They'll be organically grown, diverse businesses with a far higher degree of counter-cyclical strength than we see today. Some are already heading in this direction, but I'm talking about widespread DNA change of how these businesses are run and funded.

And - and here's the kicker - they'll be making money. Never count out the Greeks.