Interview with Mr. Ioannis Plakiotakis, Minister of Shipping of Greece

Dec 2019 Interview with Mr. Ioannis Plakiotakis, Minister of Shipping of Greece

 

General overview of Greece’s shipping and marine industry: key facts and figures to illustrate the economic importance of the sector, its role and contribution, its recent performance, competitive advantages and many challenges faced.

 

The shipping industry is by far the most extrovert sector of the national economy, a leading global player and a major source of income, wealth and prestige for Greece.

Greek shipping leads the international shipping industry by providing high quality maritime services with a modern fleet and operating with the most up-to-date management techniques and the highest safety and environmental standards.

The Greek merchant fleet counts more than 720 ships amounting to 39.61 million gt and it is placed eighth on a global level. In addition to the national fleet, Greek shipowners control a total number of more than 4.930vessels of various categories, with a carrying capacity of 389,69 million dwt distributed among 43 different flags around the globe. The fleet controlled by Greek interests is at a record high. Greek owned fleet ranks first accounting for 20.9% and 53% of the global and the EU dwt tonnage, respectively.

The Greek shipping cluster is a uniquely successful bright spot in the Greek economy. More than 1.430 shipping companies active in ocean-going shipping and further 3,674 maritime companies active mainly in cabotage and short-sea shipping, operate in Greece, highlighting Piraeus as a worldwide maritime center and basis of expertise in technical and commercial management of vessels. These companies, offer direct employment to over 16.000 employees and constitute the driving force for the entire maritime cluster, employing directly and indirectly 190.000 people. The key contributing factor to the cluster’s competitiveness is the highest degree of experience and expertise in shipping’s genuinely competitive environment.

Greek shipping remains a reliable strategic provider of quality maritime transport services for its trading partners, both state and private. The average age of the Greek-flagged fleet is 14.3 years and that of the Greek-owned fleet 11.74 years, whilst the average age of the world fleet is 15.2 years. Greece remains on the UN IMO “List of confirmed Standards of Training, Certification and Watchkeeping for Seafarers (STCW) Parties” and on the White Lists of the Paris and the Tokyo Memorandum of Understanding, while it is one of the safest fleets worldwide with 0.43% of the fleet and 0.11% of total tonnage being involved in minor accidents.

Despite an economic landscape offering few investment incentives, the receipts in the Services Balance of Payments from maritime transport are estimated at approximately € 16,629 million for 2018 representing 9% of the national Gross Domestic Product.

The contribution of Greek shipping to the country is as important as it is diverse, going beyond the receipts in the Services Balance of Payments from maritime transport services. It ranges from indirect economic investments, to employment opportunities and to raising the profile of the country internationally by being an essential and strategic trade partner of major economic and political forces, with 22.5% and 20.3% of the Greek-owned fleet’s activity being dedicated to the U.S. and the European trade respectively and with the greatest share of the Greek-owned fleet’s activity, i.e. 31.8%, taking place in Asia serving the fast growing Asian economies.

 

 

Incentives in place to revitalize the sector, attract ship –owners to the registry, renew the ferry fleet and meet new environmental standards. What are the Government’s top priorities, plans and propositions? What can be expected?

The maritime industry is the backbone of globalization and international trade. The Greek maritime sector is one of the country’s most important sectors and a major jobsupplier. However, the industry is faced with tough competition in the world market; a market undergoing rapid changes as a consequence of increased protectionism, but also changes to the global trade patterns, the need to comply with new environmental rules and adaptation to the digital era.

In order to unleash its full potential and contribute to human wellbeing through growth and development all around the world we have to do a lot to advance collaboration, enhance standards and proactively engage with policymakers on the future regulatory landscape. Apart from the close coordination between the many sector-specific organizations we should also develop an more open and transparent approach towards the public society.

In order to sustain its leading position in global and fiercely competitive markets, the Ministry of Maritime Affairs and Insular Policy, attaches great importance to the implementation of a stable institutional environment for shipping activities, the adherence to the principles of free and fair competition, but also to the talent of the Greek seafarers at sea and their high professional expertise. The efficiency in the provision of shipping services and non-negotiable adherence to the international standards on safety, security and environmental performance, underline the quality characteristics of Greek shipping. Those elements constitute today solid foundations on which the Greek shipping continues to thrive, despite the mounting competition from third countries.

The Greek Maritime Administration attributes great importance to the work of international organizations, as well as to the benefits of bilateral and multilateral maritime cooperation and diplomacy, to maintain open and accessible maritime markets. To this end, Greece supports the efforts for the further liberalization of international maritime transport services in the context of World Trade Organization (WTO), as well as negotiations at EU and bilateral level, aiming at the conclusion of trade agreements securing access to the global maritime markets.

In addition, we attach great importance in the adoption and effective implementation of uniform international rules for shipping. In that context the Greek Maritime Administration has constantly supported the IMO work,as the only competent institution in achieving a global regulatory level playing field on shipping matters,to address operational, safety and environmental issues. For those measures to be effective, they need to be based on sound socio-economic analysis, respecting the need to avoid unnecessary over-regulation. In the same vein, we firmly oppose trends of regionalization, which do not pay a good service to a global industry.

The further development of Piraeus as the center of the Greek shipping is a major priority of the Ministry. This objective is directly linked to the strengthening of academic and maritime training, to maintain and further enhance the Greek maritime know-how. In this context, our aim is (i) to significantly upgrade maritime education and promote structures that promote specialization and further contribute to the development and expansion of the rich maritime knowledge base. This will definitely result in broadening the competitive edge of Piraeus and Greek shipping as a whole and (ii) to promote electronic procedures to further facilitate ship and company registration.

As regards the ferry sector, we have announced a significant increase in the compensation of public service obligations, through the Public Investment Program, which is now seen as a growth tool for facing the challenges of insularity and social cohesion. We thus aim at attracting newer ferries which shall provide transport services of higher quality for our islanders. In addition, and in cooperation with the Hellenic Chamber of Shipping, we will explore EU funding opportunities for the ferry fleet.

 

Managing changes and disruptions in the shipping industry: Technology and innovation, geopolitical shifts, efficiency, security, sustainability – How is Greece staying ahead of the game?

 

The global economy is undergoing a period of change and this has, during the recent years, a significant effect on the demand side for shipping services. Generally speaking, the shipping industry has, during the last years, been under pressure stemming from overcapacity, low freight rates and high bunker costs, altogether influencing the economics of the industry. It is remarkable that in such challenging times, the figures of the Greek shipping remained virtually unaffected. This is due to the professionalism and adaptability of the Greek shipping industry which, in constant support from the Greek government, managed to respond to the challenges and look with optimism towards the future.

Maritime transport services require a free and stable global regulatory framework guaranteeing the unrestricted and non-discriminatory access of vessels to the worldwide movement of cargoes in a genuinely competitive environment, which is not only to the benefit of the carriers but also of the consumers world-wide. It also requires uniform global rules about safety and protection of the marine environment.

Recognizing the contribution of shipping to the national economy and to our society, Greece supports on a constant basis shipping activities through a coherent institutional framework with positive measures aimed at fostering competitiveness of the maritime sector and cluster in the international scene. For the same reason, the Greek State has entrusted a specialized administrative body, the Ministry of Maritime Affairs and Insular Policy, with the administration and support of Greek shipping.

Furthermore, the Greek Maritime Administration attaches great importance to further expand the maritime know-how, taking advantage of the talent of the Greek seafarers and their high professional expertise. The efficiency in the provision of shipping services and adherence to the international IMO standards on safety, security and environmental performance, underline the quality characteristics of Greek shipping. Those elements constitute solid foundations for the future of our shipping.

As far as the future challenges are concerned, the potential game changers include:

(a)Emerging and escalating trade protectionism, which puts at stake the efficiency of the shipping sector to serve and facilitate global trade. Our guide should be the acknowledgment that efficient world trade is strongly dependent on a rules based globaltrading system.

(b)The realistic implementation of the IMO initial strategy on the reduction of GHG emissions from ships. The strategy constitutes an important milestone in IMO’s efforts to achieve the appropriate international solutions for an international industry such as shipping. Over the next years, we look forward to the constructive cooperation with other IMO Member States and maritime stakeholders in order to realistically implement the Strategy,in a way appropriate for different ship trades;

(c)The consistent and smooth implementation of the new 0,5 % sulphur limit from 01.01.2020 through global availability of safe compliant fuels. We should always keep in mind that the responsibility for this lies with the bunker fuel supply chain

(d)The preservation and further expansion of the Greek maritime expertise, since the role of the human element is essential in any strategic reflection about shipping and

 

(e)The uptake of new opportunities from digitalization and automation, which can reduce operational costs and increase efficiency.

 

From our part, we are closely following international developments on the above areas and adapt our strategy with a view to secure the long-term competitiveness of our maritime industry.

 

 

Focus on major infrastructure development and upcoming investments in the sector. How is the country working to reinforce its position as European shipping hub as European shipping hub and trading gateway?

 

The Greek ports could serve as «development vehicles » for the country, both in terms of local economies and at national level. By utilizing the potential of ports,  Greececan restart the development process and increase employment. To achieve this goal in, Greek ports should:

• increase participation in international transit trade, in particular through Eastern Mediterranean Sea
• provide high quality services, at all levels and at competitive prices
• have a flexible and efficient administrative operation, adopting modern management and administration practices
• attract private capital and expertise

The Greek Port System is in a transition phase, following the reform of the national transport system. Thirteen (13) Ports of International Importance, those of Piraeus, Thessaloniki, Patras, Igoumenitsa, Kavala, Heraklion, Volos, Elefsina, Lavrio, Rafina, Corfu, Alexandroupolis and the ports of Evia Island operate as SociétésAnonymes. In 2016 the Hellenic Republic Asset Development Fund (HRADF), sold 67% of Pireaus Port Authority’s shares to the Cosco Group Limited, giving to the latter the operational rights of Piraeus Port until 2052. A similar procedure was also followed for the second biggest Greek port, Thessaloniki. Ten (10) of the above mentioned ports (Evia island ports excepted) belong to HRADFportfolio and are under evaluation for the most appropriate use.The Greek Legislation regulates the framework for investment in these ten major Greek ports and creates new opportunities in the port sector.

 

During the last years major infrastructure projects are under implementation, in the ports of Patras and Igoumenitsa co-financed through EU and national funds. According to the National Transport Plan which was completed inJune 2019, the following main interventions are defined regarding the port system and its connectivity, for the period 2019-2037:

 

International Land Connectivity

• Improvement of rail line from Thessaloniki and Alexandroupolis to the Bulgarian border

 

TourismSector

• Preparation and progressive implementation of a programme for developing port facilities for cruise ships
• Development and operation of comprehensive information systems for the maritime transport and port sectors aiming to better monitor port and maritime activities, performances and competitiveness
• Development of a core network of water airports for the provision of seaplane services from, to and between islands

 

Connectivity to the Greek Islands

• Preparation and progressive implementation of a programme for improving port facilities for domestic ferry passengers
• Preparation and progressive implementation of a programme for upgrading substandard port infrastructure and modernising ship service facilities
• Port relocation – new port developments in island cities where traditional ports are landlocked by urban extension
• Development of Lavrio port as an alternative to Piraeus and Rafina for domestic ferry traffic

 

Logistics Sector

• New rail connection of Kavala port ‘Philip II’ with main rail network
• New rail line Volos port & industrial areas – NeaAnchialos airport – Almyros port
• Development of Port Community Systems / Single Window Systems in Greece
• Promoting initiatives to establish Greece as the South European Logistics Hub
• Improvement of land access to Thessaloniki port
• Extension of Thessaloniki container terminal
• Development of capacity for dry bulk ports

 

 

Insights onto Greece’s national port strategy, infrastructure and services revamping. Close- up on the Port of Pireaus’ own upgrade master plan: expectation, impact and perspectives.

The basic priorities of the National Port Strategy,which is under finalisation,are the following:

1. Tocomplete the planning and organization of the national port system by creating strong port clusters.
2. Toevaluate and exploitthe ten regional ports which operate as societesanonymes.
3. To further integrate the five major ports of the Core and the twenty ports of the Comprehensive Network in the Trans-European Transport Network System (TEN-T) and promote the sea and combined transport by developing the Motorways of the Sea.
4. To promote the ports of the country as principal hubs of combined transport and to integrate them in the logistics chains
5. To develop the rail connectionof the major ports of the country
6. Tointegrateenvironmentalprotectioninportoperationanddevelopment
7. To introduce the liquefied natural gas (LNG), as a basic fuel in the maritime transport and to construct the relevant infrastructure
8. To prioritize the projects and port sector andorganise their finance for the next programming period
9. To develop the blue economy and integrate the Greek ports in the MaritimeSpatial Planning
10. To strengthen the safety and security of the port system in the framework of the ISPS Code.
11. To promote the international cooperation in the port sector in the framework of bilateral relations, as well as the regional cooperation in the framework of the EU Strategy for the Adriatic and Ionian Region and Black Sea Economic Cooperation.

 

The revised Master Plan of the Port of Piraeus submitted by the OLP S.A. envisagesinvestments of  800mEuros.(the construction of the forth pier included). The Port Planning and Development Committee should convene shortly to examine the revised Master Plan.

COSCO’s investment in Piraeus is perhaps the most significant foreign direct investment in Greece in the recent years. It could also be considered as a pilot for other investments of foreign companies. COSCO is highly qualified for its development, such as size and market significance, profound know-how as both global terminal operator and shipping company, excellent business prospects.

Due to COSCO’s presence the port of Piraeus has become one of the largest European ports and the most significant port of the Mediterranean Basin. COSCO’s selection to invest in Piraeus shows exactly the importance of the port and its prospects. The investment put Piraeus on the map of global transportation, since Piraeus isbeing transformed from a regional hub into a link of global transport corridors and logistic chains. This becomes evident within the context of great transport initiatives such as the Trans-European Transport Network or the Belt and Road Initiative and the Maritime Silk Road.

 

 

Insights into the Government’s next round of privatisations in the sector, and key opportunities to highlight to international investors at present. What can foreign/American investors expect and how can they contribute?

Ten (10) of the Hellenic ports  (Patras, Igoumenitsa, Kavala, Heraklion, Volos, Elefsina, Lavrio, Rafina, Corfu and Alexandroupolis) belong to HRADF portfolio and are under evaluation for the most appropriate use, either on the model of sub-concessions, or of a master concession, as in the ports of Piraeus and Thessaloniki.

Both the Hellenic and the American parts should examine investment prospects in port development, operation and combined transport in Greece, taking into consideration the important advantages of the Greek Ports. It should be stressedthat located at the crossroads of three continents,  on the intermodal Corridor Orient/East-Med (Hamburg-Nicosia) of the Trans European Transport Network and on the “maritime silk road”, theyare in a strategically advantageous position to serve as international transport hubs between the East and the West.

 

 

A look at Greece maritime tourism industry: Government’s plans to attract more cruise ships and upgrade the maritime tourism industry while preserving its islands; potential and objectives.

Greek islands are considered as destinations of particular importance and welcome a high percentage of maritime tourism and cruise. Attracting tourism and investments will lead to the enhancement of the regional and especially islands’ ports, generating benefits for the local communities and economies, but also for the country’s growth in general.

Responsible planning is required to encounter some of the perennial problems, such as the seasonality and the congestion in tourist destinations and ports, to develop measures that enable a balanced cost-benefit outcome of tourism, as well as to emerge and create a strong destination branding that can be achieved through digital media and tools. Tourism development should be based on sustainability criteria, meaning that it must be long-term, economically viable and ethically and socially acceptable.

The national strategy for boosting competitiveness in the field of maritime tourism and cruise is based on four principles: port infrastructure upgrading – port security – quality of services – local society.

In this context, the works of the National Coordinating Cruise Committee will be intensified in order to achieve an immediate promotion of measures and incentives concerning infrastructure and superstructure, shipping logistics, operation of archaeological sites, traffic regulations, passport controls, navigation, waste management, water airports, home-porting targeted development and environmental protection, so as to succeed the maximization of the benefits for the Greek economy.

Furthermore, the existing legislative framework of cruise and yachting sectors will be reconsidered in order to achieve qualitative and quantitative development.

 

 

General reflection on Greece’s economic ‘regeneration’ and innovation capacity: importance of shipping in the Government’s master plan; your personal ambitions as new Minister

As I said Greek shipping cluster is a uniquely successful bright spot in Greek economy, employing directly and indirectly almost two hundred thousand (200.000) people. Greek-owned shipping rightly plays a leading role in Greece’s development course which also gives us the advantage of world trade diplomacy.

Around a large shipping, shipyards and management center as Greece is, a network of ancillary services is being developed that can make a strong contribution to the national economy such as:

• Freight Forwarding Services
• Brokerage Services
• Boat power supplies
• Ship equipment
• Radio telecommunications
• Legal services

For these reasons what is needed is competitive and quality services, the State seeks to simplify the regulatory framework, political alignment with the objectives of the relevant European policy pursued last year.

We are also focusing on areas that make use of alternative energy sources and we are open to any innovative idea that supports this.

In conclusion, shipping  industry is a unique and significant sector and our government attaches great importance to it.

Μy ambition is to demonstrate that Greece owes and must have a leading role in forming the shipping agenda at a global level.

 

 

Concluding remarks and final message to the readers of Foreign Policy.

Τhe Greek Nobel laureate poet George Seferis, when he was awarded the prize, likened Greece to a stone cape in the Mediterranean and I can’t find a more accurate picture of the relation of the Greeks to the aquatic element. Α relationship counting thousands years of life which explains how it is possible for such a small country to holds the largest commercial fleet of the world.

This is because, as Greeks, the sea flows into our DNA and the Greek ships will always be the bridge of culture, development, peace and cooperation between nations.