Pireaus: An exodus in the wind

Business File, September-October 2017, No. 112

As the European Commission’s Directorate-General for Competition is causing uncertainty for the Greek shipping industry with its prolonged examination of its legal framework (taxation and the regulatory framework), the prospect of relocations by shipping firms from Piraeus to new bases offering more favourable conditions can no longer be ruled out.
By David Glass
Greece will need to work hard if Piraeus is to retain or strengthen its standing as a maritime capital at a time when global maritime clusters around the world are actively working to attract Greek shipowners.
Indeed, according to the ndings of the study “Repositioning Greece as a Global Maritime Capital” conducted by multinational professional services firm, EY, many in the Greek cluster are ready to consider a potential relocation of their ship management function outside Greece.
EY found some 56% of responding companies to the study would consider repositioning as the European Commission’s Directorate-General for Competition is causing uncertainty for the Greek shipping industry with its prolonged examination of its legal framework.
“If the local shipping sector’s legal framework becomes noncompetitive, or far more attractive o ers are made by other countries, then a major exodus by Greek-owned shipping companies is possible,” EY reports one sector entrepreneur, echoing the sentiment of the Union of Greek Shipowners (UGS).
New bases with favourable conditions
In its recently circulated annual report, the UGS warned the prevailing uncertainty is threatening Greek shipping, which makes up half of Europe’s industry. The prospect of relocations by shipping firms to new bases o ering more favourable conditions –beyond Europe, or even within Europe, to non- EU countries– can no longer be ruled out, the UGS warned.

Taxation and the regulatory framework are the main concerns, with 84% of respondents in the survey referring to taxation and 64% to the regulatory framework as the main reasons that would prompt shipowners to seek new bases, according to EY. Singapore, London and Dubai ranked as the most popular alternative destinations. Cyprus is also emerging as a nearby, competitive maritime cluster and all have actively been touting Greek business.
The EY study shed light on the industry’s perceptions of the competitive advantages and disadvantages of Greece as a basis for ship management functions, the attractiveness of competitive maritime centres and the ways in which the competitiveness of the Greek maritime cluster could be improved.
The related issue of the perceived advantages and disadvantages of the Greek flag is also examined.
EY says: “The survey revealed human capital, the seamanship, along with geographic location and, obviously, ship ownership, are the main competitive advantages of Greece as a ship management centre, while the lack of a stable regulatory environment governing the cluster, lack of access to financial institutions, poor infrastructures and tax issues are the main disadvantages.”
However, EY says that “in spite of the perceived disadvantages of Piraeus and the growing attractiveness of competing maritime centres, the Greek shipping community remains confident about the role of Greece as a maritime centre in the coming years and believes its enhancement would strengthen their business.”
In-depth analysis
For in-depth analysis of the maritime clusters of Piraeus and Thessaloniki, EY called on University of the Aegean professors Thanos A. Pallis and George K. Vaggelas, who highlighted four main areas where concerted effort could potentially improve the competitiveness of Greece as a maritime centre.
They said marine and maritime educational institutions need to be strengthened while young Greeks need to be encouraged to consider the option of a career in the shipping industry.

They urgently want to see a more business-friendly regulatory environment which will facilitate establishing and operating a shipping-related business in Greece, while infrastructures need to be upgraded in order to improve the ports’ accessibility and connectivity. Finally, “a closer coordination of private sector initiatives aimed at establishing a competitive Greek shipping cluster will help in promoting its image globally,” said Pallis and Vaggelas.
EY says Maritime UK, a non-profit organisation which brings together the UK’s shipping, ports, marine and business services sectors to promote the UK as a world- class maritime centre, could be a useful model for a similar Greek association.
Greek-UK shipping industries after Brexit
Indeed, early July the benefits of continuing to foster the strong long-standing relationship between Britain and Greece, and in particular their shipping industries after Brexit, were emphasised by the ministers of shipping of each country, within the context of the 4th Greek-British Shipping Forum held in Athens, July 5, hosted by the British ambassador Kate Smith. Senior British officials at the forum urged the Greek shipping community to have faith in the City of London after the UK leaves the EU.
“Traditional ties between our two people will continue,” Greece’s Shipping and Island Policy minister Panagiotis Kouroumplis said, adding “this cooperation in the eld of shipping can have concrete and beneficial results for both.”
Just prior to the Athens forum, Kouroumplis had been in London promoting the attributes of the Greek shipping cluster should London-based shipping companies look for an alternate home, post Brexit.
He said the government is trying to make the Greek flag more accessible by eliminating red tape, before saying “the government wants to ensure the best possible cooperation between the UK and EU.” “We have always believed the UK and EU are united. Through co-operation we will be able to solve any problems in shipping.”
In a recorded message, John Hayes, UK’s minister of State for Transport, said “working with Greece will help keep the UK a major maritime nation and trading partner.” Hayes, emphasising the fundamentals of London remain strong, said Brexit does not mean the withdrawal of the UK from Europe, but presents the opportunity for the country to work outside, as the “vote showed the people wanted to be more independent.”
London will remain the “best one-stop-shop for business,” declared Lord Mountevans, a former shipbroker, may- or of London’s “square mile” and now chairman of Maritime London. “The legal regulatory climate in London is unmatched,” he said, continuing “the City is working to make London the most cyber safe place in the world.”
But as EY noted, for the time being, Greece continues to nd itself among the maritime capitals o ering attractive environments for shipping companies, but the future is uncertain, sector pundits underlined, citing the fears felt over legal, regulatory and tax terms as primary concerns.
Some 72% of the EY study’s respondents said they would actively support an o cial campaign for Greece’s international promotion and further development as a global maritime capital.
International competition is intensifying, especially in Asian emerging mar- kets, meaning Greece’s comparative advantages alone will no longer suffice for the country to maintain its position as a maritime capital, declared the study.