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Chapter 1 The Greek Paradigm of Maritime Transport: A

View from Within

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CHAPTER 1

THE GREEK PARADIGM OF

MARITIME TRANSPORT:
A VIEW FROM WITHIN

Athanasios A. Pallis

The study of the economics, management and policies of maritime

transportation has evolved through a long history of researching into a
progressively expanding number of markets, sectors and industries involved
in the completion of seagoing transportation. Starting from core shipping
economics with a special focus on the various aspects of the liner and tramp
international shipping markets, it further expanded to include the study of
the unique features of domestic/coastal/regional shipping. Meanwhile, the
discipline of port economics became part of the research agenda as well. The
distinction between the shipping economics and port economics is inevitably
blurred with each one of these disciplines impinging on the territory of the
other (Cullinane, 2005). As the whole process of transporting passengers
and cargoes via the sea became increasingly integrated with hinterland
transport modes, research has progressively adopted a ‘horizontal’ maritime
transport approach that considers the entire transportation process, within
which the seagoing leg is only a part. Today, both in academia and in the
business world there are many believers of the view that, while shipping
remains the core of the system, studying any maritime industry alone,
whether this is ‘shipping’ or ‘ports’, stands as a useful but incomplete
exercise as long as it is not viewed from such a wider transport perspective.

Maritime Transport: The Greek Paradigm

Research in Transportation Economics, Volume 21, 1–21
Copyright r 2007 by Elsevier Ltd.
All rights of reproduction in any form reserved
ISSN: 0739-8859/doi:10.1016/S0739-8859(07)21001-7
1
2 ATHANASIOS A. PALLIS

Along this journey, there have been examples and among them seminal
works dedicated to the study of regional or national maritime transport
systems prompted by hegemonic positions or crucial links with the rest
of the national economies concerned; by virtue of both, the Greek case
provides a unique paradigm and is among those worthy of closer exami-
nation.
The Greek-owned fleet has dominated the waves for more than a century,
providing a most successful paradigm of entrepreneurship. Greek shipping
companies either established in Greece or located in other maritime centres
(i.e. London) have led the industry by example. Fleet renewal practices,
a legendary flexibility and the successful feeling of market trends are all
constant references of an industrial analysis of the maritime sector. The
organisational structures, management practices and strategies adopted in
various conditions, and not least the national policy environment, stand also
as key issues leading to success and admiration by both academia and the
market.
In the domestic arena, however, the Greek maritime transport system
points in a very different direction as well as scale. This is a traditional
shipping nation which – most paradoxically – has placed little importance
on ports and relevant maritime infrastructure development. The location
of Greek ports at the crossroads of three continents, and their potential
to become among the most important nodes in the route connecting the
Far East with Europe through the Suez Canal, have either not been
appropriately appreciated or have been ignored. Despite the country’s
geography, or even because of it, Greece has faced persistent difficulties in
developing an efficient and effective coastal shipping system. In the era of
sustainable development, short-sea shipping competitiveness and the
integration of maritime transportation in intermodal supply chains seem to
elude still this prominent maritime nation. The state has evidently focused on
‘flag-state’ policies supporting the large Greek-flagged and Greek-owned
ocean-going fleet, rather than on the deployment of other concrete, long-
term policy initiatives necessary for the success of other aspects of maritime
transport. Key underlying reasons for this were the small size of the country’s
international trade in the global marketplace and the – non-commensurate –
substantial contribution of Greek-owned tramp shipping to the country’s
balance of payments.
At the same time, a number of opportunities have arisen worldwide which
have significantly altered the maritime scene both locally and globally.
World seaborne trade expansion and the structural reorganisation of
the production–transportation–distribution chain have emphasised the
The Greek Paradigm of Maritime Transport: A View from Within 3

importance of the rapid development and adjustment of the Greek port

sector, and the need to enhance the interconnection of shipping by the sea
and hinterland transport modes further. Financial initiatives towards
shipping modernisation have taken various paths in recent years, with the
capital markets offering viable alternatives for capital mobilisation. The
application of new technologies both at sea and ashore might lead to post-
conventional operations that enhance competitiveness, both in international
operations and local services provision. Meanwhile maritime tourism has
emerged as a very dynamic market.
Surprisingly, a systematic review of Greek maritime transport is currently
unavailable in the international literature. Several scholars have been
fascinated by Greek shipping, and studied its structures and evolution,
turning it into one of the rather most discussed shipping industries in the
world. This group of scholars includes mostly Greek authors, with the
works of the late Basil Metaxas on tramp shipping (Metaxas, 1971) and on
flags of convenience (Metaxas, 1985) – which established a methodology for
analysing Greek shipping based on market forces and competition in the
international arena – being the pioneering ones.1 Since then, a number of
distinguished scholars have embarked on the examination and theorisation
of the economics, management and policies related to Greek – especially
ocean-going – shipping producing a substantial body of literature.2
Yet, while several internationally published journal papers and book
chapters discuss aspects of the Greek maritime transport, there has not
been a more comprehensive analysis of the whole Greek paradigm per se.
This void to be filled exists mainly at the international level as there have
been relevant studies addressing such issues in texts published in Greek.3
The sole exemption is the seminal Harlaftis’ (1993, 1996) examinations
of the history of Greek-owned shipping, and in particular of the making
and evolution of the most successful tramp shipping fleet internationally
since the establishment of the modern Greek state in the first half of the
19th century.
The book aims at a thorough analysis of the ways that the Greek
maritime paradigm developed and continues to evolve and adjust. It has
been set to examine a variety of the economic, management and policy
parameters of the paradigm’s remarkable successes but also to explore in
detail its failures and/or missing links. At the same time, it assesses the
various (i.e. financial, technological, organisational) opportunities available
to be both grasped and ‘grabbed’ in an era during which opportunities may
transit and be missed all too fast. Combining a wide range of aspects, the
book’s systemic approach allows drawing more integrated conclusions for
4 ATHANASIOS A. PALLIS

the sources of successes of, the problems involved with and the pressures
exercised on, maritime transport systems.

1.1. THE MANY FACETS OF THE GREEK PARADIGM

As all the relevant analyses explicitly or implicitly indicate, shipping stands

as the backbone of the maritime transport system (cf. Brooks, Button, &
Nijkamp, 2004). Indisputably, the Greek-owned fleet stands in the backbone
of the Greek paradigm as well, transforming the latter to a much worthy
examined case study.
What is remarkable in the Greek ship-owned and Greek-operating
industry is the fact that it has long been at the top of the world fleet,
including the last 30-year period that witnessed the decline of the great
maritime powers of the past. As Cafruny (1987) has pointed out, Greece has
been part of both the old pre-oil crises maritime order and part of the post-
oil crises new international maritime order (NIMO).
Harlaftis’ (1996) insight into the successful course of the Greek maritime
industry until the end of the 20th century, suggests that the excellence of the
Greek tramp fleet has its foundation in networks and organisational
structures which were already in place in the 19th century. By generating
positive externalities such as transaction cost saving, buildup of reputation
capital, and quality assurance, these networks helped in the pre-World War
II period to access to world markets and to being involved in the carriage of
cargoes in the major trading routes worldwide.
The Greek shipping continued its expansion to the international freight
markets during the post-war period. Operating from London and New York
during the 1950s and 1960s, Greek shipowners successfully exploited
opportunities offered in the international freight markets of bulk shipping.
This has in most cases been a quest of what has been coined as ‘quality
shipping’ (Haralambides, 1998) and match qualitative demands by the users
(i.e. the manufacturers, traders, freight forwarders or final consumers). In
other cases, various market actors (shipowners, charterers, surveyors, etc.),
frequently called ‘the mavericks’, have remained ready to lower these
standards if this meant increase of the profit margin. Overall, a large number
of family firms who had identical entrepreneurial philosophy continued to
form networks based on common culture and trust. The competitiveness
of their businesses were based on the loyal and highly productive Greek
seafarers, who were also the main source for the renewal of the shipping
profession. A great number of ship officers became shipowners during this
The Greek Paradigm of Maritime Transport: A View from Within 5

period. Many of them created business that marked the development of

Greek shipping in the years after the 1970s.
Meanwhile, as Grammenos and Choi (1999) point out, the global
competitiveness of the Greek shipping industry was boosted by a second
factor, Greek ‘flag-state’ policies. Greek government has endeavoured not
only to attract overseas Greek shipping companies into Greece, but also to
retain existing shipping companies by providing favourable tax treatments.
Because of the footloose characteristics of tramp shipping in which Greece is
the world leader, the shipping companies successfully obtained concessions
from the government.
The deep, prolonged and severe shipping crisis of the 1980s forced almost
all European maritime nations, including Greece to experience a remarkable
flagging-out. This led to proposals for the introduction of a maritime policy
based on a second-shipping registry, in order to cope with flagging out the
same way like European countries were trying to (Goulielmos, 1998). The
economics of this proposal were right and remain undisputable; thus the
policy proposal was making sense. Yet, Greek shipping survived and
flourished without this cure of ‘sensible policy-making’ followed by other
maritime nations. It did so in its original way as Harlaftis (1993) had
extensively analysed and Thanopoulou (1998, p. 372) had characteristically
epitomised: Greek shipping ‘‘developed first under flags of convenience and
then flagged-in instead of out’’.
The facts suggest that, facilitated by world trade revival, the Greek
shipping industry managed to make structural adjustments, facing compe-
titive pressures from new maritime countries and changes brought on
by globalisation. It has also managed to respond to a context marked
if extensive worldwide regulatory changes of international shipping as deve-
loped since the 1980s (cf. Yannopoulos, 1989), and to a progressive policy
Europeanisation (Bredima-Savopoulou, 1990; Pallis, 2002). With these
changes, and increased capital mobilisation demanding shipping companies
to increase their capital base, make new investments, disclose more infor-
mation about their operations, and professionalise their management
structure (Grammenos & Choi, 1999), Greek shipping endorsed different
means of financing, and fleet and maritime companies management. All these
inevitably changed the competitive structure of the industry.
In the first months of 2007, the Greek-owned fleet broke a record hold
since 1988 in both numbers and tonnage, continuing to be at the top of the
table of ownership of the world fleet. Using the data for vessels of over 1.000
grt that are collected by Lloyd’s Register, the Greek Shipping Co-operation
Committee in London reported in February 2007 that Greek-owned 3.699
6 ATHANASIOS A. PALLIS

vessels, with their tonnage amounting to 218.2 million deadweight (dwt) or

129.7 million gross tonnes (gt). Within one year, there was a rise of 302
vessels (8.9%), or 28.1 million dwt (14.8%), or 16.1 million gt (14.2%)
reaching a historical record.4 The Greek-controlled fleet stands at
approximately 8.5% in terms of vessels, 16.5% in terms of world fleet dwt
and/or 14.0% of gross tonnage.
Greek orders are again at high level and in February 2007 amounted to
612 vessels, or 9.2% of the total world fleet new building, raising the
prospect of the year 2007 overtaking 2006 as the historic record-year. New
shipyards all around the world jockey for ship specification and specialisa-
tion in bulk-carriers, containerships and other vessels, with the slots going to
well-informed Greek owners who undertake huge projects towards renewal.
The leading categories of orders are vessels transporting chemicals and oil
products (220), those transporting dry cargoes (164), tankers (120), LNGs
(39) and containers (27).5 The age of the Greek-owned fleet has decreased
and today its median age is 11.1 years (based on the number of vessels)
which is lower than the respective average age of the world fleet.
This has not been a rise of tonnage under Greek ownership only. The
Greek flag remains the preference of Greek owners and continues to rise as
well. In February 2007, the number of Greek-owned vessels operating under
the Greek flag was 969 (an increase of 6% within a year) with a tonnage of
12 million dwt (+20%) or 6.3 million gt (+17%). Greeks also use other
flags, as this usage has turned to a structural characteristic of the world fleet.
Panama (583 vessels, 28.5 million dwt), Malta (502 vessels, 27.8 million
dwt), Liberia and Cyprus are the most used ones.
The prospect – if not the certainty for some – of a decline of the Greek-
owned and Greek-flagged fleet, which was looming at the end of the
20th century has been reversed. How this has happened is a multi-faceted
question worth to be examined. Has it simply been the result of successful
management practices? Or were there (many) more factors contributing to
competitive advantage gains? If this was all about successful corporate
management, aren’t there any flaws in the adopted management practices?
How did it happen that Greek shipping succeeded to be among those
industries extensively funded via public offerings and listings in New York
and other Stock Exchanges? While raising shipping finance has always been
an extremely important aspect for the success of contemporary water
transportation companies, the list of companies of Greek interests that are
involved in maritime transport and have gone public in the last five years is
extensive.6 Are these the only markets that shipping companies employ to
fund their investment projects or do they employ other methods as well?
The Greek Paradigm of Maritime Transport: A View from Within 7

What has been the contribution of new financial tools in this revival, and at
what extent has Greek shipping taken advantage of their potential?
Beyond these, there is a major question regarding the contemporary
employment practices. The declining number of Greek seafarers – as the
profession has become globally less attractive to new generations –
challenges the long-term pattern of an industry traditionally looking at the
local market for human resources for manning vessels and running offices
ashore. This pool of maritime knowledge has seen its membership declining.
At the same time, cost considerations result in demands for reforms in
respect of vessels manning rules and the minimisation of nationality-based
restrictions of the employee-based personnel. What are the practices
currently followed and to what extent are improvements on the management
of human resources the way forward?
Meanwhile Greeks have been more active than before in the international
policy fora. Of course, since the establishment of the International Maritime
Organisation (IMO) Greece has been, due to fleet size, a member of the
Council and among the most active members of this primary international
rule-making organisation. They have progressively endorsed the idea of
being more active at the European front as well.7 Yet, 2007 is the year that
Greeks assumed the leadership of the top industry associations (BIMCO,
INTERTANKO, INTERCARGO, International Chamber of Shipping,
and International Shipping Federation), while a Greek holds the top job at
the IMO.8 This single nationality ‘sweep’ has never happened before and is a
peculiarity that will perhaps never occur again. At one level, it is pure
coincidence. Greece has been the world’s largest shipowning nation for
decades, now and it can be argued that an even stronger showing in industry
fora was in fact overdue. At the same time, it is indicative of a growing
desire from within the Greek community to assume the mantle of leadership,
combined with a more wholesome readiness internationally to acknowledge
the fitness to lead of Greek shipping personalities than has sometimes been
the case in the past. As a recent Lloyd’s List editorial suggested, although
there is no doubt this level of hegemony may provoke resentment in one or
two quarters, if the Greeks’ joint occupation of the top seats lasts long
enough the Greeks have a great opportunity, but also heavy responsibility,
to guide the industry through a critical period.9
Therefore, this is the case of a major player in the more complex than ever
international maritime policy scene. The latter is combined with a rare
situation nowadays in the domestic policy-making arena: the presence of an
active national ministry devoted to shipping (the Ministry of Mercantile
Marine), the minimal and infrequent involvement of the Ministry of
8 ATHANASIOS A. PALLIS

Transport, and an influential maritime transport community which is likely

to be active in all national and international policy development. The
question to be answered is rather obvious: To what extent is this policy-
making regime workable?
At the same time, coastal shipping makes the headlines, both locally and
internationally every summer. The geographical morphology of many
islands makes the Greek case among the most difficult situations due to
peculiarities of the demand. This type of transport needs to serve small
populations, and coastal shipping companies have to develop a complex
schedule that fulfils a vital social role, when costs are remarkably high.
A growing concern about cabotage liberalisation has granted Greece a long-
term exemption from the implementation of a relevant EU directive adopted
in 1992. Greece had 12 years to implement this rule, with the set day being
2004; yet all the pre-liberalisation preparations, whether these were reforms
of policies governing the provision of coastal services or firm-level
developments (mergers, Athens Stock Exchange listing, etc.), failed to
reach expectations and improve the coastal shipping situation. All actors are
discontent: unsatisfied customers (passengers) who fail to reach their
destination, private companies that fail to deliver and at the same complain
for lack of state responsiveness to their demands, and a state that fails to
create a workable (de)regulatory framework to protect public interests. The
difficulties seem to be eternal, with the European Commission indicating
several times its willingness to go to the European Court of Justice against
Greece for failing to introduce a national framework laying down
competition in coastal shipping in a proper manner. The ‘coastal question’
of the Greek paradigm has been one that remains to be further discussed.
This examination needs to concern both the supply side and the demand side
of the market.
Difficulties have also been evident in the short-sea shipping front, as a
result of the absence of a successful strategy that would take into due
consideration the need to integrate sea transport with hinterland transport
modes. Development in short-sea shipping has been slow, and complaints
have been expressed by both service suppliers and current and potential
users. All these at a time when Greece, as a member of the EU, is supposedly
implementing a policy of promoting short-sea shipping since 1995, and has
been among those member states that have benefited from financial
initiatives aiming at enhancing the interoperability and the interconnection
of the environmentally friendly sea transport within wider supply chains.
An intermodal approach aiming at exploiting the comparative advantages
of more than one mode in the appropriate transport leg, thus optimising
The Greek Paradigm of Maritime Transport: A View from Within 9

the overall chain and facilitate the arrival of ocean going cargoes, has still
to develop. Which factors contribute to this slow process and why this
sector has been underdeveloped when it has been regarded as a vital
element of achieving sustainable mobility is certainly a question to be
answered.
It is also worth examining what has gone wrong in the case of Greek ports
development. This is simply a case of failing to combine a positive
geographical location with governance, management and organisational
forms of port activities, in order to increase the use of the national port
system by non-captive users. When other countries in the region (i.e. Italy,
Spain) or elsewhere in the world discuss the potential of gateways
developments, newly devolved port entities in Greece are still searching
for which strategies to endorse. True, Greece embarked on a much-needed
major port devolution programme in 1999. Still, almost a decade later, a
number of indecisions, severe complaints by the users – with several of them
standing sceptical regarding the future of their visits – and successive lengthy
industrial actions are taking place too frequently. The presence of
intermodalism via the functional integration of Greek ports with inland
transport modes has been postponed in several cases. In the absence of a
stable framework, securing the essential public or private funds stands as an
insurmountable difficulty. Piraeus, a major hub port in Eastern Mediterra-
nean, Thessaloniki and the other ports of national interests have not
managed to enhance their competitiveness. Whether they will manage to do
so in the future is something that might be answered only after addressing
what went right or wrong in the early post-reform days, and what might be
done to correct the observed failures.
There is another dimension of the maritime transport sector that is
frequently neglected: maritime tourism. Greece remains a major tourism
destination, and the country’s ports host several maritime tourism vessels,
whether these are cruisers, yachts, or other leisure boats. In the post-9/11
period, maritime tourism, in particular the cruise sector faced severe
difficulties. Flagging-out followed complaints for the comparatively
expensive operating costs, and lengthy discussions regarding crew composi-
tion. Along with the bankruptcy of a cruising operator under the Greek flag,
and the major worldwide cruise sector consolidation, these events brought
the Greek flag to a state of extinction in late 2003. Since then however
fortunes have changed and a trend to offer cruise services of advanced
quality by Greek-flagged vessels is part of the agenda. The growing number
of passengers that cruised Greece exceeded 925.000 in 2005, representing an
increase of 22% compared to 2004, while a further increase was observed
10 ATHANASIOS A. PALLIS

in 2006, and cruise passenger numbers in 2007 are set to be at a new record.
Meanwhile, a fifth cruiser ship has decided to operate flying the Greek flag.
A number of other sub-markets of maritime tourism have also continued
to expand their services, with product differentiation and ‘variety’ being
key issues towards prosperity. The frequently ignored ‘tourism’ component
of the Greek maritime transport paradigm provides another interesting case
of revival that is worth to be examined in detail.

1.2. THE STRUCTURE OF THE BOOK

In a nutshell, this volume examines the various facets of the Greek maritime
transport paradigm, aiming to identify those parameters that have resulted
in the various unique successes, the capacities of some maritime sectors to
remain competitive far beyond the national borders, and those parameters
that explain the observed failures and difficulties observed in the case of
several other markets of maritime transport that, paradoxically at first sight,
are more connected with the national economic space.
In Chapter 2, Helen Thanopoulou provides an analysis of international
Greek shipping in the 21st century and of recent developments at the level
of its specialisation and age. Through astute investment moves and quick
responses to market challenges a fleet – whose development prospects
looked rather grim around the millennium after many years of almost
uninterrupted expansion – sailed with new dynamism into the new century
and the new era of shipping. While the age of the Greek-owned fleet, and
its heavy specialisation in ship types faced with a sea of regulatory changes
as the 20th century was coming to a close, seemed to challenge the conti-
nuation of decades at the top of the world fleet, Thanopoulou analytically
describes how Greek-owned shipping has sailed again through its dema-
nding environment in recent times as in a repetition of a pattern.
The analysis draws from the foundations of Greek shipping competitive-
ness which allowed for its survival and success in the all too often changing
markets of the last decades which are reviewed early in the chapter.
Focusing on the good timing of recent changes in the age and specialisation
of the Greek-owned fleet and on the new trends they set for the development
of the fleet, Thanopoulou concludes that the market ‘feel’ of the Greek
shipping community led to the Greek-owned fleet not only transiting
successfully into the 21st century at the leading position in world shipping
hierarchy, but also building solidly on its existing strengths while venturing
into new areas.
The Greek Paradigm of Maritime Transport: A View from Within 11

This chapter provides also some notes of caution. In her concluding

remarks, the author stresses that the recent changes of the Greek-owned
fleet can only prove successful in the long-run if they are not contradicting
the fundamentals of shipping competitiveness in traditional bulk markets.
While the structural characteristics of this most international Greek industry
may eventually themselves be challenged in the course, Thanopoulou
remains optimistic despite her caution on the transient character of mari-
time glory. This optimism is based on the concentration of talent and
accumulation of human resource skills in this internationally hegemonic –
sole example for the whole country – national industry, a concluding remark
which points to the extensive discussion of this aspect in the next chapter.
In Chapter 3, Ioannis Theotokas analyses the organisation, management
and strategies of Greek shipping companies. All these have been successful
characteristics of Greek shipping over time. Theotokas discusses relevant
empirical evidence, collected in different points of time and employing a
resource-based view of the firm. The author concludes that resources and
capabilities created the basis for the development of core competencies,
which in turn led to the formation of a sustainable competitive advantage:
Greek shipowners succeeded in exploiting opportunities in the freight
markets either by using the resources and capabilities of their companies or
by investing in developing new ones.
Greek shipping companies are family controlled and managed firms. In
most cases, the founder remains responsible for both the strategic and the
operational management of the companies. The author explains that their
organisational culture gives them flexibility and ability to react instantly to
opportunities. Last but not least, the recruitment of competent employees
contributed to the development of a superior know-how for the technical
management of the ships. People employed in the industry possessed a wide
and industry-specific tacit knowledge that allowed the cost-effective
operation of ships. Many of them used their knowledge base to put their
entrepreneurial talent into practice, by creating small-sized, family-run
firms. Ship officers and shipping company employees went on to create their
own start-up companies, many of which became key players in the Greek
shipping industry. Thus, human resources, knowledge base and entrepre-
neurship emerge as the main factors that contributed to the creation and
development of the main body of Greek shipping companies. At the same
time, networking continues to be a key issue of Greek shipping companies’
strategies. The question that one might pose is to what extent this is going to
be sustained in the future, given that the business environment of shipping is
continually changing. Theotokas believes that it depends on the companies’
12 ATHANASIOS A. PALLIS

ability to remain flexible and adaptive, to renew and expand their knowledge
base and to practise the entrepreneurial talent of their people.
In Chapter 4, Ioannis Lagoudis and Ioannis Theotokas apply a supply
chain management approach aiming to further the existing knowledge of the
competitive advantage of the Greek shipping industry. In particular,
Lagoudis and Theotokas examine the importance and effect that three
additional factors, namely quality, level of service and time, have on shipping
management companies.
Analysing data obtained from a field survey of Greek shipping manage-
ment companies operating in the bulk, dry, liquid and specialised shipping
markets, Lagoudis and Theotokas conclude that these three factors play
a vital role to shipping companies in terms of value creation. Nevertheless,
deviations exist depending on company size and age, type of operating
vessel(s), chartering strategies and dominant philosophy regarding the
application of supply-chain strategies. The authors demonstrate those large
companies, as well as those that adopt diversified strategies, in terms of the
number of sectors they operate in, are more supply chain aware than Greek
medium-size companies, which operate mainly in the dry bulk market
and rely more on the spot market for the chartering of ships. Another
characteristic finding is that large Greek companies give particular attention
to cost-related factors, while medium-size companies and those operating in
one sector appreciate more those factors related to quality. In reference
to quality, personnel seem to be the most important attribute for the
competitive operation of Greek shipping companies, followed next by
reputation.
In Chapter 5, Ioannis Tsamourgelis focuses on the employment patterns
in Greek shipping, analysing the declining number of Greek seamen and the
determinants of negative employment trends in the Greek seafaring labour
market. The author focuses on the role of wage inertia in reducing emplo-
yment, along with structural mismatch problems. Greek seafarers on the
average enjoy lower wages relative to other OECD countries and higher
wages relative to their foreign colleagues who are employed on ships
under the Greek-flagged or Greek-owned ships. The detected productivity
differential, explains extensively the wage differential, especially in terms of
higher efficiency and loyalty. The high wages of Greek seafarers are
associated with the monopsony power of Greek shipowners over Greek
seafarers and disincentives of getting employment on ships not contracted
with the Greek Seamen’s Pension Fund. This chapter provides evidence of
hysterisis effects on seafarers’ unemployment, and explains it as the outcome
of wage inertia as well as structural problems in the seafarers’ labour market
The Greek Paradigm of Maritime Transport: A View from Within 13

that lead to a mismatch between the vacancies and the specialties and skills
of the unemployed.
Tsamourgelis develops a coherent employment function that takes into
account the restrictions presented in the sector, and describes the direct and
indirect relationships between the engaged parties in the system. The
formatted employment decision model seems to fit the presented evidence
and data behaviour, according to which shipowners employ Greek seafarers
for the critical position of the vessels’ operation, since they exemplify effort.
For the non-critical positions, shipowners prefer the cheap seafarers’ labour
so as to meet some cost minimisation criteria, thus they prefer employing
foreigners for ratings.
The policy implications of this economic analysis include the need for the
gradual abolishment of all disincentives rising from the social security
system, in order to allow Greek seafarers to seek employment on ships
under foreign flags, several positive employment policies in the sector (i.e.
better education and training, especially at the ratings level, facilitation of
mobility between specialties, etc.), and the creation of a strong employment
multiplier by taking advantage of the maritime cluster expansion in Greece.
Chapter 6 by Theodore Syriopoulos discusses the modern financing
instruments and markets that shipping companies can employ in funding
their investment plans, emphasising those practices that have been applied
by Greek shipping companies. Syriopoulos presents a concise and integrated
framework of two distinctive approaches of the modern, highly sophisti-
cated, innovative and complex shipping capital financing, which are self-
sustained (internal) financing, based on robust corporate profitability, and
external financing, with the company turning to the international capital
markets to raise the required funds.
This analysis concludes that the list of major financing tools for Greek
shipping include new forms of bank lending, leasing and syndication, IPOs
in international equity markets, private equity funding, high-yield bond
issues and securitisation, whereas freight forward agreements (FFAs)
provide an efficient risk management mechanism. Shipping companies
apply more outward-looking business strategies and take advantage of
international capital mobility. They gradually follow a more tailor-made use
of equity markets and further growth is anticipated in this area, although
the recent shipping IPO wave may not be repeated soon.
At the same time, shipping finance appears to have reached a stage where
innovative financing methods are combined with traditional approaches.
These include asset-backed lending and securitisation, leasing, syndicated
bank loans, structured finance and high-yield bonds. Private equity
14 ATHANASIOS A. PALLIS

companies and specialised hedge funds pay increasing attention to financing

shipping investments. The growth in freight derivative instruments has
served to spread risks associated with shipping and has made shipping a
more attractive sector to investors, private equity and hedge funds.
Syriopoulos also emphasises that this environment presents business
opportunities for shipping companies with robust liquidity, supporting fleet
expansion and sustainable long-term growth. However, it may also impose
risk constraints on shipping companies with over-leveraged balance sheets.
This discussion leads back to the consolidation issue: if lower charter rates
are seen, companies with weak liquidity and smaller family-owned firms
may become merger and acquisition targets or may seek to form strategic
alliances. Shipping companies in need of funds may also be attractive targets
of private equity funds that are constantly in search of undervalued
investment opportunities.
In Chapter 7, Alkis Corres examines Greek maritime policy developments
and the role of shipowners’ associations within this policy-making process.
Corres compares policy demands and policy outcomes and provides a cost-
benefit approach to the policies followed in the various sectors, aiming to
conclude on the role of the shipowners’ unions in policy formulation in
Greece for the period of 1976–2006.
This analysis highlights the presence of a simple institutional structure
with complex policy actors’ interrelations. On the one hand, the Greek
Ministry of Mercantile Marine is assigned with the role of developing
policies. However, there is no single style of Greek maritime policy. The
wide spectrum of policies ranges from the interventionist approach in the
domestic ferries’ sector, to the much freer regimes adopted for the ocean
seas carriers, and to the inertia in short-sea shipping developments. On the
other hand, unlike in other countries (i.e. Italy), the shipowners’ associations
in Greece are fragmented, with five different associations taking care of the
interests of particular categories of owners.
Corres concludes that shipowners’ associations appear to play a
significant, yet discreet, role in shipping policy-making in Greece. The
resilience and the flexibility of that system of governance have been proven
time and again in practice. He also points out that Greek shipowners’
associations have generally been quite placid in their demands on the
government, a recent exception being the Association of Greek Coastal
Shipping Companies. Legal challenges, strike threats and lockouts have not
been seen for years. With the exception of disputes related to the adoption of
cabotage liberalisation, Greek shipping has been enjoying a long-term period
of industrial peace. However, the author notes that the perceived activity of
The Greek Paradigm of Maritime Transport: A View from Within 15

the shipowners’ associations in Greece cannot alone explain their members’

degree of success abroad. Although their multifaceted networking clearly
offers advantages to their members, neither their own initiatives nor the
important support offered by the Ministry of Mercantile Marine, are
sufficient to explain alone the perceived successes of Greek shipping.
In Chapter 8, Maria Lekakou examines the reasons that have led to
endless difficulties in developing an efficient and effective Greek coastal
shipping system. Lekakou analyses how the interplay of oligopolistic market
features and ineffective state policies has resulted in an unstable coastal
market that undermines the quality of the supplied shipping services.
Lekakou discusses the role of an intervening state in shaping a regulated
oligopoly. Emphasising the essential characteristics that a passenger
transportation network has to fulfil, and providing evidence of the limited
extent that these criteria have been applied for developing Greek coastal
shipping, the author identifies the absence of a systemic approach that
would take into account all the constituent parts of coastal transport and act
as the driving force towards the modernisation of coastal shipping services.
While the assurance of public interest and the reinforcement of competition
stand as the priorities of the EU-level coastal market liberalisation, current
major implementation problems in Greece continue. The terms of public
service obligation assignments the entering into a contract of public service
provision and other institutional issues (i.e. the short duration of contracts)
are received with criticism by the users and the shipowners. Based on an
adjusted Herfindahl–Hirschman Index, the author also identifies a high
concentration of the supply side of the market.
This analysis concludes that a change of perception is essential in order
to achieve a sustainable balance of public and private interests. Rather
than focusing on the ‘ship’, Lekakou suggests the endorsement of a systemic
and network approach (network – port – company – supporting services –
monitoring of traffic and economic data – evaluation – assurance of service
provision), in parallel with the definition of the ‘essential public service’
elements and the enactment of initiative for the assurance of the public
interest. This analysis stresses that the geographical peculiarity of Greece
does not allow the possibility for copy and paste ready solutions endorsed in
other regions, but requires special solutions and potentially variable
frameworks relying on the specifications of the system. These solutions may
involve fundamental organisational changes as the very model suggested by
the relevant EU Regulation 3577/92 starts to show its weaknesses.
The coastal question is also the theme of Chapter 9 by Amalia
Polydoropoulou and Nikolaos Litinas. This chapter models the demand
16 ATHANASIOS A. PALLIS

for Greek passenger shipping. Polydoropoulou and Litinas provide a

methodological demand-modelling framework based on understanding the
choice behaviour of individuals addressing the competition and/or comple-
mentarity of ships and airplanes. The methodology was applied to a case
study on the competition between passenger shipping and aviation in the
Northern Aegean region, based on the analysis of discrete choice data
collected on an annual base for 2001–2005.
The models developed by Polydoropoulou and Litinas include a
multinomial logit model with dependent variable, the choice among
different types of maritime services and airlines. The results show that
travel times and travel costs of the alternative modes play significant roles in
the choice of the alternatives. Furthermore, socioeconomic characteristics
such as age, education level, purpose of trip and experience represented by
the prior frequency of travel with the specific mode, are also found to be
significant. In addition, response bias indicators are applied to capture the
propensity of respondents to justify their prior choices and their travel-
related constraint to be accompanied by their car in their trip. The models
developed are used to calculate the value of time for the alternative modes.
They can also be used for prediction of the market shares for the different
alternative modes. The methodology and modelling results presented in this
chapter offer a paradigm for applying innovative techniques of decision-
making theory that can be used by policy makers and service providers to
offer services better tailored to the passengers needs.
In Chapter 10, Seraphim Kapros and Costas Panou seek answers to the
reasons that short-sea shipping in Greece remains in a marginal position.
The emphasis of this chapter is on the weak links between coastal shipping
and intermodality. The authors suggest that the reason for this missing is the
fact that Greek success in maritime transport is built on a port-to-port
organisation, while intermodality needs a door-to-door approach of the
chain management which is currently absent.
This analysis has taken place in light of EU transport policies aiming to
advance intermodalism and the advancement of short-sea and coastal
shipping via their integration in multimodal chains. Kapros and Panou
examine developments in the wider Mediterranean region and emphasise the
presence of two failures of integrating short-sea shipping in intermodal
transport chains within a ‘quasi-favourable’ environment. First, the state
has been reluctant to take the necessary measures to support alternative
modes such as coastal shipping. Second, the majority of the main market
players (i.e. coastal shipping operators and road haulers) have not endorsed
the idea of collaborating to provide the line-hauls in large intermodal
The Greek Paradigm of Maritime Transport: A View from Within 17

chains, which resulted in the low visibility of coastal shipping in terms of

intermodality. As a result coastal shipping is perceived by many shippers
and freight forwarders as a less competitive transport service, and has failed
to increase its freight modal share by capitalising on the market gap which
resulted from the shrinking rail sector.
The authors suggest that to reverse this situation, the coastal shipping
industry must invest in building strategic market alliances with forwarders,
shippers and other transport players. Moreover, they stress that ports need
to play a key role in the development of intermodal coastal shipping, and
that the availability of adequate and reliable information is essential for the
effective operation of intermodal chains. These two issues are the themes of
the next two chapters.
Concentrating on one of the most neglected sectors of the Greek maritime
transport paradigm, my own contribution in this book (Chapter 11)
examines the search for a long-term port strategy in Greece. The adopted
design of port reform that has been underway since 1999 follows inter-
national trends, aiming to support autonomous and commercially driven
port entities. However, the twofold assessment of the actual developments in
port governance and performance analysis emphasises a conflict between the
scope of the governance choices and the adopted practices.
The examination of the input of this port reform, which is the port
governance fit in place, identified inconsistencies between the economic
context, the port strategy and the Greek ports structure. This inconsistency
has a direct impact on the financial performance of the Greek ports. While
Greek ports exhibit positive bottom lines in their financial accounts, they
still have not attained a solid course of robust growth and competi-
tive development. Certain financial rigidities are still present and raised
considerable doubts as to the efficiency of their organisational structures.
Even though financial performance is only a part of the overall performance
of a port system, these findings underline an imminent need for further
reforms.
With national port reforms starting less than 10 years ago, the governance
of Greek ports is still in a state of flux. There is, however, a clear indication
of paths that could enhance a better performance, reversing many decades of
an inefficient and ineffective interventionist public sector management and
inward-looking policies. These include amendments and re-consideration
of political practices that might further modify the structures of the sector,
thus enabling the Greek ports to adjust their strategies. Among others, this
study highlights that future essential changes should include the lowering
of entry-barriers, the introduction of intra-port competition, labour
18 ATHANASIOS A. PALLIS

reforms, limitation of the existing political interference and the establish-

ment of really autonomous port authorities.
In Chapter 12, Nikitas Nikitakos and Maria Lambrou examine the extent
to which the various sectors of Greek shipping have endorsed digital
shipping applications. While e-business is developing rapidly, the pace and
pattern of development of these technologies and related business practices
are quite variable. The global economy is converging towards common,
homogenised and integrated organisational models, whereas e-business
methods are seen as a set of practices congruent with the ‘modern’ way of
organising economic activities. In the shipping industry, there are various
implementations and modes of use of maritime electronic services, which
target the facilitation of maritime business operations and tasks such as
chartering, procurement, manning, planned maintenance, technical and
operational monitoring of the vessels, voyage planning and navigation, as
well as safety, security and emergency operations.
The analysis of Nikitakos and Lambrou is particularly interesting because
it provides a distinctive examination of the cases of Greek-owned, ocean-
going shipping companies and of the Greek-owned short-sea shipping sector.
The authors review current practices and emergent patterns regarding digital
shipping, and cite empirical evidence regarding perceptions of key barriers
and incentives in the Greek-owned shipping sector, as interlinked with
overall firm characteristics and strategies. Whereas they observe a low level
of use and very moderate technology evolution trends, in the Greek-owned
financially robust shipping sector, they seek a more thorough understanding
of the digital mode of operation in the international shipping industry
context. Indicating the way forward, this study considers the emergent
digital shipping operation frameworks and the important determinants of an
organisational, decisional context as essential means in order to set digital
shipping strategies, design market policies and design and implement
business models and technical options toward a future frictionless and
networked shipping environment.
In Chapter 13, Mihail Diakomihalis examines the evolution, structures
and prospects of Greek maritime tourism. The chapter emphasises the
advantages from a distinctive analysis of each of the three main activities
of maritime tourism, cruising, yachting and coastal leisure shipping, respec-
tively, while it also assesses the impact of the sector on the main
macroeconomic data of the Greek economy.
Examining cruise tourism, this analysis provides evidence of a stable
demand increase, with this type of maritime tourism becoming significant
for a number of Greek ports. The fact that the fleet of Greek cruisers has
The Greek Paradigm of Maritime Transport: A View from Within 19

shrunk considerably over the last few years and that the cruise supply is
offered mainly by ships of foreign interests under foreign flags, is considered
to be the main disadvantage of the Greek cruise market. The author also
discusses the structural developments in the largest professional yachting
fleet worldwide: This is the supplied yachting services in Greece employing
over 9,200 people. This examination emphasises that development of port
infrastructures is a major problem: comparatively to the other European
Mediterranean countries, Greece falls short, both in the number of mooring
posts, and the quality of services provided. This chapter also concludes that
a third emerging sub-market, that of coastal leisure shipping that provides
daily sea excursions to more than four million tourists annually, contributes
substantially to the local economies of the regions that have developed this
alternative form of tourism. Finally, Diakomihalis also provides estimates
of the overall impact of maritime tourism on the Greek economy, stressing
that the contribution to the Greek balance of payments has increased in
recent years.

1.3. CONCLUDING REMARKS

The ambitious aim of this extensive, in terms of issues discussed, volume has
been to fill some of the gaps in the international literature of maritime
transport studies as regards the unique paradigm of Greek maritime
transport by combining the various aspects of it under one heading. Yet, the
diversity of the components of any maritime transport system and the
multidisciplinary approaches that might be endorsed in order to compre-
hensively analyse such a system has ruled out outright the potential for a
complete analysis. This volume is certainly not exhaustive. Nonetheless,
apart from putting the Greek maritime record(s) straight, the examination
of a number of facets of the Greek paradigm included in the chapters that
follow facilitates future comparative research of specific maritime transport
systems. Within the vast and complex economic environment of the globa-
lisation era, whose changes affect the organisation and development of all
transport systems, similar projects and the consequent accumulation of
several studies on related issues aim to enable a wider synthesis.
Whether this volume achieves its ambitions is something for the reader to
decide. It has to be noted, however, that all contributors are currently
affiliated with the Department of Shipping, Trade and Transport at the
University of the Aegean on the Greek island of Chios, most of them being
active in – or founding members of – the recently established Hellenic
20 ATHANASIOS A. PALLIS

Association of Maritime Economists (2006). This writing clustering is

neither the outcome of any type of ‘corporatism’, be this of the most
benevolent academic character, nor of any type of ‘nationalism’ whatsoever.
Rather than these, this is an attempt to provide a ‘view from within’, from
the very edges of the most extrovert ancient archipelago, the Aegean Sea.
It is commonly said that ‘Greeks have the sea in their blood’; hence it is
really worthy to discuss the economics of the Greek maritime transport
paradigm having an input by those that are part of the tradition. In other
times, the contributors to this volume might have chosen to join the local
tradition and become entrepreneurs, seamen, or providers of any other
maritime transport services. They chose otherwise, devoting their profes-
sional lives studying the various facets of maritime transport while living
and breathing the atmosphere of the Chios island – one among the so-called
maritime islands due to the origin of one of the largest local pool of
shipowners and seamen, and Greece’s trademark for all too long.

NOTES
1. Basil Metaxas was one of the prominent post-war maritime economists who
laid the foundations of maritime economics in the second half of the 20th century.
2. Any reference is omitted as it may lead to omitting distinct studies and be thus
unfair to their authors. It has to be stated, however, that these studies, and not least
the cooperation with several of those who conducted them, have provided many of
the contributors of this volume with the drive to embark on the study of the maritime
world. It is only in the context of this introduction that they remain anonymous; in
any other respect, their contribution is gratefully acknowledged.
3. With few exceptions, studies that have been published in Greek are used mainly
as undergraduate teaching material. Again, any reference here is omitted, as it
creates the potential to forget specific studies and to be unfair to their authors.
4. Naftemporiki, New Historical Record for Greek-Owned Fleet, 28 February
2007.
5. Naftemporiki, Over 2.4 Billion Dollars in Newbuildings, 6 March 2007.
6. The list of companies of Greek interests that are involved in ocean shipping and
have gone public in recent times is extensive and includes: the NYSE listed Danaos,
Diana Shipping, DryShips, Eagle Bulk Ship, Excel Maritime, Genco Ship & Trade,
Genmar, Navios Maritime, Quintana Maritime, Stealthgas, TEN, and TOP Tankers
Inc.; and the London Stock Exchange (LSE) listed Global Oceanic and Goldenport.
7. The European Community Shipowners Association (ECSA) chairmanship by
John Lyras in the 1990s is indicative.
8. In 2007, Nick Fistes confirmed as the new chairman of the Independent Tanker
Owners’ Association (INTERTANKO) and Philip Embiricos confirmed as the
second Greek president of BIMCO (following the late George P. Livanos in
1989–1991), while Nicky Pappadakis is Chairman of INTERCARGO, and Spyros
 The Greek Paradigm of Maritime Transport: A View from Within 21

Polemis is the first Greek Chairman of the International Chamber of Shipping (ICS)
and International Shipping Federation (ISF). Efthimios Mitropoulos is the Secretary
General of IMO for an initial four-year period commencing in January 2004.
9. Lloyd’s List, A Chance for Leadership, 2 April 2007.

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