In its latest yearly report on the Hellenic-owned fleet, Petrofin Research noted that the number of Hellenic vessels rose at 4,714 in 2011, rising from 4,655 in 2010, when a decline was apparent, as a result of a booming shipping market during the precious years. Currently, vessels are controlled by a total of 762 Hellas-based ship management companies, a number increased by four compared to the previous year.
“Currently, conditions in shipping are quite poor across all sectors and the volumes of s&p activity have reduced, scrapping has increased and the rate of newbuilding deliveries, although still very positive, is waning. Consequently, it is to be expected that these difficult market conditions shall have their effect in 2012/2013 in terms of the number of Greek vessels. There can be little doubt, however, on the ever rising Greek fleet’s DWT, which shall continue to grow as Greeks favour larger vessels. Turning to the age profile, we anticipate a quickening of the pace in which the fleet’s age is declining. The growth of scrapping will have a profound effect on the average age of the fleet, which is expected to decline to well under 15 years by 2012.
Given the presence of some very old coastal/port vessels, the average age of the Greek fleet for vessels over 10,000 DWT in 2011 was only 12.08 years, run by 460 companies. The figures change but only a little for vessels over 20,000 DWT, whereby their average age is 11.62 years, run by 426 companies. The top 30 owners in 2011 accounted for 52% of the Greek fleet, up from 50.74% the year before.
The most popular sector for Greeks is that of dry bulk, where 347 owners run 1732 vessels, over 10,000 DWT totaling 119.96m DWT and an average age of 13.3 years. The corresponding figures for tankers are 751 vessels, over 10,000 DWT totaling 97.08m DWT run by 95 owners and an average age of 9.08 years. In comparison, the Container fleet of over 10,000 DWT vessels is rather small at 189 vessels, totaling 10.64m DWT and run by 22 owners with an average age of 12.1 years” said Petrofin in its research report.
The overall age of the fleet
“The Hellenic fleet age has dropped yet again. The whole fleet is now 15.9 years old, down from 16.64 years of age in 2010 , down from 17.6 in 2009, 18.4 in 2008, 18.71 in 2007, 19.14 in 2006 and 23 years in 2005. This steady downward age trend does not only reflect the influx of newbuildings, but most definitely the sale, and to a lesser extent, scrapping and their replacement with younger vessels. Over 30 year old fleets have reduced from 205 in 2010 to 187 in 2011 (down by 8.8%). Still, 24.54% of Greek shipping consists of vessels of 30 years and above.
The most interesting development, however, has occurred in the youngest fleet ages of 0-9 years old. In this sector, the companies have exploded from only 30 in 1998 to 92 in 2009 and 151 in 2011. Clearly, Greek companies have invested in younger tonnage in order to remain competitive in the emerging global economic conditions. Within this growth, even the smallest fleets comprising of 1-2 vessels, have risen from 16 in 1998 to 26 in 2008 and 37 in 2011. It is self-evident that emerging companies have broken away from the historic model of investing in older tonnage and have invested in young tonnage. This signifies ambition and commitment and augurs well for the future. It is important to mention the effectiveness of the pressure exercised by banks who strongly favour and finance young tonnage” said the research.
All in all, the development of the Hellenic fleet despite the uncertain financial and shipping environment has been remarkable. Greeks have continued to provide enormous sums as capital for the building of new vessels and for the modernization of their fleets. It is clear that the Greek strategy involves bigger and younger vessels, designed to meet the requirements of charterers, banks and to provide satisfactory economic returns. “The new challenges facing Greek shipping are linked to the huge order book, the lack of finance and adverse effects of the shipping market on vessel values and cashflows. Such trying conditions are usually exploited by Greek owners to expand. Market conditions are especially favourable for large owners to grow even larger and we anticipate that the percentage of the Greek fleet held by the top Greek names shall increase further” said Petrofin.
Further analyzing company statistics, the research noted that the overwhelming trend is for the biggest companies to avoid overage fleets (over 20 years old), hence only 3 such companies remained in 2011. Furhtermore, it is believed that the interest of banks is concentrated in the larger Group sizes. Some banks focus on the biggest owners (including public companies) and some on the middle to higher Groups. In any case, assuming that the top 3 bigger Groups are of interest to the banks, these 3 Groups consist of 57 companies with 0-9 year old fleets and a further 24 companies with 10-15 year old fleets. The total, therefore, consists of 71 companies. Furthermore, there are a further 94 ‘modern fleet’ companies of 0- 9 years old in the lower 3 size groups and a further 80 companies with 10-15 year old fleets. It is reasonable to state that the age of vessel does count among banks, even though there are some banks that also look to secure the smaller owner with older vessels.
Commenting on this year’s findings, Petrofin Research mentioned that  “we are currently experiencing a weak shipping market across all sectors. Furthermore, the enormous order book and continuous imbalance between vessel demand and supply is pointing out to a longer term shipping slump.
Given the above harsh environment with declining asset values and weak cashflows, Hellenic shipping shall experience significant market and banking pressure. In order to maintain their fleets, let alone grow, Hellenic owners will need to invest increasing amounts of capital.
The above ‘squeeze’ is expected to result in a significant increase in scrapping of overage Greek-owned vessels, as well as some distress sales. The main beneficiaries of the ‘cashflow’ and ‘asset cover squeezes’ will be the large, financially strong companies, whether public or private. Consequently, substantial consolidation process is expected to occur.
Although some Hellenic newbuilding cancellations shall take place, the vast majority of newbuilding orders are expected to materialise, whether on time or with some delay. Consequently, with the reduction of the average fleet and the continuous delivery of newbuildings, the Hellenic fleet is expected to become even younger.
The prerequisites to further Hellenic growth and / or survival (especially for the smaller owners) lie with shipping banks who are currently very tight in the willingness to finance shipping, despite the industry’s offered rather generous terms. The attitude of banks towards foreclosures is also a key and whether they are prepared to continue with the same model of co-operation, as up to now. Although it is anticipated that banks shall become more demanding as the shipping slump continues, it is not expected that we shall see numerous bankruptcies. The reason is that banks are wiser and regard foreclosures as a true last resort only when the bank client relationship has vanished. Consequently, fleet disposals shall be accomplished on a ‘softly-softly’ basis, with the co-operation between owners and the bank when these become inevitable.
A key factor in maintaining a good relationship with banks is an owner’s ability to maintain his loan repayments and to provide additional capital when needed to maintain such repayment. Here, with the exception of the large private and financially strong companies, public companies hold an edge, as they are able to raise additional capital (admittedly via dilution of their shareholders) in the market.
A long lasting shipping crisis is likely to see a substantial consolidation of the Hellenic fleet and concentration into increasingly fewer names. A short lasting crisis, coupled with the return of banks towards competitive and abundant ship finance, is expected to delay the above process.
In every shipping crisis up to today, Hellenic shipping has emerged stronger. This time, Hellenic shipping is also facing a banking crisis. It will be interesting to see whether Hellenic owners’ flexibility, commitment and risk taking shall permit them to take advantage of the bad shipping market” concluded Petrofin.