glyptis_greek shipping dynasties

The Development of

Greek Shipping Dynasties:

Past, Present, Future

Dr Loukas G. Glyptis

A historical review of Greek Merchant Shipping is crucial for one to appreciate its nature and identity as well as the reasons behind its persistent ranking on the top of World Shipping

Preamble

This presentation will focus on:

A historical overview of the development of Greek Shipping dating as back as the 17th century

A more detailed review of the emergence and

entrepreneurial development of the Greek Shipping Families

Current Trends and Conclusions

Content

History of Greek Shipping:

From the Post Byzantine to the

Industrial Revolution Era

(17th 19th Century)

The 17th Century

During the 17th century, piracy and corsairy flourished in the Mediterranean due to the declining naval control of the Venetians

and the Ottomans

Testimonies suggest that some Greeks joined piracy and corsairy under the protection of different country flags, something which

led to the establishment of the first Greek families with a tradition in piracy and corsairy

The 18th Century

The 18th century is characterised by wars that re-drafted the

geo-political map in Europe

Greek pirates and corsairs were preoccupied with smuggling

wheat and other supplies into ports embargoed by the

Empires of the time

The 18th Century

Greek pirates and corsairs earned enormous profits out of the smuggling business, something which provided the foundations for the establishment of Greek-owned shipping

in the early 18th century

Regions in which Greek-owned shipping first developed

Up to the second third of the 18th century, Greek-owned shipping developed around the Ionian Islands

Later on, the Isles of Cyclades joined the network of Greek-owned shipping due to their overpopulation and

their administrative autonomy

Moreover, after the treaty of Kutchuk-Kainardji in 1774

the new trade routes between the Black sea and the Mediterranean, introduced more islands of northern Aegean (e.g. Chios, Psara)

Greek Shipping in the 19th Century

The pre Greek Revolution Era

(1800-1829)


The 19th century was characterised by tremendous developments in trade and shipping such as the introduction of faster and larger ships

For Greek-owned shipping, enormous opportunities arose due to needs in Europe for:

Import of raw materials

Export of industrial goods

At the time, the captain of the vessel was simultaneously the ship-owner, the ship manager and the merchant

Greek Shipping prior to the Greek Revolution

Greek vessels then, while obviously owned by Greeks, were registered under various country flags due to an array of economic and political reasons

However, the use of the Greek-owned sailing fleet to support the Revolution resulted in its extensive destruction


The post Greek Revolution Era

(1830-1900)


Vessel Co-Ownership

&

Greek Shipping Networks

Greek Shipping in the 19th Century: Co-ownership & Shipping Networks

The development of the Greek shipping venture at the post revolutionary era was based on:

1. A traditional hierarchical organisational structure that fostered discipline and trust to the commands of the shipping family(ies) patriarchs

2. An entrepreneurial culture, which was indispensable to an effort to retain the family property by pursuing marriages even among members of the same family


Ship-owning families formed a powerful network that was established via offices in England, the Black Sea, Marseilles and

Alexandria

A distinctive characteristic of this network was the high trust among their members, which was embodied in such mottos as my

word is my bond

At the early stages of the network, most families originated from the

island of Chios, but from other areas as well, e.g. Constantinople


Families of the network of that time have predominantly

originated from Chios such as the Ralli, Rodokanaki, Skaramanka

and Skylitsi


In 1870s, the network was dominated by families mainly descended

from the Ionian islands; the Chiot families declined mainly due to:

1. The adverse developments in the trade of wheat at the Black Sea region

2. Lack of adaptation to technological advancements, e.g. adoption of the steamship, the telegraph and the telephone

3. Many 2nd and 3rd generation members of those families, invested in other commercial activities such as real estate

4. Poor investments to the British stock market during the economic crisis of 1858-1859


The prominence of a new group of families in the network did not alter its distinguishing structure and culture, which were still based on strong familial relationships and the security offered by their common place of origin

An example of strong familial relationships in the network is a case

where members of the Empeirikos family (descended from the island

of Andros), married to members of other Andriot ship-owning

families such as Goulandri, Mari and Koulouthra

Greek Shipping in the 19th Century: Co-ownership & Greek Shipping Networks

The Greek shipping network, despite maintaining its foundational values, evolved and differentiated in that:

1. Its profit generation activities were focused on shipping and much less on trade

2. Specialised in the shipment of certain bulk commodities such as wheat and coal

3. The networks emphasis shifted to the ports of the Black Sea

and Constantinople

History of Greek Shipping:

The 20th Century

The Enduring Role of the Network in embedding Greek-owned Shipping

(1900-1914)

Greek Shipping in the early 20th Century

In the 20th century, the domination of steamships over sailing vessels, necessitated substantial investments on the part of Greek ship-owners

During the transition era, it was a matter of knowledge to ensure the new method of propulsion offered more than the previous one

Well educated ship-owners or those who could trust and understand

naval architects and marine engineers were the ones who

transcended successfully to the steamship era

Greek Shipping in the early 20th Century

The number of Greek ship owners increased through the persistence of vessel co-ownership, which was to become the main financing and governance structure of the Greek shipping venture and its use to exercise control and spread risk


1900-1914

The network safeguarded the competitive advantage of Greek-owned shipping in the 20th century, because:

The necessary capital for fleet renewal was provided by the network members

Many captains were funded from ship-owning families in order to enter into the co-ownership of vessels; this enabled the latter to buy the vessel when its value was deemed to have been

low


1900-1914

The network also contributed to the emergence of a number of new ship-owners with origin from the islands of Cephalonia, Ithaka, Andros, Chios/Oinousses and Kasos:

These islands are not coincidental; they reinforce the importance of both common origin and affinity to the sea as the core values guaranteeing the cohesion of the network

Many Chiots and Aegnousiotes in particular, benefited from the practice of vessel co-ownerships, giving rise to a number of new ship-owning families: Livanos, Carras, Pateras, Hatzi-pateras, Michalos, Margaronis, Georgantis, Lemos, Xylas etc.


The Interwar Period (1918-1939)


1918-1939

In the aftermath of WWI, 70% of the pre-war tonnage had

vanished

Greek ship-owners benefited from soaring freights in 1919-1920

due to the shortage in vessel supply; freights collapsed when the

world economic crisis erupted in 1929

However, in 1932-1935, while the main competitor fleets, i.e. the

British and the Norwegian, recorded low or even negative growth

rates, the Greek fleet grew phenomenally

How did this happen?


1918-1939

This is due to what Helen Thanopoulou describes as the

anticyclical investment behaviour of Greek ship-owners:

It involves buying vessels when their prices are low and selling

them when their prices are deemed to have peaked

It is a major profit-generating strategy adopted by Greek ship-owners which persists nowadays


1918-1939

During the inter-war period single-vessel owners emerged

Single-vessel owners, based in Piraeus, sought to combine their capital with that of other, large-scale ship-owners originating from the same island, who possessed the expertise and capacity to open an office in London


1918-1939

If the London office was successful, so would be the affiliated, Piraeus-based single-vessel companies

The London Schemes with excellent single ship clientele, were based on the family relationships which created new dynasties and

strengthened others through marriages


The Post WWII Era

(1944 - To date)


1944 - To date

WWII spawned a number of changes in World shipping:

The centre of maritime operations shifted from Europe to America

The type of commodities traded, which apart from dry cargo,

also included minerals, oil, cereals, coal, aluminium

As early as 1940, many Greek ship-owners move their offices to London and New York


1944 - To date

Greek-owned shipping boomed and ranked among the top national fleets after WWII because of:

1. The introduction of tankers at the end of 1940 to late 1950s mainly by Onassis and Niarchos

2. The registry of vessels under flags of necessity such as of Panama and Liberia, which promised significant tax benefits to the ship-owners

3. The purchase from the US of 100 Liberty vessels (with the provision of a 75% guarantee towards the purchase cost by the Greek government) by such families as Likiardopoulos, S. Andreadis, S. Livanos, Chandri Bros, George Nicolaou and Goulandri Sons


1944 - To date

Key characteristics of the Period:

Traditional ship-owners dominated the profession in the aftermath of WWII

However, simultaneously with the return to economic growth, new, smaller scale ship-owners emerged, particularly after 1960

The islands of Andros, Chios, Kasos, Cephalonia and Ithaka were again, the birthplace of many of the post-WWII Greek ship-owners

However, ship-owners emerged from other parts of the country, mainly Athens and Piraeus


1944 - To date

These new ship-owners were primarily of two categories:

1. Merchants and other entrepreneurs who were a lot more likely to fail due to their lack of know-how in ship

management. Successful examples of such ship-owners,

however, include Angelopouloi and Alafouzou

2. Merchant marines officers


1944 - To date

Ship-owners who emerged from merchant marines officers:

Either became shareholders to a vessel or bought a usually old vessel

As they usually lacked the finance to buy the vessel, the seller ship-

owner was providing the necessary capital as a loan

Examples of ship-owners with seafaring experience are Capt.

Panayiotis Tsakos from Chios and Capt. Vasilis

Constantakopoulos from Kalamata


1944 - To date

The phenomenal growth of Greek-owned shipping came to a halt in 1973 when the OPEC world oil crisis erupted

Since then, Greek shipping was subjected to the immense fluctuations and cyclicalities of world shipping that were caused by a number of economic crises with the latest being that

of 2008


The Financial Crisis (2008)

&

Current Trends

The Financial Crisis (2008) & Current Trends

Greek ship-owners were faced with an unprecedented shortage of liquidity due to:

1. The slowdown of the world economy

2. The oversupply of vessels in conjunction with substantial

freight rate decreases

3. The liquidity problems and restructuring issues faced by

Greek and international banks (e.g. RBS)


At the outbreak of the crisis some Greek ship-owners tried to

cancel contracts with shipyards for new-buildings

Income streams were disturbed as charterers demanded the

revision downwards of hire in time-charters


Despite the difficulties faced in accessing capital, Greek ship-

owners remained loyal to their practice of buying second-hands and building new vessels in times of crisis:

1. In 2012 Greek ship-owners invested more than $1.5 billion

in new-buildings and more than $1 billion in second-hands,

while they invested extensively in LNGs

2. Since the commencement of the crisis, Greek ship-owners

have bought 137 and 193 vessels from German and

Japanese firms respectively


But how did Greek ship-owners manage to proceed with their investment plans when the major banks providing the financing faced severe issues of liquidity and private equity was short?

In 2012-13, the major source of financing was through issuing

new shares or through IPOs (e.g. Livanos, Pitas, Economou,

Tsakos and Haji-ioannou)

Ship-owners such as Frangou, Restis, Pappas, Tsirigakis and

Panayiotides established Special Purpose Acquisition

Companies in order to draw financing from the capital

markets


2014 has been quite encouraging so far due to a positive turn of macroeconomic factors, including increases in freight rates, asset values

and new-buildings

However, there is no consensus yet whether world shipping will

exit crisis in late 2014 or in late 2015


Signs of recovery include:

The ongoing investment behaviour of Greek ship-owners

The partnership of Greek ship-owners with Australian parties to transport their cargo to the emerging markets of the Far East

The positive growth prospects of China and India


A snapshot of the competitive edge of the Greek-owned fleet today (VesselsValue.com):

19% of the highest value vessels today on an international level,

equal the investment cost of the remaining 81%

Greek ship-owners own the greatest proportion of this 19%, i.e.

892 vessels of $52.92 billion value

Only in 2014 Greek ship-owners invested $2.5 billion to buy 99

second-hands and $1.25 billion to buy 34 new-buildings

The total value of the Greek-owned fleet is estimated to $101

billion and is the highest of all national fleets

Conclusions

&

Projections

Greek Shipping: Conclusions & Projections

Greek-owned shipping is still inextricably embedded in a network of Greek maritime families underpinned by kith and kin relationships

A snapshot of the continuity & evolution of Greek ship-owners (20th century To date)

Greek Shipping: Conclusions

Most Greek Ship-owners originate from the Greek islands of Kasos, Chios / Oinousses, Andros, Cephalonia and Ithaka

Many of the traditional ship-owners are based in London, e.g. Goulandri, Chandris, Fafalios (GSCC), Niarchos, Empeirikos, Lemos, Koumantarou, Hajipatera

New ship-owners originating from the above places emerged after 1960 such as Tsakos, Angelikousis, Veniamis (President of UGS), Palios

Post WWII, the above list is extended to include ship-owners from Athens, Piraeus and the Peloponnese such as Kolokotronis, Prokopiou, Konstantakopoulos, Karnesis

This proves that Greek-owned shipping is not static and concentrated

Greek Shipping: Conclusions

Nevertheless, Greek ship-owners have adopted new modes of business governance that move beyond the traditional values:

1. Have recruited foreign crews and managers to Greece or their place of origin

2. Greek ship-owners have invested heavily in times of crisis, earning enormous profits from the purchase and sale of second-hands

3. Have moved beyond the perception that equity is the best source of financing, and apart from resorting to borrowing, they have listed their companies in stock exchanges

4. Have embarked on initiating joint-ventures with parties beyond the national borders, even with ex- competitors such as the Norwegians and the Germans

Greek Shipping: Projections

Greek-shippings future will remain bright as long as the Greeks retain their affinity and interest in the sea and as long as new Greek ship-owners emerge out of the maritime profession:

Greek Shippings history so far has shown that the most successful and enduring ship-owning families emerged from the marine profession

A crucial pre-requisite for the future of Greek shipping, therefore,

is the continued cultivation of Greek seafarers and marine officers

Who is Who

Dr Loukas G. Glyptis is a Lecturer of Management

Accounting at UCLan Cyprus. His special interests lie

with the cost management and control of inter-

organisational relationships as well as with issues of

governance in family businesses. Loukas has a PhD

from the University of Birmingham on the inter-

organisational cost management and control (IOCM &

C) practices of the Greek Shipping industry.

He has developed skills on qualitative field research

and has embraced theoretical perspectives that

endorse interpretive, critical and relativistic strands of

social theory. He has presented in a number of

conferences and his first publications focus on IOCM

& C and the accounting of family businesses.

Dr Glyptis also holds an MSc in Accounting & Finance

from the University of Birmingham and a BSc in

Business Administration from the University of

Piraeus, Greece.

glyptis_greek shipping dynasties

Documents

greekowned shipping

merchant greek shipping

psara greek shipping

greek shipping venture

greek revolution greek

century greek pirates

greek families

establishment of greek