In the sparkling blue waters off Greece's bustling port of Piraeus, dozens of hulking carrier ships loom out of the haze of a retreating thunderstorm. After spending several boom years racing across the world's oceans, they swing idly on their anchors, waiting for cargo. The global financial crisis has hit the shipping industry hard, reducing volumes and sending charter rates for dry bulk cargo such as iron ore, coal, steel, grain and other commodities plunging by about 90 percent. And Greeks, who control nearly 20 percent of the world's merchant fleet and whose shipping tycoons such as Aristotle Onassis and Stavros Niarchos gained near mythical status in the 1960s and 1970s, are feeling the pinch. “The shipping industry is at the forefront of the free economy, and we're the first ones to feel the recession as well as the boom,” said shipping broker Francois Savaricas of ACE Chartering. “In this case, what we're going through is not so much a shipping crisis as a whole financial crisis.” With the international financial crisis leading banks to sharply cut back on lending, and consumer spending contracting in many places, it is much harder to move goods, and there are fewer goods to move. The crisis means that “fewer consumer products are sold because people don't have money to buy them, ... therefore this has a knock-on effect on our sector, which is particularly globalized and prone to all these fluctuations,” said Nikos Efthimiou, head of the Union of Greek Shipowners. Efthimiou said there had been “a violent drop from June to today” in the dry bulk and container sector, with oil and gas tankers weathering the storm the best so far. Shipowners, brokers and analysts say ships that earned $50,000-100,000 a day a few months ago are now struggling to take in $5,000-10,000 a day. The Baltic Exchange Dry Index, an indicator of dry bulk freight rates, has plunged from a record high of 11,793 points in May to a nine-year low of just 815 on Nov. 4. Analysts and brokers say the scene outside the gritty port of Piraeus, with ships anchored and awaiting orders, is being replayed across the world, particularly outside Asian ports such as Singapore and Shanghai. Savaricas says that about 25 percent of the world's fleet is at anchor because it is uneconomical to trade. “The lack of liquidity in the banks meant there's no cargo moving, and so from one day to the other there's been no volume, no cargos and no movement for the ships,” he said. It's no small matter for Greece. Shipping makes up about 7.6 percent of gross domestic product and brought ¤16.9 billion into the country in foreign exchange last year, 18 percent more than the previous year, according to the Union of Greek Shipowners. The wider shipping industry employs 160,000 people, or roughly 4 percent of the Greek work force. The Greek-controlled fleet, counting vessels of more than 1,000 tons under Greek and foreign flags, came to 4,173 ships and more than 154.5 million gross tons in February, Hellenic Union of Shipping figures show. Just a few months ago, the picture was completely different. Shipping had enjoyed four or five years of burgeoning trade that had seen companies ordering new ships while still keeping old vessels in service, reluctant to decommission and sell them for scrap. “Everyone knew that the shipping market was going to downturn, and they prepared for it. But when it hit, it hit so hard and so fast,” says David Glass, managing editor of the Greek shipping publication Naftiliaki. “One morning, everything was a few clouds on the horizon. By evening, the thunderstorm had flooded. It just happened so fast.” Now, companies with old vessels are selling them for scrap in India, Bangladesh, China and Pakistan. Others are canceling orders, forfeiting millions of dollars in down payments to shipyards. Harry Vafias, who heads StealthGas Inc., the NASDAQ listed gas arm of the Vafias Group, says oil and gas tankers have not suffered the same freight rate drops. Of the Vafias Group's 82 ships, only five are bulk carriers. With orders for 24 new vessels in shipyards in China, Japan and South Korea, the group has the fourth largest order book in Greece, Vafias says. But with banks unable to provide financing, or giving it only on very expensive terms, companies are forced to use a lot of their own money to take delivery of the ships. Industry experts say it can't last forever. “Trade can't stop,” Efthimiou said.
