By Jim Aristopoulos (Social anthropologist and Historian)
During the last decades, we have witnessed the economic rise of Far Eastern countries with the so called “Asian Miracle”. China is the main protagonist in this historical process. China has achieved this by binding ports in many countries in the Western world and transferring most of the goods internationally. Because of this, China has reached a level of economic dominion in most places in the world. There is, however, an aspect of economic life that China has not achieved a monopoly in – shipping. In this part of international trade industry, Greece, a Mediterranean country of only 11 million people, happens to rank first. Effectively, Greece is a great economic rival to China’s economic world dominion in this one industry.
For a country like Greece, which represents only 0.15% of the world’s population (compared to China 18.47%), it is really impressive that ships owned by Greeks represent about 21% of global shipping.
But how did Greek shipowners manage to create the largest international merchant fleet and remain at the top of global shipping, facing crises, adversity and challenges in an extremely competitive environment, with positive growth rates?
Unlike most Greek entrepreneurs, shipowners have, from the beginning, treated shipping as an export sector, incorporating – even the so-called “traditional” – models of management of multinational groups, while adopting a unique, special and extremely aggressive business philosophy, aimed at development and expanding into new markets and sectors, as top consulting firms admit in the City of London, the world’s most important financial center for shipping.
Although Greek seafaring is based on small and medium-sized companies, which are usually family businesses, it has unique advantages, such as flexibility and adaptability to changing economic conditions, and has been able to respond immediately to all major post-war crises by showing resilience to changes in trade standards (technical, technological, environmental, etc.) and international standards, world trade trends and international freight market requirements.
Assistant Professor of Maritime History at the University of Piraeus, Tzelina Charlaftis, has authored books entitled “History and Shipping, 16th-20th century” (Stachy Publications) and “History of Greek-Owned Shipping, 20th century”. He revealed that in 1875, Greek shipping was at its peak with 70 seagoing cargo ships carrying cargo between the Black Sea, the Western Mediterranean and Northern Europe. The records of that year show that the Greek fleet consisted of 2,500 sailboats, with most of the fleet based in the Cyclades, where the island of Syros turned into a shipping center with 800 registered sailboats.
In the book “The History of Greek-owned Shipping,” he claims that from the creation of the Greek state until the end of World War I, Greek ships increased their capacity tenfold, crossing the Mediterranean into the Black Sea and the Atlantic Ocean into the North Sea.
In early 20th century London, Greek shipowners set up business networks and sought to penetrate the world’s financial centers. In the period 1915-1919, Greek shipowners made the gradual leap into the Atlantic and the New World (the Americas), while in the interwar period, they strengthened their position in world shipping by taking advantage of the decline of the British fleet and other European shipping countries. Until 1939, Greek shipping was on the rise and spread more than any other period since Roman times!
The advantages and disadvantages that Greece and China have in terms of shipping.
If we look at the map of Greece, we will see one of the main reasons for its advantages in the shipping sector.
First of all, 80% of Greece is covered in mountains – there are many advantages to having a mountainous landscape, and there are some negative aspects as well. For example, it’s quite hard to grow large quantities of food in mountainous regions. So, the Greeks have traditionally turned to the sea in order to fish (since it’s a country surrounded by sea) and engage in maritime trade in order to get food like wheat and resources like gold.
Also, Greece is a nation with over 5,000 islands, hundreds which are populated. This implies that having a big shipping industry was vital for the population centers in these islands.
Another advantage Greece has is its geostrategical position.
Not only is Greece geostrategically located between three major continents (Europe, Africa and West Asia) by being in the East Mediterranean, but it is also quite close to the Suez Canal, one of the most important trade routes in the world. At the same time, it also has a short land connection to some of the wealthiest European nations on earth.
All these factors imply that Greece has been destined to be a maritime and trading nation ever since it made its geographical boundaries. As such Greece has been a seapower for many milleniums, forming not only a great shipping industry whose roots lie in ancient customs of focusing on the sea and transports of goods, but also a great navy, which has never faced defeat in any battle since its modern formation in 1821.
This is a clear advantage over China, whose investement on the sea is quite recent. In China’s most important historical periods, they had been a land power, whose economy was mostly based on agriculture and livestock.
However there are clearly some advantages on the part of China which have an obvious impact for them in terms of competition.
70 years ago, the image of China was that it was a huge but poor country, with no trading partners, diplomatic relations and no external backers – a Giant in isolation, doomed to pursue self-sufficiency.
In 2021, however, the economic power of China, when it comes to its global real estate portfolio, has exceeded to the point that has granted the country great capital that runs at about $14 trillion. Despite the Covid-19 pandemic, its GDP growth has not ceased at all, unlike Greece.
These capital advantages and this economic growth have given the Chinese the chance to buy about a dozen ports in Europe, such as the port of Genoa in Italy, the ports of Marseille, Nantes and Le Havre in France, as well as the port of Marsaxlokk in Malta, those of Bilbao and Valencia in Spain and many more. Among the ports that have been bought by COSCO is the port of Piraeus in Greece, exploiting the chance of doing so after the Greek economic crisis in 2010. The Chinese have invested in buying the greatest port in the East Mediterranean, which might cause a form of dependency of the Greek shiping industry on Chinese companies.
Many Greek shipowners, such as Evangelos Marinakis, have already expressed their concerns about the effects of COSCO’s monopoly on Piraeus. Furthermore, COSCO, like most of China’s businesses, are state-controlled, which implies that the achievements of Chinese businessmen are a direct benefit for the state as well, giving out the fact that China’s regime lacks a clear distinction between private sector and state-owned businesses when it comes to economy.
This is not the case with Greece, where Greek businessmen and shipowners consider the state a parasitic bureaucratic Frankenstein that destroys private initiative. This mentality however has historically led many Greek shipowners to tax evasion and enact their influence on many political leaders in Greece – there have been laws that have granted them tax exemptions of a high degree, something that has caused the Greek state to lose a great amount of tax revenue for many years now.
What will happen in the future and how will this shipping rivalry between China and Greece play out?
Given the fact that China’s investments in Southern Europe shall continue to spread, there is no doubt that the economic influence on Greece shall increase. The Greek shipping industry has two main issues to face in the future: the first is the fourth industrial revolution, and the second is the fear that China might overtake Greece as top shipping nation by 2030.
Already on March 31, 2015, the Shanghai International Shipping Institute officially released its 2030 China Shipping Development Outlook which analyses the future of China’s shipping industry. According to the text, China’s total shipping volume will reach 6.2 billion tons, which will account for 17% of the world’s shipping volume.
China is expected to exceed Greece in terms of total fleet capacity by 2030, and China’s ship financing will account for 30% of the world volume. These facts have troubled Greek shipowners who believe in investing in the fourth industrial revolution. The so-called fourth industrial revolution, which already greatly affects the daily lives of people on land, makes the first, but dynamic steps in shipping.
This period, for some representatives of the shipping industry, is more important than the “steam revolution” in shipping in the 19th century, and the transition, then, from sail to coal – a development that gave a huge boost to shipping, increased speeds, increased ships and strengthened safety.
People are now turning to green technologies, while communication capabilities and automation are slowly but steadily reducing the number of sailors.
The picture is similar in shipyards and ports since automation has become mainstay. Unmanned terminals in ports are constantly multiplying, while in shipyards the demand for workers is declining due to the dynamic entry of automation, robotics and communication in industry.
“Green ships”, autonomous ships, smart ships, smart materials, digitisation, interconnection, cybersecurity, blockchain and information dissemination, artificial intelligence and robotics – these are the next challenges for the shipping industry, which seems to be entering a long period of transformation.