Your Excellency, Dear Professor Shi, Ladies and Gentlemen,
Good Morning and welcome to all of you in this morning’s session of our seminar on One Belt One Road(OBOR) here in the Tsinghua-Carnegie Center in Beijing.
I would like to thank you very much, it is a great honour for me to be here and be able to speak to you about a subject which is extremely dear to every Greek, especially to Greeks whoare involved in the Maritime Business and Shipping.And why is this the case? For a very simple reason;because in shipping Greece stands tall.Greece has the largest fleet in the world, its voice is heard very loudly, it stands taller than the superpowers of this world and its shipping policy has a great reverberation throughout the shipping industry, thus giving me and all of my colleagues the great pleasure of speaking about this great achievement.You may wonder how could such a small nation like Greece be so strong in shipping. I should explain this by saying that this has been our business for thousands of years. We have been the maritime transporters of the world since the ancient times.In fact, shipping in the Eastern Mediterranean and Greece has started about eight thousand years B.C. and there is proof of that, of the maritime traffic between the islands and the main land.It has continued well into the Classical Times. Greeks have undertaken all the maritime transport of theHellenistic Era, the Roman Empire, the Byzantine Empire and later on the Ottoman Empire until the early 19thcentury, when they have settled down in many ports in the Black Sea, the Mediterranean and even in Europe.They have built up a great fleet which they have lost twice in the two World Wars and which they have started rebuilding after the Second World War when finally, in 1981, the Greekfleet became the largest in the world.
Today, the Greek fleet represents about 16.5% of the world’s total cargo carrying capacity equating to some 330 mio tons DWT. By comparison, the second place is occupied by Japan with approximately 14% share, followed by China with about 13% and the fourth place is held by Germany with about 11%.Though Japan and China have more ships in absolute numbers than Greece - this is reasonable given the fact thattheir territory is much larger -, Greek owned ships are on average of larger size. Most importantly,weshould mention that Greek shipping carries about 20% of the entire world’s commerce and trade,as far as the two main trade areas are concerned,that being the bulk carriers trading and the wet - mainly oil - cargo trading.
Imagine such a small nation carrying 20% of world’s trade with the percentages oftrade carriedinto China beingsubstantially larger. This would give you a small indication of the importance of Greek shipping. In addition, and since we are going to speak later on about the relations between China and Europe, it is worth noting that the Greek owned fleet makes up 50% of the entire European shipping fleet.
At this point, we should distinguish the Greek owned fleet,to which the above figures apply,from the Greek flagged fleet which is substantially smaller.The reason for being substantially smaller lies mainly in the lack of senior ships’ officers. There are a few other minor reasons, but the main one is the lack of senior deck and engine officers.
The Greek fleet to which we have been referring is managed by about 700 shipping companies, the most of which are situated in Piraeus, Greece. There are also some small, yet significant, groupings of ship management and ship owning companies based in London and New York.
Undoubtedly,we will speak about the significance of Piraeus later on in this presentation.
The above providea rough diagram of what the Greek fleet is all about. I should also complete these data by saying that 70% of the Greek fleet is owned and managed by small and medium size family businesses and about 30% belongs to large shipping corporations, which are also controlled by families, but have many shareholders, and most of them are also traded in various stock exchanges - mostly in the exchange in New York -raising capital and finance.
Allow me to say one or two words about the general relations between Greece and China within the maritime field. These relations are by far the strongest. Overall, Greece has a small export trade to China, butimports lots of goods from China and I believe that,in terms ofvolume, the relations in the maritime field between Greek Shipping and China are manytimes larger. The largest, perhaps,are the investments made by Greek Shipowners in building ships in China.
Greek Shipowners, my colleagues,have built in China more than 1,000 ships over the last fifteen years with a total value of more than50billion US Dollars. So, this is by far the biggest cooperation – if we could call it that way – between the Greek ShippingIndustry and China.
Another aspect of this cooperation is the regular – since ongoing for many years – ship repair business undertaken by the Greek fleet in China. There is a great number of shipyards in China which provide services of good level at a reasonable price. Therefore, the repair business of Greek ships in China is very lively and this is the second area where the maritime interests of China and Greece meet.
The third area, which has developed over the past few years uponChina’s banking system opening to the world,is the financing of Greek ships and Greek Shipowners by Chinese banks. There are several Chinese banks which are nowadays in the business of financing foreign ships in general, and Greek ships in particular.My company has relations with two of those banks. The major participant in the Greek fleet financing is the Export-Import Bank of China (EXIM),which retains the eighth position in the ranking of the international banksthat finance the Greek Shipowners resulting in a total portfolio, deriving fromthe Greek fleet alone, of approximately 3.6 billion US Dollars.This business of financing started about ten years ago and,unavoidably,owing to thecurrently very low levelsof the freight market, it has subsidedto a small extent. However, there are regular and frequent businessesgoing on.
The fourth area of cooperation,to which we will refer in detail a little bit later, is obviously the large investment finalised recently by COSCO in Greece.COSCO has since years been working on an investment project in the port of Piraeus. This hasnow been finalised and entered the phase of implementation.
These four elements,i.e. the new buildings, repairs, ship financing and COSCO’s investment, are what is mostly evident to uswithin the scope of the maritime relations between Greece and China. There is also one more narrow element, and this is Greek Shipowners owning container ships and chartering them out to Chinese container companies, such as COSCO.
The subject of today’s seminar is the Silk Road, and it is true that there aremany ways one can look at and talk about this subject. We all know the oldSilk Road; what it was, through which countries it passed, what it represented. Both the old and the newSilk Road did not constituteonly a route for trade, because, obviously, the trade brought with it a lot of other aspects and relations; cultural relations, people to people connections, the transfer of knowledge, the transfer of habits and languages, and in general all sorts ofexchanges.Even today we think of the new Silk Road asa conduit of several differentconcepts alongside trade.Of course, today things have changed, but one could imagine that such a new structure introduced by the new Silk Road will be a conduit for the transfer of energy networks, information networks, political connections,and so on and so forth.
So, this is, I think, the concept that we understand under the new Silk Road and we should of course distinguish the overland new Silk Road (for which there is an excellent book written by Peter Francopan where one could find a lot of information, but this is not the subject of our discussion today) and the Maritime Road. Suffice it, however,to say that China is manifesting its big interest, huge interest actually, in this overland new Silk Road.One could understand this by a very simple fact, which I pickedup by chance in the press justa few days ago; China is actually offering support and assistance, by means of financing, to many of those countries within the new Silk Road enabling the latter to raise debt,issue state debtgoing to the international markets, and raise money by means of state bonds, which will be supported or guaranteed by China, so they can develop the requiredinfrastructure and thus assist in the development and extension of this new Silk Road.
There may be similarities between the old and the new concept.World’s largestempire of thepast, the British Empire,also built up a similar trade conduit between Britain and the rest of the world and ensured theretainment of control over all important spots along the way, occupying critical places like Gibraltar, Malta, Cyprus, the Suez Canal, Djibouti, Aden, Ceylon, Singapore and Hong Kong, in order to serve and protect its trading interests.
Anyway, we are now talkingabout the maritime newSilk Road andI would like to move on and introduce the Port of Piraeus. I am sure you know where Piraeus is and what it is.For Greece, it is obviously the most important port.It is a bit different frommany other ports, in as much as it is a port which offersa full range of services, but is not very big or very important in any particular area individually.
It isfirst and foremostthe passenger traffic to which we should refer, because Greece is an island country and desperately needs to havein place a functioning passenger ships network. Then, it is the cruise business which is very important for our tourism industry. Piraeus port also hosts Greece’s main car import terminal, it has a small fishing port, it has a small oil import terminal (though the main oil import terminals are adjacent to the two large refineries outside the port of Piraeus and outside the port which is the subject of the COSCO’s business), it used to be very important(but todayis not that important)in ship repairs and last, but not least, it contains the three container terminals. This is the nature of the port of Piraeus.
COSCO had shown its interest in the container business in Piraeus many years ago and after several years has leased one of the two container terminals existing at that time; container terminal no. 2 (container terminal no.1 was and remains until today in the hands of the port itself, for which one hasto take into accountthat it is being managed by the state,and although it became a listed company several years ago, the majority lies in the hands of the state,resulting in the way and habits of working being those of a state run company). COSCO leased container terminal no. 2,invested a lot of money and soon enough converted terminal no. 2 into a very efficient and successfully run facility.
Three years ago,COSCO continued showingits interest by leasing an area in which it hasconstructed container terminal no. 3. The construction of terminal no. 3 has very recently been completed with substantial investment in the same allowing it to handle even the largest 20,000TEU container ships which are beingbuilt today.
Throughout this period, there has been an ongoing discussion over the privatisation of the Piraeus Port rendering it a strange situation for Greece.Some governments wanted to promote said privatisation, whereas most governments, especially the socialist and left-wing governments,were strongly against the same, but over the years of the economic crisis the situation has maturedleading to the decision that this port must be privatised.After a lot of protests going back and forth, finally COSCO was the only contestant that remained in the running and an agreement was reached some months ago. This agreement has been signed in June and thereafter wasratified bythe Parliament and became Greek law(once again after a lot of back and forth). Everything is now signed and done, andabout fifteen days ago COSCO became the owner of the 67% of the port of Piraeus.
This brings us to the question of what this agreement foresees.It foresees that COSCO acquires 67%, with now having taken over only 50%, which enables it to run the company and undertake the management and for which it has paid a price of approximately 420,000,000.00 Euros. COSCOwill receive the balance of 17% share, reaching then the total share of 67%, once it has completed a certain part of investments amounting to approximately 300,000,000.00Euros. Now you may wonder what is this magic percentage of 67% all about.Under Greek company law, with 51% you can exercise the management – you have the majority to run the company –, but in order to take some more substantial decisions, you need the what is called“constitutional majority” of 2/3 or66.66%. Such decisions are decisions over crucialmatters,such as dissolving the company, taking the company outside the stock exchange, allowing or refusing to distribute dividends. Therefore, you actually have full control of the company only once you have acquired more than67% share.In the present case, this is supposed to happen once COSCO has effected the minimum investments it has promised to make.
Right after the agreement, COSCO announced that it will invest additional funds, in excess of its obligations, and this may very well be the case becauseapparently COSCO has some plans about Piraeus withone of them being the substantial extension of the cruise ship facilities.This is a quite expensive business and I think it will be one of COSCO’s priorities, because the timing now is quite fortuitous given that Greece has seen cruise business growingover the last years.
By looking at COSCO’s plan above, one could realise how this fits into the general and broader concept of the new Silk Road. It is worth mentioning that Piraeus was ranked in number 93 among world’s ports in terms of throughput of containers. In the few years during which COSCO is running terminal no.2, and has just now started to run terminal no.3, Piraeuswas brought to number 44. By 2018 COSCO aims at increasing the throughput of containers by 35%. How are they going to do that? We have already seen some directly relatedexamples; COSCO has a similar facility in Port Said andis transferring and diverting business from Egypt to Greece. Additionally, COSCO hadbeena part owner of a container terminal in Naples, Italy and has recently sold itsshare to its partner. These are clear indications of the fact that COSCOwill concentrate on Piraeus. In addition, COSCO is networking successfully all the Mediterranean ports in which it has presence.
It is estimated that within the current year Piraeus will put through approximately 3.7 million containers. It will reach now the capacity of 6.2 million and COSCO’s future plan is to soon make Piraeus the largest container port in the Mediterranean and the fifth largest one in Europe. The plan is to create 4,000 working places in addition to the 1,000 which have already been created.
You may wonder whetherall thatis worth the trouble investing in Piraeus likewiseinvesting in any other port of the world. Well, obviously, it is not. There is a further plan,a further development which is now being contemplated andtaking place around the port of Piraeus and in which the Chinese have great interest;it is the business which turnsaround the very large logistics center, the first part of which has already been awarded to a Greek consortium of companies(COSCO has not participated in this first round for the simple reason of perceiving thispart of the area as very small, thus going for the second round of allocations foreseeing an area of 1.5 million square meters), and the idea is to build up there a very large logistics storage and distribution complex. However, it is not only that. The initial idea over the logistics center is obviously to store and distribute the cargoes which will be brought in Greece and send them all the way to Europe. At the same time, there is another important consideration, which people do not speak much about,yet I believe it is in the back of everybody’smind, which is the following:Most countries in Europe, and Greece is one of the them, have the right under the European Union Agreements to establish one or two places in their territory where foreign imports shall arrive, be assembled and receive what is known as the European label; this is the European “CE” label that you might have noticed on products.Obviously, if that was to happen,it is my view thatit would be absolutely music to the ears of the Chinese. So, this is one part of the broader idea overlogistics.