Greek shipowners are faced with a decision: increase investments in more efficient container ships to stay competitive, or return to their roots in bulk shipping, where the market is expected to improve. According to a recent report by global shipping association BIMCO, Greek shipowners have chosen the latter option, mostly moving away from investments in container ships and increasingly focusing on bulk ships.
Almost midway through 2014, Greek shipowners’ share of container ship purchases has fallen back to the same level it was in 2012 after spiking in 2013, BIMCO said. In the first five months of 2014, Greek owners purchased 15 container ships, accounting for 19 percent of all global container ship sales. In the full year of 2013, Greek owners bought 54 container ships, which was 27 percent of all container ship sales, and in 2012, they purchased 29 container ships, which was 19 percent of all container ship sales.
On the selling side, Greek shipowners’ share of container ship sales year-to-date has already risen above its share of container ship sales in the full year of 2012, although it is still down compared with the full year of 2013, BIMCO reported. From January through May, Greek owners sold four container ships, or 5 percent of all container ship sales, versus 13 ships sold in the full year of 2013 (7 percent of all sales) and two ships sold in 2012 (1 percent of all sales).
Peter Sand, chief shipping analyst at BIMCO, said in a written statement: “2012 was a weak investment year for all, heavy impacted by very poor commercial market conditions for all main shipping segments. Improving conditions in 2013 meant that the appetite returned to investors across the board. 2014 is off to much slower start.”
Conversely, Greek shipowners’ share of bulk ship purchases has increased as their share of bulker sales has fallen, building up their already significant bunker fleet, Sand said. In the first five months of 2014, Greek owners purchased 91 bulkers, accounting for 43 percent of all bulker sales. In the full year of 2013, Greek owners bought 199 bulkers, which was 36 percent of all bulker sales, and in 2012, they purchased 81 bulkers, which was 21 percent of all bulker sales.
“The level of activity seen so far in 2014 would suggest Greek owners are on target to top the 199 bulker purchases completed in 2013,” BIMCO said.
In terms of selling, Greek owners’ share of bulker sales fell from 19 percent in 2012 to 13 percent in 2013, and their share year-to-date equals an even lower 7 percent.
“The development gives insight into the minds of Greek owners and where they expect to see the biggest opportunities arise ― sooner rather than later,” Sand said.
Greek owners’ purchases and sales of tankers has remained flat ― another sign that the focus on bulk is increasing compared with other segments. The market share of Greek tanker purchases has averaged at 19 percent in past two-and-a-half years, and so far this year, Greek owners have bought 39 tankers, of which 12 were built before 2000.
“The interest is much centered on bulkers and has become more and more explicit over the past two years, whereas Greek buying interest in tankers and container ships is flat,” Sand said.
Peter Shaerf, managing director at AMA Capital Partners, told the JOC that the core business of Greek shipowners has always been bulkers and tankers.
“Coming into container ships five or six years ago was more a departure for the Greeks, and this move towards bulk is perhaps more of a return to their natural habitat,” he said. “Five or six years ago, there wasn’t as much of an opening in bulk as there was in containers. Now they’re looking for other opportunities ― it’s cyclical.”
Back to Bulk
Last year, one-quarter of total new ship orders was placed by Greek owners, with $4.5 billion invested in bulk carriers, $3.5 billion in tankers and $1.6 billion in container ships, according to IHS Maritime.
Euroseas, a shipping company based in Greece, confirmed in its first quarter earnings call in March that it is increasingly focusing on the bulk market, while holding off on new investments in container shipping.
“Over the last six months, we have embarked on an investment program for the dry bulk part of our fleet by ordering or acquiring the contracts of four newbuilding vessels and agreeing to acquire a secondhand Panamax vessel for a total of $138 million, thus positioning Euroseas to take advantage of the recovery in the dry bulk market,” said Aristides Pittas, chairman and CEO of Euroseas, in the earnings call.
Euroseas said in its earnings presentation that there are no new incremental container ship deliveries expected in 2014 and 2015, which may help balance supply-demand and help improve rates.
“We have decided consciously to concentrate within Euroseas on the dry bulk sector,” Pittas said. “We’re trying to become more of the dry bulk company, and in fact this is what we feel that we are at this point in time. The majority of our balance sheet is dry bulk.”
Paragon Shipping, another Greek shipping company, said in its recent earnings report that it ordered three more new dry bulk vessels in the first quarter, increasing its orderbook to seven dry bulk vessels, and sold one container ship.
“The company is now positioned to take advantage of what we expect to be an improving dry bulk market in the forthcoming years, which we expect will eventually enable the company to resume paying cash dividends to its shareholders,” said Michael Bodouroglou, chairman and CEO of Paragon Shipping, in the report.
DryShips, a Greek bulk and tanker shipping company, mentioned in its first quarter earnings report that it also expects a recovery in bulk in the second half of the year and beyond.
Although most Greek shipping companies are not investing in container ships, Shaerf noted that some carriers, such as Costamare and Evergreen, have recently ordered larger container ships, signaling their intent to stay in container shipping.
“Container shipping is a long-term play,” Shaerf said. “Bulk shipping is much more liquid.”
“Most of all the container shipping industry is under huge pressure,” Sand told the JOC. “Big liner companies wants to own more tonnage and charter less in TEUs.”
That’s because container ships have improved rapidly in terms of economies of scale and fuel efficiency, ahead of the opening of the expanded Panama Canal in early 2016, while bulk ships have been slower to progress, Shaerf said.
Ocean container lines and the shipowners that lease ships to them have also been suspending new ship orders until they can assess the impact of the expanding carrier alliances like the P3 Network, which may launch later this year, and the expanded G6, which is in the process of launching, as well as the new merger between Hapag-Lloyd and CSAV and possible expansion of CYKHE. However, the temporary halt to new orders will not be enough to offset the record amount of new container ship deliveries this year, which will continue to cap freight rates, according to a panel of shipowners and investors at the annual Invest in International Shipping Forum held by Capital Link in New York on March 20. Alphaliner recently predicted the global container fleet will expand by 5.5 percent in 2014, after growing 5.7 percent in 2013.