Greek shipping misses opportunity to capitalise on Maersk’s exit from Russia

Greek shipping

Danish shipping giant Maersk decided to completely leave Russia and sell its Russian assets due to the sanctions imposed against the country for its military operation against Ukraine. On March 21, Maersk notified its clients that it was stopping all new bookings on all its services (sea, air and land transport) to and from Russia. The Danish exit from Russia could have spelled an opportunity for Greek shipping magnates and companies, however, participation in sanctions means that Greece’s economy only suffers.

Every third container in Russia belongs to Maersk. The company owns 31% of the Russian port operator Global Ports, which operates six terminals in Russia. As Maersk will exit the Russian market by the end of April 2022, shipments of goods to and from the country will be severely affected, creating a huge gap in the market that Greek shipping companies could take advantage of.

Rather than taking advantage of this gap in the market, the CEO of Greek shipping company Angelicoussis Group said in late March that her company will avoid lifting Russian cargoes.

“There is a big hesitancy among shipowners to ship any Russian oil or products. There is self-sanctioning,” Maria Angelicoussis said. “European refineries are having to source oil from further away.”

Her fears appeared validated though as EU Commission president Ursula von der Leyen said on April 5 that a fifth round of sanctions would increase financial pressure on Russia, which was “waging a cruel and ruthless war” on Ukraine. If the EU approves the ban on all Russian-operated vessels from its ports as part of their fifth round of sanctions, which reportedly will also cut coal imports and extend sanctions to the oil sector, it can only be assumed that Moscow will reciprocate sanction measures.

With over 4,500 vessels, according to KPMG, Greece ranks first globally in ownership of commercial vessels, presenting a 28% increase in owned capacity in the last five years. The average size of Greece-owned vessels is almost double, which indicates that Greek ship-owners mostly operate in high volume markets.

For their part, Lloyd’s List Intelligence data found that Greece-owned ships made more than 8,000 calls at Black Sea ports in 2020 and controlled about 20% of the capacity trading to and from the region. 26% of the region’s dry bulk trade could be ascribed to Greek owners. Greece-owned tankers — about 820 oil tanker calls —represented about 35% of the crude oil tonnage moving in and out of Black Sea ports during the year. The data also found that nearly 700 calls by Greece-owned product tankers in the Black Sea in 2020 represented about 22.5% of the products capacity engaged in the region.

George Xiradakis, CEO of business consulting firm XRTC, which is based in the Athens port neighborhood of Piraeus, said that although investments in new shipyards with new technologies allows Greek shipping to have a comparative advantage, “geopolitical disturbances and trade disputes greatly burden world trade, affecting some of the busiest shipping lanes in the world and generally the entire supply chain.”

If Moscow were to reciprocate measures against EU sanctions, Greek shipping will not only suffer and lose its own place in the Russian market, but it will lose an opportunity to expand its presence in the country – especially as it is unlikely that Russia will be isolated from Europe in the long-term.

Greek finance journalist Minas Tsamopoulos said that the “war clearly affects the imports and mainly the exports of Greek companies, to and from the ports of the Black Sea, which is an important sea trade route. 70 Greek companies operate in Russia and about 45 in Ukraine.”

He also added that “it is estimated that tourist arrivals from the war zone will be ‘lost’ with the question arising as to whether tourist flows from the United States and the rest of the world, that are directed to the countries of Southeastern Europe, and of course Greece, will be affected.”

This is especially alarming as the Greek economy, which is still reeling from a decade-long financial crisis, is entirely reliant on shipping and tourism. The Greek National Tourism Organisation had hoped 500,000 Russians would visit Greece in 2022, but all bookings have been frozen while airfare and energy costs continue to rise.

Fraport Greece’s Chief Executive Officer, Alexander Zinell, admitted that such a scenario could limit Greece’s competitiveness as a destination, especially given the proximity to the war in Ukraine and Greece being listed as an “unfriendly country” by Moscow for providing weapons to Kiev.

In this way, Greece’s participation in sanctions against Russia will mean that it will not only lose its share in shipping to Russia, but fail to take advantage of Maersk’s exit. In addition, hundreds of thousands of Russian tourists will likely not travel to Greece and go to Turkey instead.

This effectively means that Greece is making its financial recovery more difficult by participating in sanctions against Russia, especially as the country has long failed to get their EU allies to also sanction Turkey for its daily violations of Greek airspace and periodic violations of its maritime space.

In effect, the Greek government is serving the interests of the West instead of citizens, without even at least securing sanctions and other guarantees against Turkey, by actively participating in the economic aggression, not taking advantage of gaps in the market that have been created, and incentivising Russians to holiday in Turkey instead of Greece.

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