Sandwiched between the world’s great global powers in a time of deepening global tensions, Greek shipowners are still finding a way to thrive.

The nation’s maritime industry will meet, talk and party over the next five days with visitors from around the world at hotels and beach clubs in and around Athens, the Greek capital. They’ll be gathering at a time of a lasting boom — fueled in part by conflicts — and a future that’s clouded by what vessels they should be building. 

Greek-owned ships move everything. Crude oil and the fuels it makes, gas for power plants, finished goods, coal and ores that drive the global economy. They’re neck-and-neck with Chinese firms as the world’s No. 1 owners of vessels that transport almost all global trade by volume.

And across markets, earnings are good. Rates for oil tankers ballooned after Russia’s invasion of Ukraine led to an increase in how far the ships have to travel. In the Red Sea, Houthi attacks on the merchant fleet — a response to Israel’s actions in Gaza — forced a vast majority of container ships to avoid the Suez Canal, once again supercharging earnings as distances went up. Giant coal and iron ore carriers have made the best start to a year since at least 2015.

“We are ruled more by commercial interest than politics,” said Ted Petropoulos, founder of Athens-based shipping researcher Petrofin Research and a well-known figure within Greek ship-finance. “One of the reasons we have survived these centuries is we have been very flexible and ingenious and able to adjust to changing circumstances.”

That’s not to say that Greek owners, whose involvement in shipping stretches back centuries, haven’t been criticized. 

Ukrainian officials have highlighted their role in transporting large amounts of Russian oil, thereby helping to funnel petrodollars to Moscow. For their part, Greek owners point out that they’re acting exactly as the US government asks: following rules set out by Group of Seven nations to keep the barrels flowing.

Major Roles

Over the past decade, shipping has contributed 148 billion euros to the Greek economy, and contributed as much as 8 percent to gross domestic product last year. 

In transportation capacity, Greece is just ahead of China as the world’s largest shipowning nation while in gross tonnage terms — another closely watched metric — it ranks second. The total value of the Greek fleet is estimated to be almost $180 billion, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. 

Beyond geopolitics though, there are other important challenges that shipowners all over the world are facing, and they will big talking points this week at Posidonia — the biennial industry get-together in Athens.

When earnings rally, it normally precipitates a surge of vessel orders, which in turn creates extra transportation capacity that finally crushes rates. That is the industry’s longstanding boom-and-bust cycle. But this time, shipowners’ ordering of new capacity has been relatively subdued, potentially delaying the slump.

The energy transition has created uncertainty about what the dominant fuels of the future are going to be. Regulators are pushing to decarbonize the industry by 2050, which should in theory hasten the obsolescence of ships that run on fossil fuels. 

Despite that, more than half the new ships ordered so far in 2024 are fossil-fuel powered vessels, Clarkson data show. That’s a telling indicator of how owners see the future, given that many of these freighters could still be in operation close to the time that the switchover is supposed to happen.

“Until now, we don’t have enough data about what are the fuels,” Christos Stylianides, Greece’s minister of maritime affairs, said on the sidelines of a Capital Link conference in Athens on Monday. “We remain a little bit confused about what is the immediate and near future fuels. We have to continue this scientific adventure to find the fuels, and to see how we can create the port infrastructure. That’s another challenge.”

Ships burned about 200 million tons of fossil fuels last year, according to the International Energy Agency. The industry accounts for more carbon emissions than Germany.

Yet while there are numerous alternative fuels being touted, it remains far from clear which will prevail at the kind of scale needed to replace today’s hydrocarbon-based varieties. Entire supply chains and infrastructure systems will need to be built to accommodate the newer fuels. 

“The best alternative fuel remains a topic of debate,” said George Macheras, global head of shipping at law firm Watson Farley & Williams. “Being able to hedge your bets to determine what would work best is an expensive option that not many can afford.”

That’s especially difficult in Greece, where the industry includes a number of smaller participants who tend to follow the lead of larger peers, he said.

Adding to that, limited shipbuilding capacity is making ships prohibitively expensive, and cheap high-leverage debt is less readily available because banks are more reluctant to lend than in the last super-cycle, according to Nicolas Duran, a managing director at Fearnley Securities.

“Usually, what kills every boom is that the market drops off a cliff because shipowners pump all their profits into building new ships,” he said. “For once shipowners are making an enduring return on the risk they’ve been taking and this time they seem to have learned a lesson. They are not all pumping all their profits into ordering ships. They have started diversifying. 

The reluctance to buy new means that the fleet is getting older, with the average age of a bulk carrier at the highest in more than a decade. 

Instead, some owners are snapping up second-hand vessels so that they can cash in on the current market. It means they don’t have to worry about their vessels becoming obsolete in years to come, Duran said. The prices of five-year-old capesize commodity carriers and supertankers are at the highest in over a decade, data from the Baltic Exchange show.

All that’s delaying the transition to more environmentally-friendly ships and means the fleet won’t grow as fast. 

“The sum of these things could allow us to see a longer boom,” Duran said.