This study is indeed rare, though interesting, because it reveals companies’ strategies for growth, but also their mistakes, which have led them towards an undesirable final bankruptcy! Such analysis, however, can become pedagogical, no doubt, for the reader, so that, he/she, will not commit the same mistakes. For this we have to assume, obviously, that maritime history is, more or less, repeatable ( Goulielmos, 2009 )! Moreover, the 198os depression, analyzed here in detail, has many similarities¹, we believe, with that of the 2024.

The Greek-owned shipping, in 2023, owned/managed 4507² large, (over 20,000 dwt each), vessels, most of them bulk carriers, (230 m dwt or 53% of the 436 m dwt total) of 11.5 years of average age. The tankers represented the 36%, or 157 m dwt, (10.3 average age), reduced by 5 m dwt in one year ( Goulielmos, 2024 ) due to the “Russia-Ukraine” & the “Israel-Palestine” Wars.

The Greek-owned shipping companies, which owned/managed, somehow large ships, were 592 in 2023. The 30% of them owned/managed 1 - 2 vessels, 60% from 3 to 24 vessels, & the 10% of them more than 25 vessels. This last category, however, owned/managed 320 m dwt or 68% of the total. Moreover, worth mentioning is that 30 companies only owned/managed 377 m dwt or ~79% of the total ( Goulielmos, 2024 ). In 2007, the number of the very small Greek-owned shipping companies estimated to be about 600.

The plethora of the small Greek-owned shipping companies is an apparent proof, we believe, that for every Greek citizen, belonging to a shipping family, from a Greek island, in particular, it seems to have a secret desire: “to establish, one day, his/her personal shipping company by buying an over-aged 2^nd hand tramp³ ship”.

It aims at analyzing the business history of 20 Greek-owned family shipping companies, selected randomly, by summarizing their published CVs, & revealing their main strategies. Moreover, we applied the modern global Management to explain their strategies.

This work is organized in 4 parts, after the Literature Review: Part I, dealt with the Shipping Industry, which faced the 1980s depression; Part II, dealt with a brief historical account of 10 Greek-owned family shipping companies; Part III, dealt with a brief historical account of additional 10 Greek-owned family Shipping companies. Part IV, dealt with the advantages that the family shipping companies have. In 8 appendices, we analyzed companies’ strategies. Finally, we concluded.

The contribution of this work can be considered as the revelation of the business strategies of the 20 Greek-owned shipping family companies and their patterns, with a view that the reader to be informed about the reasons of their success, or failure, in their about 100 years history for certain of them.

Stokes (1997) mentioned the problematic companies, which emerged between 1973 & 1977, at a time when a serious tanker depression occurred (starting in Oct. 1973). This was the result of: 1) the Arab-Israeli War, 2) the resulting oil embargo & 3) the about 5 times rise of the oil price. It seems that the above depression was the forerunner of the present crisis in 2022. The tanker freight rate index was as follows ( Figure 1 ).

As shown, the rise of the oil price, (per barrel), (of the Arabian light crude oil), in Jan. 1973, was from $2.4 to about $11 by Jan. 1974, a rise of about 5 times. This was indeed serious, & moreover, happened for the first time! Additionally, the tanker fleet, at that time, was 215m dwt, but the extraordinary fact was that the tanker tonnage on order was … 197 m dwt (~92% of the existing fleet), with particular emphasis on VLCC⁴s & ULCC⁵s ships, based on Economies of Scale!

For the 1980s shipping depression responsible were not the Charterers (= i.e. the demand), (which sustained till 1975) or the distances (5% longer), but the ship-owners, who used their free will to order a plethora of giant tankers… which, it has been proved that they were not needed.

The bitter conclusion of the above depression is that no Greek-owned shipping company was ever being prepared to face it, effectively & efficiently. Couper et al. (1999) recorded the failures, the frauds and the abuses, committed by the international shipping companies in the 1990s, with a special emphasis on the Greek-owned company of “Adriatic Tankers”. Goulielmos (2024) analyzed the business history of 30 Greek-owned shipping companies & revealed their business patterns/strategies.

Worth pointing-out is, however, the frequency that the members of the Greek shipping families, in particular, or maritime partners, in general, split-up to establish separate shipping companies. This, he considered it as mainly responsible, for a small country, like Greece, to create as many as about 1150 shipping companies!

The business history of the Greek-owned family shipping companies is interesting, but rare. The material comes from published interviews. We ignored companies’ performance during the steam area, and tried to single-out their common patterns so that to build-up a uniform practice. We tried to answer the question: “how our fathers did that and why?” Though the sample⁶ is about 3.3%, its interest is much greater, we believe.

Another question is: why to deal with the 1980-1990 depression? First, as shown in parts II and III, the 1980s depression caused quite a number of shipping companies to stop. Secondly, in 1975, the shipping environment changed⁷, where sea trade fell, followed by a major dip, in the 1980s, at a scale in trade rivaled that of the 1930s ( Stopford, 2009: p. 120 ).

Economic Principles before business strategies

The Managers of the shipping companies have to understand, we believe, that Economies of Scale is a sound economic principle to follow, but provided that there is the proper⁸ quantity of demand. This means that in order to build an UL/VL tanker, a shipping company has to find first these large quantities of oil, and also for some time, e.g. by signing a rather long-term charter party (15 - 20 years).

A shipping company, by increasing its capital, by adding ships to those it operates, or by growing company’s carrying capacity in tons of cargo (net dwt), given prevailing distances, certainly it can reduce the average cost of its vessels! This situation is known, especially among the economists, as one of “increasing returns to scale” ( Arthur, 1994 ).

We introduced below, indirectly, the demand, by indicating the 100% of ship’s capacity utilization ( Figure 2 ). This means that in order for a vessel to produce her maximum ton miles, at the minimum average cost, per voyage, demand has to fill-up the net dwt of the vessel every time per each voyage for a year. This further means, to minimize the off-hire time of the vessel or to maximize her ton-miles, in the unit of her production time (360 days).

As shown, the average cost, AC, is falling as soon as ship’s capacity is used-up. Of course, a medium & large shipping company manages⁹ not one, but many ships!

What then a multiple-plant company has to do according to Managerial Economics? Let us draw on its mathematics: let the production function, in thousand of ton miles, for each of say 2 vessels, be: Vessel 1 = Q_A = 24M_A − 5 ${\text{M}}_{\text{A}}^2$ (1) & vessel 2 = QB = 20M_B – M^2B (2) ( Samuelson et al., 2022: p. 155 ). Let the Marginal products-MPs be: MP_A = 24 − M_A (3) & MP_B = 20 – 2M_B (4). The optimal solution is thus: M_A = 8000 ton miles & M_B = 2000 ton miles, where MP = 16, or 196,000 ton miles p.a. for a total joint production. The problem solved was to maximize Q = Q_A + Q_B s.t. M_A + M_B = 10,000 ton miles (5), where M_{A, B} = the marginal product of the two vessels together.

The 2^nd ship is less productive, & according to managerial economics, she has not to be used as much as the 1^st more productive vessel! In shipping, however, every vessel is 1 shipping company & we do not have to allocate production, even optimally, among ships! This means that we have to apply the classical rule of Microeconomics: MC_{voyage x} = MR_{voyage x} (6).

As shown in Graph 1 , the vessel-firm produces at Q*, at her 100% capacity, where also the difference between her total cost, for the voyage, (which at the beginning is rising, & then falling, & then rising again), & her straight line total revenue, which is the result of net dwt OQ times the given OP (i.e. the price determined by supply & demand), is greater. At Q*, the MR & the MC are equal, because the tangents to the lines at Q*, (shown only one), are parallel, & the difference between the 2 lines is nowhere else greater.

As shown, the cyclical character of the 2 main shipping markets, plus Combos (Combination Carriers), is clear. Moreover, shipping is not an easy business because: 1) no one can predict its price (the freight rate) & 2) it produces frequent medium-term cycles. On the other hand, shipping is simpler than other industries because nothing can be done to fix (to influence) the price of the services (a price-taking & not a price-making industry).

The victims of the 1980s depression, which was widely spread, were, at least, 12 large international shipping companies¹¹. The reason of the above shipping collapses was ( Stokes, 1997: pp. 8-9 ) because all 12 companies attempted an “excessive debt-financed expansion” by over-ordering their new tonnage (between 1970 & 1990)!

A basic principle in shipping is that the demand ( Figure 4 ), for ships’ services is a derived one, simply because cargoes have to be transported from the port of production to the port of consumption!

As shown, seaborne oil trade, fell from 140 index units, in 1979, to 98 in 1982-1985, or from 36.5 m barrels per day in 1979 to 22 mbd in 1983-1987 (not shown here), despite the fact that the GNP of the OECD countries was rising… (1983-1989). The 1980s depression can be characterized by: a renewal & expansion of capital period, pre-requiring, however, both rising cash flows & asset prices, meaning that otherwise an investment (in new buildings) is definitely ill-timed.

The above situation is better understood if we admit that a ship-owner, when ordering vessels, does not take into account what the other shipowners ordered, or will order ( Figure 5 )! The result is that the deliveries of ships ( Figure 6 ), which will take place eventually, (less cancellations), during the next 1 or 2 years, will most probably collapse the whatever good freight market was, in a situation where high freight rates are needed to pay for substantial loans!

As shown, scrapping of the Bulk Carriers, between 1980 & 1989, could not cope with the high deliveries (15 m dwt deliveries vis-à-vis 5-9 m, in certain years, scrapping). The deliveries are a function of the orders of 1 - 2 years before (allowing for the time required to build the vessels).

What, however, happened after 2004 as far as the orders of ships are concerned?

As shown in Figure 7 , shipowners have learned since the 1979-1987 depression, because in 2005-2024 they ordered, with the 2008 (August) exception, from 40% in 2010 to 10% - 12% of their existing fleet, in 2017-2024. Shipowners hope, according to our experience, on scrapping for the markets to improve fast, but this is a very slow mechanism, depending on the demand for scrap iron, its supply, its price & the state of the freight rate market, as well the tonnage in lay-up & its time of stay there¹² (requiring least 1 - 2 years in lay-up till to be scrapped?) ( Figure 8 )!

Shipping companies, as a rule, respond, (our experience), to a depression by liquidating their most profitable assets (ships), because this way they collect a higher amount, but by this they drop their asset prices… The consequences of the above mentioned 12 collapses were also, for the companies survived, to avoid the new-buildings thereafter, especially of large tankers, together with a resort to stock exchanges, away from the commercial banks, which suffered the greater losses!

This is why we always recommend to shipping managers to build-up a “facing-up-a-depression-fund-FUDF”, so that the company to be adequately liquid when a depression comes. This policy has to be also coordinated with company’s policy on depreciation as well that concerning the distribution of profits to shareholders (dividends’ policy)! Our experience, has taught us, that neither company’s shareholders, nor company’s bankers, will be willing to help during a shipping depression!

All shipping companies presented here are family ones!

Concluding this part, the dominant moving power of the growth of the 10 shipping companies, was the ship owning family in an island, together with its many generations, establishing, this way, a long tradition. Without this, having also many members, Greek-owned shipping could not grow the way it grew, we believe.

However, only 1 out of the 10 family companies adopted a rapid growth strategy; 5 had a low growth strategy & 1 a medium one. Four companies came from a Greek island; while 3 obtained liberty ships from the 107. One company mobilized 1 generation, 4 companies 2 generations, & 3 companies 4 generations! One company played with its assets & 1 specialized, while 2 companies were traditional. Tradition, we believe exists, among companies, if one company used to make businesses over more than 1 generation, & certain business principles were also applied again, by the generations which followed¹⁵!

The majority of the companies established a London, &/or a NY &/or a Piraeus Office, (total about 14 offices). Two companies undertook an extensive shipbuilding program, something which characterizes the Greek ship-owners. One company applied the vertical integration strategy.

Almost all the above companies had partners, in particular with relatives, or people coming from the same island. The trend of creating shipping companies through splitting-up was not frequent in this group. This can be explained, as all 9 families in this group, had a strong dominance of a father.

Our opinion that “shipowning/ship management” among Greeks is not a profession, but a way of life, is supported by at least 1 Greek shipowner ( Pappadakis, 2006 , his interviews in “Efoplistis” Journal). He argued that Shipping is not simply a way to make money, but a way to live… He mentioned his father saying that “a shipowner has to make businesses remaining… unnoticed!” This principle was universal among Greek shipowners, because Greeks are people of envy! He also admitted that to manage people today one has to provide motives (motivation theory).

All shipping companies mentioned are family ones!

Concluding this part, 4 out of the 10 companies came from an island, having also partners. Three shipowners had 1 at least prior small manufacturing company. Four companies obtained 8 liberties from the 107. Twelve companies established offices in USA & in NY (3 companies), in London (5) & in Piraeus (4).

Three companies split-up & 1 company was traditional. Two companies had an extensive shipbuilding program & 1 specialized. One company had a medium to a rapid growth strategy, 3 had a medium growth strategy & 2 a low growth strategy. Six companies had 2 generations, 2 had 3 generations & 1 had 4 generations!

Shipping companies have been distinguished in 2 ( Lorange, 2009: p. 285 ): 1) those run by a successful individual entrepreneur¹⁶ and 2) those run by a family. The crucial characteristic of doing business in shipping, however, is timing ( Goulielmos, 2021d ), meaning not only the perfect time to decide, but also the shortest one ( Graph 3 ).

A corporate strategy ( Robbins & Coulter, 2018 ) is an exclusive task of company’s management. A corporate strategy in shipping industry means to decide in what branch of ocean going sea-transport the company wants to be in, & deal with, adopting also its mission & its goals: “bulk carriers, tankers, containerships, LPG/LNG, product carriers, gas carrier” & so on?”

Moreover, the shipping companies had to decide on 3 related issues (i.e. the main types of a corporate strategy) ( Graph 6 ).

Table 1 describes what to do with the 115,000 dwt case playing with the asset.

Source: Figure 9 .

The same story one can see with the new-buildings ( Figure 10 ).

As shown, a VLCC can be, timely built in 1986, at $35 m, while if she is going to be built in 1991, it would cost $95 m, providing, (in 1986), a capital saving of $60 m, plus a low depreciation of $1.75 m p.a. The impact of the size of the vessel on her price is clear…

Τhe price of the vessel, however, is surely affected by her ability to bring-in revenue, as shown in Figure 11 .

As shown, the high earnings are closely correlated with the higher price ( Figure 10 ), at exactly the same time (VLCC case).

Appendix 5: the diversification strategy

This is related or unrelated. The 1^st means to combine with other companies in different-related industries. The 2^nd means to combine with firms in different-unrelated industries.

Appendix 6: The Oligopoly Market in Shipping

This type of market appeared in shipping as early as 1875 (August), in the liner connection between UK & Calcutta. In fact, this is a Cartel, meaning a “formal agreement between companies in a market, of few sellers, to co-operate, following agreed procedures, as far as price & production are concerned”.

Sys (2009) investigated whether the “container liner shipping industry” is an oligopoly. She found an increased concentration over time, leading the companies serving the various trade lanes to form either a loose oligopoly or a tight one.

Goulielmos (2018) also investigated the oligopolistic character of the Containerships by adopting the theory of the “dominant firm” ( Figure 12 ). This assumes that there is a firm which possesses a dominant market share & acts as a leader by setting the price for the whole industry ( Samuelson et al., 2022: p. 267 ).

As shown, the dominant firm sets the price at P*, producing O* ton miles, while the small firms, equally each, produce Osf, at the same price (P*). The Pc price is lower than the one determined by the supply & demand of the small firms, acting competitively (i.e. MC = MR; not shown here).

The dominant firm produces less than the small firms together. This is a characteristic of the imperfect markets, where also demand determines price, (price-making), at the equality of MC to MR. The oligopoly price P* is clearly higher than the competitive price Pc.

Two Greek shipowners faced the international cartels in cargo liners, one is mentioned above, & 1 was in ocean-going passenger shipping (Piraeus-NY &/or Piraeus-Australia; late shipowner Chandris A.). The way Chandris did it was by supplying cheaper qualitative services based on owning ships of lower cost. This of course depends on whether the services supplied by the Greeks were close substitutes²¹ of the services offered by the cartel…

Appendix 7: A cost leadership Strategy

In shipping the most important strategy is the “Cost Leadership” one. The company has to compete on the basis of having the lowest cost in its industry… This entails a higher efficiency! Overhead cost, in particular, has to be kept at the minimum possible, including depreciation.

In shipping, the differentiation strategy is of a limited, perhaps ineffective, application. “Safety” & “Security” that could differentiate the services of the shipping companies are obligatory by international conventions (see Paris MOU; ISPS code). Shipping services are considered as homogeneous & as perfect substitutes, while the efforts of the shipping companies focus now on Public Relations²² with Charterers & their Bankers as well their Suppliers.

Shipping companies must follow the functional strategy, meaning that all departments, plus vessels, have to support company’s competitive strategy. In shipping companies, especially those growing from small companies to medium & large ones, the mentality that the department is the company may still exist. In such cases the interests of a department may not be in line with company’s strategy! Take e.g. the case where the technical department has decided an expensive repair of a vessel, which after 6 or so months is about, most probably, to be scrapped!

Appendix 8: Specialization

We saw that certain companies concentrated their effort in one type of vessel, like e.g. product carriers. According to theory, this means to concentrate company’s activity in those lines of production in which the individual or the firm has some natural or acquired advantage. We saw one company to specialize in ships having double hull before the law, & also in sister ships! The “sister-ship” provides advantages in the spare parts & in crew’s knowledge of them etc. Specialization of course bears the risk of bad economic results, if the market in which the company specialized, falls into a depression (e.g. the Sanko case).

The Greek-owned shipping companies found themselves unprotected from shipping depressions, & in particular of that of the 1980s! Moreover, they were unprotected from their irrational over-ordering of new ships! These facts made the timing of building, or buying, ships, more crucial than ever! Shipping managers have learned (2005-2024), as shown indirectly, however, that “economies of scale” are beneficial, if demand for them is there & thus to avoid to order ships, which almost double their existing fleet, given demand/distances!

The new orders should be equal to the tonnage scrapped and lost in marine accidents, plus the increases in seaborne trade, as well the rise in distances, given the productivity of the fleet ( Stopford, 2009 ). This is the weak point of shipping, meaning that there is no coordination center, which shows the gap between “global demand & supply” of tonnage in helping shipping managers to know what all global shipowners ordered in a particular moment!

¹Two serious local wars; a rise in the oil price and of natural gas; a rise in global inflation; a rise in the cost of living; obstructions in tanker & other sea trade routes.

²The World fleet in March 2024 had 63,174 vessels of 2.35b dwt for ships of 1000 dwt & over (UNCTAD). Greeks had 7.1% of the world total in numbers & 18.5% in dwt.

³A tramp ship carries cargo everywhere she has to. This type of ship is the easier, the simpler & of the lower-cost vis-à-vis liners and containerships.

⁴Carrying about 2 m barrels (of about 200,000 dwt each)!

⁵Carrying over 320,000 dwt each or the equivalent of 3 m barrels!

⁶This work is the 2^nd in a series. The 1^st ( Goulielmos, 2024 ) presented the business life of 30 Greek-owned family companies. Our expectation is to present additional 100 in about 5 papers.

⁷The political events that have taken place during this period are worth-mentioning: the oil crisis in 1979; and the Gulf war in 1990.

⁸Charterers’ economic health has to be examined especially during a shipping depression!

⁹Shipping companies take the price of their services, (the freight rate), as given, after trying their best in negotiations, determined basically by Supply & Demand. Given the valid economic rule: total Profit = TR − TC, where TR = total revenue (ton miles times the unit freight rate) & TC = total cost, the managers have to achieve TC as low as possible, or: TR_fixed − TC_minimum = total Profit_maximum. In shipping the long run is equal to the time required to sell (final), or buy (provisional), or scrap (final) or lay-up, (provisional), a vessel. The capital - labor (crew) ratio is fixed & ship’s isoquant is a right-angled one, (production with fixed proportions, meaning that if the crew wages increase, the company cannot reduce crew numbers, (fixed also by law), but only to change crew’s nationality)… meaning further that the substitution between factors of production is a very expensive endeavor, (a vessel, can install a new main engine or more powerful gears or cleaning ship’s bottom or lengthen ship’s size, or install a new/modified propeller, etc.). Ship’s production is time dependent, where the total real time is given. Crew’s productivity means to do the job faster than competitive crews and capital productivity means to increase ship’s speed given fuel cost, & minimize ship’s port stay given market conditions.

¹⁰In practice, shipping companies tolerate losses by their few ships, even perhaps for a whole year, till it is decided what to do with them, given that the other ships in the same company provide profits.

¹¹Sanko, Japan Line, Orient & Overseas-Holdings, Wah Kwong & Wheelock Maritime, Hellenic Lines, Reardon Smith Line, Lyle Shipping, Saleninvest, Jebsen group, Wilh. Wilhelmsen, Leif Hoegh & Co, & McLean Industries, belonging to Japan, Hong-Kong, Greece, UK, Sweden, Norway & USA.

¹²The scrapping of tankers between 1980 & 1989 peaked-up in 1985, with 27 m dwt, while the tankers in lay-up peaked-up in April 1983, with 75 m dwt (2 years before)! This means that it takes time for the owners to admit that their large tankers bring-in losses.

¹³The “sister ships” policy has positive characteristics!

¹⁴In Greek shipping is difficult to know the number of ships owned & the number of ships managed.

¹⁵A 2^nd generation in an interview said that his 1^st generation told him that the value (price) of 2^nd hand ship declines per annum by about 4%! To confirm this we used Stopford’s (2009) regression: Price = −0.73737AGE + 18.803, & we were able to derive the following prices: new $18.8 m; 1 year/$18.1 m; 2 years/$17.3; 3 years/$16.6; 4 years/$15.8; 5 years/$15.1 & so on. This sequence of prices gives prices lower per annum by $600,000 - $800,000 or ~4% p.a.!

¹⁶He mentioned Maersk, Seaspan, Frontline, & the Greek General Maritime.

¹⁷The political events that have taken place during this period are worth-mentioning: the 2^nd oil war crisis in 1979; and the Gulf war in 1990.

¹⁸ Kelly, D. F. (no date) , Foundation of the modern Greek merchant marine: the US sale of 98 world II Liberty ships to Hellenic shipping interests returned the Greek ensign to global sea lanes, ABS publication. The numbers are as follows: 98 Liberties; 2 smaller liberties & 7 T-2 tankers.

¹⁹Thirty-three nations finally purchased 1,117 surplus ships, including 575 Liberties, till 1948. Britain bought 117.

²⁰The Greek Government asked for a Greek flag & crew in those Liberties!

²¹The close substitutability among services exists if the user is absolutely indifferent between any one offered by the one firm or the other. In such a case the price plays a decisive role to choose between the two. Firms nowadays have many tools (e.g. advertising; marketing etc.) to show that one’s services are closely similar, or even better, than its competitors! It does not matter if e.g. the ship is 2^nd hand, or modernized, as soon as she is safe, having a similar speed & a similar quality in cabins, restaurants etc. with the ships of the cartel!

²²The “good relations”, either with the voyage charterers, or the time ones, is expected to lead to charterers’ satisfaction from Captain’s attitude & from the services of the ship. The point is for the charterers to make them to want to fix the vessel performance again, perhaps in more favorable terms/conditions… The master e.g. has to load as much as possible cargo, given the safety margin. The voyage has to be ended with no breakdowns & stoppages by the effective maintenance of cargo gear/winches. The reasonable requests of the charterers should be satisfied with no harm of owner’s interests.