We deal with the Greek-owned shipping not only because we are Greeks, but also for the reason that this industry, for hundreds of years, has achieved the top global and European positions... It is thus a business and an academic curiosity here to find out the way this industry grew, and the way it has been financed. We believe that finance is the necessary, but not the sufficient, condition for a shipping company to grow. We also know that in shipping “sky is the limit”. We mentioned a few case studies where the sky never reached.

“Icarus”, son of “Daedalus”, in Greek Mythology, obtained wings from his father, but he flew so near the Sun that the wax, attaching his wings, melted and he fell into the Aegean Sea flying-away, or rather escaping, from Crete Island...

[7] argued that Greeks used to buy ships from the 2^nd-hand marker with their usual adroitness. The big names: Lemos, Livanos, Onassis & Niarchos were already established and in a position to choose their investments, but beneath this level there were hundreds of smaller owners, and would-be owners, who were eager for the chance to build up their fleets through the 2^nd hand market. A new generation of Greek owners, therefore, arose, in 1967-1973, with the aim at acquiring ships cheaply, and fixing them for a period, long enough to satisfy their financing banks. This approach was one which had attractions for the banks, and the so-called “cash-flow financing”, which quickly became a fashionable activity in the Piraeus banking market.

[1], argued that Greeks, traditionally, were known for financing the growth of their fleets out of capital raised in local communities and from profits. They rarely approached overseas banks or other financial institutions. They were a much closed society with a certain amount of secrecy. But since 1960, a number of shipping families sought funds from international financiers and so they started.

[4] argued that finance will always be the key (p. 255). For shipowning the emphasis is on securing the lowest cost of capital, where the cheap financing makes ships less expensive and thus more competitive. For the trading or chartering firm the focus will be on securing reasonable financing (in the equity market) based on cash flow (p. 98). The ability to manage financial flows and budgets, to deal with currency issues, interest rate developments and, increasingly, with the new instruments and derivatives as they relate to futures freight market trading, where financial engineering is becoming increasingly important (p. 255).

[2] argued that the interest of the shipping research, since 1913, was not on shipping finance, where the trend was that “the more the freight rate market prospers, the more orders to be placed for newbuildings”. Banks, as a rule, “give the umbrella when there is sunshine, and get it back when is raining”. He introduced the concept of the “joker”, by which the 2008 financial crisis could be described. He calculated the “Hurst exponent” equal to ~0.70 for the 257 years of the dry cargo freight rate market, 1741-2007. He found-out that the risk is higher in the freight rate markets than that in the prices of the 2^nd hand vessels. Long-term investors also run a lower risk vis-à-vis short-term ones.

The author uses his familiar methodology to prove things using not only sentences, but also graphs and diagrams par excellence. The reader surely will know that a diagram or a graph can easily be transformed into a mathematical relationship between X and Y and ceteris paribus. The first part deals with 2018-2026. The 2^nd part deals with 1949/50-2026. The 7 case-studies occurred since 1967 to 1973. The empirical research took place in 2006.

The growth rates achieved by the Greek-owned Shipping are presented in Graph 8, for the last 75 years.

As shown in Graph 8, only in 11 years the growth was negative, i.e. 14.7% of the total period. The Greek-owned shipping passed through 6 (cyclical) periods over the 75 years showed (average duration of cycles: 12.5 years). Greek shipping however, was vulnerable, par excellence, during the 1981-1987 “depression”⁴ (1978-1991).

Source: authors’ archives; there were 30 years above 6.5% (the “typical” average growth rate), 40% of the period; 34 years below 6.5% or ~45.3% of the period; 11 years negative rates = 14.7% = 100%.

Graph 8. The Growth, from year to year, of the Greek-owned fleet from 1949-1950 till 2026 (March) in GT: 77 years; less 2 years, which had their tonnage basis changed (shown by a gap).

As shown, the Greek-owned Fleet grew soon after the 2^nd WW in 1949-1950 and for 11 consecutive years remarkably, achieving rates, from year to year, from ~7% to ~30% (in GRT). In the second period, of 17 years, the fleet lost a 5% of its yearly growth on average, but it retained its cyclical character. The third period was a disaster, 1978-1991 (14 years), bringing-in a depression (except for the years 1983; 1987; 1991) with 5 yearly negative growth rates.

In the fourth period of 12 years, the fleet recovered with 6% additional growth in certain years (1993; 2001). The boom years, 2007-2008, intervened (*). The last period and the last cycle emerged between 2009 and 2026, (18 years), with rather higher growth rates in 2013-4. (*) The shipowners saw such freight rates only in 1918.

The red line (in Graph 8) indicates the typical⁵ growth rate of the Greek-owned fleet between 1949 and 2000, which found equal to 6.5% (Graph 9). In the next period, of 2001-2026, the typical growth rate fell to 2.5% (blue line) as the fleet exceeded the 98 m GT and reached the 361 m dwt (March 2026). The average growth from 1949/50 to 2000 was 7.95% and for 2001 to 2026, was 3.54%.

Source: author.

Graph 9. The growth of Greek owned fleet.

The following suggestions are addressed to Greek shipowners so that to make the right preparation⁶ to face a shipping recession⁷ and depression. Our suggestions are concerned with the creation of a number of reserves from gross profits during especially the periods of the high freight rates.

We will start by making the realistic assumption that in shipping the long term, i.e. above say one year—forecasting of the freight rates is not possible. As [5] argued, the free will of the entrepreneurs is the reason for making any forecasting to fail, where only visioning is possible for the enterprises.

We suggest to shipping companies: (1) To form a “reserve” to face the liquidity problems that a recession/depression will bring-up. The fact that a depression will happen is quite certain to those... living in Jerusalem... (2) Depreciation to be tied to gross profits so that to avoid bankruptcy—due to an excessive depreciation—being company’s major expense. (3) The “dividends-to-be-paid”, to be tied also to gross profits and to be conservative, equal to the interest of a “yearly bank deposit plus a % for risk”. Managers have to discipline their shareholders so that to look forward for exceptional money from the sales of ships and not from gross profits. (4) A further “reserve” to be created for future investments, from gross profits, in new buildings and in 2^nd hand ships. (5) Forming-up another reserve so that to repay company’s long termdebt by first priority so that to avoid the danger from a bank of a foreclosure⁸. (6) Finally, to agree with company’s bankers for a permanent credit line, of an adjustable amount, with an upper limit, for the company to face a crisis, if all the above measures fail. The company to pay the interest.

Our above suggestions of course are addressed to an efficient and effective Manager, who deserves them. To create specific deserves with their proper titles, we believe is wiser than using for the same purpose “retained earnings” and “depreciation”.

Further we demand managers to apply a policy of perfect timing—PTP. The PTP in manager’s decisions will have a meaning if the manager seeks also to maximize gross profits...

We know that the above policy, i.e. to maximize gross profits, is not always possible, but it is important—because all shipping prices are determined by Demand and Supply. Thus in shipping profit maximization is constrainedby the balance between supply and demand. So, in order to judge our manager, we compare him with his/her colleagues managing similarships in all their basic elements.

To return to PTP managers have to act according to Table 1.

Table 1. Principles for a manager to be efficient and effective.

Source: author.

As shown, by Graph 10 and Graph 11, Greeks used to buy bulk carriers, 5 years old , when their prices were low, as a result of the low freight rates, 1976-1993.

Source: author; data from [8].

Graph 10. Relationship.

As shown in Graph 10, the best time to buy ships was in 1976-1979_{1st half} and 1982-1987_{1st half}. The changes of the values of the ships and the freight rates (heavy black line) are remarkably correlated, with very few exceptions. The best time to sellships was in 1979-1982, and in 1987_{2nd half}-1993.

Let us now see what the Greek shipowners did in their S + P activity (Graph 11).

Source: author.

Graph 11. Activities of Greek shipowners.

As shown in Graph 11, Greeks sold 1180 ships in 1983-1985 and bought only 668, over the same period. Their buys were best timed, but not their sales. Their style was first to sell and then to buy, most of the times, while the reverse is more rational, as sales would have caused a fall in the prices. One explanation is that the money from sales was required to get on with the purchases thereafter.

One understands a lot if assumes always that Greeks are constrained in their decisions from a lack of liquidity. Worth noting is the fact that the number of ships sold is almost double of those bought, assuming also a difference in size and age.

Let us now deal with the way that certain Greek shipowners financed their investments since 1967.

Greeks, in 1967 (April) and thereafter, decided to transfer their offices from New York and London to Piraeus and Athens, where a friendly to them Government¹⁰ was ruling the country. This meant that the international banks had to follow them and to open branches in Greece, as they did. Moreover, as [7] argued, “one must select the year 1967 as the crucial one in the international development of shipping finance”. Greek owners have decided—for a variety of reasons—to grow their fleets mainly via the 2^nd hand market.

Table 2 presents the Greek shipowners that were protagonists—for better or worse—in shipping finance between 1967 and 1973. These 7 case-studies were selected from those mentioned in [7].

Table 2. Greek shipowners and their activity for better or worse in shipping finance, 1967-1973.

Source: author; data from [7].

1) “Adriatic Tankers¹¹” was a private Greek shipping group headed by P. Zissimatos—Z thereafter; a typical, and unconsolidated, Greek shipping operation. Till early 1990s, he was a quite successful owner and operator of chemical and oil tankers, with a fleet steadily growing-up and rapidly reaching more than 40 vessels. One of the competitive advantages of the company was the development of “good banking relationships with serious lenders”. Worth noting is the fact that in 1992, Z expanded to one of the largest Greek shipping concerns ever, and in next couple of years reached a fleet of about 100 vessels... According to “Shipping Management” “a fleet expansion should not outstrip management’s ability to achieve: (a)maintaining adequate technical standards, (b)attaining a sufficient cash flow¹²and(c)achieving low off-hire times... Z decided to switch the main thrust of his fleet’s financing away from the Piraeus banks and towards the “US bond investor market” (private placements). This did not require: (1) to obtain the “securities & exchange commission’s” approval of company’s prospectus; (2) to examine company’s corporate structure; (3) to have the support of a recognized investment bank with special expertise in the private placement market (called the manager of the issue); (4) to examine company’s due diligence and credit-worthiness/credit rating... Z raised $240 m to be repaid in 10 years, mainly from the USA insurance market. The approval based exclusively on shipbrokers’ valuation of company’s ships... By 1995, disputes etc. started to appear as shown in Table 3.

Table 3. The decadence of Adriatic Tankers, 1995 and thereafter.

Source: author; data from [7]. This table indicates the signs & the steps, which a shipping company takes towards its bankruptcy.

As shown, to be very ambitious is not a safe platform. Growth must be accompanied with earning assets. Greeks are very clever in finding-out easy ways to borrow money sometimes over the value of the vessel. Banks and others may become victims of this principle: “Bond is our word”.

2) “Tidal Marine International” was an ambitious and highly publicity-conscious corporation, which built up quite a sizeable fleet in the late 1960s and early 1970s. In 1969, it purchased 2 dry cargo vessels and 1 tanker. In 1970, a public offer took place of 267,500 shares, enabling company to buy more than 10 ships. Its prospectus in 1970, described the company as owning 12 ships, 11 off which were chartered to 1^st class charterers. By 1972, the company was a model for the young managers by having: (1) a rapid expansion; (2) a prudent chartering; (3) an extensive use of the bank finance; (4) recourse to equity market and (5) a fleet of over 700,000 dwt (18 oil tankers and 27 dry cargo ships). Its lending banks were 5 first class USA ones. The company alleged to achieve almost $15 m (3 times than that of the previous year) and a net worth of $43 m (in end 1972). The reality, however, was different than that presented by the company. It had a very low cash flow, in view also of a short slump in 1971-1972. The company collapsed in 1972-end. It turned-out that the company’s charters were frequently the work of fiction, and the prices it was paying for vessels, when raising loans from the banks, were often grossly inflated... Banks provided over 100% finance instead of 60%, which was the normal... The company had $22.3 m of equity and $47.3 of a long term debt... The company had no track record¹³.

This obviously is a criminal case, where fiction was made real.

3) Colocotronis built an empire using the “cash flow financing” method. He used to purchase relatively cheap ships, found period business for them, and financed on the basis of mortgage security plus assignment of the charter party proceeds. But he made one huge error¹⁴ in ordering 2 ships, far more costly than any other in the fleet,i.e. 2 ULCCs(end 1972) for $100m when the tanker market crashed down by 1976...This is a classical case where an ambitious newbuilding program upon delivery and without a previous long-term charter party is unable to pay-out its banking debt.

4) “Hellenic Lines”—HL thereafter, was a victim of the depression years 1981-1987. The company had cash flow problems (end 1983). It undertook a capital expenditure of $320 m in 1980 so that to obtain a modern fleet of container ships and boxes, with the ME market in mind. But this market proved disappointing. But more disappointing was the approach of company’s main bankers—MG. HL dashed for growth, but there were “downside risks¹⁵”. MG was the head of a 5-banks syndicated loan of $80 m, and it lost no time to arrest company’s first 10 ships... The company called it a “compulsory liquidation”. The US final debt was $200 m. This is an example meaning that the shipowner is obliged to select his/her bankers who understand the whereabouts of the industry. Moreover, the selection of the market to serve was wrong.

5) “Eletson” in end 1994 signed a contract with “Newport News Shipbuilding” for the construction of 2 + 2 optional, product carriers, and obtained $140 m for 10 year at 9.25% by issuing first preferred mortgage notes. The issue led by Citicorp securities in the “US high-yield debt market” with a high rating credit. The interest rate was apparently high, but this is the characteristic of this market. We wonder why this company did not list in NYSE. In 2016 this company owned 1.77 m dwt and 33 vessels. This is one of the well managed Greek-owned shipping companies of product tankers run by a number of ex Captains.

6) The Greek-owned shipping company “Anangel” formed in 1986 (Nov.) an entrepreneurial association named “Anangel-American Shipholding Ltd”—AASL thereafter, between “Angelicussis Shipholding group”, “American Express Bank”—AMEX thereafter and “Lehman Brothers”. Its purpose was to buy 2 bulk carriers and 1 tanker, aged ≤ 7 years of age. This is called a joint venture¹⁶. A new holding company was then formed aiming at offering its shares to the public (via a “best effort placing”) (June 1987), as follows:

Source: author, data from [7].

The deal was so structured so that to achieve stabilityand protection from the downside risk... First, AASL paid-out a small loan from the proceeds of the placing, to AMEX. Secondly, AASL declared that there will be no further borrowings to finance purchases of ships¹⁷. Thirdly, AASL limited itself to the purchase of vessels ≤ 7 years of age, as mentioned. Though this was a constraint in company’s growth, it allowed the ships to have a long remaining life of say 18 years. Is this liked by the investors?

Greek shipowners assumed a ship to live “economically” maximum 25 years or to lose part of its original value at 4% p.a. AASL counted on the expectation of its share-buyers for capital appreciation from ships having 18 years yet to earn¹⁸. Fourthly¹⁹, the founders AASL and AMEX, made a major equity commitment to the venture, where Angelicussis had to maintain its holding of B shares at a level so that to keep its share at more than 50% (of the total issued equity). AMEX had to hold about 8.5% of the equity, after placing, and the preferred shares to be held by these two by majority. AASL²⁰ was in fact inviting investors in a partnership, where no party could prosper²¹at the expense of the other. In 1988 the company listed in NY NASDAQ. The company liquidated, in 1992, voluntarily. In 1989, AASL, with a single share value of over $17 since 1989, offered in NY, 3 m A shares at $16.5 plus a matching subscription for B shares by Angelicussis. It has been over-subscribed. The company’s return on equity was 30% or 6.3 p.a. on average, 1992-1996, 50% capital appreciation since 1987 and 6.18 p.a. return on capital. Cash flow was 11% on total capital average p.a. In 1992 (Feb.) the company proposed to its shareholders to move to a “perpetual shipping company”, which it has been approved, as it was also trendy. The Angelicussis family offered a bonus of up to $3 p.s. (1994). This company in 2018 owned 24.5 m dwt and 127 vessels. This company is really one for Greeks to be proud for.

7) The final failure of the Regency cruises (1995-1997) was due to the knock-on effects of the late delivery of a new vessel plus a slump and a failed public stock offering; we are talking about a $200 m exposure. Crews were not paid and ITF involved²². The section of the Sea Cruises is a rather difficult one and where Greeks involved they faced great difficulties and when competition increased many Greeks abandoned this sector.

Twenty banks, foreign (15) and Greek (5), financed with ~32 b $ the Greek owned shipping companies in 2006; ~$32 b also in 2004 and $36 b in 2005 (Diagram 1) from $11 b in 1997, i.e. 3.3 times up in 9 years.

Source: author; data from Psifia’s doctoral thesis ([6]).

Diagram 1. The 20 Greek and Foreign banks that provided finance to Greek-owned Shipping companies in 2006 & their amounts.

As shown, Greeks derive about $33 m on average from the banks every year.

The 79% of the finance is provided by the foreign banks. Of course, this made possible when shipowners accepted to pass on to the banks “the management of their mortgaged ships” in case of a default (by virtue of a 1^st preferred mortgage).

The questionnaires were addressed to the managers of the economic divisions of the shipping companies. However, only 9 shipping companies responded. This means that these finding are exploratory. This low response can be explained by the fact that almost all shipping companies consider their relations with the banks top confidential. The 5/9 of the shipping companies employed University graduates for their finance; 4/9 was MBA and MA-M.Sc. graduates. All these had finance experience with the banks: 3/9 more than 16 years; 2/9, 11 - 15; 2/9, 6 - 10 and 2/9, 1 - 5. 2/9 was also shipowners... Moreover, shipping companies entrusted their finance function to “mature” individuals of the following age: 22%, 31 - 40 years, 41 - 50, 33%, 51 - 60, 11%, above 60, 22%.

8/9 of the companies confirmed the practice which wants each vessel to have its shipowning company. 4/9 of the companies owned 1 - 5 ships, 2/9, 6 - 10 and 3/9, more than 16; this means small companies by majority. 2/9, owned from 50,001 to 150,000 dwt, 2/9, from 150,001 to 300,000, 2/9, from 300,001 - 450,000, 1/9, from 450,001 - 600,000 and 2/9, over 600,001; this means a well distributed sample as far as dwt is concerned.

The ages of the ships were in the 1/9 of the companies 1 - 5 years, in another 1/9, 6 - 10, in another 1/9, 11 - 15 and in 4/9, 16 - 20. This means rather over-aged ships. 4/9 of the companies owned bulk carriers; 1/9, owned also tankers; 1/9 liners 10%, 70% tankers and 20% bulk carriers; 1/9 of the companies owned liners and 1/9, bulk carriers and RoRo.

Interesting are the sources from which Greek-owned shipowners financed their companies.

As shown Greek shipowners are conservative in their choice of the way of financing their investments avoiding the non-classical ways like leasing etc. The bank finance is used mainly by Greeks to buy ships, considered also by them to be versatile. 6/9 of the companies responded that they keep the % of own funds steady, while 3/9 responded negatively. The % of own funds to total funds was: 3/9 of the companies had up to 30%; 3/9 from 31% to 60% and 1 from 61% and over.

Interesting is the reason why shipping companies borrow money from the banks.

Source: author; data from Psifia’s doctoral thesis.

5/9 of the companies had as a 1^st preference to buy ships when the market was recovering; 3/9 when the market was rising (2^nd preference); similarly, 2/9 as a 3^rd preference and 4/9, during a crisis as a 4^th preference... Interesting is this last one though it is their almost last preference.

Sixty seven % of the companies borrow USA$ always and 33% almost always. From this %, 11% sometimes borrowed Y (Yen) and Euro, and 22% rarely borrowed Y. The loan to buy a 2^nd hand ship varies usually from $10 m to $60 m; for a newbuildings varied from $50 to $150, and for a refinance was at ~$50 m (2006).

The banks charge their profit. For the 2^nd hand ships this varied from 0.5% to 1.5% and from 2% to 2.5%, with the usual to be from 1% to 1.5% on the amount of the loan. The newbuildings paid from 1/2% to 1%. The big and reliable companies with a good past history achieved a low spread as expected, i.e. between 0.5% and 1% (55%). This means that banks add a % for risk. The usual LIBORS are that of the 6 months (33%) followed by that of the 3 months (67% almost always chooses this).

The “grace period” was 6 months for a new-building and 3 months for a 2^nd hand one (5/9), and for 6 months (4/9). The installments were 3 monthly (5/9) and for 4/9 six months. 89% of the companies asked for a balloon²³. 6/9 of the companies paid a “commitment fee”, from 0.20% to 0.25% and from $10,000 to $20,000; 4/9 paid a “negotiation fee” from 0.04% to 0.05%; 4/9 paid a “commission” from 0.50% to 0.75%.

For the collaterals, companies always, or almost always, provide a mortgage, or a 1^st preferred mortgage and the assignment of the proceeds from the insurance contracts. 44% did not assign their account and 67% never pledged ship’s shares. 4/9 provided a Greek mortgage and 2/9 that of Cyprus and Malta. For the % of insuring the vessel: 1/9 said 100%, 1/9 110%, 4/9 120% and 2/9 130%.

The 6/9 confirmed that the banks ask for a periodical valuation of the price of the vessel at company’s expenses, and 3/9 responded negatively. 4/9 said this to happen every year, and 2/9 rarely, and only at times of a severe crisis. For a shipping company to have a “retention account”, the 6/9 responded positively, and the 2/9 negatively.

A retention account means that banks have the right to use its balance to repay the loan’s installments by priority before the company uses it to pay expenses etc. This account is credited with ship’s revenue from the voyages. In other words is a pledge of ship’s revenue or gross income from charter parties and voyage parties.

Another finance requirement is the one where the value of the vessel must be always at 120% of the loan, or of its outstanding amount (44% responded positively), or at 130% (33%). Here we have to add to the unpaid loan also the interest due. The value of the ship here is that determined by her valuation every time. In such a case the bank will ask for additional collateral, as the case may be, something which may be impossible during a crisis. Original cash collateral is a solution here provided its amount is high.

6/9 of the companies asked by the banks to submit balance sheets of the 3 last years, financial statements, all certified by an auditor (6/9). The “Cash flow analysis” is done by 7/9; 4/9 use always, and almost always, the “net present value method” as well the “payback method” (almost always). 7/9 forecast their expenses and freight rates...

4/9 of the companies forecast the freight rates using the FFAs—the forward freight rate agreements -, and adjusts their figures for inflation. The expenses are forecast based on company’s experience and adjusted for inflation. Standard average revenue is used and expenses are increased by a 4% p.a. Histograms of the revenue and of the expenses are drawn.

Freight rates are forecast by increasing them by inflation (4/9 adds inflation on freight rates). Interesting is the fact that owners check every time their charterers for economic health. This last precaution is important because friendly shipowners told me that once they did not check the economics of their charterers, they were unable to collect their money from a charter party...

Prudent shipowners put in their time charter parties an escalation clause for the future rise of the expenses of the vessel over time; 4/9 responded positively. But we consider the above 4% to be low as well dangerous for an escalation clause. The adjustment of the time charter rate is necessary as the increase in expenses overtime is something to be expected. 4/9 of the companies adjust their cash flow and its discount factor due to a shipping cycle, and 1/9 adjusts only its cash flow.

Why the majority of the Greek shipowners avoid the international stock exchanges, except of a small minority, i.e. 30 companies out of 1440? Have the persons working in the company, and on board, the permission to buy company’s shares? Do Greeks prefer to buy as a rule a 2^nd hand ship and not to build a new one? Had the companies the 1^st and exclusive priority to buy and build ships when their prices are at their rock bottom?

Greece in 2025 (March) owned 4221 ships with an average size of 83,866 dwt. This indicates further that even in periods of low or negative growth rates, like in 2019-2026, Greeks sought economies of scale. Greeks owned 315 fewer ships between 2018 and 2025, due to the events mentioned. In March 2026, the Greeks owned 361m dwt.

Greek shipping achieved the first world position in dwt with 304 m and the 2^nd position in number of ships with 4221 units (by March 2025). Moreover, had the 1^st position in the EU with 53% share in dwt, 3 times above the 2^nd Germany (2018).

Greeks kept their destiny in maritime shipping to serve the sea trade of others, par excellence, and to a lesser degree that of their native country, and to pursue economies of scale and age. They also sought after the sales of smaller and older 2^nd hand ships.

Greek shipowners were, however, vulnerable in the various geopolitical events, the local wars, the Pandemic of COVID-19 and the uncertainty caused by the alternative NZF. In addition, the Greek-owned shipping was vulnerable to the frequent cycles and rare depressions, like that of 1981-1987, and additional 6 recessions, one over 14 years, on average... since 1949-1950.

We saw that the Greek-owned shipping grew through 6 different periods of a variable duration each. All six periods over the 75 recent years showed a cyclical behavior, starting from low growth rates and arriving gradually at higher ones, and then declining down to lower ones. Worth noting is the fact that the first period achieved higher growth rates than all other subsequent periods. One must take into account that the 30% growth in 1949 meant 3.3m GRT, while 10% in 2026 means ~36 m dwt... more than 10 times higher...

Greeks bought their 2^nd hand ships at low prices, in 1976-1978 and in 1983-1986, when the freight rates were also low. But, unfortunately they sold their 2^nd hand ships also at low prices. Probably they should wait till 1987_2nd half and thereafter, where the prices of the ships increased from $3 m to $16.5 m. What is worth noting is that the sales in number of ships exceeded the numbers purchased, except for 1973 and 1975-1977 and 1990-1993.

We know that in the shipping industry sky is the limit, but this is unwise to pursue. A company’s Cash Flow indicates the limit towards which a company can go in ordering and in buying ships and indicates how far it is safe for a company to borrow.

Greeks in the past knew that ordering newly built ships ran the risk of a downside and avoided them. Onassis broke down this tradition as he realized that to grow rapidly one has to borrow, as the money is waiting there in the banks and in the insurance companies.

The doctoral research in this work confirmed the mistake repeated by the banks, and accepted by the shipping companies, i.e. to approve the majority of their loans at times of prosperity (i.e. during high freight rates). This also revealed that companies use naïve tools like historical data, histograms of revenue and expenses and annual inflation. Nonlinear forecasting methods were ignored.

The degree of the difficulty to borrow from the banks was found to be correlated—as expected—to the state of the freight market. In 4 to 7 degrees of difficulty, 6/9 of the respondents stated that they had difficulties borrowing during a crisis and only 3/9 found it easy. During a top market 100% of the companies had lower difficulties to borrow, i.e. from 1 - 3 degrees. The above confirms our theory that during recessions/depressions banks’ borrowing is very difficult. To lend only during high freight rates, we consider this to be a serious mistake of the banks.

Our theory is to borrow at rock bottom prices, when the prospects of recovery are there. During a top market the prospects, we believe, are for a falling course and thus for a bad investment, especially in newbuildings. Banks called this a “downside risk” like the one in the case of the Colocotronis shipping company and others.

Banks lend from 60% to 87% for buying a 2^nd hand vessel and from 70% to 90% for a new building! This indicates that the major % of the risk is undertaken by the shipping banks...

The growth of the Greek-owned shipping would certainly not be the same without the foreign banks. In the past, i.e. before 1973, the shipowner was also the economic manager of the company. Once finance became a difficult discipline, perhaps by becoming “Financial Engineering”, shipowners appointed economic managers and sent their children to study shipping finance mainly in UK (City University).

Greeks prefer to borrow almost always from the banks. The bank finance is considered as less expensive, being also the only alternative. Equity and banking finance are considered as the most suitable and the least expensive combination. Worth noting is the concern of the companies to avoid finance from persons outside the family...

¹In the search of a new cheaper and stronger material for building ships, we read that the staff of King’s college of London discovered a new form of aluminum...

²The IMO agreed in April 2025 to the regulating framework NZF for the reduction of the greenhouse gases freed from the ships to be adopted by October 2025, but it did not occurred. It is based on the principle: the one who pollutes has also to pay.

³A “Cross-trader” is the international shipowner who serves the sea trade of other countries more intensively than that of its small native country.

⁴A depression can be considered as that abnormal phenomenon brought-in by an “investment bubble” ([7]). This further means that during a depression owners massively have ordered ships a year or so before because they believed in a substantial rise in freight rates upon delivery and during the years to come. This, however, had to be verified by the balance of demand and supply, and thus the freight rates prevailed.

⁵“Typical” means “mode”. The Mode is the most “usual” number in a distribution. The mean in the distribution of the growth rates was 6.53% (rounded) for the 75 years. The Mode = Mean − 3 (Mean − Median) and the Median is 6.51%.

⁶According to Homer the Greek word εφοπλίζω (i.e. being a ship manager) means to prepare the vessel for her voyage.

⁷A recession is a normal cyclical phenomenon, which is self-correcting after a painful, but necessary, process of adjustment ([7]). This means that in shipping industry the recessions are more frequent than the depressions, because the imbalances between demand and supply are something to be always expected. This further means that owners in ordering ships do not know what the other shipowners ordered or what the demand of tonnage is going to be. As a result supply may exceed or fall short of demand. The freight rate is then called to repair the surplus by falling down, and to remedy the deficit, by increasing-up.

⁸I.e. taking-over her ownership and management, by virtue of a 1^st preferred mortgage, of a vessel in default.

⁹A good meal on board is a very important comfort for the crew working far away from their families.

¹⁰From 1967 to 1974 a dictatorship was ruling Greece providing legislation favorable to the Greek-flagged vessels ([3]).

¹¹A fuller account of this company can be found in [1].

¹²This indicates the pattern cash flows in a company over 12 months. Net profit has to be adjusted for all non cash items, i.e. depreciation mainly, and the loss/profit from capital transactions (sale of vessels) so that to arrive at the “operating cash flow”. The inflow/outflow of capital is then added/subtracted, the purchase of vessels using cash and the repayment of debt.

¹³See also [1].

¹⁴See also [1].

¹⁵A downside risk is the risk emerging from an unexpected fall in the freight rates following the delivery of a vessel newly built. This risk can be avoided if a forecasting method is applied using a nonlinear model as we have suggested elsewhere.

¹⁶It means a temporary partnership established for a specific purpose or project.

¹⁷This non-debt policy was an unusually severe discipline in an industry habituated to excessive financial gearing.

¹⁸This proved to be true for ships aged 15 years of age or less.

¹⁹This was a strong financial commitment.

²⁰AASL was set up primarily as a “limited life capital appreciation fund” with a scheduled vote on voluntary liquidation in 1992, with no split of the back-end profits.

²¹Those promoting the deal had the option to buy 1.48 m shares (20% of the issued ones) at $10 each, after placing, divided equally (Nov. 1988), valid for 5 years. Holders of the A shares could vote on the winding-up resolution, but not Angelicussis.

²²See also [1].

²³The Greek shipowners have to agree to a specific tenor in a loan, say of 6 years, determined by the bank. When they cannot see beyond say the first 3 years, they ask for a balloon for the last 3 years (i.e. for 50% of the loan). If the bank accepts this arrangement, it looks at vessel’s residual value for the case of a default. This need for a balloon we believe—our theory—can be eliminated, if the company asks for installments tied to gross profits (unequal), which naturally will prolong or shorten the tenor. Companies propose a balloon out of the fear, we believe, that in future they may be unable to pay the high money agreed today, and thus they will have to renegotiate their loans. As this is clear, banks ignore the reality of the shipping cycle by their demand for equal installments, where these cannot be equal... Shipowners have to discipline the shipping banks, who by majority they do not know the industry. E.g. is wrong to provide finance when the freight market is at its top—and all expectations are for falling—something that happens always...