Flagging out and the need for a new Greek maritime policy

Abstract

As is already known, the 1981–1987 deep, prolonged and severe shipping crisis has forced almost all European Maritime Nations and Greece, to flag out to percentages that vary from 50% to 95% (Belgium). For certain flag administrations like Greece this phenomenon is an acute problem for which immediate measures should have already be taken a year or two ago. For some other flag administrations, like the Netherlands, flagging out benefits have been counted out via input–output analysis and have been found to be quite substantial (70% of 1.85 billion Dutch florins is produced by shore maritime activities nothing to do with flag). Greek shipping in 1980 had almost 80% of tonnage (GRT) under Greek flag while in 1997 this fell to 38%. This article will investigate the likely reasons for this phenomenon. Reasons for and against flagging out are not clear. The vessels go away (flag out) under a low freight market, but even when market improves vessels do not return! World statistics suggest that vessels are on average 50:50 in national maritime flag and foreign flags. Is this some kind of economic equilibrium? This article will investigate the following obscure facts for Greek shipping which can put in the form of questions: what really is the benefit of a national flag to a ship in terms of US dollars per day? What is the contribution to the national economy of a vessel under the national flag and what under foreign flags? Greeks have apparently “lost” from the Greek registry some 2700 vessels between 1978 and 1994 and some 1/2 of Greek seamen positions, too, while the average (per ship) crew has been steady at round 17 persons! It can be estimated that 2000 ships have been flagged out and that 700 have gone away due to scrapping, better productivity, economies of scale and automation. These phenomena are indeed worthy of investigation. This article will look mainly into the 1980–1997 situation and will propose a new maritime policy for Greeks (lacking capacity for support measures, like Europeans, to cope the same way with flagging out). Moreover, in 1995 and 1997 Greek shipping flagged out with 409 ships, 8.82 million GRT and the Greek Shipowners Union proposed crew complements to be reduced in all ships from current levels to 5–7 Greeks and 1 trainee per ship. How can this be a workable proposition?