Abstract

The influx of shipping receipts from the world's leading fleet has been critical for the development of the Greek economy. Following the fateful September of 2008, the range and speed of the shift in direction of the freight rates, combined with the general economic and credit climate, have had a significant impact on Greek receipts from shipping. The paper investigates both the long and short term responses of shipping flows in the Greek balance of payments on the basis of monthly data. It also evaluates the role of the change in Greek ship-owners’ investment strategies from 2006 onwards. The paper presents estimations of the impact of freight market determinants on the shipping flows through a Greek shipping freight rate index, the loans outstanding and the second-hand vessel’s price index. The findings provide evidence in favour of a change in the investment behaviour of the Greek shipping companies after 2006. Inflows and outflows tend to be dictated partly by the cash-flow position of the companies involved in the S&P market, as indicated by the positive relationship with freight rates.

Highlights

  • Developments in international freight markets, following the culmination of the credit crunch into an open financial crisis in late 2008, have put a strain on both private and national earnings from shipping

  • We examined the rank of integration I(d) for the series of the Total Shipping Inflows (TSI), Total Shipping Outflows (TSO), IND, LS, exchange rate (EXR) and second hand vessels’ prices (SHV)

  • As 2010 started, Greece was heading for the chapter of an economic and sovereign debt crisis having broken the provisions of the European Growth and Stability Pact

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Summary

Introduction

Developments in international freight markets, following the culmination of the credit crunch into an open financial crisis in late 2008, have put a strain on both private and national earnings from shipping. This has motivated an assessment of the impact of these developments on maritime countries like Greece. Following the collapse of the financial markets in September 2008, one of the longer periods of shipping prosperity and successive records for freight rates, which had started around 2003 ended abruptly. The market reversal came at a time when the world fleet was projected to grow at record rates, having increased since the start of the new century by about 50% (UNCTAD 2009: 38). Despite a first spate of cancellations after the autumn of 2008, the orderbook at the start of 2009 was still over 40% for tankers and containerships and at over 70% for bulk carriers of the respective current fleet (Clarkson, 2009a) with no immediate prospect for returning to pre-boom levels

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