ΕΝΘΕΤΟ FOCUS SHIPPING CHINA

Zones to facilitate free trade

China's ambitious policy to improve business climate

By Paris Tsirigotis ptsirigotis@naftemporiki.gr

SEVERAL benefits and concessions for free trade, investment and improvement of business climate are provided by the Special Economic Zones (or Free Trade Zones) established in China.

This ambitious China government policy was introduced in 2013 to enhance and promote foreign direct investment in various industries, varying by region.

The aim of the Chinese government is to provide an opportunity for foreign investors to enter the Chinese market by offering them concessions.

The first Special Economic Zones (SEZs) were created to promote international trade.

Free Trade Zones (FTZs) opened in Shanghai in 2013, followed by Guangdong, Tianjin and Fujian in 2015. Goods in these zones can be unloaded, handled, manufactured or remodeled and re-exported without the intervention of local customs authorities.

However, when goods are transported to consumers within the province in which the zone is located, they are then subject to the applicable customs duties.

According to Chinese officials, the establishment of the Special Region is China's clear stance towards the healthy development of economic globalization. This major national strategy was designed, developed and headed by

Call for Greek businesses

President Xi Jinping personally.

Since 2013, as many as 21 such Free Economic Zones have been established in China. For instance, the Shanghai Free Trade Zone (SFTZ) launched by the China’s government in September 2013, covers an area of 120 square km in Shanghai’s Pudong District and is divided into three areas: Waigaoqiao Free Trade Zone, Yangshan Free Trade Zone and Shanghai Pudong Airport Free Trade Zone.

The SFTZ is designed to simplify trade procedures, reduce red tape and create a more attractive investment environment for foreign companies. It offers a number of incentives for businesses, including reduced tariffs, simplified customs procedures and the option to freely convert foreign currency.

zones: Nansha in Guangzhou, Qianhai and Shekou in Shenzhen.

„ Since 2013, as many as 21 free economic zones have been established in China.

The zone also allows for more flexible regulations on foreign investment, allowing foreign businesses to operate in a wider range of industries.

The Guangdong Free Trade Zone is a special economic zone located in the south of China. It was established in 2015, covering an area of more than 116 square km and including three distinct

The GFTZ is becoming an increasingly popular destination for foreign investors looking to enter the Chinese market, particularly in sectors such as finance, supply chain and technology.

Also, the Tianjin Free Trade Zone (TJFTZ) is a special economic zone established in China in 2015, expanding over an area of 119.9 square km. The zone is divided into different areas, such as a logistics park with customs, an integrated zone with customs, and a financial services area. It hosts a wide range of industries, including manufacturing, logistics, finance and high-tech sectors.

Other Free Trade Zones are Fugian, Chongqing Special Economic Zone, Sichuan, Shaanxi, Henan, Zhejiang, Hubei, Liaoning,

Hainan, Jiangsu, Shandong, Hebei, Heilongjiang, Guangxi, Yunnan, Beijing, Anhui and Hunan.

Recently, China's cabinet re-adopted policies to further open some Free Trade Zones and ports on a pilot basis to bring them in line with international standards. Among the measures are allowing the free and timely transfer of funds related to foreign investment in these zones that are authentic and compliant, as well as giving the green light for foreign financial institutions there to embark on offering the same new services as their Chinese counterparts.

According to the measures, the test will be spearheaded by the free trade port of Hainan, and by recognized Free Trade Zones in areas such as Shanghai, Guangdong, Tianjin, Fujian and Beijing.

Delegation from Jiangsu Province at EBEP

IN THE MEANTIME, the board of the Piraeus Chamber of Commerce and Industry (EBEP) recently held a meeting with a multi-member Chinese delegation from the Jiangsu Province, with the main topic being to explore bilateral trade and economic affairs.

EBEP president, Vassilis Korkidis, following a meeting held

between the Chamber’s board and the Chinese ambassador to Greece, Xiao Junzheng, referred to the wide scope for developing collaborations and synergies with companies located in the Jiangsu province, stressing the importance of the development of export activities by Greek companies based in the wider Pirae-

us area to the specific province, but also in general to the wider Chinese market.

Mr. Korkidis reminded that Greek shipowners are building a significant number of commercial ships in Chinese yards, and referred to the choices for cooperation of Greek companies in the shipbuilding repair and other

sectors with Chinese shipyards. He also emphasized that Greek companies based in the wider Piraeus area, manufacturing all types of ship materials and equipment, deserve the attention of the Chinese shipyards building ships for Greek shipowners, as well as the attention of Asian and European shipyards in general.

Free Trade Zones (FTZs) opened in Shanghai in 2013, followed by Guangdong, Tianjin and Fujian in 2015.

WITH the objective to further improve the business climate between Greece and China, the first official presentation of the Free Trade Zone of China (Lingang Special Area of China) was recently held at the Piraeus Port Authority (PPA). Deputy director of the economic zone, Zhao Yihuai, in his speech at the event emphasized that China and especially Shanghai have placed great emphasis on the development of the Special Zone, thereby introducing multiple supportive policies and measures focusing on facilitating business investment, free import and export of goods, easier flow of capital, transport and easy access to information. Mr. Zhao Yihuai invited Greek entrepreneurs to visit the Lingang Special Region to develop further bilateral cooperation by offering more facilitation measures and comprehensive services. He added that in December 2022, the first direct air route between Athens and Shanghai was launched, offering greater options for cooperation. He also added that worldrenowned companies, such as Tesla, Maersk, GE Aviation and Novo Nordisk have already established themselves in this free zone and have made rapid development. Regarding Tesla, he said that the firm’s activities in the free zone involve the manufacturing of batteries, while he emphasized that Maersk's iconic integrated logistics warehouse has also been built. In recent years, there has been a significant increase in the main economic indicators of the Lingang special region, which recorded an annual growth of 30% in 2022.

SHUTTERSTOCK

Free Trade Zones (FTZ) opened in Shanghai in 2013.

As many as 151 countries have signed a cooperation agreement with China to work under the Belt and Road Initiative (BRI).

In an effort to speed up the promotion of domestic products to distant markets as well as those of other countries in Chinese territory, China is eyeing the revival of the old Silk Road trade route with the Belt and Road Initiative (BRI).

By Paris Tsirigotis ptsirigotis@naftemporiki.gr

IN THIS CONTEXT, Beijing is financing major infrastructure projects, connecting China to Europe as well as to other regions.

In April 2023, China's Ministry of Commerce (MOFCOM) released new statistics on the Belt and Road Initiative, covering the period January-March 2023.

According to the data, in the first quarter of 2023 Chinese enterprises invested approximately 5.76 billion euros in non-financial direct investment in countries along the BRI, recording a 9.5% year-on-year increase.

Preliminary figures for Chinese engagement through financial investment and contractual cooperation for the first half of 2023 in the 151 countries of the One Belt One Road initiative show about 102 deals worth US$43.3 billion. This is equivalent to about 60% of China's involvement in the Belt and Road Initiative for the whole of 2022 (US$72.6 billion). Of this commitment, approximately US$24.1 billion is through investment and US$16.3 billion through construction contracts (partly financed by Chinese loans).

China's overall commitment has shown steady growth since 2020 and after the onset of COVID-19. By June 2023, 151 countries had signed a cooperation agreement with China to work under the BRI initiative.

China's colossal infrastructure investments could inaugurate a new era of trade and growth for the economies of Europe and Asia.

Recently, government officials in neighboring Italy - the only G7 power to have signed on since the trade and infrastructure initiative was launched by Chinese President Xi Jinping a decade ago - have expressed doubts about the country’s participation in the initiative.

In spite of Rome's skepticism, China’s Foreign Minister Wang Yi said cooperation with Italy under the Beijing-led BRI initiative had been fruitful, with high-quality Italian products entering thousands of households in China.

All roads lead to the Red Dragon

China's New Silk Road investments in major infrastructure projects are aimed at moving goods around the world

“The thousand-year-old friendship inherited from the ancient Silk Road has endured,” Wang told Italy’s Foreign Minister Antonio Tajani, who visited China recently.

Evaluation of the results of the initiative

In June 2023, during a forum on the achievements of the 10-year development of the BRI initiative was held in Hong Kong, full

confidence was expressed in the prospect of mutual benefit and mutual results.

“My team and I look forward to promoting Hong Kong to other countries and regions of the One Belt One Road initiative," said John Lee, head of the Hong Kong Special Administrative Region (HKSAR), at the Bauhinia Culture Forum on “BRI: A decade of Achievements and Prospects for High-Quality Development.”

Liu Guangyuan, commissioner of the Chinese Ministry of Foreign Affairs in Hong Kong, told the forum that over the past decade, the BRI had been effectively aligned with various countries' growth strategies and various regional and international development programs.

He added that the BRI cooperation has also shown that China hopes to “join hands with each other instead of leaving each

other's hands” and "tear down walls instead of erecting walls.”

China's New Silk Road initiative is one of the most ambitious infrastructure projects ever planned. It was launched in 2013 by President Xi Jinping, with a collection of development and investment initiatives. It was originally designed to connect East Asia and Europe through physical infrastructure, but in the intervening decade the project has expanded to Africa, Oceania and Latin America, greatly expanding China's economic and political influence.

As regards Europe, the initiative includes a network of railways, airports and shipping lanes - most of which are either managed or controlled by China. Supporters point to the potential for economic growth, while

critics warn of growing dependence on China.

Investments in European ports

China is seeking new sea lanes through European ports. COSCO is the fifth largest terminal operator in the world and a major investor in European ports. Besides COSCO, there are two other companies investing in ports.

The first is China Merchants Group, also a state-owned company like COSCO, but based in Hong Kong. Its subsidiary, China Merchants Port Holding (CMP), is the world's sixth-largest port terminal operator and has held a 49% stake in Terminal Link since 2013. Through Terminal Link, CMP holds minority stakes in terminals in Europe.

Another major player is CK Hutchison Holdings, a group registered in the Cayman Islands but headquartered in Hong Kong. Its subsidiary, Hutchison Holdings Ports (HPS), is the second largest operator of port terminals in the world, holding stakes in several terminals in Europe.

COSCO holds minority stakes in container terminals in Tollerort Hamburg, Antwerp (Belgium), Las Palmas (Spain) and Rotterdam (Netherlands), and has control or majority stakes in container terminals in Valencia (Spain), Bilbao (Spain) and Zeebrugge (Belgium). The company is also the main owner of the majority of the shares of the Port Authority of the Port of Piraeus. COSCO started investing in European port terminals as early as 2004, with activity peaking around 2016.

The agreement with Germany

China’s most recent investment in a European port was in October 2022, when COSCO acquired a 24.9-per-cent stake in the Tollerort terminal in the port of Hamburg, which however provoked reactions by the relevant German ministries and the EU, who had warned that sensitive

information about the operation of the port could fall into Chinese hands, as the port of Hamburg is not only of political, but also of military importance.

In an intervention, German Chancellor Olaf Scholz promoted a slightly modified version of the original agreement. Following the completion of the investment evaluation process, port company Hamburger Hafen und Logistik AG (HHLA) and COSCO Shipping Port signed the contracts for the Chinese company's minority stake in the Tollerort terminal. The terminal will become a preferred handling point for COSCO. HHLA said it was convinced that the partnership will strengthen Hamburg's position as a logistics hub in the North Sea and Baltic regions.

Notably, the purchase of 24.9%

Chinese construction engagement in the BRI

Chinese investement in the BRI

of the shares is lower than the initial agreement signed in September 2021, which concerned a stake of 35%. China is currently Germany's largest trading partner, with around 30% of goods originating from or destined for China handled by the port of Hamburg.

In 2021, China accounted for 2.6 million TEUs of the containers handled by the port of Hamburg, while in addition to sea transport, the German port has several Silk Road rail connections, with more than 20 destinations to China. In total, around 160,000 TEUs in 2021 were transported by rail between the port of Hamburg and China.

Traffic from Piraeus

In the port of Piraeus, COSCO owns 67% of the shares. The investments that will have to be implemented by the Chinese giant are both mandatory and non-compulsory, and are included in PPA’s comprehensive Master Plan that has now been approved following a long and arduous process with the issuance by Greece of a presidential decree. Notably, the organization's total mandatory projects include 10 projects. Based on article 7 of the concession agreement between PPA SA and the Hellenic State, the company is obliged within the first investment period to make mandatory investments, with a total reference cost of 293.8 mil-

lion euros, which in detail relate to the following:

Expansion of the passenger port (Southern Zone, Phase A); repair of floors, rails and gantry cranes Pier I SEBO; conversion of the pentagonal warehouse into a cruise passenger terminal; underground road connection of the car handling station with the former ODDY site; improvement and maintenance of port infrastructure; supply of equipment; dredging of the central port; construction of a new oil jetty; expansion of the car handling station (Herakleos port); and, improvement of Shipbuilding Zone infrastructure.

In the first half of 2023, the port of Piraeus seemed to have surpassed Valencia in the handling of container numbers, climbing in fourth place among European ports. According to data for the first half of 2023, 2.24 million TEUs have been handled by the port of Piraeus from piers II and III of the Container Terminal managed by COSCO's subsidiary, SEP SA.

Adding another approximately 300,000 containers, handled by first SEMBO pier, the total traffic in the first six-month period of 2023 exceeds 2.5 million TEUs.

Valencia, according to the latest data posted in the first half of 2023 has reached 2.36 million TEUs, registering a drop of 11.2% compared to the corresponding period of 2022.

China's colossal infrastructure investments could usher in a new era of trade and growth for the economies of Europe and Asia.

International cruises back to normality

The industry has entered the post-pandemic era, aiming for a $77 billion financial footprint by 2035

The international cruise market has returned to China, following the lifting of restrictive anti-pandemic measures that had suspended the industry for three years.

By Paris Tsirigotis ptsirigotis@naftemporiki.gr

ACCORDING to Chinese media

Chinese market for the first time. Blue Dream Cruises became one of the first companies to start offering cruise services in China again. After acquiring the former Glory Sea - now called Blue Dream Star - during the pandemic, the China-based company launched its services last May.

Departing from Shanghai, the 836-passenger ship now offers short cruises to various destina-

2 million people traveled by cruise ships from China in 2019

Carnival Corporation and CSSC, began sailing in July from Shanghai on a cruise that will visit Okinawa, Japan.

CSSC Carnival Corporation, the Chinese cruise line launched by China State Shipbuilding Corporation with investment from Carnival Corp., announced agreements to start operation of cruise ships and also to start schedules with its second cruise ship.

refers to the ship using the popular Shanghai nickname of Ada Modu.

Notably, the CEO of Royal Caribbean International, Michael Bayley, during a call with analysts in early May about the Royal Caribbean group’s earnings, did not hesitate to mention that the company is planning its return to China.

“We still have some work to do, but we are now starting to

George Pateras President, Hellenic Chamber of Shipping

THIS ARTICLE examines the characteristics of two of the world's most prominent shipping nations from ancient history to the present modern times. Some useful statistics:

THE FLEET controlled by PRC is reported to number 8,280 ships with a dwt of 368 million tons, and an average ship age of 12.9 years. Up to 68.5% of this fleet is registered off shore, while the average size of its vessels is 44,000 tons. The PRC fleet recorded its highest growth rate of 5.5% in 2023 (against 2022), overtaken by Hong Kong at 17.2% and Singapore at 13.2%. This growth has propelled the PRC to controlling 17% of the world shipping capacity. Assuming, of course, that a considerable percentage of the Hong Kong controlled shipping fleet is beneficially controlled by citizens of the PRC.

THE GREEK-controlled fleet on the other hand, numbers 5,200 ships with a dwt of 425 million tons, and aver-

„ Although shipping is proportionally a small contributor to GHG emissions, at less than 3% of global GHG emissions, we must still strive to minimize and eliminate air pollution.

age ship age of 13.2 years. As much as 86.8% of the Greek fleet is registered off shore, while the average size of its vessels is 82,000 tons. The Greek fleet recorded a growth rate of 2.7% in 2023, compared to 2022. Greece still holds pole position in world rankings, controlling 19.0% of world capacity.

Greece & China: Two great shipping nations

tionally, a majority of second-hand quality tonnage acquired by Greeks were built in China. The concession for the deep water Port of Piraeus is of great strategic and economic importance to PRC. Although we have experienced an impressive improvement in productivity and throughput with an improvement in the quality of port services, the general feeling that prevails is that the benefits are not equally distributed to the peripheral states considering the advantageous position of the port which is apparently a monopoly, at least for the liner and container trades. A future revision of the lease agreement may rectify these imbalances. However, we are all anticipating an earlier rectification in one form or another. Our position on this planet is clearly defined: both our countries, their populations and entrepreneurs have great ambitions and strive to fulfil them. As long as there is mutual trust

The fleet

controlled by PRC numbers 8,280 ships, with a dwt of 368 million tons and an average age of 12.9 years

and fair play, we can all achieve even better and greater goals.

The Greekcontrolled fleet copmrises 5,200 ships, with a dwt of 425 million tons and an average age of 13.2 years.

WITH the exception of about 300 coastal ferries and small tankers and cargo ships, the vast majority of the Greek controlled tonnage is employed in international trade which does not involve any national cargoes. This not however the case for China, where a large capacity of the local tonnage is employed in cabotage trade, while to a great extent, ocean-going ships are chartered-in by PRC enterprises. Thus, Chinese shipping is ostensibly serving the country's import and export trade. On the contrary, Greece's ocean-going fleet is almost entirely serving international trade and is therefore more globalized. This genuine link between trade and transport, within the framework of a national economy, is a phenomenon that has existed since the early history

of humanity. Shipping, as a complimentary but essential activity, has been instrumental in the creation of great empires and great powers. Examples include the Phoenicians, Chinese, Greeks, Romans and Byzantines in ancient times, and in more modern times the British, French, Dutch, Spaniards and Portuguese, to name just a few.

ZHENG HE (1371-1433), China's most prominent navigator and admiral, managed ships with 9 masts, 127m long and 52m wide, by far the largest at that time. He was a pioneer in opening China to international trade. The benefits of his pioneering activities to the country were disrupted by Haijin, and the sea ban imposed by the Ming and Qing dynasties,

with dramatic effects on the Chinese economy, leading the country into introversion. While Greek traders and shipowners were closely linked during the 19th century and the early part of the 20th century, the transition to cross trading, in other words serving any legitimate sea transportation requirements without any commitments, became the business model that prevailed and still stands today.

IN THE PERIOD 2018 to June 2022, 47 tankers, 90 bulkers and 21 container ships were built in PRC for Greek interests, numerous ships were drydocked and repaired in the same period, while China is the main supplier of marine equipment and materials to the Greek fleet. Addi-

THE GREATEST challenge facing the world today is in combating the climate crisis. Although shipping is proportionally a small contributor to GHG emissions at less than 3% of global GHG emissions, we must still strive to minimize and eliminate air pollution. Technologies are still basically in the development stage, worldwide availability of safe eco-friendly fuels is scarce, and storage and distribution networks are currently non-existent. The struggle to fulfil IMO targets is common to all shipping, including China and Greece. The uncertainty for the future of globalization and the effect on seaborne trade, concerns all sectors of the maritime industry.

THE WORLD is transforming at a greater pace than ever. Habits, traditions, mentalities, social life, needs and standards of living are all rapidly changing. The new world that is emerging requires more and new types of synergies, and this is an opportunity to further develop cooperation between our two great shipping nations.

Our position on this planet is clearly defined: both our countries, their populations and entrepreneurs have great ambitions and strive to fulfil them. As long as there is mutual trust and fair play, we can all achieve even better and greater goals.

Vassilis Korkidis President, Piraeus Chamber of Commerce and Industry (EBEP)

CHINA AND PIRAEUS might seem as two rather unrelated words or places, but a more insightful consideration reveals that the first one is a huge market, perhaps the biggest on the planet, and the second one a key port-gateway for the markets of the European Union. Therefore, the Port of Piraeus is the key for the wider Piraeus area -and other areas- businesses’ presence in the two large markets of China and Europe.

BOOSTING member companies’ competitiveness remains among the top priorities in the Piraeus Chamber of Commerce and Industry’s agenda, to be achieved through a series of actions that have already taken shape. However, competitiveness must be understood as being intertwined with extroversion, considering it as a matter-field of competition, either domestically and/or internationally. It should be stressed here that there are tools for developing extroversion, but also proven policies that can be followed. The good thing about issues pertaining to extroversion is that they are highly measurable policies. One of the indicators is none other than exports. We have to admit that the significant increase in exports is proof that they are the mirror of a competitive economy. And we have proven that we can develop strong export activity in productive sectors, as well as new ones.

The 6th China International Import Fair, to be held next November, is a unique opportunity for Greek companies to position themselves in the Chinese market.

AS I MENTIONED above, the actions taken by the Chamber focus on the effort to open up the doors of the Chinese market. The initial steps have already been made, and Piraeus hopes to keep the door wide open for cooperation with Chinese companies, with the focus being on the Port of Piraeus. In a recent meeting the Chamber had with the president of PPA-Cosco, Yu Zeng Gang, the good intentions of both sides were established for cooperation but also mutual understanding for the breadth in the field of cooperation between Chinese companies and Piraeus-based companies, which will allow the expansion of business contacts between the two sides in the near future.

NOTABLY, the Chamber signed an MoU with Mr. Liu Fuxue, head of China's authorities responsible for import trade, aimed at developing partnerships for participation in the 6th China International Import Expo, to be held in November 2023. Participation and attendance in this exhibition, in which Chinese companies will be buyers - emphasizing "buyers"- is a unique opportunity for Greek companies to present to and position themselves

China and the Port of Piraeus: A win-win relationship, in spite of challenges

in the Chinese market. At the same time, it is a first-class opportunity for companies active in the manufacture of materials for ships to supply their products to Chinese shipyards, where a significant number of ships are built on behalf of Greek shipowners.

GREEK COMPANIES operating in the wider Piraeus area, which manufacture all types of materials and equip ships, deserve the attention not only of the Chinese shipyards, in which Greek shipowners build their ships, but also

of the Asian and European shipyards in general. It is worth noting that the estimated value of imports of services and goods in China in the next five years, will exceed USD 10 trillion.

IN THE FIELD of export competition, I will not tire of repeating that there is no luxury of complacency, and tried and tested practices should continue, but there also is an urgent need to cultivate a new culture, capable of imparting dynamics in order to present the range of exportable products. Opportunities of such scope, such as this particular exhibition, which opens up the gates for Greek businesses to the colossal Chinese market, should not be missed, just as the opportunity to present the undeniable quality characteristics of the products and

services that the businesses of the Piraeus area produce and offer.

COSCO SHIPPING is launching a faster "door-to-door" freight service between China and Greece through the Port of Piraeus, to further strengthen the role of the forwarder in the freight relations between the two countries. With this new service, called “Talent Athena”, Cosco customers can import goods from China to Greece and neighboring countries in just one stop. The goods will be transported by ships from mainland China to the the Port of Piraeus’ PCT container handling terminal, and from there by trucks to the mainland areas of Greece and neighboring countries. Those interested will be able to order their products through Cosco Shipping's digital platform, SynCon Hub. Recently Cosco's subsidiary, Orient Overseas Container Line (OOCL), announced is was boosting its network of intra-European services through the Port of Piraeus with a new route called Turkiye Spain Morocco Express (TSM). The new line will provide direct connections between Greece, Turkey, Spain and Morocco, along with a transshipment connection at the Mediterranean hub of Piraeus in Greece. Also, through the Port of Piraeus, OOCL has already upgraded lines to Northern Europe with four new-build containerships, including "OOCL Piraeus", with a total capacity of 24,188 TEUs.

OF COURSE, it is not only China that first recognized and highlighted the importance of the Port of Piraeus as a gateway of Chinese products -as well as from other counteis- to EU markets. Recently, during his visit to Greece, India’s Prime Minister Narendra Modi revealed his country’s interest in using the Port of Piraeus as a gateway for Indian exports to EU markets. The upgrading of the Greek-Indian ties to a strategic partnership, sealed by a joint statement during the meeting between Greek PM Kyriakos Mitsotakis and his Indian counterpart, is yet another opportunity that should not be missed. We must understand the role of city of Piraeus and its port. We are going from record to record in terms of foreign direct investment. We are very interested in presenting the Greek success story to the Indian business community. This is "only the beginning to see our strengths", the Greek PM recently told domestic entrepreneurs. As the Piraeus Chamber of Commerce and Industry we ought to preserve and expand the win-win relationship we have built, focusing on the city of Piraeus and its port between Greece, China, and Europe.

„ The city of Piraeus hopes to remain open for cooperation with Chinese businesses, focusing on its port.

SHUTTERSTOCK

The Port of Piraeus is the key to the presence of businesses in the wider Piraeus area -as well as other areas- in the markets of China and Europe.

Greeks are building in China

Chinese shipyards are currently building 191 ships on behalf of Greek shipowners

The main recipients of Greek shipowners’ new ship orders in recent years have been Chinese shipyards, with the two sides having developed a strong cooperative relationship based on the construction of efficient tonnage.

By George Georgiou ggeorgiou@naftemporiki.gr

A total tonnage of 17.14 million dwt in new ships is currently being built in China for Greek shipowners.

ACCORDING to data shared with "N" by the shipping brokerage George Moundreas & Company SA, the orderbook by Greeks to China comprises 191 ships, with a total capacity of 17.14 million dwt (data up to the first week of September 2023).

Out of these 191 ships, 75 are bulk carriers, with a capacity of more than 6 million dwt; 47 are product tankers, with a capacity of 5.16 million dwt; 28 are crude tankers, with a capacity of 5.26 million dwt;

24 are containerships, with a capacity of 130,744 TEUs; 12 are chemical tankers, with a capacity of 474,000 dwt; and, 5 are PCTCs (vehicle transporters), with a capacity of 29,400 CEUs.

The above data refer to ships that are currently under construction, not to the total orders placed in previous years, as some ships have already been delivered to their owners.

Shipyards chosen by Geeks

In the type of bulk carriers, the largest volume of newbuilds, i.e. 14 ships, with a capacity of more than 1.14 million dwt, has been undertaken by the Chinese shipyard Hengli SB.

Nantong Xiangyu SOE follows with 13 ships, with a capacity of 825,300 dwt, while 6 ships, with a capacity of more than 1 million dwt are being built by Cosco HI (Yangzhou), making up the top three (based on capacity, as Huangpu Wenchong builds 8 ships, with a capacity of 680,000 dwt). In product tankers, the lion's

share has been taken by Cosco HI shipyard (Yangzhou) with an orderbook of 14 vessels, with a capacity of 1.61 million dwt, and the top-three list is completed by Shanhaiguan SB with 10 vessels, with a capacity of 1.15 million

„ Greek shipowners have developed a strong cooperative relationship with Chinese shipyards based on building efficient tonnage

dwt, and Shanghai Waigaoqiao with the same number of ships, but slightly smaller tonnage (1.14 million dwt).

With regard to crude oil tankers, activity has been funneled into two yards. New Times SB has received orders for 26 steamers of 4.62 million dwt, while CSSC (Tianjin) has taken orders for two (2) tankers totaling 640,000 dwt.

75

bulk carriers, with a capacity of more than 6 mln dwt

More balanced conditions prevail in the containership market. With the exception of the Zhoushan Changhong shipyards (which has received orders for 10 containerships, with a capacity of 53,090 TEUs), Yangzi Changbo is currently building 4 vessels, with a capacity of 7,102 TEUs, while another five yards have taken in orders for two (2) ships each.

In the chemical tankers type of ships market, orders have been placed with three yards: YangziMitsui SB is building 6 ships, with a capacity of 300,000 dwt; Wuchang SB Group is building 4 ships, with a capacity of 74,000 dwt; and, Chengxi Shipyard is bulding 2 ships, with a capacity of 100,000 dwt.

Finally, the PCTC type of ships segment has been showing increased interest in newbuilds in the last two years, with the Yantai CIMC Raffles shipyards building 3 such ships, with a capacity of 21,000 CEUs, and Fujian Mawei building another 2 ships, with a capacity of 8,400 CEUs.

47 product tankers, with a capacity of 5.16 mln dwt

28

crude tankers, with a capacity of 5.26 mln dwt

24

Containerships, with a capacity of 130,744 TEUs

12 chemical tankers, with a capacity of 474,000 dwt

5 PCTCs, with a capacity of 29,400 CEUs.

THE MAP OF NEW ORDERS

Intense activity and new agreements in 2023

GREEK shipowners seem to have been highly active in shipbuilding this year. According to data collected by "N" from shipping brokerage sources, orders during the first seven- month period of 2023 have already exceeded the levels recorded in the whole of 2022.

If deals are viewed in historical terms, this year's numbers are the highest since 2014, at seven-month level (excluding 2021).

The majority of this year's contracts were signed with Chinese shipyards.

A survey conducted on behalf of "N" by George Moundreas & Company SA reveals that by the first week of September 2023, Greeks had placed orders in China for: 46 bulk carriers, with a capacity of 3.99 million dwt; 44 product tankers, with a capacity of 4.81 million dwt; 24 crude tankers, with a capacity of 4.63 million dwt; 8 chemical tankers, with a capacity of 274,000 dwt; 4 containerships,

with a capacity of 28,000 TEUs; and, 2 PCTCs, with a capacity of 8,400 CEUs.

Notably, orders for bulk carriers placed this year regard mostly medium-sized kamsarmaxes (82,000 dwt capacity)

„ As of the start of 2023 up to the first week of September, Greeks had placed orders for 46 bulk carriers in China

and smaller ultramaxes (60,000 dwt capacity).

Of course, there are also deals for the large capesizes and newcastlemaxes, as well as the smaller handysizes.

Although the dry bulk freight market has been quite subdued for most part of this year, companies are still flush with cash as a result of the freight market rally in the past two years, and

can surely invest in renewing their fleets.

In the tanker ship market, aframaxes/LR2 tankers (with a capacity of approximately 115,000 dwt) are the most popular type of ship orded by Greek shipowners.

However, the high interest in crude oil tankers, mainly medium-sized suezmaxes (capacity of about 157,000 dwt), but also for super-tankers, of the VLCC type (capacity of about 300,000 dwt), is noteworthy.

Following some years of waiting and keeping away from shipyards, Greeks decided, mainly as of the second half of 2022, and after the shipping market picked up, to return to tanker building, significantly expanding the orderbook.

The remaining ship categories have so far recorded fewer shipbuilding deals. Notably, LNG and LPG tankers are missing in China’s orderbook, as Greeks generally opt for South Korean shipyards for these types of ships.

n New orders to China by Greeks

In recent years, Chinese shipyards have been the main recipients of new ship orders by Greek shipowners

Containers handled (.000 TEUs)

China's investments in seaports along the Maritime Silk Road

Beijing's ultimate goal is to connect countries with trade and cultural ties

Chinese investments in European seaports have increased rapidly in the 21st century as part of the country’s Belt and Road Initiative (BRI) - in particular, its maritime component, the Maritime Silk Road (MSR)and is among the economic and geopolitical effects of China's growing role in global affairs.

SEAPORTS are crucial pivots connecting a national economy with the world economy. Historically, however, China has been a land power; its presence in ports or port terminals is a relatively new activity that has advanced its transformation to one of the largest seaport constructors and operators around the world. The Maritime Silk Road, put forward in 2013, stretches from the Pacific Ocean to the Atlantic Ocean through the trajectory of the Indian Ocean, Eastern Africa and the Mediterranean Sea, connecting some 50 marine countries of Southeast Asia, South Asia, West Asia, North and Eastern Africa, Southern European countries, and the Maghreb states.

The BRI project aims at connecting countries for commercial and cultural purposes through rail, road, sea and pipelines. As part of this goal, China has invested in two-thirds of the world's largest container ports, with this activity increasingly expanding. A distinguishing characteristic is that this strategy unfolds without being necessarily tied to governance-related conditions; it often involves development projects contracted to Chinese companies. The strategy’s main way of funding is through bank loans granted by a mix of government, state-

owned enterprises (SOEs), development agencies and private institutions. According to data firm Refinitiv, up to 60% of the BRI projects are owned by Chinese government entities, while the private sector accounts for approximately 25%.

Investments are mainly aimed at gaining control of particular port infrastructures, and this has led to some critical approaches. Mostly, these are infrastructures that are critical to certain markets or trades in order to establish and consolidate a leverage over global and regional supply chains, and at the same time creating the conditions to absorb the Chinese industrial over-capacity. To China, BRI consists of a broad set of "policy coordination" to learn from the Chinese experience and knowhow while serving the goal of its exports’ easy access to the European market.

For the hosting countries’ seaports, the benefits of Chinese investments are not limited to economic and political rewards generated by the broader cooperation with a leading economy of the world. In terms of capacity, China stands among the prom-

trade throughput, or the respective list of the leading container ports in terms of throughput mainland, 13 ports are Chinese.

A key role in the presence of Chinese interests in the global port industry has been played by China Cosco Shipping. The national shipping company, founded as a state-owned enterprise in 1961, started establishing its international presence in the late 1980s, and became the first Chinese company to be enrolled as a member with the World Economic Forum in 2000, as it has invested in several ports around the globe. The linkages of the leading liner shipping company with one of the three alliances (ONE) transporting containers should not be underestimated, as allowing a carrier to participate in a container terminal is one of the best guarantees to attract vessel calls and volumes to the ports. Today, together with China Merchants Port, which is another Chinese maritime financial group, the share of the world's total capacity corresponds to approximately 24% of the TEUs handled by container ports annually.

inent empires of seaport operations. Throughout the past two decades, China has ranked first in the world in tangible goods trade. Its trade and container throughput has ranked top of the world. Ports at home have been instrumental in the global economy. Among the world's top 20 ports in terms of global

In Europe (Table 1), the presence spans seven countries, including its main European partner, Germany, with which China trades goods valued at almost €300 billion per annum. Notably, all Chinese investments in the continent -and beyond- are via the purchase of minority and/or majority stakes in container terminal operations. The sole exception is Greece, which has offered the opportunity to purchase the majority of the managing entity of the Port of Piraeus and determine the present and future of the port. With regard to other parts of the world, in the Pacific, the Chinese presence ranges from

North Korea (Port of Rajin) to Malaysia (Melaka Gateway) and Australia (Port of Darwin). At the Bay of Bengal, the Chinese presence in operating and/or constructing ports includes Myanmar (Kyaukpyu), Sri Lanka (Hambantota; Port of Colombo), and Bangladesh (Chittagong). In Southwest Asia, the list includes Pakistan (Gwadar), Saudi Arabia (Jeddah Port), Abu Dhabi, the UAE (Khalifa Port) and Oman. In Eastern Africa, one might name Kenya, Sudan, and Tanzania. In Maghreb, it includes Alegria, and Morocco, and in the non-European Med the Chinese presence ranges

from Egypt (Damietta, Suez) to Turkey (Kumport).

The Challenge

China extends its commercial investments overseas underscoring the principle of development first. Seaport projects provide the conditions through which the Chinese government is cautious in going global without threatening the status quo of specific countries. In general, China seeks economic opportunities through involvement in owning, operating, or developing commercial seaports contending that they offer win-win conditions for both the investor

Cosco Shipping, which entered the international scene in the late 1980s and was the first Chinese company to enroll as a member of the World Economic Forum in 2000, has invested in several ports around the globe.

Thanos

Pallis

Professor in Maritime and Port Economics and Policy, Department of Maritime Studies, University of Piraeus, Greece

„ Τhe commercial involvement by Chinese firms in European ports has become increasingly politicized.

n Table 1. Chinese investments in European Ports

Investing in Greece: Port of Piraeus

ALTHOUGH China has made numerous maritime investments abroad in recent years throughout the world, few have attracted as much attention as its acquisition of the Port of Piraeus in Greece. Following a failed attempt for a direct intergovernmental agreement in 2006, which was rejected by the European Commission on the grounds that it lacked an international open tender, the Piraeus Container Terminal SA (PCT) was awarded the right to operate container terminal Pier II, and construct a new Pier III in 2008.

This concession was followed by the decision by the Greek State to sell the majority of stakes in the Port of Piraeus Authority in 2016, with China Cosco Shipping purchasing 67% of PPA SA shares, through an international tender. Since 2008, the number of containers handled in Piraeus has increased to record levels, as has done its liner shipping connectivity.

Piraeus is today a major trans-shipment hub, with the port standing as the fifthbiggest container port in Europe (following Rotterdam, Antwerp-Bruges and Valencia), and as the third in the Med (after Valencia and Tangier Med). Notably, Chinese investments occur in all these

major container ports.

The most advanced BRI port projects so far are those that are based on existing routes. BRI projects representing success stories for China include Piraeus and an expansion of existing ports along established maritime routes. Other port projects along similar lines include the acquisition of the terminal portfolio of Noatum, most importantly its terminal in Valencia.

„ Greece, has offered the opportunity to purchase the majority of the managing entity of the Port of Piraeus.

Less progress has been made on projects related to alternative routes. BRI projects that are related to new trade opportunities, in particular in Africa, seem to be promising, especially when port projects are linked to railway development to the hinterlands and mineral resources. New canal projects -such as the Nicaragua and Kra canals- do not seem likely to materialize. Although it cannot be excluded that the coming decades will see the emergence of alternative maritime routes driven by these projects, their likelihood is not very high.

and the hosting country.

This process has triggered a debate in Europe on the significance of, and how to deal with, growing Chinese influence in European ports. In recent years, the commercial involvement by Chinese firms in European ports has become increasingly politicized. The main driver of this process has been the changing perception of China in some parts of Europe. Whereas ten years ago, China was regarded primarily an opportunity for economic exchange, some European governments are increasingly focusing on the potential risks related to interaction with

„ China extends its commercial investments overseas underscoring the principle of development first.

China. The minority presence of Cosco in the smallest terminal of the Port of Hamburg had been subject to controversy before the German government gave its approval in early 2023. As is increasingly the case, when Chinese state-owned enterprises (SOEs) are involved or when these activities take place in

strategically important sectors, such as ports, decision-makers are not ready to provide approval a priori, while, at large, due to the extensive presence of Chinese interests in European ports, the European Parliament is considering guidelines for a uniform involvement of foreign direct investors in ports around Europe.

In any case, with ports standing as the critical infrastructure for local, regional, national and global prosperity, China's participation in seaport operations and management serves as the symbol of achievement of a leading global economic power.

Since 2008, the number of containers handled in Piraeus has increased to record levels, as has done its liner shipping connectivity.

A key role in the presence of Chinese interests in the global port industry has been played by China Cosco.

BRI projects representing success stories for China.

HEC extends MARPOL 73/78 Annex I Environmental Services in Malta through Green Ports Malta

Staying true to our commitment to provide global environmental services of the highest caliber, we are delighted to announce that the Hellenic Environmental Center (HEC), is now extending its services in Malta through its subsidiary Green Ports (Malta) Ltd., as leading Port Reception Facilities provider.

Our Green Ports brand has firmly established its presence in major shipping hubs such as Hamburg, Gibraltar, and Piraeus. We are now expanding our expert services to Malta, contributing to the protection of the marine environment, as well as providing the responsible, seamless and reliable support to our clients who have grown to trust in our other hubs.

Five points that make us different:

Expertise & Experience: With a rich legacy spanning over 30 years in premier ports, we bring with us vast experience and understanding of the maritime environmental challenges and their solutions.

1

For our partners in Malta, this expansion is more than just a new location. It represents Green Ports unwavering commitment to uphold environmental standards, foster innovation, and support the growth and sustainability of the Maltese shipping industry.

2

Comprehensive Services: From waste management to treatment, our comprehensive suite of services available 24/7, ensures your operations remain both efficient and compliant.

Dedication to Sustainability: Our mission extends beyond compliance. We aim to spearhead sustainable initiatives that benefit not just the shipping sector, but also our global environment. We believe in shaping a future where maritime operations coexist harmoniously with our planet.

3

In anticipation of receiving your orders at the Maltese Anchorage, we look forward to serving the marine environment related to collection, transportation and disposal of Oily waste with dedication, expertise, a vision for a greener tomorrow and a circular economy. Let us embark on this journey of environmental excellence together.

4

Local & Global Network: Our strong coLocal & Global Network: Our strong connections in major ports mean that we are not just your local partner, but also your gateway to a network of resources and expertise.

5 Technology and Processes: Our clients benefit from cutting edge support. We invests constantly in pioneering technology, groundbreaking research, development, and the impeccable management of its global operations.

GREEN PORTS ALL OVER ΤHE WORLD

HEC, your Trusted Environmental Partner now in Malta through Green Ports Malta.

China’s new financing agencies for shipbuilding

The Chinese are settling in Greece and establish companies with help from Greek banks

More than one out of every two ships of Greek interests are currently being built in China, while at the same time Chinese are settling in Greece and establish companies with help from Greek banks.

By Antonis Tsimplakis artsimplakis@naftemporiki.gr

COMPANIES set up by Chinese in Greece have succeeded -through a labyrinthine system created in China itself- in financing many Greek and European shipping companies to the satisfaction of Chinese shipyards and other exporters.

Th information was provided to "N" by Mr. Giorgos Xiradakis, managing director of XRTC Business Consultants and the Union of Banking & Financial Executives of Hellenic Shipping, who added that Greeks have built approximately 1,300 ships worth more than $60 billion in Chinese yards.

History

The making of the Greek miracle with the conquest of first place in the world ranking of ship ownership has essentially been based on European and American funding, as the two are considered to be its historical partners.However, as Mr. Xiradakis mentions, in the past 20 years, Chinese financial organizations appeared with the pur-

pose to support China's export efforts in shipping, especially the shipbuilding industry. With the gradual development of Chinese shipyards since the mid-70s, but mainly after 2007, the Greek shipping community became interested in taking advantage of China’s financial market. Very cautiously at first, due to the lack of experience and the inability of Chinese organizations to hire foreign experienced executives in order to develop their expertise.

Thus, in the first period of the internationalization of Chinese banks until 2007, Chinese banks mainly provided foreign trade support guarantees and issued the so-called Refund Guarantees.

The collapse of Lehman Brothers (2007) and the implementation of the Basel measures led to the reduction in the shipping portfolios of large traditional European banks, while giving the opportunity to banking and investment organizations from the East to enter shipping finance.

The increasing number of cancellations of ship orders by shipowners sent Chinese shipyards into a slump. The entry of China’s systemic banks in 2007 allowed shipping companies to raise capital from these banks to complete the construction of ships they had ordered in China, with the aim of minimizing the number of cancellations while strengthening order books for the local shipyards.

n Countries and ship types in Greek shipowners' orderbook

„ Some 1,300 ships, valued at more than $60 billion have been built by Greek shipbuilders on Chinese yards.

Close relationships

Mr. Xiradakis notes that during the same period Greece and China developed very close ties, assisted both by the sequence of the Olympic Games organized in the two countries, and by the Greek policy of expanding relations with this great country. Thus, in addition to the fact that discussions started to emerge for cooperation in the Port of Piraeus, the Chinese side considered

cooperation in shipping finance rewarding. Export credit agencies have played an increasingly important role, with the largest one of them being the Export-Import Bank of China (CEXIM), which is controlled by the Chinese government, as is the financial institution Sinosure.

A series of shipping loans to Greek shipowners happened to be signed during the Chinese premier Wen Jiabao’s visit to Greece in 2010, prompting him to announce the establishment of a $5 billion fund to finance shipbuilding for Greek companies. The following year, the Chinese government announced the doubling of available funds. This resulted in the support of Greek shipowners by Chinese banks.

Adjustment of ship values

Them came the era when the Chinese financial market was confronted for the first time with a shipping crisis, which culminated in 2016 with a subsequent adjustment of ship values. Chinese banks failed to manage market risks, crushing most small- and medium-sized Chinese companies, and accumulating huge losses. In the meantime, with few exceptions, all lending related to international and Greek shipping was managed in a safe manner. However, the damage to the perception of shipping risk had already been done, and Chinese banks pushed for the need to support the shipbuilding and shipping market to leasing companies. Thus, all the banks

With the gradual development of Chinese shipyards since the mid-70s, but especially after 2007, Greek shipowners became interested in tapping into the Chinese financial market

established their own subsidiary company for Leasing, which drew funds from private individuals through stock exchanges or from foreign banks, even European ones - which instead of directly supporting European shipping finance, opted for cooperating with Asian financial institutions through which the industry was financed. A typical example was the cooperation between BNP Paribas and Japan’s SBI Leasing Service, and other export credit agencies of South Korea and China, or the cooperation between German and Dutch banks with Chinese leasing companies.

This market was now getting bigger, growing the portfolios of leasing companies which expanded their clientele to smaller fleets that had excellent solvency and creditworthiness characteristics. Characteristically, leasing companies were constantly increasing their portfolios, reaching from $47 billion in 2017 to $77 billion in 2021. Meanwhile, Chinese are settling in Greece and establish companies with help from Greek bankers who have lost their jobs as a result of the closure of European banks, succeeded -through a labyrinthine system created in China itself- in financing many Greek and European shipping companies to the

The Chinese shipping finance today

TODAY, the two largest Chinese banks have a combined shipping portfolio of $31 billion. Before the global financial crisis, Chinese shipping finance was focused on the domestic market, providing financial support mainly to Chinese shipbuilders and shipping companies, Mr. Xiradakis notes, adding that at that time, not a single Chinese bank ranked among the top 15 global shipping lenders (OECD, November 2015). Ten years later, in 2019, the Bank of China, the Export-Import Bank of China (CEXIM) and the China Development Bank (CDB) not only reached the top 15, but the Eximbank and the CDB banks even ranked second and third globally, respectively. According to the latest 2022 data, the CEXIM and the Bank of China have climbed to second and sixth position in the global ranking of bank financiers, with portfolios of $18 billion and $13 billion, respectively.

Greek shipowners build their ships in China, having ordered about 1,300 ships of a total order value of $60 billion from Chinese shipyards, while over the past decade, half of Greek newbuilds were built in China.

In September 2023, Mr. Xiradakis emphasizes, Greek shipowners placed a significant number of orders. A total of 361 ships, with a total capacity of 33 million dwt, are currently being built in various shipyards, mainly in China’s East. According to data from Vessels Value, the value of ships under construction stands at $32 billion. As much as 54% of these ships (196) and 58% of their total tonnage (19 million dwt) are being built in China.

Huge funds

benefit of Chinese shipyards and other exporters.

The effects of Covid-19

The slowdown in Chinese shipping finance growth was due to the Covid-19 pandemic and the subsequent decline in shipbuilding. A fresh development cycle of financing through leasing began in parallel with the subsidence of the pandemic and the implementation of programs to renew the fleets of large companies. The development of the Belt and Road Initiative (BRI), as well as the Chinese market's huge investments in supply chains, have also played and are still playing a major role. The only constraint to financing by Chinese organizations was the development of dark money-flow corridors, through the labyrinthine system that had been created, and which forced the Chinese authorities to arrest shipping finance executives, according to reports in shipping newspapers. So this fact, combined with the ease that had now emerged in finding experienced market executives, lead the big Chinese banks to sell the large portfolios that had been amassed by the leasing (operating/financing) companies, and to re-establish the departments of contractual financing.

Greeks are currently building 361 ships around the world, with 54% of them (196 ships), or 58% of their total tonnage (19mn dwt), being built in China.

Marine lending in China has now undergone a remarkable transformation as it continues to evolve and is becoming more outward-oriented. Banks are promoting green technological innovation, supporting the green transformation and the upgrading of the shipbuilding industry.

The terms and conditions of Chinese bank lending are not much different compared to traditional Western financiers. At the same time, banks are promoting the option of lending outside of the US dollar in RMB, in an attempt to break the US monopoly. Issuing bonds in RMB is an alternative that seems to be gaining ground

due to rising interest rates in the West as opposed to the low and relatively stable RMB interest rates. In this context, Pearl Bonds have become increasingly competitive in terms of financing costs compared to other offshore bonds. The offshore bonds are governed by English or American law, and their legal documents are the same as the Off-shore Bond format (Reg.S & rule 144A).

Ship orders

For decades, Greek shipping played a major role in China's economic development, primarily serving the latter's needs for imports of mainly raw materials. Almost 50% of energy resources and 20% of other products/ goods imported into China are transported by Greek ships. Many

n Greek-owned ships built in China

n Greek-owned ship orders

A European Parliament decision regarding the financing of ships as a specialized loan is seen as very important and auspicious for the resumption of shipping financing by European banks or investment organizations, Mr. Xiradakis pointed out. It remains to be seen, he adds, "whether European banks will re-enter shipping finance aggressively, or whether Chinese banks will continue their bullish attitude in the industry. What is certain, however, is that the transition of global shipping from a carbon-dependent industry to one that operates without greenhouse gas (GHG) emissions is a huge undertaking that will require huge capital. Given the fact that without bank cooperation this transition is not possible, the continuous and even increasing presence of all banks in the shipping market is essential. This philosophy also drives the Cooperation Agreement signed in February 2023 by the Association of Banking and Finance Executives of Hellenic shipping with the Shanghai Lujiazui Financial City Council to create a cooperation network to stimulate communication between shipping companies and financial institutions from both international shipping centers. The comprehensive know-how and in-depth experience of the Greek shipping financiers is a great advantage, with great added value that could be tapped into by Chinese banks to further expand their activities in the Greek shipping territory", Mr. Xiradakis concluded.

In 2010, a $5.0-billion fund was established in China to finance shipbuilding for Greek companies.

Giorgos Xiradakis: For decades, Greek shipping played a major role in China's economic development.

40% reduction of carbon intensity by 2030 is the goal for IMO.

The regulatory framework for reducing ship emissions is becoming increasingly strict, with the goal of achieving "carbon zero" by 2050.

By George Georgiou ggeorgiou@naftemporiki.gr

THE LEADING body in this effort is the International Maritime Organization (IMO), which adopts and applies regulations concerning the entire shipping industry, while in recent years, regional regulatory efforts have emerged, centered on the European Union.

The IMO issued its initial strategy to reduce greenhouse gas emissions in 2018.

The first step of this strategy was the introduction of two short-term measures: the Energy Efficiency Index of Existing Ships Energy Efficiency Existing Ship Index (EEXI), and the Carbon Intensity Indicator (CII). In July 2023, the organization revised the strategy to include stricter targets to accelerate the decarbonisation of the industry, aiming at achieving reach zero emissions by or around 2050.

New indicators

The EEXI and CII indicators were introduced in early 2023 as a result of extensive consultation on the best way to depict the efficiency of transport work in calculations, without disadvantag-

2050 THE YEAR

around which zero carbon dioxide emissions should be achieved

ing specific types of journeys or destinations.

EEXI provides a one-time certification of the energy efficiency of a ship's machinery and its intended operating profiles, while CII offers an ongoing annual certification and rating,

Mapping out the strict regulatory framework for decarbonization

Revised goals, EEXI and CII indicators, and medium-term measures under review

which demonstrate a ship's operational efficiency. The efficiency of the two measures will be examined for improvements by the IMO in 2026.

IMO’s objectives

The new IMO strategy, as adopted last July, is a comprehensive set of tasks consisting of targets, work plans, reviews and impact studies, with the ultimate goal of decarbonisation by or around 2050.

Notably, in July 2023, the 80th meeting of the IMO Marine Environment Protection Committee (MEPC 80) adopted the following targets (all reductions compared to 2008 levels):

 Reduction of carbon in-

tensity by 40% by 2030;

 Adoption of technologies, fuels and/or energy sources with zero or near-zero greenhouse gas emissions, aimed at accounting for at least 5%, with an effort for 10%, of the energy used by international shipping by 2030; and,

 Zero total greenhouse gas emissions by or around 2050.

Indicative milestones that were set within the framework of the revised strategy are the overall reduction of greenhouse gas emissions by 20%, with an effort for 30%, by 2030 and a reduction by 70% with an effort for 80%, by 2040.

THE YEAR

in which the IMO will examine the effectiveness of the EEXI and CII indicators

Marine fuel

Achieving the targets will require a range of medium-term technical and economic measures, which will be developed to guide the shipping industry on the road to decarbonisation.

The technical measures

will be a marine fuel standard that will regulate the reduction of the greenhouse gas intensity of marine fuels, while the economic measures will be based on an emissions pricing mechanism.

Various candidate measures have been put forward, including variations of the financing and reward systems, a zero-emissions shipping incentive scheme (ZESIS), an international sustainable marine fuel fund, and a levy on greenhouse gas emissions. Combinations of the above measures will be subject to comprehensive impact assessments to detect effectiveness and feasibility across the shipping industry.

Twists to be brought about by Brussels’ policy

IN 2021, the European Commission adopted a series of legislative proposals, known as the “Fit for 55” package, with the aim of reducing the region's net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. The EU aims to achieve carbon neutrality by 2050.

The European proposals affecting the shipping industry are the Emissions Trading System (EU ETS), the FuelEU Maritime Regulation, the revision of the Renewable Energy Directive, the revision of the Energy Taxation Directive, and the Alternative Fuels Infrastructure Regulation.

The EU ETS has two principles: setting a cap on maximum annual greenhouse gas emissions, and creating a European Union allowances trading system. Regulated units will have to purchase and deliver, at the end of each annual period, one EUA for each tonne of carbon dioxide equivalent of what they emit during the period.

Starting from 2025, shipping companies operating in European territorial waters will have to

submit EUAs for ships of more than 5000 gt, based on the verified emissions of the previous year, as quantified by Regulation 2015/757 (MRV). On 1 January 2026, the EU ETS will be extended to include methane and nitrogen oxide emissions. On 1 January 2027 it will start to apply to offshore support vessels over 5000 gt. In addition, the FuelEU Mar-

itime legislation mobilizes the production and adoption of sustainable renewable and low-carbon fuels for ships above 5000 gt operating in European territorial waters.

over 5000 gt will have to deliver EUAs as of 2025

ShipsStarting from 1 January 2025, the greenhouse gas emissions intensity of the energy consumed by ships on European voyages will be assessed on a WtW (well-to-wake) basis. The emissions intensity upper limit is calculated on the basis of 2020 EU MRV data. This upper limit will be gradually reduced every five years, from 2% in 2025 to 80% in 2050. This progressive reduction is designed to provide incentives for the development and adoption of biofuels and renewable fuels of non-biological origin.

In addition, as of 1 January 2030, container ships and passenger ships will have to connect to and use land-based energy infrastructure for all of their energy needs while in a mooring port under the jurisdiction of an EU member state.

Piraeus and Shanghai becoming “green centers”

The world’s two leading IN GREECE, about 10 months ago a company named Cleos (from the Greek word "κλέος", meaning “glory”) started operation, having been established as a subsidiary of Peter Livanou’s companies DryLog and GasLog, and Onassis Foundation’s Olympic Shipping, all of which boast a huge maritime legacy and environmental action.

Internationally, Cleos is among the very few companies working on helping shipping reduce its carbon footprint, through extensive research and subsequent development of innovative and sustainable solutions, Dr. Giorgos Skevis, mechanical engineer and Cleos general manager, has pointed

Quite high on Cleos' agenda is the introduction of biofuels into the marine fuel mix. The decisions taken by the Marine Environment Protection Committee of the International Maritime Organization (IMO), at the last crucial meeting in July 2023 (MEPC 80), pave the way for the use of biofuels and the calculation of their lifecycle carbon footprint. Such biofuels, e.g. biodiesel, renewable diesel, or biomethanol, are entirely miscible with their fossil fuel counterparts, meaning that few or even no changes will be needed to the respective engines that will use them.

A second major technology for Cleos is carbon capture and storage systems. Although carbon capture technology on ships is still at an initial phase, on land there are more mature carbon capture, storage

and utilization systems, which make it particularly attractive even as a retrofit or modification solution.

Of course, every technology that Cleos examines is under the umbrella of digitization. Cleos attaches great importance to what we call a digital twin, notes Dr. Skevis. "Today", he explains, "every company can receive accurate information about critical parameters of a ship's operation. Understanding and measuring the quantities that affect the operation of the ship, and introducing them into advanced energy efficiency models provide us with the

He explained that the center will create a database on ships’ energy consumption, which will provide statistics to monitor emissions and contribute to the formulation of policies related to their reduction.

Another project the center will undertake will be to assist the Ministry of Transport in managing the energy efficiency of Chinese-flagged ships in order to meet the targets set by the international community.

Xie added that the center will direct maritime authorities at different levels across the country on the regulation and management of ship energy efficiency, including policy making and implementation.

is expected to mark a milestone for the decarbonization of Chinese shipping

impetus to propose solutions, see them on the computer and arrive to an integrated design”.

Cleos’ objective, he added, was to ultimately design the ship “for 2050”, which should have a very low carbon footprint or even a carbon-neutral lifecycle.

The Shanghai center

The year 2024 is expected to be a landmark one for the decarbonization of Chinese shipping, as the Asian country plans to launch a national ship energy efficiency management centre. The unit is designed to guide and monitor the domestic industry's efforts to decarbonize.

“It will help shipping companies in China and ships flying the Chinese flag to comply with international regulations to reduce emissions,” said Xie Xin, head of the pollution prevention and dangerous cargo supervision division of the Shanghai Maritime Safety Administration, speaking at a domestic conference in mid-July.

The said Administration and China’s Ministry of Transport have set the establishment of this center as a major pursuit this year (2023). As Xie told the shipping review Lloyd's List, the center is expected to start operating between the end of this year and the first half of 2024.

Notably, in November 2022, the China Maritime Safety Administration authorized the corresponding Shanghai body to be responsible for statistics, analysis and verification of ship energy consumption, as well as the management of carbon intensity for Chinese-flagged vessels.

Finally, it should be noted that the leading Chinese shipbuilding group China State Shipbuilding Corporation (CSSC) signed a deal last June with the Norwegian classifier DNV to establish a joint innovation center for future ships in Shanghai.

The innovation center will set up three joint working groups on decarbonization, digital twin/digital ship and smart shipping, focusing on developing integrated solutions that can be leveraged in the future.

Greece’s Cleos company aspires to design the ship “for 2050,” with a very low or even neutral carbon lifecycle.

Decarbonisation: Greece and China step up efforts to reduce shipping’s environmental footprint

CCS entering a digital and environmental path

By Antonis Tsimplakis atsimplakis@naftemporiki.gr

CHINA Classification Society (CCS) has been at the forefront of digital and environmental transformation of global shipping in recent years. In a latest achievement, the Fujian first pure battery-powered cruise ship "Moli," surveyed by China Classification Society (CCS), was successfully launched at Fujian Funing Shipbuilding Co., Ltd., the battery-powered ship assembly base of Fujian Shipbuilding Industry Group Company Limited.

This ship is 27.66m long, 7m wide and 1.9m deep, and can carry 102 passengers. The capacity of its battery is 840 kWh, providing sufficient power for 70km of sailing. The ship is mainly used for sightseeing on the two rivers and four shorelines of Fuzhou (Cangxia WharfJiangxin Park WharfYantai Mountain Wharf). After the vessel is put into operation, tourists can experience the cultural charm of the Minjiang River through water and land travel, and cultural tours in the three major scenic spots of Shangxiahang, Yantai Mountain, and Jiangxin Park.

The "Moli" cruise ship is a demonstration project of the "Electric Fujian" series of policies in the Fujian Province. In the early stage of the project, Fuzhou Branch provided professional and efficient technical services to the shipyard, shipowner, and other related parties.

Also, the construction of the unmanned surface vessel "Zhikun," surveyed by CCS and constructed by Taizhou Maple Leaf Shipbuilding Co., Ltd., has been successfully completed. With a length of 19.90 meters, the Zhikun is the largest USV currently built according to the "Guidelines for Surveys of Unmanned Surface Vehicle" of CCS.

Liquid hydrogen CCS issued the first AIP certificate for the marine liquid hydrogen fuel supply system, which is developed by Weishi Energy Technology Hebei Co., Ltd. The marine liquid hydrogen supply system of Weishi Energy Technology Hebei Co., Ltd. is developed based on the actual application scenarios and the environmental conditions for the installation and use of marine products. With

an integrated design of marine liquid hydrogen tank and cold box, supercooled hydrogen storage technology, heat exchange technology, regulated hydrogen supply technology, subcooled hydrogenation technology, etc. under supercritical pressure are adopted in a creative manner, and a "dual-boost" design is adopted to ensure rapid system startup and meet the needs of multiple working conditions. It has such performance advantages as corrosion resistance and salt-alkali resistance in special

environment, including marine climate and high humidity, and the comprehensive performance indicators of the product have reached the domestic and international leading level.

CCS Jiangsu Branch issued the first domestic type approval certificate for the hull monitoring system to the China Ship Scientific Research Center. Zhang

Dongbiao, Deputy General Manager of the CCS Jiangsu Branch, attended the award ceremony.

under construction by Zhijiang Shengmao Shipyard Co., Ltd. for China Yangtze Shipping Group Co., Ltd. The CCS conducted the plan approval and new building survey.

Highlights

This ship, with a deadweight of 9800 tons, complies with the "Green Ship-2" standard as specified by CCS’s "Rules for Green Ships on Inland Rivers".

In terms of power, this ship’s engines are solely fueled with LNG. Compared with diesel fueling, it can reduce carbon dioxide emissions by 20%, sulfur oxides and nitrogen oxides emissions by 100%, and reduce 60t of carbon emissions annually. In addition, it is integrated with the latest scientific research achievements in lines optimization, structural light-weighting, and efficient propulsion in design. Compared with similar ships, its energy consumption can be reduced by more than 10%. Meanwhile, the intelligent technologies have been applied in navigation assistance, energy consumption, ship-shore integration, etc., which will significantly improve the navigation safety and the precision of shipshore management.

This vessel is the first 130-meter-long, green intelligent Chuanjiang standard ship that adopts micro LNG ignition technology. It is also a key technology verification ship for the "2030 Type" green intelligent ships in Hubei region.

Bunker

CCS issued the first AIP certificate for the marine liquid hydrogen fuel supply system, which is developed by Weishi Energy Technology Hebei Co., Ltd.

As an important component of intelligent hull, the hull system is of great significance in improving the safety performance, extending the service life, reducing operating costs, and improving the efficiency of ships. The China Ship Scientific Research Center has successfully developed the hull monitoring system, and achieved breakthroughs in key core technologies, providing a reliable path for domestic substitution of similar products.

LNG Fuel

The new generation of the 130-meter-long Chuanjiang standard bulk carrier "Chang Hang Huo Yun 002," which is a green and intelligent ship solely fueled with LNG, was successfully launched. The ship is

The CCS Wuhan Rules and Research Institute issued the first AIP certificate for methanol bunkering ships to Zhejiang Seahead Ship Design and Research Institute Co., Ltd. in China.

The methanol bunkering ship certificated is a competitive brand of new energy ship independently developed by Seahead. The ship, with a maximum capacity of 7500t, bunkering fuel oil and methanol, fitted with hoses, ERS, QC/DC and ESD, etc., can be used for the transfer of methanol fuel to the largest methanol powered ships. The design fully considers the risks of methanol bunkering and the future development demand of Zhoushan as the fuel bunkering center for Northeast Asia bonded ships. The speed, deadweight, economy and adaptability of this ship type have all reached the advanced level of similar international ships.

Smart ships, batteries, hydrogen and LNG at the forefront of CCS

The «Moli» is 27.66m long, 7m wide and 1.9m deep, and can carry 102 passengers.

The new generation of the 130-meter-long Chuanjiang standard bulk carrier "Chang Hang Huo Yun 002".

Greeks at the forefront of green ship building

Although the path to the decarbonisation of the shipping industry is still murky, as the fuel options are many and their support infrastructure is still unready, shipowners and shipyards are making efforts to greenify the global fleet.

By George Georgiou ggeorgiou@naftemporiki.gr

GREEK shipowners are on pole position as they are speeding up the construction of environmentally-friendly ships, with the assistance of course from Chinese shipyards, on whose docks state-of-the-art ships are currently being built.

n Greek alternative fuels orderbook

n Greek orderbook per ship type

carriers and 2 dry bulk carriers. The last two (with a capacity of 190,000 dwt each) are part of a deal between the Angelicoussis Group and the Chinese shipyards Shanghai Waigaoqiao.

Currently, 17 tankers, 12 containerships and 2 LPG carriers are being built under the “LNG-ready” label.

agreements have been signed to build 47 ships that will use alternative propulsion.

Yannis Parganas, head of

firm Intermodal’s research department: The Greek orderbook includes 365 ships under construction.

After all, the regulatory environment surrounding the reduction of ship emissions, both at the level of the International Maritime Organization (IMO) and at the level of the European Union, is becoming increasingly strict, requiring the emergence of new innovative tonnage in order to achieve the targets set for 2030 and 2050.

So, the momentum is there, and according to data supplied to "N" by Yannis Parganas, head of shipping brokerage firm Intermodal’s research department, orders in 2021 were placed for only 29 ships with the option of using alternative fuels. The following year, contracts rose significantly to 54 ships, while so far in 2023 (data up to mid-September)

As Mr. Parganas says, in 2023 a significant increase will be recorded in the adoption of methanol-ready engines, which can, in other words, use the fuel in question after they undergo conversions. A total of 14 ships are of this type, bearing this designation, based on year-to-date data.

Greek green ships

Intermodal data show that the Greek order book currently consists of 365 ships under construction. Of these, 130, or 35.62% of the total number of ships, will be designed for use of alternative fuels. Notably China's shipyards have undertaken the construction of 38 of these new, green ships.

"The majority of ships that will use alternative fuels are LNG carriers, which are equipped with engines that can use it," Mr. Parganas notes.

Specifically, 77 ships, or 21.10% of the Greek order-

book, can use LNG (LNG capable), while 31 ships (8.49%) are LNG-ready. The difference between the two categories is

that the “LNG capable” ships use the fuel directly or have dual- fuel engines capable of using it, while the “LNG-ready” ones can use the fuel only after conversions have been made to their engines.

A total of 50 LNG carriers will be “capable”, while the same category includes 18 tankers, 5 vehicle carriers, 2 container

Moving on to the choices by Greek shipowners, there is methanol. In total, the survey revealed that orders have been placed for 18 methanol-ready vessels, representing 4.93% of the total orderbook. Of these, 10 are tankers and 8 are containerships.

Next comes LPG propulsion which, naturally, is exclusively chosen by companies with ships that can transport it. A total of 14 contracts concern the use of LPG, i.e. 3.84% of the domestic tonnage under construction.

The market around ammonia is also slowly growing. The result is that Greek orders have already been placed for 3 “ammonia-ready” ships (0.82% of the orderbook), which are vehicle carriers.

Notably, some of these ships will be designated with indications for different fuels, depending on the preferences and plan of each ship-owning company. For instance, it is common to place an order for a steamer that will burn LNG, but also have the capacity to use methanol ("ready"), when this type of fuel will be used on a large scale.

Greek shipowners and Chinese shipyards are building the global fleet of the future

„ In 2023, a significant increase in the adoption of methanol-ready engines has been recorded.

shipping brokerage

The majority of ships that will use alternative fuels are LNG carriers, which are equipped with engines that can use the specific fuel.

From January to July 2023, China exported 39.8 million tonnes of steel products, up almost 28% compared to the same period of 2022.

China's significant role in the dry bulk market

CHINA PLAYS a significant role in the dry bulk market, accounting for around of 50% of total bulk carrier trade. China’s lockdown, port congestion and real estate crisis are some of the factors that have affected the T/C averages of Capesize, Panamax, Supramax and Handysize from the onset of the COVID-19 pandemic up until now.

BACK IN January 2020, China imposed its first lockdown (followed by a series of numerous lockdowns and strict measures), leading to disruptions in industrial activities, the first headache which affected the dry bulk market. As a result, China reduced its demand for commodities, including iron ore and coal, as the implementation of many infrastructure projects that have been budgeted in China was delayed, and many steel mills either shut down or operated at reduced output capacity. During the second half of 2020, coal imports were reduced by around 12% to 12.9 million tonnes compared to the same period of 2019, while within the first half of 2021 China imported 20% less coal compared to the first half of 2020. China’s iron ore imports recorded a drop during the second half of 2021, when the country imported

56.3 million tonnes, down almost 11% compared to the same period of 2020. Furthermore, in the end of 2020, China imposed an unofficial ban on Australian coal imports following a sharp deterioration in the diplomatic relations between the two countries, further pressuring the coal market and reshap-

„ China’s iron imports rose by 7% to 669.4 million tonnes compared to the same period of 2022. China’s coal and lignite imports stood at 39.2 million tonnes in the first seven-month period of 2023, an increase of almost 90% in comparison with January to July 2022’s.

ing global seaborne flows, as China turned to Indonesia and Russia to meet its coal needs, which changed again when Europe banned coal from Russia in mid-2022.

PORT CONGESTION is another factor which had affected the dry bulk market significantly, with a majority of ships being stuck in ports for days waiting to unload/load. Chi-

na accounted for more than a third of this congestion and imposed many precautionary measures for ships entering Chinese waters due to Covid-19 and its variants. Port congestion peaked during mid/late 2021 when dry bulk rates climbed to their highest levels since 2008.

CHINA’S REAL estate crisis, whose impacts started to appear at the end of 2021 when Evergrande (China’s property giant) failed to meet interest payments to international investors, creates turmoil in the dry bulk market. The crisis resulted in reduced demand for steel products, iron ore and other construction raw materials, pressing demand for seaborne trade to lower levels. Although the Chinese government implemented a series of measures to cool the property market including restrictions on lending to property developers, caps on home purchases, and efforts to curb speculative behavior, these policies have put more pressure on the profitability and financial health of developers.

MOVING TO 2023, China has officially eased lockdown restrictions and has also ended the Australian coal ban. As China returned to normality, its main imports and exports

have significantly increased in terms of quantity. More specifically, from January to July 2023, China exported 39.8 million tonnes of steel products, up almost 28% compared to the same period of 2022. A similar increase was also recorded in China’s main imports. During the first seven months of 2023, China’s iron imports rose by 7% to 669.4 million tonnes compared to the same period of 2022.

China’s coal and lignite imports stood at 39.2 million tonnes in the first seven-month period of 2023, an increase of almost 90% in comparison with January to July 2022’s imports, with hopes that the increase may continue at a steady pace for the rest of the year due to favourable international market prices and the country's zero-tariff policy.

However, China’s steel products imports fell to 4.4 million tonnes from January to July 2023, down almost 33% compared to the same period of 2022.

AS CHINA plays a significant role in the dry bulk market, it is hard to dispute that the market’s rebound will be strongly connected to the resolution of China’s property crisis and the return of the Chinese economy to strong GDP growth.

Eirini Diamantara Research Analyst at Xclusiv Shipbrokers Inc.

GREEKS , DEEDS

A luxurious publication by Naftemporiki Media Group on the invaluable contribution of Greek shipowners to society

In September 2023, more than half of the tanker orderbook was being built in Chinese shipyards (approx. 53%).

IN SPITE of existing challenges, China is still the world's largest importer of oil and refined products. This means that the country has played and will continue to play a major role in the tanker market in years to come. In the first six months of 2023, China imported about 255 million tonnes of Crude oil, approximately 10% more than in the same period of 2022 and around 24 million tonnes of oil products, more than double compared to the first six months of 2022.

CHINA’S initial lockdown in early 2020 led to a sharp decline in demand for oil and refined products, which in turn caused tanker rates to plummet. As the pandemic evolved, China's demand for oil somewhat recovered, but it remained well below pre-pandemic levels. The end of lockdowns and the Zero Covid policy in Jan 2023, created optimism in the tanker market hoping the country's appetite for crude oil and oil products will start to rise, approaching pre-pandemic levels, also supporting tanker freight rates. Indeed, the freight rates of wet cargoes for routes to China saw a huge spike from mid-January to mid-April, while the Chinese market was trying

China’s major role in the tanker market

to obtain the additional quantities it needed for its air travel rebound. For example, the US Gulf to China Timecharter Equivalent rose from USD 19,562/day on January 31, 2023, to USD 72,551/day on April 20, 2023.

APART from the pandemic, China's recent economic slowdown has also weighed on the tanker market, with the country's growth rate dropping from its past double-digit levels to just 2.9% in 2021. This has led to lower demand for oil and refined products, which was a factor for further

„ In the first six months of 2023, China imported some 255 million tonnes of Crude oil, approx. 10% more than in the same period of 2022.

depressed tanker rates. However, encouraging news is coming through analysts and economists as they expect a GDP growth of about 4.5% - 5% in 2023. China’s economic recovery along with the return to pre-pandemic levels of tourism and airborne travel will be a good booster for crude oil and oil product demand, and will also have a significant positive impact on the wet market and freight rates.

IN ORDER to understand China’s significance in the wet market, one should just take into consideration that some 125 supertankers with the capacity to deliver 250 million barrels were en route to China at the end of April 2023. Following the Western sanctions imposed on Russian oil, China was there to fill the gap and replace the western countries as the main destination for Urals crude. From im-

porting about 0.7 million barrels per day before the Russian invasion of the Ukraine, to over 1.1 million barrels per day in June 2023, China’s imports of Russian crude oil rose by almost 30%. Deals for importing discounted Russian crude oil have saved Chinese buyers millions of dollars, and have also supported vessel demand and supply in an era when routes from Russia faced the danger of zero demand.

FINALLY, China’s role in the tanker market is not only as a key player in the wet seaborne trade but also as a major builder of new vessels. In September 2023, more than half of the tanker orderbook was being built in Chinese shipyards (approx. 53%), when in September 2021, i.e. two years earlier, only 38% of the global tanker orderbook was contracted to Chinese shipyards. The country’s shipbuilding industry is becoming more competitive, and specifically in the tanker market more and more owners trust Chinese shipyards. The Chinese newbuilding industry growth will play a major part in the future, when the need for fleet renewal will be more urgent as we move closer to the target for zero carbon emissions.

Dimitris Roumeliotis Researcher, Xclusiv Shipbrokers Inc.

In order to understand China’s significance for the wet market, one should just take into consideration that some 125 supertankers with a capacity to deliver 250 million barrels were en route to China at the end of April 2023.