Limassol

Dawn of a European champion

Limassol has all the right maritime ingredients to prosper

The strategically located island of Cyprus, third-largest in the Mediterranean, has been an important trading hub and point of exchange between different cultures since antiquity, meaning it’s no surprise that the country is home to a thriving, cosmopolitan centre of the international maritime industry today with Limassol (or Lemesos in Greek) as undisputed capital of that business. Really little more than a town with only just over 100,000 inhabitants, Limassol enjoys the distinction of being the leading third-party shipmanagement centre in Europe and one of the most important worldwide, with all the ancillary services one would expect to go alongside, as well as also housing the administration of the EU’s third-largest shipping register, ranked 11th internationally, and a port recently re-energised by privatisation. Limassol’s modern shipping fortunes really began some 50 years ago when a handful of German shipping names – including Klaus Oldendorff, Bernhard Schulte and Heinrich Scholler - first chose Limassol as a suitable lowtax base from which to manage their fleets, the combination of easy access to the island’s central mountains for skiing and an unspoilt Mediterranean coastline providing a highly enviable lifestyle; Norwegian tanker magnate John Fredriksen also chose to obtain Cypriot nationality and base some of his operations for a short time in the city. This injection of north European expertise served to galvanise the local shipowning community, also acting as a catalyst for improvement of the Cyprus flag, which in those days was seen as a low-cost refuge for older Greek and Levantine tonnage of dubious quality. Cyprus’ accession to the European Union in 2004 brought a further stepchange in quality of the flag, while at the same time many of the shipmanagers based in Limassol rode the ‘super cycle’ of the early 2000s to became shipowners in their own right, overseeing ambitious newbuilding programmes, mostly in China and almost all of innovative and highly environmentally friendly tonnage. Today Limassol has one of the most dynamic national shipping administrations in the EU, which in turn works closely with the Cyprus Shipping Chamber (CSC), representing some 200 maritime-related companies based on the island, and the Cyprus Union of Shipowners (CUS), representing overseas owners – mainly Greek – flying the Cyprus flag, both associations based in the city as well.

Together these three bodies wield considerable influence within EU and global shipping circles, as evidenced by the number of Limassol-based shipping figures now occupying key roles in international associations. Philippos Philis, founding chairman and CEO of Lemissoler Navigation, is current president of the European Community Shipowners’ Associations (ECSA); Columbia Shipmanagement’s Mark O’Neil is president of the international shipmanagers’ association InterManager; CSC president and Interorient CEO Themis Papadopoulos is vice-president of the International Chamber of Shipping (ICS); and Tototheo Maritime joint CEO Despina Panayiotou Theodosiuou is outgoing president of WISTA (Women’s International Shipping & Trading Association) International. Meanwhile, the Cyprus shipping minister – officially only a Deputy Minister for constitutional reasons linked to the Turkish occupation of the northern part of the island, of which more anon – is Vassilios Demetriades, formerly a policy officer in the Directorate General of Mobility and Transport of the European Commission, meaning the Limassol shipping community is no stranger to the machinations of Brussels on shipping matters.

Philis’ own company Lemissoler is a dry bulk operator that was named after the term for inhabitants of the city. “There is a humanity and compassion within the Limassoler psyche that is often reflected in the activities of our company,” he explains. Another key supporter of the Cyprus cluster and founder member of the CUS is Polys Hajioannou, chairman and CEO of Safe Bulkers, which operates a rapidly expanding fleet of 40-plus bulkers that fly the Cyprus flag. While not resident on the island, he is nephew of the late Lucas HajiIoannou who built up the mighty Troodos tanker fleet – at one time the world’s largest - after having grown up in a village in the mountains of the same name just to the north of Limassol. The Cyprus flag currently boasts more than 2,200 ocean-going vessels totalling 21m gt but suffers from the serious handicap of Turkey’s embargo on all ships linked with Cyprus entering Turkish ports, a legacy of the ongoing political dispute over the status of northern Cyprus that has been rankling for nearly 50 years. “Any maritime disputes, embargoes or other restrictions are always strongly condemned,” says CSC president Themis Papadopoulos. “They tend to be shortsighted and counterproductive most of the time. Turkey’s embargo of all things related to Cyprus shipping, including ports, falls within that category. Despite this, Cyprus has successfully managed over the past few decades to establish itself as one of the main global and European maritime centres.” Papadopoulos’ own company, Interorient, is a leading operator of product carriers, most of which are employed in the Norient pool it runs jointly with Denmark’s Norden. It is also one of the island’s leading shipmanagers and unlike others - such as BSM, Columbia, Intership, OSM, Unicom and V.Ships (Cyprus), for example - is Cypriot owned. Intership and sister Limassol-based company Donnelly form part of the Hartmann Group of Germany and together currently manage 70 vessels, approximately. half of which are fully or partially Hartmann-owned - mainly either dry bulk/ multi-purpose vessels (intership) or product/small gas tankers (Donnelly). “Limassol is well known for its benefits to shipmanagers – relatively low cost, yet EU operation, highly skilled labour base, extremely supportive government, easy access to decision-makers, highly developed professional services support and so forth,” says Dieter Rohdenburg, Intership CEO. He therefore expects the number of owners/managers in the city to continue increasing, although finding affordable housing in Limassol is a rising concern.

Long-term vision

Shipping is such an important contributor to the national economy that government incentives are constantly being upgraded

Cyprus offers a number of fiscal and economic incentives to shipping companies basing their activities in Limassol or elsewhere on the island, including a competitive corporation tax where the standard rate is currently 12.5% but set to rise to 15% this year in line with the global OECD tax reform agreed with

Cyprus. Adding to this are lower operation costs than in most of mainland Europe, as well as the ready availability of competent local employees with both English and

Greek language skills

Then there are the competitive ship registration costs for vessels flying the

Cyprus flag, as well as a very favourable and tonnage tax regime which covers shipowning, shipmanagement, and chartering companies. That Cyprus Shipping Taxation Scheme was approved by the European Commission in December 2019 for another 10 years, hailed at the time as a significant achievement that demonstrated the close cooperation and coordinated efforts between the island’s shipping industry and government. Indeed, government support combined with a long-term vision underpin the strength and stability of the Limassol cluster, the importance of shipping routinely acknowledged by politicians as being the second largest contributor to the national economy behind tourism. In October 2021, following a ninemonth consultation with the local shipping industry, Cyprus president, Nicos Anastasiades and the shipping deputy minister (SDM), Vassilios Demetriades, launched a long-term strategic vision for Cyprus shipping. Entitled SEA Change 2030, it contains 35 individual actions described under the three main categories of Sustainable, Extrovert, and Adaptable. A new unit has been created within the SDM to implement these initiatives, which the government says are designed to “create the conditions for Cyprus shipping to become more resilient and sustainable.” From fiscal year 2021 onwards, the government is also introducing a green incentives programme for tonnage tax reductions of up to 30% for vessels that can demonstrate effective emissions reductions. Specifically, vessels that have achieved further reduction of their attained EEDI (Energy Efficiency Design Index) compared to the required EEDI will obtain rebates of 5 – 25%, while under the IMO DCS (Data Collection System) ships which demonstrate reduction of their total fuel oil consumption in relation to the distance travelled compared to the immediately previous reporting period will receive rebates of between 10-20%. Vessels using an alternative fuel and achieving CO2 emissions reductions of at least 20% in comparison with traditional fuels will qualify for 15-30% rebates. This will be reviewed on a case-by-case basis, following review of documents submitted from a class society. Any vessel detained during a Port State Control detention for any reason that violates any regulation of the European Commission relating to environmental protection or in laid-up condition during the year will not be eligible for the incentive. Deputy minister Demetriades commented: “Striking the right balance between the green transformation and competitiveness is a challenge but also presents opportunities. “Cyprus believes incentives such as this will encourage greater environmental sustainability across the global industry while also enhancing maritime Europe’s competitive advantage in new green technologies. This creates opportunities for jobs and growth, providing a firstmover advantage to the EU shipping industry.”

Full-service offering

As befits an island with so many shipmanagers, there’s no shortage of ancillary maritime services

Limassol has long boasted a full spectrum of maritime services companies, based principally on its strong constituency of shipmanagersturned-owners. Crewing is an important affiliated activity and the city is also home to dedicated crew managers like Marlow

Navigation, supplying mostly to German owners. Indeed, it was on account of the island’s strong crew management activity that Cyprus lobbied long and successfully to get crew managers ruled eligible for EU tonnage tax rules.

Limassol ship and crew management companies have spawned dedicated travel, telecommunications and catering companies based in the city, while BSM operates the Hanseatic Marine Training

Centre for cadets and officer STCW refresher courses.

Companies engaged in chartering, ship surveying, shipbroking, salvaging and marine insurance are also all present in Limassol, notes the Cyprus Shipping Chamber (CSC), as well as shipping, clearing and forwarding agents; ship chandlers; freight forwarders, and other shipping-related businesses. Then there is the Cyprus Deputy Ministry of Shipping which administers the Cyprus flag, meaning there is no shortage of surveying and inspection expertise.

Legal services are another specialty of the island, based both in Limassol and Nicosia. Cyprus combines a legal system closely modelled on its British counterpart, as well as a high level of professionalism in accounting and an established banking system Indeed, following Brexit many London-based financial services companies have opened subsidiary offices in Limassol for EU ‘passporting’ purposes.

The city has several colleges teaching maritime-related subjects to those wishing to follow a sea- or land-based shipping career, and it was the Limassol-based CSC that 16 years ago first invented the highly successful Adopt-a-Ship programme for schools that has since been replicated in several other countries.

Tech island

CYPRUS IS IN the process of setting up a centre of excellence for marine and maritime research, technological development and innovation which will place particular emphasis on the encouragement of start-ups in the blue economy. Called the Cyprus Marine and Maritime Institute (CMMI), the centre will be headquartered on a greenfield site next to Larnaca airport, located less than one hour’s drive east of Limassol. The CMMI was first set up in 2019, with the help of a €30m grant from the EU’s Horizon 2020 Research and Innovation programme and matching funding from the Cyprus government. This March, CMMI announced a partnership with Safetytech Accelerator – a non-profit body established by Lloyd’s Register to promote safety and risk in industrial sectors through the encouragement of start-ups. CMMI has already set up 10 separate poles or research and innovation centres that will be focused on: engineering, robotics, digitalisation, marine observation, marine and coastal ecosystems, the human element, cultural heritage, maritime policies and regional cooperation, and underwater and seabed technologies. One recent start-up already making a name for itself is Marine Fields, an affiliated company of comms specialist Tototheo, which offers a port call optimisation service called Perseus that allows instant data sharing between shipping companies, ports and terminals. A fellow award-winning Limassol start-up is KeelX Robotics, a spin-off of Lemissoler Navigation. Together with the RCDS Laboratory of Mechanical Engineering at the Cyprus University of Technology it has developed a nextgen autonomous robotic systems for maritime operations. Limassol is also home to one of the three offices of Innoport, the venture capital arm of the Schulte Group. Innoport invests in start-ups in the maritime and logistics sector, leveraging its links with the group’s global network that also includes Limassol-based shipmanager BSM Cyprus.

Port transformation

Much has changed in the five years since the port was privatised

Limassol port on the western fringes of the city is the largest on Cyprus for both cargo and passenger activities, as well as being the island’s main support centre for the growing offshore energy sector, making it one of the busiest shipping hubs in the Eastern Med. The port currently handles around 400,000 teu of containers a year as well as general cargo, breakbulk, roro and bulk cargoes – representing about 90% of the country’s import and export trade - while its new cruise terminal is able to receive the largest ships afloat today.

The old harbour in the city centre, now redeveloped into a high-end retail, leisure and residential complex, also boasts a marina for superyachts. The port has undergone a major transformation in the five years since it was privatised in early 2017. DP

World Limassol was handed a 25-year concession by the Cyprus Ports Authority to operate the cruise and multipurpose terminals, including up to 50,000 teu of containers a year, while Eurogate Container Terminal Limassol was charged with looking after the remaining containerised activities and P&O Maritime Cyprus (part of DP World Group) the provision of marine services to vessels calling the port.

DP World’s biggest investment in the port since then has been construction of a new 7,000 sq m cruise terminal costing €14.4m, which opened in May 2018.

The company also plans progressive upgrading of the port’s multipurpose facilities, currently consisting of three quays. Meanwhile, Eurogate Container Terminal Limassol – run by a consortium led by Hamburg-based Eurogate in which local shipowner/manager Interorient has a 20% stake - covers 340,000 sq m with 800 m of deepwater quay and five container gantry cranes. In February this year, the port’s three operating companies attracted unwelcome publicity when they announced plans to revise upwards tariffs - as allowed for according to an index in their concessions – by an average 16%, citing higher electricity, fuel and labour costs.

Amid widespread protest the move was averted, the government saying it would absorb some of the operators’ increased costs by paying off portions of their outstanding debt. But this in turn has raised the prospect of the government’s plan being investigated by the European Commission as a possible breach of State Aid Guidelines - anathema for a country that normally prides itself on being in lockstep with EU maritime policy.

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