The world's shipping industry converged on Athens this week for Posidonia -- widely regarded as the maritime industry's most important conference and most notorious bacchanal, the site of as much deal-making as partying, not to mention gratuitous demonstrations of wealth.
The last time the event occurred -- it's held every other year -- things were a little different. In June 2008, the Baltic Dry Index, that barometer of the shipping industry's health, had only a week earlier surged to its all-time high. A Capesize bulker carrying iron ore from Australia to China fetched more than $200,000 a day. (The same ship was bringing about $47,000 on Thursday.) By some estimates, the paper value of the world's merchant marine fleet surpassed $1 trillion.
John Fredriksen, the Norwegian CEO of
, the largest U.S.-listed shipping company, docked at the port of Piraeus in an enormous yacht, firming his already splashy legend -- perhaps because his famously beautiful twin daughters were also aboard.
"It looked like a destroyer," said one person who was there. "The joke going around was that, you know, the yacht cost him whatever huge amount per day -- he should've come on one of his VLCCs instead."
Circa June 2008, flush ship owners, still with pristine credit, were taking money from banks at near-free rates and binging on fleet expansion. Companies were forking over huge sums to the shipyards that now threaten to submerge the industry yet again with a glut of those vessels purchased two years ago -- the natural cycle of things made vastly worse by the financial crisis and recession.
Two years later, and for obvious reasons, the event has taken on a decidedly different tenor. The host country, of course, has become a worldwide emblem of fiscal largesse leading to fiscal austerity. Greece now evokes the sea for a reason different than its ancient connection to the maritime trades: its debts are the things that are underwater.
People on the scene at Posidonia -- named, as you're almost certainly aware, after the Greek god of the sea -- have reported no protests, not even outside the Athens conventioneers' complex, the Hellenikon Exhibition Centre, where the conference itself takes place, complete with booths and keynote speakers and acres of floor space. Attendance appears to be high. The Posidonia people counted 17,000 visitors and 1,855 exhibitors from 87 countries. Hotels have naturally jacked their rates; more than $1,000 per room at the best places in town.
"It seems like it's business as usual," said one attendee over the phone the other day as he was traveling by cab from one event to the next. (He was going out for a sail the next day, he said, on a yacht owned by one magnate or other.) "I don't get the feeling that people have avoided it because of what they see on TV."
Things haven't really slowed down in the equities markets, however, as the industry's people take their biannual break. Dry bulk stocks, for example, tanked hard early in the week, as global economic fears continued to steer investors away from the stormy cyclicals -- of which dry bulk is certainly one -- and into safe harbors.
One Greece-borne hedge fund player chose not to attend Posidonia this year, staying back in New York. As dry-bulk stocks plunged, many hitting new 52-week lows, he noted that the sell side had been strangely quiet. "The analysts are hiding under their desks or something," he said, before adding, "They're probably partying in Posidonia."
But some business was being conducted.
, the New York-based tanker outfit launched by shipping dealmaker Peter Georgiopoulos (whose name and origins only suggest deep familial ties to the sea; he's a native New Yorker), announced a deal on the first day of the conference to acquire more than
and small dry bulkers from
, a privately held company controlled by another magnate, Theodore Angelopoulos.
George Economou, the controversial boss of
, gave a rare interview on Tuesday at the conference, telling the
that he had sworn off doing the kinds of murky deals between the publicly traded company and his private outfit, Cardiff -- essentially selling ships back and forth -- that had caused rancor among investors in the past. He also defended his ongoing adventure into the now-perilous deepwater drilling sector,
The cocktail-party chit-chat focused on the subjects that have characterized this volatile industry since last year or more: the odds that a glut of new ships will sink freight rates; the degree to which China, whose hunger for commodities had basically given the shipping industry a reason to exist since the financial crisis, has eased back its breakneck growth; the latest
ransom sums paid to Somali pirates
; the willingness of banks to reopen their lending windows to ship owners; the closure of the equities markets to shipping IPOs given the duds that debuted in spring; the question of when the retail investor will once again return to maritime stocks (or any stocks at all); the somewhat stunning revival of the container ship section of the industry over the last few months; and, of course, asset values. What, in other words, is a ship worth these days?
During the week of Posidonia, those conversations occur at events spread throughout the city, at private parties on the lawns of estates and amid throngs of youngsters at all-hours night spots. Or at the Astir Palace, the Athens luxury hotel that generally plays host to those non-Greek shipping lords, like Fredriksen, who have come from out of town.
(Fredriksen, Norwegian by birth, renounced his citizenship some time ago in order to get out of paying those onerous Scandinavian income taxes. He's now a resident and citizen of Cyprius. His "secondary" residence, however, is in a Chelsea mansion that Roman Abramovich once tried to buy.)
The Astir Palace is ideally located for shipping magnates wishing to avoid any Greek activists who may wish to protest the status quo. The hotel is situated on a private peninsula, miles from Parliament Square.
In Greece, the status quo is probably best summed up in the now-notorious anecdote reported by
The New York Times
not long after the nation's debt crisis began grabbing worldwide headlines: in the rich suburbs of Athens -- where whole ranks of Greek shipping executives live -- 324 households reported having a swimming pool on their income tax forms. A camera on a satellite later zoomed in for a few shots. Greek tax authorities had a look at the resulting photos, and counted 16,794 little squares of turquoise blue.
In Greece, in other words, dodging taxes is a national pastime, a cultural habit, a dependency -- and it's contributed vastly to the nation's current predicament.
When Greek Prime Minister George Papandreou visited Posidonia on Tuesday, he made some canned yet florid remarks to the assembled merchants. The message was undisguisedly obsequious. "The shipping industry is the strength of the Greek nation, the leverage of our development and the power of our voice to the international community as expressed through Posidonia, this major international maritime forum," he said. "My government stands by this industry."
The industry, however, has not exactly stood inside Greece. For decades, shipping companies the world over have resorted to hoisting "flags of convenience." Called "boutique registries" -- Liberia, the Marshall Islands, Malta, Kirabati -- they're microstates or other obscure nations that sell merchant ship owners the ability to fly their national flags. In return, ship owners obtain the ability to dodge a good amount of tax liability in whatever country they're nominally based.
Shipping is Greece's second-biggest industry, behind tourism. In 2009, it contributed 5% of the country's GDP. The number of ships owned by Greek citizens or companies controlled by Greek citizens constitutes the largest commercial fleet in the world. It's well understood that the secrecy under which most Greek shipping magnates live is part of a larger strategy to park as many of their assets as possible offshore: Swiss accounts, a web of foreign shells and businesses and names and murky dealings.
But the Greek way is also the general shipping way, it seems. After all, Northlander Fredriksen is now a Cypriot.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.