ECONOMY

Coastal shipping firms sailing into perilous waters

The threat of bankruptcy appears to be looming over several coastal shipping companies, which, due to the country?s economic crisis and the state?s bureaucratic stance, are battling to stay afloat. Meanwhile, the state owes more than 12 million euros to coastal shipping firms for subsidized transport services dating back to 2011.

Under the current circumstances, rumors of more than one company going under if the financial situation doesn?t change substantially are multiplying.

Speaking at a recent one-day conference organized by the General Secretariat for the Aegean and Island Policy, Giorgos Xiradakis, managing director of XRTC, argued that the coastal shipping industry is faced with specific problems, ?dangers which will lead the sector to unforeseen situations, including that of dissolution, if not dealt with right away.?

It appears, however, that instead of mobilizing its forces to save the sector, the state is bringing back to the table a proposal for the harmonization of sea transport ticket prices with those of land transport based on distance in kilometers (and a similar level of services). At the same time nothing has been said about how the state will make up for the major financial discrepancies which will occur in transport fares if the above measure is implemented.

In the meantime, the coastal shipping industry is faced with an increasing set of dangers.

The sector is currently recording a steady drop in demand as a means of transport. In 2011, the figures ranged from 5 to 30 percent, depending on itineraries, compared to the previous year.

The cost of fuel is also on the rise, with prices having risen by 44 percent in 2011 compared to 2010. Meanwhile, in the first two months of the current year, the cost of fuel per ton rose to 640 euros, compared to 500 euros the year before. As a result, a company operating standard new-technology vessels or speed boats could see an additional 30-million-euro bill being added to its annual costs.

Moreover, due to the ongoing crisis, banks have substantially lowered funding, even though the loan obligations of coastal shipping businesses went down from 1.76 billion euros in 2004 to 1.02 billion in 2010. The lack of liquidity has caused problems in the operations of mostly smaller companies, which in some cases have been obliged to cancel scheduled departures as they can?t cover the cost of fuel.

The number of vessels operating in Greek waters has also gone down, given that some ships have been sold to cover loan obligations or increase liquidity.

?In the current climate I believe that the coastal shipping sector will shrink even further if measures for the decongestion of this highly dangerous route are not taken as soon as possible,? said Xiradakis.