Coastal shippers grapple with liquidity crunch

Greek coastal shipping fared better than expected this summer thanks to a significant increase in foreign visitors, though liquidity problems are expected to resume in the autumn.

Meanwhile, the Merchant Marine Ministry has launched a string of initiatives to help boost coastal shipping, where managers are seeking solutions to their liquidity problems and opportunities to restructure their loans. While some companies appear to be in a profit-making position after successive loss-making quarters over the past few years, there are companies that are unlikely to survive the year.

According to George Xiradakis, managing director of XRTC Business Consultants, a firm that specializes in financing for shipping firms, only ANEK Lines and Attica Group achieved positive operating earnings (EBITDA) in 2012.

Other Greek coastal shippers remain on a downward trajectory, with Minoan Lines posting losses for a third straight year and NEL Lines for a fifth. Hellenic Seaways, meanwhile, managed to stay afloat in 2011 but has slipped into negative territory since, with EBITDA losses of around 8 million euros.

Paradoxically, both Greek and foreign lenders appear – so far at least – to be adopting a stricter stance toward companies with a healthy asset-to-debt ratio while being more lenient with those whose debts exceed the value of their fleet, according to industry sources.

Also, according to industry sources, efforts are now focused on the looming liquidity crunch, as the drastic reduction in domestic passenger traffic is expected to take a toll on coastal shipping in the coming months.

One positive sign that has emerged as the summer season comes to a close, officials explain, is that foreign travelers this year have mostly made up for the losses in domestic traffic.

Other sources, however, are warning that banks’ reluctance to extend funding to struggling coastal shippers will dry up the cash flow and put some companies at risk.

Speaking to Kathimerini, Merchant Marine Minister Miltiadis Varvitsiotis said that as far as direct steps for managing the problem are concerned, the government is focusing on restructuring subsidized services and taking steps to transfer part of the country’s coastal shipping fleet from Piraeus to the port of Lavrio in southern Attica, a move that would significantly contribute to the reduction of fuel costs.

Coastal shippers, for their part, according to Xiradakis of XRTC, “must persevere with the painful task of cutting operational costs, limit their competitive strategies even further and explain even more succinctly just how close to collapse they are.”

Observers of the banking sector argue that getting around banks’ reluctance to lend to Greek coastal shippers is the key to their survival. For banks – Greek and German – to be able to help the industry, XRTC suggests that their remaining debts – estimated at around 900 million euros – be refinanced by eurozone investment banks such as the European Investment Bank (EIB). Once the initial lenders are relieved of the debt burden, they should provide funds to support coastal shippers during the difficult winter months in order to avert their collapse, XRTC suggests.

A top executive at the EIB who wished to remain unnamed told Kathimerini that while the refinancing option is out of the question right now, a deal has been reached with Greek lenders to boost the country’s exporters in the form of guarantees, which could be extended to include Greek coastal shipping.