ECONOMY

Flagging demand and rising costs are sinking ferry sector

Coastal shipping in Greece is in dire need of a lifeline as its companies have been facing increasing financial problems in recent years, according to a survey by the Foundation for Economic and Industrial Research (IOBE) presented on Tuesday in Piraeus.

The survey also illustrated the sector’s significant contribution to the economy, estimated at 1.5 billion euros in 2013, while accounting for 21,400 jobs including some 5,000 office positions in the industry’s firms. When taking into account the indirect impact of coastal shipping on the economy through the growth of tourism and the support of the islands’ primary and secondary sectors, the total contribution amounted to 15.4 billion euros or 8.5 percent of the country’s GDP last year.

The financial problems that have accumulated in recent years are threatening even the biggest coastal shipping companies. The IOBE report showed that demand for constant shipping services has been in constant decline in Greece since 2010. From 2009 to 2012 the total number of passengers dropped from 16.8 million to 12.8 million per year – i.e. a 24 percent drop over three years. Similarly the number of private cars shipped went down by 29 percent to 1.7 million, and trucks carried also declined by 29 percent to 618,000.

Along with the drop in demand, operation costs soared due to the constant rise in fuel prices in recent years, sending coastal shipping companies’ losses soaring.

As a result of that the current financial picture of the sector is particularly bad, with particularly reduced cash flow and loan pressure high. IOBE stressed the need for an immediate reduction in the cost of ferry operations (through crews that meet the requirements of ferries) or the reduction of the obligatory chartering of ferries on regular lines.