ECONOMY

Fierce fight seen over Aegean Sea shipping routes

«The Aegean Sea will become an Adriatic in miniature,» said a top banker trying to describe the evolution of Greece’s passenger shipping sector and the behavior of the biggest players over the following 12 months. Comparing the Adriatic Sea and Aegean markets is apt. The Adriatic Sea routes, such as the one between Patras and the Italian port of Ancona, gave Greek companies, irrespective of whether they were privately owned or cooperatives, a chance to show they could successfully compete in an open market and not one closed to foreign competition, such as that in Greece. Over time, however, the Adriatic Sea suffered from an excess supply of services and the competition has degenerated into a fierce battle among Greek companies, which have overinvested in the latest ships, to grab market share from one another. Bank managers, like our interlocutor, believe that this battle over market share reconfiguration will happen in the Greek market, first on the routes to and from Crete and then in the Cycladic Islands market. The recent dispute – by correspondence – between ANEK Lines and Strintzis concerning their respective ship routes is a glimpse into the nature and terms of the upcoming competition. In this case, choosing an aggressive tactic has a strategic goal: to force ANEK and Minoan lines, both companies with a widely dispersed ownership structure making them, effectively, cooperatives, and which once divided the Crete market between themselves, capitulate under the weight of financial problems. Both have difficulties repaying their loans despite recent restructuring agreements with banks. The capitulation would entail an agreement by the two Cretan shippers to «pool forces» with the Attica Enterprises group, which owns Strintzis. In early March 2002, ANEK and Strintzis lines signed a preliminary agreement to cooperate in the Aegean and Adriatic markets. The agreement was scuppered after it was fiercely opposed by several ANEK shareholders. Thus, ANEK and Strintzis, the latter with the backing of its parent company, will compete fiercely until one gives. According to bankers, it would be very difficult to bring ANEK and Strintzis back to the table to negotiate a mutually beneficial agreement. From now on, any solution to their dispute will be imposed by the market.