A ship management survey, released by the Central Bank of Cyprus, revealed that the island-nation’s ship management industry broke records in the first half of 2018, generating revenues equivalent to 5.1% of GDP – or € 506 million – its highest level since 2013. This positive performance follows the worldwide rebound of the shipping industry, a decade after the global financial crisis triggered an overcapacity crisis that took a heavy toll on the sector. Accounting for the transport of 90% of world trade, it is estimated that the global shipping sector has a direct and indirect economic impact surpassing $400 billion per annum – only one indicator of the sector’s colossal importance.
However, with consolidation on the rise, and the imminent risks associated with international trade disputes, along with cyclical swings; just surviving – let alone exceling within today’s global shipping industry, is by no means an easy feat. Only the strongest and savviest are able to succeed, which is why Cyprus’ Interorient Shipmanagement (Interorient), offers a unique example of how to achieve just that. Celebrating its 40th anniversary this year, the company – which prides itself as being a leader in the ship management industry – has managed to withstand international headwinds, by embracing a full-on diversification within the sector. Themis Papadopoulos took over as the company’s CEO in 2004, and is greatly attributed with having galvanized this extrovert approach. He has also seized the opportunity to become a leading policy advocate for the shipping sector, both within Cyprus and at an international level.
“Our scope has broadened,” said Papadopoulos, while explaining the strategy that has attributed to the company’s growing success. “We’ve taken (..) the view that diversification is particularly useful in the shipping world, and especially over the last ten years which have been rather challenging, I would say, for the sector.”
“Today, as a ship manager, we are bigger than we’ve ever been. We’re running a fleet in excess of 100 ships,” added Papadopoulos – a man who exudes confidence, yet is surprisingly humble, given his stature and influence. “We offer a total package,” Papadopoulos explained, which goes beyond ship management, to include performance monitoring, insurance services, and legal services. All of this is being done by embracing diversification and looking at how to develop various sub-sectors within shipping.
The company has expanded to all corners of the world — from Germany to Russia to the Philippines. In fact, they opened a Southeast Asia base in Singapore in mid 2016, which Papadopoulos observed is “growing steadily.” This development was notably supported by the European Bank for Reconstruction and Development (EBRD), when it gave the company a loan of USD 114 million in 2015 for the company’s expansion — the first loan in the shipping sector ever granted by the multilateral investment bank in Cyprus.
Meanwhile, the company acts as a ship owner, through its partnership with Denmark’s Dampskibsselskabet NORDEN. The two companies jointly established Norient Product Pool in 2005, which today manages close to 90 vessels, and is now recognised as one of the world’s largest product tanker operators.
However, the boldest move in Interorient’s diversification quest materialised in 2016, when a German-led consortium comprising of Eurogate International Gmbh, Interorient Navigation Company Ltd (an affiliate of Interorient), and East Med Holdings S.A., won the concession for the operation of the Limassol container terminal. The Port of Limassol is one of the busiest ports in the Mediterranean and the largest in Cyprus. The government is transitioning the port to private ownership, and predictions of revenue generation from the privatisation are already in the billions. Papadopoulos acknowledged that this has been a huge boon to the company’s diversification efforts.
“It’s the first time that we’re involved in port operation,” he explained, “as we’ve always been a client of port terminals, whether container or otherwise, so it’s interesting to see the business from the other side.”
In a very short time — it has been less than two years since the consortium took over the terminal —the port has grown substantially. “We have (…) managed to bring efficiencies and operational levels at the Limassol container terminal that had not existed before,” commented Papadopoulos, adding that, “volumes are up 8 to 10 percent year on year”. As to the future of the terminal, Interorient’s CEO is confident – and with good reason. “We think that in fact the best years of the container terminal are very much ahead of us.” Market research firms agree. IHS Market predicts global container trade will increase 5.1 percent this year — a hugely positive sign for Interorient and its operations at Limassol, in addition to the overall Cypriot economy.
The Cypriot government, in conjunction with the local shipping industry, foresaw the benefits this sector could bring to the island nation, which sits in the Eastern Mediterranean at the nexus of trade from the Middle East and Europe, (and numerous other parts of the world, whose goods pass through this region).
Over the past four decades, they have nurtured the growth of the industry. Cyprus is currently one of the world’s top three ship management centres, and boasts the 11th largest fleet.
The Cyprus Shipping Chamber was established in 1989, as a trade association for the shipping industry in the country. It works to promote the competitiveness of Cypriot shipping, and to show the larger role shipping can play in the wider region. It also acts as a governmental advisory body for any policy decisions on shipping.
“I think there was a conscious effort by the resident shipping companies through the Cyprus Shipping Chamber (CSC), to raise the profile of shipping — not just for their sake, but more so to pass the message to young Cypriots that we have a live industry here,” said Papadopoulos, who is also the President of the CSC, after being re-elected in 2017 for another two-year term. “It’s everyone’s responsibility to make sure that we protect what we have, we grow what we have” enthused Papadopoulos – adding that it is precisely this belief that motivated him to take on the Presidency of the CSC. “We all have to do our bit and everyone has to contribute. It’s not down to one person, it’s not down to one company (…). We have an industry that provides good employment ashore, good employment at sea, and we have a product to be proud of.”
More recently, in March of 2018, the government created the Deputy Ministry of Shipping to the President, to support the sector’s strong growth, and create space for more innovation in the industry.
The biggest limitation to the upward climb of the Cypriot shipping sector comes from Turkey’s restrictions on Cyprus-flagged vessels, and vessels serving the Cyprus trade – an embargo that was first imposed in 1987. A consequence of the decades-long territorial dispute over the island-nation, between the two countries. It is widely accepted that a European solution to the ‘Cyprus Issue’ would extend great benefits to the sector. “I think a potential solution, either to the Cyprus problem, or to the Turkish ban, will be of huge benefit to the Cypriot economy at large,” stated Papadopoulos, adding that trade, and not just shipping activities, would multiply rapidly.
Moreover, Cyprus has also been increasing its role in the international shipping arena as of late, and in doing so, is contributing to raising the bar within the context of the environmental sustainability of the sector. The country is a part of the International Maritime Organisation, and earlier this year, along with the organisation’s other members, agreed to reducing 50 percent of greenhouse gas emissions from the shipping sector by 2050, compared to 2008 emission levels.
“That’s a starting point,” commented Papadopoulos, who sits on the Board of Directors of the International Chamber of Shipping, the world’s main shipping association, which represents more than 80 percent of the world’s global tonnage. “If we want dramatic results [on cleaner shipping], if we want a revolution, not an evolution, we really need to radically think outside the box,” he stated. “We need technologies that are either in their infancy, or not really being looked at today, in order to provide shipping with a carbon free, or as much as possible, future.” However, the key in driving these advances forward, said Papadopoulos, “is that this [be] done in collaboration, and in partnership with all the partners that are involved in the shipping chain.” By his wearing of multiple hats – as a business and an advocacy leader, both in Cyprus and afar – he is contributing vehemently to achieving this.
Cyprus is uniquely positioned to lead this cleaner, greener vision; to propel innovation in the shipping sector, whilst it grows into one of the largest industry centres in the world. As well as in Europe, which controls approximately 40 per cent of the world’s maritime fleet; having a “huge competitive and strategic advantage” said Papadopolous – who is also a leading advocate for the European maritime cluster. The bloc has an important role to play in driving forward change within the sector. “I think all maritime sectors within Europe should be fighting the same fight, which is to protect the maritime industry of Europe from competition outside Europe, where they operate without the same restrictions in many cases, that we have here in Europe, and with much more flexible regimes.”
As a sector that is so symbiotically connected with the global economy, and that we all –knowingly or unknowingly – rely on; what seems clear is that the shipping industry is both unique and fascinating, and its evolution inevitable. And if a company like Interorient is to be considered a benchmark for success, beyond extroversion and internationalization, the key to that success in this particular case, can be found in the company’s leadership – a man not only committed to his company, but to the development and evolution of an industry, in Cyprus, in Europe, and on a global scale. “My very, very small ambition” commented Papadopoulos “[is to] feel that I have contributed in any way to a sensible discussion and to sound policies and regulations.”
“That’s as much as you can ask for, and the way that the shipping industry is set up internationally, gives you the opportunity to have that voice and I think that’s something that shouldn’t be taken lightly.”