Liberty Ships to LNG: A Century of Cycles

The postwar history of Greek shipping is a sequence of violent cycles, and the Chian families' survival through every one of them is the substance of their reputation. It is worth going through the sequence, because the pattern of behaviour is consistent and it explains the outcome.

1945–1955: the Liberty era. The disposal of the American war-built fleet transformed Greek shipping. Greece had lost a very high proportion of its prewar tonnage and an appalling number of its seamen during the war; the Liberty ships rebuilt the fleet in less than a decade, and postwar reconstruction demand for coal, grain, and ore kept them fully employed. The Chian families were among the largest buyers, and several of the fortunes described in this section were founded on those ships.

Flags of convenience. From the late 1940s, Greek owners registered heavily in Panama, Liberia, and later other open registries, for reasons of tax, regulatory flexibility, and freedom in crewing. This is the single most important reason that shipping statistics have to be handled carefully: the fleet owned by Greeks and the fleet flagged in Greece are entirely different quantities, and the first is several times the second. Every figure in this book refers to beneficial ownership regardless of flag.

1956 and 1967: the Suez windfalls. The closure of the Suez Canal in the 1956 crisis, and again from 1967 to 1975, forced tankers and bulk carriers onto the long route round the Cape of Good Hope, multiplying the ton-miles needed to move any given cargo and sending freight rates to levels nobody had imagined. Owners with ships free on the spot market at those moments made fortunes in a matter of months; owners who had fixed long-term charters at fixed rates watched them do it. This is the purest possible illustration of what the business actually is: returns dominated by a small number of unpredictable events, and positioning for them the entire art.

The 1960s and 1970s: the revolution in scale. The tanker grew. From the 16,000-ton ships of the war, the industry moved through the 1960s to 100,000 tons, then to the VLCC at 200,000–320,000 deadweight, and then to the ULCC beyond that. The economics of scale in bulk transport are relentless and unforgiving, and the same process reshaped dry cargo with the Panamax and Capesize bulk carrier. Greek owners participated fully, and the great tanker fleets of Onassis, Niarchos, Livanos, and Lemos belong to this period.

1973–1987: the long crisis. The oil shock of 1973 and the collapse in oil demand that followed caught the tanker industry with an enormous order book placed at the top of the market. What resulted was the worst and longest depression in the history of modern shipping. Rates collapsed; values collapsed much further; modern VLCCs less than five years old were sold for scrap. Owners went under in numbers, and the shipping banks took catastrophic losses. The dry bulk market followed the tankers down through the 1980s.

This fourteen-year winter is the great filter, and it is where the Chian family model proved itself. The firms that came through did so by carrying low debt, by laying ships up rather than trading at a loss, by scrapping ruthlessly and early — and, for the boldest, by buying good modern ships at scrap prices from men who could not hold on. Several of the houses in this section did exactly that and emerged from the 1980s substantially larger in real terms than they had entered the 1970s. It is not an exaggeration to say that a significant part of the present Chian position in world shipping was bought between 1978 and 1986 from desperate sellers.

The 1990s. Recovery; consolidation; and the arrival of the modern quality regime. The grounding of the Exxon Valdez in 1989 produced the US Oil Pollution Act of 1990 and the phase-out of single-hull tankers; port state control, vetting inspections, and the ISM Code followed through the decade. The effect was to raise the cost and the competence required to operate ships and to squeeze out the cheapest operators — which favoured the technically serious family firms and disadvantaged the bottom of the market.

2003–2008: the China boom. Chinese industrialisation produced an increase in seaborne iron ore, coal, and oil demand with no modern precedent. Dry bulk freight rates reached levels never seen before or since; a Capesize bulk carrier could earn in a week what it had previously earned in a quarter. Ship values quadrupled. Greek owners, who had bought heavily in the depressed late 1990s and early 2000s, made enormous gains — and many of them sold into the peak.

2008–2016: the crash and the hangover. The financial crisis hit at exactly the moment the order book placed at the peak began delivering. The Baltic Dry Index fell roughly ninety-five per cent in a matter of months in 2008, which is not a market movement so much as an evaporation. The overhang lasted the better part of a decade, made worse by the withdrawal of the European shipping banks — above all the German institutions, which had funded the sector on an enormous scale through the KG system and then collapsed. Greek owners bought distressed ships, and in some cases bought the distressed loans as well.

The 2020s. Pandemic disruption and the collapse and violent recovery of trade; the reordering of world energy flows after the Russian invasion of Ukraine in 2022, which lengthened voyages, remade the tanker trades, and produced extraordinary earnings; Red Sea disruption; and, running underneath all of it, the decarbonisation transition — new fuels, new regulation, and profound uncertainty about what kind of ship to order for a thirty-year life when nobody knows what it will burn in 2045. The Greek fleet, and the Chian families within it, entered this period as one of the best-capitalised ownership groups in the world.

Through all of it the pattern held with striking consistency. The public companies, the bank-financed newcomers, and the private-equity ventures that periodically decide that shipping is an undervalued asset class were repeatedly destroyed. The private family firms — with their long horizons, their low gearing, their willingness to sit out a bad market for years, their captains-turned-owners who understood the ships themselves, and their institutional memory of the last four crashes — kept going.