The Greek tanker Minerva on the high seas. [Photo courtesy of Consulate General of Greece in Shanghai]

The global shipping industry faces a grim outlook amidst the European debt crisis, an oversupply of vessels and low freight rates, compelling industry heavyweights China and Greece to strengthen seaborne cooperation.

With world trade down, fewer ships are on the waters and rising fuel costs are eating into operators' profit margins. A glut of ships sits on the market because ship owners ordered huge numbers of vessels during the mid-2000s economic boom.

Shipping carries 90 percent of global trade and is one of the first industries hit when economic conditions sour.

The severity of the situation places maritime cooperation between China and Greece at a critical juncture.

Greece is a major player in the international shipping industry, with nearly 4,000 ships – 8 percent of all vessels sailing – and 15 percent of the world's total moving capacity. Greek ship owners control 25 percent of the world tanker fleet. Shipping accounts for 6 percent of Greece's GDP and generates 75 percent of the Mediterranean country's estimated 400,000 jobs tied to maritime activities, according to George Gratsos, president of the Piraeus-based Hellenic Chamber of Shipping.

China, meanwhile, leads the world in shipbuilding and in 2010 its commercial hub Shanghai surpassed Singapore to become the world's busiest container port.

Yet because of the shaky global economy, overcapacity has become a major problem at Chinese shipyards and hundreds of them have closed since 2009.

Few new orders are coming in, since most vessels now under construction in China were ordered in 2009 and 2010. Chinese shipbuilders reported orders falling 47 percent in the first 11 months of 2011, according to the National Development and Reform Commission, the nation's top economic planning agency.

At an annual shipping conference last November in Boao, Hainan Province, China's Transport Minister Li Shenglin said the current downturn could wreak more havoc on the industry than the earlier slowdown brought on by the 2008-2009 global financial crisis.

Fortunately, Greece has ordered hundreds of ships from China that Chinese shipyards will be busy building through 2013, when the industry is expected to begin a slow recovery.

Since 2000, Greek ship owners have ordered nearly 500 vessels from China's shipyards. 155 vessels have been delivered while an estimated remaining 250 are still under construction, wrote Theodore Vokos, president of Posidonia Exhibitions, in a research note. Posidonia holds the maritime industry's largest annual shipping event in Athens.