Port of Piraeus Takes Pole Position in the Mediterranean

A €612 million investment plan is “absolutely necessary” for Greece’s largest port to maintain its attractiveness and comparative advantage, says Yu Zenggang, BoD Chairman of the Piraeus Port Authority, adding that the Port of Piraeus can take further advantage of its geostrategic position to become the first European port after the Suez Canal that bridges all available transport modes.

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Main Conclusions:

  • Following the concession of Greece’s largest port to China’s COSCO SHIPPING in 2016, the Port of Piraeus continues to break barriers, having climbed the ladder in 2020 to become the leading harbour in the Mediterranean in terms of container traffic, 4th in Europe, and 25th on the global stage, while also being Europe’s largest passenger port.
  • COSCO SHIPPING’s successful strategy is credited to strategic investments in the port’s infrastructure and superstructure, enabling Piraeus to become a key regional transhipment hub, along with significant performance improvements, with the port having reached a milestone of 5.65 million TEUs in 2019.
  • To date, completed investments –– particularly in Piers 2 and 3 –– have increased the port’s yearly container handling capacity ninefold (to 7.2 million TEUs per annum).
  • A combination of mandatory and voluntary investments in the ongoing modernisation and upgrading of the port entail a €612 million investment plan, with construction works on the expansion of the cruise terminal having commenced earlier this year, and investments in the container and car terminals expected to launch in the coming months.

GIG: The privatisation of the Piraeus Port in 2016 has marked a before and after for the harbour, with the port having climbed the ranks to recently become the top container port in the Mediterranean and the fourth in Europe. What are the major differences that COSCO has brought about in the way the port operates? How important is Greece within COSCO’s wider strategy?

Zenggang: In 2016 we took on a significant challenge. Following the new concession agreement with the Greek state, PPA S.A. moved into a new era in which the new management undertook the responsibility to implement a task of great difficulty but also of great importance: to transform Greece’s historic and largest port into the largest port in the whole Mediterranean region.

From the very beginning COSCO SHIPPING focused on further highlighting the strategic advantages of the Piraeus Port and strengthening its position in the port industry. It also implemented a more customer-oriented approach and extroverted marketing policy. In general, the company has as primary concern to build strong and long-lasting relationships with its customers and to provide excellent services, especially in terms of quality, reliability and delivery time.

Today, and in terms of container traffic, the Piraeus Port is the number one port in the Mediterranean, the fourth in Europe, and the 25th globally.

The rapid container handling growth was the result of major investments in infrastructure and superstructure, and improved performance and service quality which led to reaching a milestone of 5.65 million TEUs in 2019.

In particular, we built the new Pier 3 at the Piraeus Container Terminal (PCT), while we also refurbished Pier 2 infrastructure. All Piraeus Port container terminals now have a joint capacity of 7.2 million TEUs per annum, while 10 years ago the port was handling approximately 800,000 TEUs in total.

As for Greece, the country can play a significant role in the global transportation industry due to its key position at the crossroads of three continents. The geographic location of the Port of Piraeus, in particular, makes it a vital transportation, trade, logistics, tourism and communications hub, connecting the Greek islands to the mainland, as well as an international maritime tourism and freight transportation centre.

Greece’s geostrategic location is key for the country to become an international transit hub. Copyright:Aerial-Motion / Shutterstock.com

The port’s position favours its operation, both as a commercial and tourism gateway to Greece, as well as a transit trade hub for the Balkan and Black Sea countries.

GIG: The port’s revised master plan envisages an ambitious investment programme with projects valued at an estimated €600 million, for the port’s modernisation and development. What are the milestones of the PPA’s investment plan and what are your priorities going forward? Are you currently on track?

Zenggang: The concession agreement was connected with the commitment to a €294 million investment package which concerns a whole range of port services and is targeted in the right direction, as it predicts a holistic development of the port.

These investments, however, are not enough to cover the increasing demands of the port industry and to make Piraeus able to respond effectively to intense international competition.

For this reason, the Management of PPA S.A., acting as a long-term and responsible investor, has included in its Master Plan additional – voluntary – investments of €318 million to its mandatory commitments,

all of which are absolutely necessary so that Piraeus can maintain its attractiveness and comparative advantage.

These additional investments, to complement the company’s contractual commitments, will strengthen the competitive advantage of Piraeus and contribute to its transition into the Mediterranean’s greatest hub, which will play a key role in the provision of a large range of services, including cruises, container and car terminals, ship repair and supply chains. Due to this large variety of activities covered by our Master Plan, many licences and approvals are needed in order to get the green light for the initiation of construction works.

From the start of the implementation of each individual project until the end of 2019, investments worth €71,027,181 were completed, concerning projects for the maintenance and overall upgrading of the port’s infrastructure, which are not part of the mandatory investments.

At the beginning of the current year, we started the construction of the cruise infrastructure expansion budgeted at €120 million, which is co-financed by EU and Greek funds for two new berths for new generation cruise vessels.

Other critical investments in the Container and Car terminals are expected to start in the following months. We are also considering the development of a Pier 4 for the container terminals, subject to the approval of the Greek government and support of all stakeholders.

GIG: What steps are being taken by the PPA to ensure the sustainability of its activities and that it safeguards the marine environment?

Zenggang: By setting as a primary objective to limit the negative effects of PPA’s operation and activity on the environment as much as possible, we have adopted a number of actions and activities to reduce emissions, use renewable energy sources, manage waste, reduce noise, and ensure seawater quality. PPA S.A. is a member of the EcoPorts European Network and, as such, prepares a Self-Diagnosis Method (SDM) report every year, and duly informs all its stakeholders. Moreover, the Company implements an integrated environmental management approach that has been certified according to the European Port Environmental Review System (PERS), which is dedicated to ports.

GIG: What are the PPA’s priority needs as far as the allied transport infrastructure network is concerned (sea-road-rail-air transportation network integration) to further increase connectivity?

Zenggang: The Port of Piraeus has been developed as a large transhipment hub and in 2019 reached the world’s 37th place, concerning the number of direct connections with other ports, according to the latest data of UNCTAD (United Nations Conference on Trade and Development).

However there is still room for improvement, especially regarding the quality and the speed of rail services connected to the port. Last year, we reached more than 80,000 TEUs via rail connecting with 16 European countries and for 2020 we expect to reach 100,000.

Piraeus can further take advantage of its ideal geostrategic position, to operate more efficiently as the first European port after the Suez Canal that bridges all available transport modes (sea, rail, road, air), to provide the best possible solutions for handling cargoes with the shortest transit time to and from the Balkans and Central and Eastern Europe, and finally to become a major hub for supplying the EMEA (Europe, Middle East, Africa) region, reinforcing trade flows in Greece and in the wider area of Eastern Mediterranean.

GIG: Country lock-downs and the closure of international borders have shed light on the vulnerability of supply chains. What steps were taken by the Port of Piraeus to ensure the uninterrupted flow of goods through Greece’s main port during this period?

Zenggang: The Port of Piraeus, being a critical transport infrastructure, plays a key role in the supply chain of basic and complementary products. When the Greek government announced the lockdown and associated measures, we took all necessary steps to safeguard the health of our workers and ensure the uninterrupted provision of our services. In fact, PPA S.A. responded well in advance to this crisis, having as a top priority the safety and welfare of all employees at the port, including frequent sanitary cleanings, the creation of work cabins, and the obligatory use of face masks.

It should be noted that despite the challenges, we did not delay any ships or operations and, in terms of container traffic, the first half of the year went very smoothly.

We have and are constantly following the instructions of the national and international authorities in terms of health & safety and work actively to prevent the further spread of the coronavirus. We also support our customers in practical ways, and keep them informed of the latest developments. It is worth noting that so far the Greek Government has shown very positive results in dealing with the pandemic. In any case, continuous readiness and close cooperation between many and different institutions are required to ensure the best possible result against this difficult situation.

GIG: 2019 was a landmark year for the port in terms of turnover, profitability, and throughput. What impact does this bring about for the Greek economy? What are your expectations for 2020?

Zenggang: 2019 was a year of growth for PPA S.A. The company achieved a turnover of €149.2 million compared to €132.9 million in year 2018, recording a 12.3% increase and a similar increase in profitability. Container handling reached 5.65 million TEUs, up by 15%, ranking Piraeus first in the Mediterranean and fourth in Europe. Ferry passengers exceeded 16.5 million, while cruise passengers numbered 1.1 million. With a total of 17.6 million passengers, Piraeus is Europe’s largest passenger port. The above high performance recorded in 2019 has had several positive effects on the national and local economy. The concession fee collected by the Greek State increased by approximately 12%, to €5.4 million. Our tax contribution amounted to approximately €49 million.

In addition to the approximately 3,000 employees that work at the Piraeus Port, the port business generated over 10,000 indirect and induced jobs. Based on the above, the socio-economic footprint of PPA S.A. is estimated at 0.68% of Greek GDP for 2019.

In 2019, the container handling reached a peak of 5.65 million TEUs, ranking the Port of Piraeus as the #1 container port in the Mediterranean. Copyright: Aerial-Motion / Shutterstock.com

For 2020, it is really difficult to make estimations during this volatile situation. Piraeus Port is the largest port in Greece with a multitude of port activities (Container, Car terminals, Ferry and Cruise terminals, Ship Repair facilities – inclusive of 5 dry-docks) and is also a listed company on the Athens Stock Exchange. Therefore, all results and estimations are made public officially via the Athens Exchange. But our great goal remains the same: to improve and increase the port business so as to increase our socio-economic impact and create a better future for PPA employees and the local communities.

GIG: The coronavirus pandemic has accelerated digitisation across sectors worldwide. How digitally prepared was the port previous to this pandemic? Is the PPA leading any plans to introduce digital changes or deepen the role of technology in its day-to-day operations?

Zenggang: The performance of the container terminal during the pandemic showed that the Port of Piraeus is capable of successfully dealing with this unprecedented situation. However, we continue our efforts for the digital upgrade of the port’s operations. Recently we established a new intelligent IT system for the car terminal that is designed to enable end-to-end transparency of all processes in the supply chain, and at the container terminal we started to utilise a private-based mobile network, laying the foundations for a fully digital hub of international shipping in Piraeus.

GIG: What is the one key message or advice you would send to foreign investors looking to invest in Greek infrastructure assets?

Zenggang: Greece is a beautiful country, a member of the EU and the eurozone. The social and political stability is a strong advantage. Additionally, the key geographical position of the country is an important factor that investors should evaluate before they make their decisions. However, what we also consider as a major asset are the Greek people: Greeks are friendly and hardworking, proud of their long history and ready to make strong efforts in order to make great achievements.

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