Contribution to the Greek economy from the logistics sector
Gross fixed capital formation as a percentage of GDP (2018)
Expected Year to upgrade transport corridors with Bulgaria, Albania, Serbiaects in Greek infrastructure pipeline
Greece’s ranking among EU countries in terms of infrastructure (2018)
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After a nearly decade-long recession and financial crisis, Greece is
trying to shed its old growth model in favour of a new, outward-
looking, investment-driven growth strategy. Transport and logistics,
along with energy and tourism, are spearheading its economic
At the forefront is the country’s fast-growing transport and logistics
sector, which aims to capitalise not just on Greece’s location, but on
the country’s deep roots in merchant shipping. According to the
Hellenic Logistics Association (HLA), the sector contributes about
€19 billion to the Greek economy, or roughly 9% of gross domestic
product (GDP) – up from about 6.5% three years ago. Much of that
is thanks to shipping, but the road, rail, port, and airport projects
now in the pipeline will boost the overall sector exponentially.
As it is, some €7.4 billion worth of rail projects and €4.3 billion
worth of highway projects are already in progress or ready to be
launched, according to a recent PricewaterhouseCooper (PwC)
study, Infrastructure in Greece: Funding the Future. Another €2.2
billion worth of investments in tourism infrastructure and waste
management projects are also in the works.
“The pipeline [of infrastructure projects] is higher than in the past
due to the completion of lower-cost projects, and the addition of
higher-cost ones, in the preparation phase,” says PwC.
Kostas A. Karamanlis, Greece’s Minister of Infrastructure and Transport, says a series of major transport and infrastructure projects, spearheaded by the Hellinikon real estate development, will help drive growth in the future.
The report also stresses that more needs to be done following years of underinvestment due to the crisis as well as to catch up with investment levels in the rest of Europe.
And as the World Bank put it in a report on the industry: “The logistics sector is now recognised almost everywhere as a core enabler of development”.
And for good reason. Logistics is the array of services needed to move goods from producers to consumers, both domestically and across international borders. But today’s logistics sector is more than the provider of warehousing, brokerage, and delivery services. It is the nexus uniting the rail and highway networks, port facilities, intermodal systems, and information management capabilities needed to secure a high-value niche in global supply chains.
Transport and Infrastructure Minister Kostas Karamanlis says that infrastructure investments have a multiplier effect on the economy, boosting its competitiveness and creating new job positions. “The government believes in the growth prospects of infrastructure projects and in the important role they can play in private investments,” says Karamanlis.
And while he acknowledges that infrastructure projects in Greece have suffered from slippage and delays, Karamanlis says the government will introduce new tools to improve the quality of projects and reduce the cost and time associated with their completion. Unsolicited Proposals, for example, are slated to allow the private sector to partake in infrastructure planning through the submission of ad hoc project proposals for which a tendering procedure has not been launched.
With the country lagging on a number of competitiveness indices, Greeks in both the private and public sectors have their work cut out for them.
The good news is Greece’s geostrategic location between Europe, Asia, and Africa. On the long ocean voyage from the Far East to Europe, goods unloaded in Greece and sent onwards by rail to northern Europe have the potential to shave eight days off shipping times compared with ports like Rotterdam and Hamburg. A number of private-public partnerships are moving to seize these opportunities.
In June 2019, over 464,700 twenty-foot equivalent units (TEU) were shipped through container terminals operated by Chinese shipping company COSCO at the country’s main port, Piraeus. This is up from 374,300 TEU in the same month of 2018.
That puts Piraeus in the top tier of European ports and makes it the second busiest container port in the Mediterranean. These exploding container volumes bode well for the ultra-modern logistics centre taking shape in the Thriasio Plain, just a few miles to the northwest of the port.
Connected by road and rail to Piraeus and the rest of Greece, the huge freight village is slated to be the largest in the Balkans. Meanwhile in the port itself, several major multinationals, like Chinese telecom companies ZTE and Huawei, have set up their own local logistics centres.
In northern Greece, bids also have been tendered for another major logistics centre on 167 acres of the former Gounou military base located west of the Port of Thessaloniki, the country’s second largest. The construction costs are estimated at €150 million.
That project comes as the recently privatised Thessaloniki port extends one of its container terminals by 440 metres – and with a depth of 16.5 metres that makes it suitable for oceangoing vessels – as part of the port’s programme of operational upgrades. Already the port has more than halved waiting times for ships at anchor.
Sotirios Theofanis, Chairman of the BoD & Managing Director of Thessaloniki Port Authority S.A., says planned expansion will help make Thessaloniki an international transportation hub for southeastern Europe and the Balkans.
The new freight village will be able to service 400 trucks and 50 train cars per day with a broader range of services.
Elsewhere across the country, in tandem with rail, road, and port
projects, smaller logistics centres are in the planning stages
including in Alexandroupolis, near the Dardanelles, and the
northern Greek cities of Kavala, Volos, Larissa, and Igoumenitsa, as
well as Patras in the western Peloponnese, which serves as Greece’s
gateway to Italy and western Europe.
Those six ports, along with another eight scattered across Greece,
are all slated for privatisation as part of Greece’s ambitious plan to
sell off some €50 billion worth of state-owned assets.
All these initiatives are part of a grand scheme. By 2030, as part of a
European Union masterplan, Greece plans to upgrade its transport
corridors with Bulgaria, Albania, Serbia, and other countries to its
north, and link its northern ports with the Black Sea.
“There is no growth without modern infrastructure, roads, trains,
ports, and airports,” says Alexandros Exarchou, CEO of construction
Long lagging in rail transport, Greece is seeking to raise rail utilisation with 14 EU-funded projects that will fill important gaps in the network. Interest has revived in one ambitious, long-pondered cross-border transport project with the signing of a memorandum of understanding in 2017 between the prime ministers of Greece and Bulgaria.
The Sea2Sea project envisions creating a multimodal freight corridor through a high-speed rail link between the ports of northeast Greece and Bulgarian ports on the Black Sea and the Danube. Romania has also shown interest in the project. Connecting the Aegean Sea to the Black Sea, the project would bypass the congested Bosporus and Dardanelles straits of Turkey and expedite freight shipments into Central Europe. The project hopes to draw major investors from the Middle East, China, and Russia.
Proposals are also on the drawing board for the 720 km Egnatia Railway. Running roughly along the new Egnatia Motorway – a €5.9 billion highway project completed in 2009 – the railway would extend across northern Greece, from near the Turkish border in the east to the Italy-facing seaport of Igoumenitsa in the west. The railway project envisions additional vertical corridors to bordering Balkan neighbours. Eastern portions of the high-speed line, connecting the seaports of Thessaloniki, Kavala, and Alexandroupolis, appear poised to go forward independently, boosting prospects for realising the Sea2Sea project. Meanwhile, the Egnatia Motorway will be upgraded with the construction of nine connecting highways linking it to roadways in Albania, eastern and western Bulgaria, and Northern Macedonia.
Passenger transport is also receiving attention. In May 2019, the recently-privatised Trainose launched its high-speed passenger service, cutting travel times from Athens to Thessaloniki to under four hours, from roughly six previously. Numerous urban rail projects are also underway, with substantial funding from the EU to the tune of €1.1 billion through 2020 and 2021.
Once completed, the Metro currently under construction in Thessaloniki is expected to serve 315,000 passengers daily. The project includes a 14.3 km extension from Kalamaria to the city’s east.
In Athens, six new stations are now being built to serve the capital’s western suburbs, and the extension of the popular Athens Metro to Piraeus will connect the Athens International Airport to the Port of Piraeus, boosting ridership to 132,000 per day.
Tenders are also advancing for Athens Metro Line 4 that will run through from some of the city’s most densely populated neighbourhoods, serving a projected 500,000 daily passengers. Completion of Line 4, with 38.2 km of track and 35 stations, is expected to take eight years. Attica’s light-rail tram is likewise being extended along a 5.3 km route between Nea Faliro and Piraeus, with a daily capacity of 100,000 passengers.
Manolis Sigalas, Vice President and Managing Director of the Southern Europe division of Hill International says his firm’s project management and consultancy operations are set to benefit from billions of euros of Greek capex in the coming years, as the economy recovers, circumstances are more promising than ever before, and a strong pipeline of projects reaches maturity across the country.
New international airport on Crete to provide visitors with enhanced arrival experience.
Spurred on in part by burgeoning tourist arrivals, new airports and upgrades are also making their mark on the expanding transport map. In 2017, Fraport Greece, a German-owned airport management company, assumed operational control from the Greek state of 14 Greek regional airports and is spending €415 million on improvements through 2021.
Its investment programme will dramatically increase the commercial areas of the 14 airports, while also investing in a range of capacity improvements from baggage handling systems to new check-in counters.
Still to come: the Greek state has recently initiated a review and evaluation of the 23 municipal airports it still operates in preparation for their future privatisation.
One marquee airport project is the new international airport to be
built at Kasteli, on the popular tourist island of Crete. After years of
delays, construction of the €1.5 billion airport is expected to begin
in 2020. It will replace the older Heraklion airport that had reached
overflow capacity after handling more than 6 million passengers
annually in recent years.
Established as a private-public partnership
with the consortium of Indian-owned GMR Airport Construction
and Greek-owned Terna, the project is expected to create 1,500
jobs during construction and, according to the Airport Transit
Action Group, 7,000 to 7,500 permanent jobs once in operation.
Crete will also enjoy the impact of other infrastructure projects with
the launching of the second phase of a €1.7 billion highway project
stretching along the island’s northern coast. Also planned is a €1
billion underwater power cable to link the island with the
mainland’s electricity grid.
Greece’s privatisation agency is also
moving ahead with plans to tender the Port of Heraklion, Crete’s
largest port and a major cruise ship destination.
Literally, from northern Greece to the island of Crete, new road,
rail, air, and sea links are building Greece’s new economy.
Investors focus on across-the-board assets, and public mood on state efforts to privatise assets has changed, says Riccardo Lambiris, CEO of the Hellenic Republic Asset Development Fund (HRADF).
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