Infrastructure and Logistics

Infrastructure Spearheads Economic Development

Major overhauls are taking place on Greece’s network of highways, railroads, and air and sea ports. Greece is building up its new economy, both literally and figuratively.

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 development.

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.

Work Cut Out

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.

Gaps Filled

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.