Sectoral Report: Container Ports (April 2013)
Reflecting the sharp growth in world trade, global container traffic was 7 times higher in 2011 than in 1990 (reaching 600 million TEUs). The surge in container trade is mainly attributed to the increasing penetration of Asian products in developed European and American markets.
Mediterranean ports have improved their relative position, as they continue to handle a steady 9 per cent of world container traffic during the past two decades, at a time when Northern European ports have lost 10 pp of market share.
Three years after the concession agreement with Cosco, Piraeus container terminal is capturing significant market share. Container traffic in Piraeus (which comprises almost 90 per cent of the Greek container market) more than tripled in 2012 compared with 2010 (handling 2.7 million TEUs), while traffic in other Mediterranean ports increased by about 20 per cent during the same period.
Greek ports’ potential stems from international transshipment and transit traffic.
- Transshipment is the primary driver for Piraeus’ impressive dynamics during the past two years, as it accounts for ¾ of the port’s container traffic. Looking forward, new investment in infrastructure is expected to increase its capacity by 60 per cent, allowing the transshipment traffic to increase to 2.5 million TEUs by 2015 from 2 million TEUs in 2012 (in line with regional demand) and leave room for transit traffic. As a result, Greek ports appear to be on their way to capturing their fundamental share of the transshipment market (7.6 per cent).
- However, Greek ports have significant untapped potential as gateways for transit traffic. As the CEE/Asia container market is expected to reach about 3.3 million TEUs by 2015, transit traffic in Greek ports (mainly Piraeus and Thessaloniki) could reach 1.2 million TEUs in 2015, from only 45,000 TEUs in 2012, if the appropriate investment in land transport is completed (around €3 billion), partly supported by EU structural funds. It should be noted that the transit sector offers far more revenue and value added to the Greek economy than the transshipment sector (about 4.5 times more per TEU), as it also creates the corresponding land freight transport business.
According to our estimates, the value added from the projected increase in container handling in Greek ports (to 4.7 million TEUs in 2015 from 3 million TEUs in 2012) could rise by around €0.8 billion, or 0.4 per cent of GDP by 2015. Importantly, the long-term benefit could be much larger (€5.1 billion or 2.5 per cent of GDP by 2018), as the multiplier effect from the formation of a cargo-related cluster (mostly from suppliers) is potentially large (multiplier of 1.6 on the value added of the cluster). Indeed, the total employment effect of the increased traffic could reach around 9,000 new jobs by 2015 and more than 125,000 new jobs by 2018.
It is important to note that in order for Greece to reach its potential,
- Greek ports need further privatization to facilitate large investments, while
- the entire intermodal transport network - ports, road and mainly rail - need a significant infrastructure upgrade (partly through an effective use of EU funds).