ECONOMY

Piraeus port needs investment and reform to keep up with rivals

The port of Piraeus shows 30 percent less productivity than the Mediterranean port average, lagging in competitiveness ahead of the expected fourfold rise of container traffic in the broader region within the next decade. Port users believe that this lag is due to past mistaken policies that have hampered the investment required, while the steps needed for the modernization of the existing legal framework are not being taken. Today the port of Piraeus operates at its limit, at 1.5-1.6 million teu (20-foot equivalent units), when other ports have seen their traffic increase by 15-20 percent since they have invested in new infrastructure and responded to the rise in demand. In contrast, in Piraeus, the extension of Dock I, one of the most important projects set to start in 2002, was criminally delayed by three whole years. This has taken Piraeus from the 53rd (in 2003) to the 63rd spot (in 2005) on the global list of container handling. The new management of Piraeus Port Authority (OLP) in cooperation with the Merchant Marine Ministry is trying to create the right economic and political environment to attract foreign investment, which, along with public funds, will modernize the port. «The improvement in productivity and the reorganization of the port are the state’s main objectives,» says OLP CEO Nikos Anastassopoulos. «The state is promoting a series of investments to assist in the development of Piraeus port as well as its transformation into a major Mediterranean transit center with high competitiveness and multiple benefits for the national economy,» he adds. The port of Piraeus, according to scientific studies, lags behind its competitors in productivity, which is about four times less than that of Algeciras in Spain and 30 percent lower than the Mediterranean average. This is due to the stacking system used in Piraeus and the port’s limited space. «Piraeus must improve its mechanical infrastructure and change its stacking system or extend its docks; both these alternatives are costly and must be completed within five years to keep up with rivals. Otherwise Piraeus risks being left behind,» argues Anastassopoulos. The port also lags behind its Mediterranean rivals in its loading productivity rate by about 30 percent. This stretches the time required to serve vessels, hampering the development of Piraeus as a transit center. Piraeus’s location means it could become much more than just the country’s trade gate, believes Anastassopoulos. «The expected rise in the significance of Greek sea routes, and mainly the Aegean, means Piraeus requires some initiatives so as not to remain a mere transit center in southern Europe. Piraeus must adapt to the constantly changing conditions (financial and technological) and the international standards of productivity and service to users,» he suggests, adding that «the existing organizational and operating framework creates problems and delays which make adjustment to the new conditions impossible.» Competition is raging in the eastern Mediterranean, with rival ports increasing their market shares. Most have conceded their container terminals to global port operators, gaining access to capital, an upgrade of infrastructure, increased flow of traffic and therefore high profits. «The need to increase productivity, realize investments immediately and proceed with an organizational and operational reform is closely associated with the strategic aim of turning Piraeus into an international transit center in southeast Europe. Any further delay will jeopardize its development and diminish its international role,» warns the OLP head. «The state and the OLP administration are proposing a realistic five-year investment and development program. Unions and staff have reacted to that, but offer no alternative development model. Everyone will be judged in the future but then the opportunity will have been missed and the allocation of blame will have only historic value,» deplores Anastassopoulos. Obsolete system The organization’s obligation to adapt to the state’s procurement regulations and existing organizational structures lessen the port’s ability to follow global developments, and mainly to respond in time to structural and seasonal shifts in demand. «Peaks in demand, such as the increase last summer with the war in Lebanon, could not be served through the leasing of machinery or hiring of temporary staff. This leads to permanent solutions which raise operational costs,» Anastassopoulos explains. Furthermore, the existing mechanical equipment is obsolete and insufficient, with more than half of it being at least 15 years old. Problems exist in the stacking system, too: Piraeus and Italy’s Gioia Tauro are the only ports in the Mediterranean’s top 10 still using the Straddle carriers system, when all rivals have switched to RMG and RTG.