The Port of Piraeus – Opportunity for Railways in South East Europe?

Chinese state-owned shipping companies, along with several East Asian corporations, have marked the Port of Piraeus as a new logistics hub of Europe. China Ocean Shipping Company (COSCO) in 2009 won the 35-year concession for the two of three port terminals and in January 2016 formally acquired a 67% share for €370 million. Furthermore, the company has announced another €350 million investment in the next five years, increasing the port capacity from 1 million to 7 million TEUs.

A reliable indicator of the future traffic potential is the Hewlett-Packard (HP) decision from 2013 to relocate a major part of its distribution operations from Rotterdam to Piraeus, and use the rail transport from Piraeus for distribution to the Balkans, Hungary, and the Czech Republic . East-Asian companies like ZTE, Samsung Electronics, Dell, Lenovo, and LG have also expressed interest to use Piraeus as a gateway to South East and Central Europe.

Railway Corridor X meets the potential demand but is inadequately equipped. In the competition with the Corridor IV and the trucking companies, it will be increasingly difficult to attract new rail freight. Plagued by the poor infrastructure and long border-crossing procedures, the corridor is in dire need of investments and better policies.

Estimated trade in 2016 between Central Europe2 and Asia is 1.8 million TEUs, and Southeast Europe3 and Asia around 0.9 million TEUs. The cargo coming from Asia is shipped to one of the Mediterranean or North European ports where it is reloaded to a smaller ship, which then transports it to the final destination (transshipment). Alternatively, cargo is reloaded to a rail or truck and arrives at the final destination by land (transit). The Port of Piraeus is not reaching this market. Out of this year’s target of 3.3 million TEUs, around 2.1 million will be transshipped to the ports in Spain, North Africa, and the Middle East, 1 million unloaded in Greece for the local market and only 0.2 million TEU is the transit traffic going to the Central and Southeast Europe.

COSCO and Trainose, a Greek railway operator, are very interested in becoming a player in this 2.7 million TEUs market. Their goal is to integrate the port and rail operations and provide quick and seamless shipping to the hubs in Hungary and Czech Republic. Undoubtedly, Port of Piraeus has a sufficient capacity to service the entire market. However, the rail infrastructure is not up to speed, making the ports in the Adriatic Sea and the Black Sea more viable routes.

Future plans for railways in South East Europe

The ways to reach this market is by truck, by rail via Pan-European Corridor IV or rail via Pan-European Corridor X. Currently, out of 0.2 million TEUs of the transit traffic, only about 25% is shipped by rail. The European Union has recognized the opportunity and included Pan-European Corridor IV in the network of nine core TEN-T corridors. Romania has secured €2.9 billion for modernization, electrification and construction of the second track for the 490km section from Arad to Calafat, achieving speeds of 120km/h for freight trains by the year 2020 [4]. Similarly, Bulgaria will receive €1.6 billion from the European Regional Development Fund (ERDF) and Cohesion Funds for modernisation of the same corridor [5]. The plan is to cut the Thessaloniki – Budapest travel time to 14 hours [5] and become an obvious choice for the shipping companies. At the current state, a large portion of the Corridor IV railway infrastructure is a single track with operating speeds between 60 and 70km/h [5]. Notwithstanding the EU membership, the countries on this stretch of the Corridor IV still face an issue with the border procedures. The waiting time on the Greece/Bulgaria border is around 3.5 hours, Bulgaria/Romania around 2.5hrs and Romania/Hungary up to 2 hours. The waiting time is the result of slow operational procedures, such as changes of locomotive and inadequate staffing. According to the EU strategy for the corridor, the waiting times will be reduced to 20-30min by 2020 and ultimately annulled by 2025

Corridor X, although 300km shorter than its eastern neighbour, is currently not a viable option for the long haul transport. Extended travel times, inadequate maintenance, sluggish speeds and on-going development of road infrastructure parallel to railways have contributed to the decline in the cargo transport. Furthermore, waiting time on the borders is on average eight hours [6] (Figure 1). Each train is stopped twice per border, where it goes through lengthy customs and operational procedures. Further organisational problems, such as extra shuttle services between border stations, lack of coordination and communication between the operators and legislative differences boost the waiting further.

In total, the travel time from Thessaloniki to Budapest can be as high as three days. On average, it lasts 49 hours (see Figure 2), half of the time spent at the borders. Average commercial speed is 22 km/h, and average running speed is around 35 km/h

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