The Eastern Mediterranean container port market has proved highly volatile in recent years, with cargo volumes posting significant fluctuations year-on-year.

Data published by Ukraine-based consulting company Informall Business Group reveals that, in 2017, the number of loaded containers handled by ports in the countries neighbouring  the Black Sea (excluding Turkey) rose by 12.7% to over 2M TEU (see Table 1). Turkey is largely irrelevant when it comes to the Black Sea, as Trabzon, which is its  largest box port on this coastline, processed less than 11,500 TEU in 2017.

 
Moreover, several port authorities and terminal operators are excited by the opportunities presented by China’s ‘One Belt, One Road’ (OBOR) programmes and the expected rise in  traffic moving between China and Europe on trans-Caucasian rail corridors.

 
The new port being built in Anaklia, Georgia is designed with this cargo base very much in mind. However, management also sees it becoming one of the most important maritime  gateways for the Central Asia States, especially for cargo moving to/from Azerbaijan, Armenia and north-west Iran.

Constantza in Romania, the Bulgarian ports of Varna and Burgas, plus various facilities in Turkey’s main container handling complex, Istanbul, also think that OBOR will boost their  cargo volumes. A range of capital plans, business development strategies, marketing and sales programmes is already in place or being formulated by stakeholders to take advantage of this situation.

Staying on top

Constantza, which is the largest box port in the Black Sea, is keen to hold on to this position, and sees hinterland expansion and sister port trading deals as being very important in  this process. In particular, the port’s management wants to position the port as one of the leading gateways for cargo flowing to/from Eastern/Central Europe and the Central Asia States and China.

To further this objective, the National Company Maritime Ports Administration SA Constantza (CMPA) has agreements in place with key ports/inland centres along the ‘New Silk Road’,  including with Qingdao in China, Aktau in Kazakhstan, Baku International Sea Trade Port in Azerbaijan, and the Georgian ports of Batumi and Poti. CMPA is also a member  of the Trans-Caspian International Transport Route Association, which has promoted rail transport through the Central Asia region as one of its main objectives.

Anaklia’s big plans

Among the biggest civil engineering projects taking place in the Black Sea region is that at Anaklia in Georgia, where a new deepsea port is being built and a massive special  economic zone developed on about 600-ha of adjacent land.

Over US$2.5B is being invested in the Anaklia project by the Anaklia Development Consortium (ADC), which is a joint venture between Tbilisi-based TBC Holding LLC and Conti  International, a US-based infrastructure and capital investment group.

 
The first phase of the port will have the capacity to handle 900,000 TEU a year, which is about 2.5 times the volume of containerised cargo currentlyhandled at Batumi and Poti in 2017. SSA Marine has been appointed to operate the container terminal.

A bulk handling facility will also be built as part of the phase 1 development programme, and this will have the capacity to handle at least 2 Mtpa of cargo. While grain was the  original cargo targeted by ADC for this facility, WorldCargo News understands that it will now be designed to handle mainly fertilisers.

Ultimately, when Anaklia port is completed in 2030, the port will be capable of handling over 100 Mtpa of cargo.

Anaklia will open in late 2020, and it will be the first port in Georgia able to accommodate deep-draught container ships of up to 10,000 TEU capacity. Currently, Poti and Batumi can  only accept ships up to about 1,700 TEU capacity, and this means the majority of the nation’s cargo has to be relayed over hub ports, such as Istanbul, Piraeus, Marsaxlokk and Port  Said. It means local shippers/consignees pay more, while schedule reliability is often poor, and transit times extended.

Poti/Batumi pause

The new deepsea port, therefore, casts doubt on the long-term viability of both Poti and Batumi, particularly when it comes to handling containers. This uncertainty appears to have  stopped APM Terminals’ plan to develop two new berths for servicing 9,000 TEU container ships, which would effectively double Poti’s box handling capacity to 1M TEU a year. APMT,  which owns 80% of the port, had launched its plan in 2015, and was scheduled to have the new terminal completed in 2018. In 2017, Poti handled just 319,000 TEU, although this  was up 16% on the previous year. But the numbers are still well below those of the early part of the decade, when 500,000-plus TEU was processed.

Today, APMT’s focus is on the dry bulk market. In January 2018, a Memorandum of Understanding (MoU) was signed between APMT and Poti New Terminals Consortium (PNTC) for  the development of a new dry bulk handling facility with the capacity to handle 1.5 Mtpa of cargo. PNTC will spend approximately US$100M on the 10 to 12-ha facility, which will have  a 300m quay line.

It is hoped that the new terminal will help boost Poti’s transit cargo business, with grain exports out of Kazakhstan believed to be a target for the new facility.

International Container Services Limited (ICTSI), which operates Batumi International Container Terminal (BICT), plans to expand its annual handling capacity from 150,000 TEU  currently to 200,000 TEU by acquiring a third mobile harbour crane and four more reach stackers. But there is no timeframe for the work, and there is no pressure to undertake it,  given that, in 2017, only 76,025 TEU was handled at the facility.

Rail ramps up

The past couple of years have seen over US$3.5B invested in Georgia’s highway network and rail system. This included the new Baku-Tbilisi-Kars railroad linking Azerbaijan and  Turkey, via Georgia’s capital city, commissioned in the later part of last year. It has practically doubled Georgian Railways’ freight-carrying capacity to an estimated 28 Mtpa of cargo.

It will also offer transport service providers and beneficial cargo owners another option on the trans-Caucasus rail corridor, as well as providing a more effective and faster link  between China and Europe. These countries are powerful trading partners, and cargo exchanges between the two have been increasing very fast over the past decade. Automotive  components, machine tools, consumer durables and food products are among the main cargoes transported, and all of them are suited to rail transport, as they are relatively high-value goods.

In terms of the special economic zone, ADC is known to be in discussions with companies from many industries, primarily in the food/beverages, biosciences, light engineering, and transport/logistics sectors, about opportunities in Anaklia. Primarily, ADC wants these industries to invest in the zone, to use it as their distribution hub for the Central Asia  States, and the port as their international trading gateway.

Ukraine and PPPs

In Ukraine, private enterprise is being chased by the government as it seeks to modernise its outdated transport networks and port systems. To encourage this, laws are being  amended and incentives offered, including discounts on port dues of up to 20%, and commitments to dredging and reclamation projects.

In addition, the country’s Ministry of Infrastructure has drafted a new law on concessions, and set up an office that is dedicated to initiating and structuring public-private partnerships (PPPs). The new law is more flexible, in that it enables investors to acquire usage rights, both to the property under concession and the underlying land plots,  without the need to go through additional land-lease procedures, as was the case previously. It means negotiations can be concluded faster and with a higher level of certainty. In  addition, the new law allows investors that currently have leases of state-owned property to transfer to the PPP concession model without having to go through a public tender. In all,  Volodymyr Omelyan, the minister of infrastructure, wants to modernise 13 of the country’s ports and renew highways and railways, as he seeks to position Ukraine as a viable  transit corridor for cargo moving between China and Europe, and between Europe and the Central Asia States.

One of the biggest development projects in Ukraine is in the port Chornomorsk (formerly known as Ilyichevsk), which is located less than 30 km southwest of Odessa. In December  2017, Hutchison Port Holdings (HPH) secured permission from the government to lease and develop berths 1-6 and the area behind the wharves, under a 49-year  build-operate-transfer concession agreement. Although full details of the project have not been announced, HPH is expected to start construction work on its new facility later this year. The terminal is likely to focus on the handling of containers, given this is the group’s expertise, and it has often spoken of having a hub in the Black Sea region.

In Odessa, Container Terminal Odessa (formerly HPC Ukraine) is continuing to expand its operations through the construction of a new container terminal. To date, in excess of  UAH5B (US$191M) has been invested in the Quarantine Mole project, and just under 50% of the terminal operator’s business handled in the port is now processed at this facility.

The past six months have seen a strong recovery in cargo volumes, as ZIM has phased in larger 5,000 TEU ships and China Cosco Shipping Corp has commenced a new service  that carries both feeder and intra-regional cargo. The weekly string uses two ships on a rotation calling at Alexandria, Mersin, Novorossiysk, Odessa, Piraeus, and return to Alexandria.

In the western part of the Black Sea, the port of Constantza dominates, with 58.4 Mt of cargo processed in 2017, and almost 700,000 TEU. These figures were slightly below those  of 2016, when 59.4 Mt (-1.7%) and 711,339 TEU (-2.1%) were processed.

In fact, there are growing concerns over service levels in Romania’s largest port and the effectiveness of its landside connectivity, which is inhibiting cargo flows and leading some  customers to consider other service options. This is despite significant investment in several rail and highway projects, including:

• ? Double-tracking of the railway at the port’s Agigea Lock.
• ? Expanding the road between Gate 10bis and Gate 10 to four lanes.

The port authority is also investing in new facilities and modernising various areas of the port and its warehouses so that more value-added cargo support services and logistics  activities can be undertaken. 

While much smaller, Bulgaria’s main ports of Varna and Burgas grew strongly in 2017, with the former port’s box traffic rising by 8% to 152,000 TEU.

 
In addition to improving the cargo handling facilities at each complex, the port authorities, federal government and European Commission are working on a number of projects to  expand and improve transport connections to/from the ports. Strategically, the rail link being developed between Burgas, Varna, Ruse, Kavala and Alexandroupoli will provide faster,  safer and more secure services to the Aegean Sea, thereby expanding the hinterlands of the two Bulgarian ports.

 
In the Russian Black Sea port of Novorossiysk, an additional berth for accommodating mainline container ships is being constructed. Scheduled to be commissioned in the summer  of this year, the new wharf, which will have a draught alongside of 15m, will increase the handling capacity of the port by 250,000TEU a year.

It is being developed so that Novorossiysk will be able to process the expected increase in the number of new services that will start to call directly in the Black Sea from Asia in the  coming months.

New players

Outside of the Black Sea, Israel is determined to handle more of its cargo direct while attracting transhipment traffic. Two large container terminals are being built, and will be  operated by foreign companies. In Ashdod, Terminal Investment Limited (TIL) has secured the concession to operate the Southport Terminal, while Shanghai International Port  Group will manage the Bayport Terminal in Haifa.

The two facilities will feature 800m long quays as part of the initial phase of development, be dredged to 17.3m alongside, and will feature STS cranes that have an outreach across  23 rows of containers. They will be able to handle at least 1M TEU a year.

While construction is underway, the process is not going smoothly, and, with Israel’s dockers’ union, which has something of a militant reputation against the privatisation  programme, industrial unrest is never far away. In the past month, a three-day strike closed both Haifa and Ashdod, and led to more than 40 ships being unable to load, discharge  or enter the two ports. Crane productivity rates either side of the strike days were between 15% and 20% below normal levels.

The action has been ongoing since 2013 when the government gave the go-ahead for the large privately controlled box terminals to be developed, and it is difficult to foresee an  end to the situation, despite discussions taking place regarding new labour contracts and employment terms.

With dockworkers fearing that business, and therefore their jobs, will be lost to the private terminals, they are demanding that the government funds improvements at the state-controlled facilities, rather than money being sourced from Israel Ports Company.

Meanwhile, WorldCargo News understands  that the Ashdod dockers’ branch of the union wants assurances that its members will be employed at the private port.

Ups and downs

Elsewhere in the Eastern Mediterranean, independent port consultant Huseyin Sipahioglu estimates that Turkey’s ports handled 10.15M TEU in 2017, up by almost 15% on 2016’s  level, and a result that he described as “very promising”. In particular, exports were strong, partly helped by the weaker value of the Turkish lira.

But his research also showed that ports posted very mixed results in 2017, with the relatively new DP World-operated facility at Yarimca registering the best performance. Its traffic  soared nearly 750% to 437,047 TEU last year (see Table 2). Elsewhere, AsyaPort and Kumport posted the strongest increases, with their volumes up by 44% and 60%,  respectively, on the previous year.

By contrast, the Marport facilities, which are owned by the Izmir-headquartered Arkas Group, continued to lose traffic (-7.3%), while Evyap volumes collapsed last year, falling by  46.3% to 370,000 TEU. This reflected service changes by some of its customers, and additional competition in the Izmit Bay area.

At the Ambarli complex as a whole (which includes the terminals in Marport, Kumport and Mardas located on the western side of the Bosphorus Strait) 3.12M TEU was handled in  2017. This was an exceptionally good result, given that the pulse of economic and industrial activity in Istanbul is moving towards the Asian side and the container terminals  located there. In addition, MSC continued to shift transhipment cargo from Marport to AsyaPort (Tekirdag), which is operated by its sister company TIL. MSC is using this port as its main transhipment hub for the Black Sea and certain smaller ports in Turkey.

Kumport lifted

By contrast, China Cosco Shipping Corp (CCSC) routed more traffic over Kumport, whose shareholders include its affiliate Cosco Shipping Ports and compatriot terminal operator  China Merchants Ports. CCSC’s move helped lift Kumport’s volumes to over 1M TEU in 2017, and further growth is expected in 2018.

In the Asian sector of Istanbul, Yarimca has benefitted from its ability to handle two ultra large container vessels simultaneously, and its proximity to Turkey’s burgeoning  automotive industries. DP World has invested over US$550M in the 1.3M TEU capacity terminal, and is optimising its operations further, as it seeks to turn ships around more  quickly and to smooth the flow of containers through the facility.

Two of the terminal’s Konecranes E-RTGs are to be upgraded and will be remotely controlled from two stations. “This will enhance the effectiveness of the terminal,” said Kris  Adams, CEO of DP World Yarimca. “The introduction of this new technology, which is a proof of concept for the DP World organisation, is another milestone for DP World Yarimca in  providing cutting-edge technology in its operations, which are already considered the most productive and efficient in the market.”

In other developments in the Port of Yarimca, Tokyo-headquartered NYK Line has teamed up with OYAK, the Turkish armed forces pension fund, to build and operate a terminal for  handling finished vehicles in the port. Approximately US$110M will be invested in the facility, which is scheduled to open in mid-2019 (see p73-74).

Elsewhere in Turkey, Mersin International Port (MIP) continues to benefit from the opening of its second container handling facility in 2016, and its ability to accommodate mega  container ships. 

New owners

The past year has witnessed a change in ownership at the port, as the Australian-based infrastructure and investment group IFM Investors purchased Akfen Holdings’ 40% stake in  the port for close to US$870M. PSA International, which is the other main shareholder, is largely responsible for managing the port, and there has been little change in operations and development strategy since IFM came on board. The current operating concession for MIP runs until 2043.

 
In the first four months of 2018, the port’s box traffic climbed by 6% to 540,228 TEU. This compared with 510,023 TEU in the corresponding period of 2017. This followed a 9.6%  jump (up to 1.59M TEU) in its throughput in 2017, a year in which the port reinforced its credentials as the main maritime gateway in Eastern Turkey.

But Limak Iskenderun, which lies 207 km to the east, and had lost out to Mersin for many years, has successfully built a cargo base since opening a new dedicated container  terminal in 2013. Its focus on serving Eastern and South-eastern Anatolia and large cities, such as Gaziantep, Osmaniye and Kahramanmaraş, has paid dividends.

Meanwhile, the port is ideally located as a transit gateway for Northern Syria and Central Iraq. In the case of the latter, the port is already handling a significant volume of imported  vehicles, and this is expected to grow further as political stability returns. This should also be an important corridor for container traffic, and, once reconstruction of the  various cities in Iraq starts, the shipment of construction materials, steel and consumer durables should rise quickly. In 2017, Limak Iskenderun handled just under 265,000 TEU,  an increase of 8% on the previous year.

Elsewhere in Turkey, the Port of Akdeniz (Antalya), which is controlled by the London-listed Global Ports Group, handled over 200,000 TEU in 2017, on the back of strong growth in  marble exports from the region. Most of this cargo is containerised, with the main markets comprising China, other countries in the Far East, and Australia.

 
Özgür Sert, general manager of the port, said that marble exports through the port had totalled over 2 Mt in 2017, as new investments in the industry in the region had taken  place, and production of marble for the export market had increased.

Moreover, the port offered companies several incentives to use Akdeniz as their export gateway. This included free storage for their cargoes at the port. Meanwhile, the port is  assisting the sector on a number of land transport and logistics initiatives.

Sert explained: “We want to create collection centres at the production points and provide exporters of the marble with easier transport and storage options. This year, we hope to  open a number of these centres and provide services that we believe will make exporting the marble from our port even more effective and cost-competitive.”

He added: “It was the second time in our history that the port handled over 200,000 TEU in a single year, with volumes in 2017 up 16.3% despite the stiff competition. Elsewhere,  our packed cement exports increased by about 45% compared with the previous year, with 700,000t handled. We hope to achieve double-digit growth figures for this cargo in 2018 too.” 

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This complete item is approximately 2200 words in length, and appeared in the May 2018 issue of WorldCargo News, on page 51. To access this issue download the PDF here.