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THE
Greek Port of Piraeus recently held an opening
ceremony of its new facility Pier 3, run
by Chinese shipping conglomerate Cosco,
Xinhua reports.
Officiating
was Cosco Group's CEO Wei Jiafu's last ceremonial
acts, before he stepped down a few days
ago from the post.
Phase
one of Pier 3, occupying 120,000 square
metres, has a quay length of 450 metres
and is equipped with five double-container
overhead cranes and six rail-mounted gantries.
It is able to handle 700,000 TEU a year
and can accommodate 18,000-TEU ships, the
biggest afloat today.
According
to the concession agreement, the new pier
was constructed by PCT-Piraeus Container
Terminal, an operating arm of Cosco Pacific
and is the terminal with the deepest draft
with the most modern facilities in the Mediterranean.
Greek
Prime Minister Antonio Samaras delivered
a speech to more than 120 participants including
the Chinese Ambassador Du Qiwen, Greek ministers,
representatives of key accounts and others.
Capt
Wei said that when Cosco took over the terminal,
the annual throughput was 166,000 TEU and
it has since risen to 2.1 million TEU last
year with this year's target being 2.5 million
TEU.
Since
the take-over, Cosco has directly created
1,000 jobs for local economies. Capt Wei
also said he believed that the opening of
Pier 3 will advance Cosco's business development
and create more jobs.
Prime
Minister Samaras said the new terminal expansion
will provide 700 more jobs to Greece, believing
the forthcoming collaboration is not only
mutually beneficial to China and Greece,
but for the entire EU.
In
fact, Chinese container terminal operators
facing slower economic growth with a slowdown
in cargo volumes at Chinese ports, especially
those focusing on Asia-North America and
Asia-Europe trade lanes, are being encouraged
to expand overseas to diversify risk.
Most
notably, Cosco Pacific and China Merchants
Holdings International (CMHI) have recently
acquired assets in overseas markets. In
Cosco Pacific's case, its acquisition of
assets in Greece (Piraeus) has already borne
fruit with a turnaround in container volumes,
according to Drewry Maritime Equity Research.
Port
Authorities looking to tender container
terminal management concessions now have
these two Chinese players with overseas
aspirations to assess, said the Drewry report.
China
has seen its economic growth moderate from
14.1 per cent in 2007 to 7.8 per cent in
2012, according to the International Monetary
Fund (IMF). Even though there are early
signs of the economy bottoming out, it is
anybody's guess as to when it will rebound
to pre-crisis levels, given the protracted
debt crisis in Europe and muted recovery
in the US, said Drewry.
China
Merchants has expanded into Africa and Sri
Lanka and it has just acquired a 49 per
cent stake in CMA CGM's Terminal Link, which
has terminals spread across the globe. CMHI's
problem is that nearly half of its equity
throughput is derived from the Pearl River
Delta, where growth has been stunted due
to an unfavourable economic environment
and high labour costs. This means that if
it is to continue expanding rapidly, overseas
investments will be important.
CMHI's
overseas assets will account for 20 per
cent of its equity, compared to negligible
levels in 2011. Its net profit from overseas
assets will be 12.4 per cent of the total
by 2015, said the report.
But
expansion entails large capital expenditure,
which stresses the company's cash flow.
The company will require US$1 billion during
2013-2014, including $525 million for the
acquisition of a 49 per cent stake in Terminal
Link, according to the report.
Overall,
expansion in overseas markets could surely
garner additional revenues and diversify
the business risk, but execution and integration
of new operations are a big challenge, which
port operators will need to handle successfully.
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