The first online event in the Transport Week series concluded last week, marking a successful start to a new format. During the webinar, various experts discussed the current port market situation and investor moods. Presentation and analysis of Port of Gdynia’s Outer Port project was a highlight of the meeting, offering a closer look at benefits of private-public partnerships (PPPs) for infrastructure investments.
Bogdan Ołdakowski (Actia Forum) opened the webinar with an in-depth analysis of the changes to the container market in Europe, the Baltic Sea Region (BSR) and Poland, illustrating the impact of the COVID-19 pandemic on turnover records.
The TOP3 European ports remain unchallenged. Rotterdam stays in first place, having handled well over 14m TEU in 2019, followed by Antwerp, with nearly 12m TEU and Hamburg, with approx. 9m TEU. St. Petersburg leads the pack in the BSR, with approx. 2.5m TEU, closely followed by Gdańsk. It is worth noting, that overall, the Polish ports strengthened their lead in the region, staying ahead of Russia by approx. 400k TEU.
As to be expected, the pandemic took its toll on turnover numbers. In H1 2020 the container market registered drops in all three regions mentioned above. Overall, the European container market shrunk by 6.94%, a number similar to the drops in the BSR (-6.57%) and Poland (-6.61%). While Q3 2020 saw some slight recovery, it is currently impossible to predict mid- to long-term effect of the coronavirus, as it is highly dependent on the type of restrictions countries all over the world decide to implement in the coming months.
With economies slowing down, investors’ may become wary of embarking on new projects. According to Maciej Ziomek (Ernst & Young), over the past years, approx. half of private infrastructure investment in the transport sector was made up by roads, tunnels and bridges subsectors. Out of the rest, heavy rail was the fastest growing one, while the port sector enjoyed least growth of all. A further, sharp decline can be expected in 2020, given the fall in transport activities and delays in project preparation related to lockdowns and other restrictions being enforced due to the ongoing pandemic.
Increase in maximum container ship capacity was mentioned as a possible driver for investments in ports and maritime infrastructure. Despite a slight recovery in cargo traffic, including cargo both destined for and originating in China, carriers have been slow at reintroducing ship carrying capacity. This strict capacity management may potentially result in driving up freight rates, as the supply and demand balance becomes increasingly unstable.
As for the moment, while most world ports report delays to their investment plans, a large number of these are described as only minor setbacks. Port infrastructure projects oftentimes span over decades. As such they are less susceptible to slowdowns, since the planning isn’t based solely on the market situation at one given time and possible difficulties along the road are taken into account from the beginning.
Speaking of investments, a key part of the event was the presentation on Port of Gdynia’s Outer Port project. It gave practical insight into the ins and outs of a very ambitious infrastructure development initiative. The project itself foresees the construction of a deep-water port, accompanied by a container terminal, which will increase the existing port surface to 151 ha and its cargo handling capabilities by 2.5m TEU. The expansion will allow for calls by Baltimax-size vessels.
Gdynia’s Outer Port is an example for the public-private partnership (PPP) investment formula. It enables the involved parties to profit from the experience and capital of the private sector in financing public services and projects.
The subject was further explored in a discussion panel concluding the webinar, with Lilianna Bogusz (Polish Ministry of Development Funds and Regional Policy) explaining the role of Poland’s central governmental PPP unit in the project. It is centered around supporting public authorities deciding to enter such a partnership. In case of the Outer Port project, the unit in question was involved from the earliest advisor selection stages. It also acted as intermediary with other Ministries, explaining their role in the undertaking.
Additionally, the unit is tasked with implementing guidelines for procedures related to the partnerships, striving to make them as transparent and international standard based as possible. In case of Poland, where the PPP formula is not yet well understood and, by extension, developed, it is vital to have a liaison making sure that balance is struck between risks and responsibilities of the parties involved. Only then can all expectations be met and lead to a successful completion of a project.
The webinar marks the first time the Transport Week series transitioned into the online realm. We would like to thank our Strategic Partner – Port of Gdynia – for their support and are already looking forward to further online events in the future.