The need to rehabilitate infrastructure is presenting opportunities for dry bulk cargoes and the ports that handle them
While the majority of investment in ports in the eastern Mediterranean region in recent years has been in container terminals, there have, nonetheless, been some interesting developments in the dry bulk sector. Meanwhile, the market appears to be opening up, with the war in Syria seemingly nearing an end, a pressing need in Egypt to improve its infrastructure, particularly for distributing food, and several investors looking at transit trade opportunities in countries like Turkey and Lebanon.
Without a doubt, the reconstruction of Syria and Iraq offers considerable opportunities, and huge volumes of construction materials, steel, cement and other cargoes will be needed. And as these countries’ economies improve, agribulk volumes will also pick up. It has been estimated that once rehabilitation of these two nations takes place, between 50 and 60 Mtpa of extra cargo could be handled at ports stretching from Mersin in the north to Beirut in the south.
Syria’s own ports of Tartous and Latakia, and Lebanon’s Beirut and Tripoli are best placed to handle the majority of this cargo. Mersin and LimakPort (Iskenderun) are well placed too, particularly for northern parts of Iraq. But based on existing facilities and cargo handling capacities, this will not be possible.
Interestingly, the Syrian Government has concluded long-term concessions with the Russians for the port of Tartous, and with the Iranians for Latakia and it will be these interests that resurrect, invest and operate the ports.
In Lebanon, Beirut and Tripoli are both handling a wide range of transit cargo for Syria, as many shipowners still refuse to call at Syrian ports due to the sanctions, ongoing hostilities and the very expensive insurance premiums that have to be paid for their tonnage.
Currently, the momentum is with Tripoli, which is located less than 40 km from the Syrian border. Since 2012, work on reconstructing the port has been taking place, and as facilities have come back on stream, so cargo volumes have risen strongly.
Port director general Ahmad Tamer has ambitious plans too. His objective is to transform the port into a strategic logistics hub for the region and to achieve this by 2022. Earlier this year, he successfully secured a US$86M loan from the Islamic Bank, which he said would be used “to equip the port with the latest technology and infrastructure to restore its important role in the region”. Initially, the money will be spent on constructing new roads and bridges, so that cargo can be moved to/from the port quicker. New systems and equipment will be installed at the port’s various terminals.
Some of the most interesting developments are taking place in Egypt, which is one of the world’s largest importers of grain. Recently, the Damietta Port Authority (DPA) completed dredging works on its main access channel, and neo-Panamax sized vessels can now call at the port.
In Egypt, there is a pressing need to improve port and landside infrastructure, especially when it comes to handling, processing and transporting food. This is because distribution costs in this sector are high, and levels of safety and security generally poor, when compared with many other countries in the region.
The Egyptian Government has reached out to other states and also private investors to get advice, capital, and technical and commercial expertise. It has received support from companies like PSA International, DP World, Dreyfus and Cargill, as well as governments/state agencies from the UAE, Oman and Ukraine.
The latter country’s support has come via the Ukrainian Sea Ports Authority (USPA) and it involves cooperation with the port authorities of Alexandria and Damietta. It is also targeted at the dry bulk cargo handling sector.
A bilateral working group has been established and it comprises representatives from shipping lines, traders and port operators. Various discussions are underway regarding facilities’ modernisation schemes, the use of new IT systems, and the role of new technologies in the supply chain. Experiences and data are also being exchanged as the working group looks for the best solutions to Egypt’s supply chain problems. Currently an estimated 4.5 Mtpa
of cargo is moved between the two Egyptian ports and Ukraine. Moreover, well over 50% of this tonnage comprises agri-based exports from Ukraine.
Chicago-headquartered Archer Daniels Midland Company (ADM) and Cargill have joined forces and set up SoyVen to provide soya bean meal and oil for customers in Egypt.
Commenting on the deal, ADM’s president of EMEA oilseeds crush, John Grossmann, said: “ADM is adding to its geographic footprint in regions of expanding growth, and we’re particularly pleased to continue to enhance our capabilities in Egypt. It is an important market where the demand for high-quality soya bean meal and oil is outpacing the rest of the world. By bringing together expertise and resources from two great companies, and by utilising an existing facility and infrastructure, this joint venture would be perfectly positioned to efficiently meet growing Egyptian demand.”
SoyVen owns and operates the National Vegetable Oil Company soya crush facility in Borg Al-Arab, along with related commercial and functional activities, including a separate Switzerland-based entity supplying soya beans to the
Egyptian crush plant. The plant’s daily crush capacity is an estimated 6,000t.
“By bringing together the strengths and capabilities of Cargill and ADM in Egypt, this joint venture is uniquely positioned to meet specific customer needs in the growing Egyptian market”, stressed Ahmet Ertürk, CEO of SoyVen. “The demand for high-quality soya bean meal and for oil from both the food manufacturing and animal feed sectors continues to rise, and I’m confident customers will turn to SoyVen as their premier provider in Egypt.”
The joint venture consists of ADM and Cargill each holding a 50% interest. The management team report to a board of directors appointed by the two parent companies. The joint venture’s assets do not include Cargill’s grain business and terminal interests in El Dekheila or the ADM Medsofts joint venture in the port of Alexandria. Each company will also continue their other business activities in the country and region independently.
In other developments, Ukrainebased Nebulon is working with Egypt’s River Transport Authority, Ministry of Supply and Internal Trade, and Ministry of Irrigation, and investing approximately US$2M in building a number of grain silos in the vicinity of the ports of Damietta and Alexandria. In addition, 20 barges, each with a capacity to load 2,000t, are being built to move grain up the river.
The investment will expand the country’s grain handling capacity and raise the efficiency with which grain is distributed inland, particularly to the city of Cairo and its environs. The silos will also support several new food processing and logistics parks that have been developed at various locations in the country.
In the Greek port of Thessaloniki, South Europe Gateway Thessaloniki (SEGT), which owns 67% of Thessaloniki Port Authority (ThPA), are pushing ahead with an investment programme that will modernise its existing infrastructure
and significantly expand its cargo handling capacity.
SEGT, whose shareholders include Deutsche Invest Equity Partners (47%), the Savvidis Group (through Cyprus-registered Belterra Investments - 20%) and Terminal Link (33%), are keen to position the port as a major transit hub for the Balkan region especially for landlocked countries including Serbia, North Macedonia and Kosovo. The investment is being concentrated in the port’s established cargo handling sectors, which include containers, general cargo and dry bulk.
In the first seven years, SEGT will spend US$180M on new projects, with US$650M pledged over the lifetime of the 34-year concession.
In the conventional cargo/bulk handling sector, Sotirios Theofanis, chairman of the board of directors and CEO of ThPA, said that two investments totalling about €120M would be implemented shortly. These comprise:
● The expansion of Quay 24 by 410m and dredging alongside to a depth of 16.5m.
● Unification of the ports 4th and 5th piers to create a continuous berthing line of 600m, also with deeper water alongside.
The executive said the works would increase the terminal’s capacity by 4 Mtpa and allow Panamax tonnage to call at the port.
In all facets of the port’s operations, Theofanis is determined to use new technologies to make it more efficient and greener. Last year, ThPA signed a Memorandum of Understanding with Rutgers University, one of the oldest higher
education institutions in the US, to develop common research, educational and know-how transfer related programmes, projects and activities, in the fields of intermodal transport, ports and logistics.
“This is a chance to exchange research experiences and apply new technologies at the port of Thessaloniki,” explained Theofanis. “The cooperation includes new technologies such as those for the ‘port of the future’ and environmental protection issues. Furthermore, our cooperation extends to other thematic areas such as the development of technologies for monitoring the state of the infrastructure and recording/managing the traffic of heavy goods vehicles arriving in the port.”
The past year has seen progress made on several fronts, with the port’s conventional volumes up 4.4% on the previous year. A total of 3.76 Mt of cargo was handled. Theofanis is confident of an even better performance in 2019, with
the executive expecting at least 4.5 Mt of cargo to be processed.
He partially attributes the changes to the port’s privatisation and the reforms that have been implemented. “Following the privatisation of the company in March 2018, the new management team has put in significant efforts to improve the operational efficiency and productivity of the port, improve reliability and quality of service to our customers, and unlock the great market potential that we foresee for the company.”
The privatisation of the port of Limassol in 2016 resulted in the container terminal and general cargo/bulk/cruise facilities being split between two consortia. DP World Limassol, along with its subsidiary P&O Maritime and local company GAP Vassilopoulos, secured the 25- year investment and management concession for the latter, and since that time, there have been significant levels of capital expenditure.
In addition to the opening of a new cruise terminal, DP World Limassol has acquired new handling equipment, including a Liebherr mobile harbour crane and reach stacker. These machines have speeded up operations in the multipurpose facility and also allowed a wider range of cargoes to be handled.
“The LHM 420 mobile harbour crane is a great investment for the port,” said Charles Meaby, general manager of DP World Limassol. “With its heavy lifting capability and innovative services the new crane will maximise the multipurpose port’s potential. We are a global leader in the management and operations of ports, and we will continue making improvements to deliver a better service for our port users.”
While the eastern Mediterranean has not seen the investment levels in bulk ports that the Black Sea to the north has, there are considerable opportunities for developments in the future, and particularly in the general cargo sectors linked to the rebuilding of Syria and Iraq.