POLAND’S EMERGING DOMINANCE
Poland has turned into the Baltic Sea’s main container hub, with volumes outstripping even Russia’s Baltic ports. And there are significant plans to consolidate this position, with every Polish port lining up ambitious expansion plans. Significant over investment – like that seen on the EU’s North Atlantic coastal stretch – looks likely, spurred on by seemingly unlimited EU funds.
Poland’s emergence as the dominant player is mainly due to Gdansk’s Deepwater Container Terminal’s (DCT) ability – as the only port in the Baltic - to handle the largest mainline vessels. DCT opened in 2007, owned and operated by a consortium of Australian investors, led by Macquarie Infrastructure. The investors’ business plan banked on attracting Asia-Europe mainline vessels all the way to the Baltic rather than turning in Rotterdam or Hamburg.
The reasoning was good. But timing was not quite right and initially DCT struggled. Maersk Line was the only client for many years and was able to squeeze DCT on tariffs. However, in recent years, the commercial benefits of bringing Asia-Europe vessels all the way to the Baltic have convinced most major shipping lines and they now call DCT.
Notably, 2M and Ocean Alliance are the main customers. Hapag Lloyd, ONE and Yang Ming (The Alliance) are still not bringing mainlines to the Baltic but it is just a matter of time before they will. It is unclear if Gdansk can accept the volumes of another alliance at this stage or whether they must wait for additional capacity to be built.
Gdansk will likely be the first terminal to add capacity in the market. But there are still some question marks. DCT can do some yard expansions but any major expansions (the so-called T3 project) will involve major land reclamations and so forth. In this context there are two factors that will stretch out the timeline. Firstly, the local communities are protesting regarding the environmental impact on the unspoilt nature areas adjacent to the port.
Secondly, the T3 project must be contracted out through a public tender by Gdansk Port Authority. Gdansk’s Terminal 2 was very quietly awarded to DCT without a proper public tender a few years ago. This led to protests and is unlikely to be allowed to happen again. As a result, a timeline of five years is probably a reasonable estimate.
Neighbouring Gdynia also has plans. ICTSI and Hutchison run terminals focusing on feeder volumes and short-sea business. But with limited depth and infrastructure, these facilities will struggle as mainline hubs. So, Gdynia Port Authority has introduced a 2030 Plan with a new reclaimed “Outer Harbour”. The cost of the project is quoted at €1.8 billion.
In addition, the Port of Szczecin and Świnoujście has announced a container terminal project with capacity of two million TEU per year and a price tag of about €500 million.
This appears over-ambitious. Profitability of the Polish ports is constrained by low handling tariffs, so the viability of all these projects is questionable. But with cheap financing and the EU still willing to finance infrastructure with scant regard for commercial viability, then do not bet against all projects being built.
PSA TAKES CONTROL OF POLAND
As a related development in Poland, it is interesting to consider that PSA has suddenly emerged as the most influential port operator in the Polish market. Until recently, no one would have connected PSA and Poland. But it is also the case that apart from its controlling shareholding in DCT Gdansk, PSA also has a significant presence in Gdynia.
Hutchison Ports operates Gdynia Container Terminal. and PSA owns 20% of Hutchison Ports. It will be interesting to see how PSA uses its newfound dominant position.
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