POLAND: EFFECTIVE PLANNING FRAMEWORK REQUIRED

Table 1
Table 1
Gdynia
Gdynia has big ambitions with its new external port area project but is it sending the right message to private sector investors?
Industry Database

Poland lacks a robust national port masterplan with the capacity to filter essential port plans from those based more on aspiration. There is also a bigger role to play for such a national framework in building investor confidence.

Each of Poland’s major ports has large scale expansion plans but looked at collectively do these plans make sense?

In mid-2019 the Polish Parliament adopted a special act on investments related to the country’s three main ports – Gdynia, Gdansk and Szczecin-Swinoujscie – which aims to accelerate the procedures relating to implementing port expansion and encourage associated investment. Together the three ports account for 95 per cent of the revenue received from the sector by the State Treasury.

The plans on the drawing board are large scale – Table 1 - but while the Polish Parliament has seemingly opened the gate on unrestrained port expansion a question mark hangs over the fundamentally important point of how rational port expansion will be achieved on a national basis?

The instrument that plays a large part in achieving this – a National Ports Masterplan – is notable by its absence in Poland which may well prove to be a costly mistake.

National port masterplans have a core role to play in providing a guiding light for rational port development, not least in avoiding the big mistake of too much capacity too soon. Equally important, a national port masterplan is an important component in promoting private sector confidence – i.e. in putting in place a framework for development that encourages demand led investment that offers sensible returns to investors.

The problems associated with individual ports pushing large scale development plans without any real coordination between them are well documented based on global experience to-date.

It is not unusual for individual ports, often supported by regional or local politicians, to enthusiastically promote their own schemes – and ultimately to come up with a logic that justifies them proceeding, especially when doing so not fully taking into account the macro (national) alongside the micro (local) context.

Big ports in the same coastal range are invariably in competition with each other – Gdynia and Gdansk for example are located just nine nautical miles apart – and it is not unusual for the competitive climate that exists between such ports to favourably colour thinking on proceeding with expansion plans.

There may well be a case for both these ports to proceed with their respective plans but add to these plans those of Szczecin-Swinoujscie, which to date has fulfilled a relatively minor role compared to its peers, then this could well prove to be a step too far.

Especially when the bush telegraph beats that the latter port has implemented independent market studies that did not find a case for large scale expansion but irrespective of this the port sill intends to proceed.

CONSTRUCTIVE ROLE

A national ports masterplan, properly implemented with input on market analysis from independent advisors, can play a very constructive role in the sanctioning of and approval for financial support of individual port projects. It is a major component of good risk management offering safeguards against what can often be seen as the over enthusiastic ambitions of certain ports – a description which some suggest applies to the Szczecin-Swinoujscie project.

There is also no reason why national port masterplans need to be static once developed – they can, and many say should, incorporate mechanisms such as a role for an independent auditor of “ideas,” managed typically by a central ministry such as the Ministry of Finance. Such an entity should possess the power to initiate its own independent studies into new proposals thereby effectively providing a check and balance mechanism to test the project justifications set out by individual ports.

Another useful dimension to such oversight is the remit to promote an investor-friendly climate. Not just in terms of making sure there is a real need for and logic underpinning proposed expansion schemes but also as regards the rules of engagement with both existing and potential new investors. One example of this is in Gdynia where the port authority has announced to more than one existing concession holder that when their respective concessions expire they will not be extended irrespective of the fact that this will be some way in advance of new port capacity being brought on-stream. With the parties concerned known to be leading contributors to the port’s earnings there seems to be a distinct lack of enlightened thinking here in terms of keeping proven major investors onside.

A more logical step would be to allow such parties to continue to operate their respective terminals until such a time as new terminal capacity is ready in the expansion area? Such a step would be collaborative with blue chip investors as opposed to the current policy which is confrontational in profile. And if it is the port’s intention to offer new concessions at these facilities then this appears to be flawed – who will bid for them with superior, deeper draught, new capacity coming on-stream in the near term? Equally, extending the existing concessions may well prove to be the only safe route to guaranteeing no loss of cargo volume between the end of the concessions and delivery of new terminal capacity. It has to be said the Gdynia approach is highly unusual and does not send out a good signal to the investor community.

EU TACIT AGREEMENT

The 2016 report from the European Court of Auditors, “Maritime transport in the EU: in troubled waters —much ineffective and unsustainable investment,“ confirms the need for more emphasis on national port planning.

The report assessed the Commission’s and Member EU States’ EU Maritime freight transport strategies and the value for money delivered by EU-funded investments in ports. It looked at 37 new projects and five reassessed projects and key findings included:

  • “The long-term development strategies put in place by Member States and the Commission did not provide a robust and coherent basis for planning the capacity needed in EU ports…., and
  • “Funding in similar port infrastructures and superstructures in neighbouring ports has led to ineffective and unsustainable investments: based on 30 of the 37 projects already completed…..one in every three euros (corresponding to 194 million euros for 12 projects) has been spent ineffectively…”

And the report goes on to emphasise….” Member States should put in place a robust and coherent long term strategy for developing their ports,” and further suggests that: “For investments in ports to be supported using EU funding during the 2014-2020 period, there is even a legal obligation to make these investments part of a wider, more general strategic port development plan.”

Poland and its shortcomings in national port planning is also specifically referenced in the report. It states: “Poland had adopted a national strategy with many elements able to serve as a basis for making good port investments, but this strategy had neither been accompanied by an implementation plan nor properly monitored. As a result, the projects selected had not always been of the highest priority or sufficiently well developed. Moreover, in some cases, non maritime projects (e.g. typical city roads, quays with tourist attractions) had been financed from the allocation dedicated to maritime transport.”

The case for the informed development and implementation of a National Port Masterplan in Poland is very clear and with the various port expansion plans in the pipeline there is no doubt that this should happen sooner rather than later.

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