Greece is at the centre of global competition for the harbours of Piraeus and Elefsina, according to an Economist analysis.
As reported by the International Economic Review, about 1,200km north of the Suez Canal in Egypt is the port of Piraeus on the country’s coast. Greece has more shipping capacity than any other, and the port, majority-owned by COSCO, a Chinese state-owned company, is one of the busiest in Europe, with more than 4 million containers handled each year, the British magazine notes.
“Just 30km to the west, the US government is backing a proposal to develop a commercial port at Elefsina. About 500km to the north, Russian and Chinese investors have acquired a stake in the port of Thessaloniki. And even further northeast, US and NATO forces have set up a logistics hub at the port of Alexandroupolis,” the paper adds.
The competition for ports in Greece is part of a global battle to control the “infrastructure” of maritime trade, from Argentina to Thailand. In some places, such as the Panama Canal, the competition has taken a dangerous turn as part of a geostrategic confrontation between the US and China. In others, many countries and companies are claiming port and logistics deals as geopolitical security, business opportunity – or both. Overall, spending on port infrastructure will grow more than 30%, reaching $90 billion annually by 2035, according to PwC.
The importance of maritime trade and the risks
About 80% of global trade by volume is carried by sea. Governments are understandably concerned about maintaining the flow of goods. A series of crises in recent years, from the pandemic to the current closure of the Hormuz Strait, has shown how easily the global trading system can be disrupted, notes the Economist The desire to reduce reliance on specific “bottlenecks” for trade and geopolitical reasons is natural. And in the long run, greater competition between ports is likely to mean lower freight rates.
However, the rush to build port infrastructure is likely to lead to huge inefficiencies. Many investors, including American and Chinese taxpayers, will see disappointing returns. And political pressure on shipping companies to use specific ports and sea routes, against all commercial logic, is bound to increase, the Economist says.
China’s expansion and the West’s reaction
As in many contemporary geopolitical confrontations, this one is fuelled by concern about China’s ambitions and its increasing control over global supply chains.Chinese companies manage or have stakes in at least 129 ports outside China and have spent at least $80 billion on port construction, from Antigua to Tanzania, with many investments linked to bilateral trade deals.
More than a third of these ports are located near critical sea passages, such as the Straits of Malacca, the Strait of Hormuz and the Suez Canal. China’s strong presence has worried Western governments. Research by the MERICS research institute showed that after signing a terminal operation agreement, trade with China increased significantly, while exports to other countries decreased, the paper stressed.
Competition, investment and geopolitical conflict
At the same time, non-Chinese shipping companies are strengthening their networks. By 2021 they have announced acquisitions of about $140 billion. At the same time, governments are investing in ports to secure trade routes. India, Saudi Arabia, Singapore and the United Arab Emirates are expanding their infrastructure.
The US is taking a more aggressive stance, as seen in the conflict over control of the Panama Canal. Following political and legal developments, control of the terminals has become an international dispute, with China reacting strongly.
The future: more ports, but also problems
Competition is leading to a separation between Chinese and Western port networks. This can bring benefits such as better services and lower costs. However, many investors will suffer, while the glut of ports increases costs and the risk of inefficient routes.
“Every port and every country wants to be a logistics hub, but not everyone can be,” a European shipping company executive tells the Economist.
Besides the problems, building more ports is not necessarily a negative. Competition will reduce profit margins and force companies to offer better services. However, this is probably not the outcome that those who started the global “war on ports” expected.
