Cosco Pacific, the Cosco Group’s terminal-operating subsidiary, will take over operations at Greece's Port of Piraeus, the biggest Greek container port, under a $4.2 billion contract.
The contract caps a two-year effort by the Greek government to put the state-owned port in the hands of a private operator, a plan that has met with continuing strikes by Greek labor unions protesting the loss of job guarantees.
Cosco signed a 35-year lease in June to operate two of the three container berths at the port. It will spend $707 million to upgrade port facilities, build a new pier and almost triple the volume of cargo the port can handle.
By The Numbers: Asia-Europe Westbound Container Traffic.
The move is part of an effort to create a network of ports, logistics centers and railways to distribute Chinese products across Europe -- in essence a modern Silk Road -- hastening East West trade and creating a valuable economic foothold on the continent.
The Greek government had planned to privatize the country’s second biggest container port at Thessaloniki, but canceled an international tender last year after the top bidder, Hong Kong's Hutchison Port Holdings, withdrew its bid on the eve of signing a draft contract with the Thessaloniki Port Authority.
HPH's decision was attributed to the downturn in the global container shipping market.
The Thessaloniki Port Authority, which is 74 percent state-owned, has said it will modernize container facilities using its own funds.
The Piraeus port in Athens can currently load and unload 1.8 million containers a year.
With a strategic position near the Straits of Bosphorus, the port also provides a way into the Black Sea region, central Asia and Russia.
Cosco aims to make the container port a hub to rival Rotterdam -- Europe's largest port.
Many see the latest COSCO investment as just the beginning of a far broader scheme to access European markets.
“The Chinese want to use the terminal to get their goods into Europe,” said Walter Kemmsies, chief economist of port design consultant Moffett and Nichol. “They are taking advantage of Greece’s weakness to step in. It gives them an excellent entry point into the rest of Europe,” he said.
By the end of the year China is expected to make a joint bid with a Greek company to create a $252.2 million logistics hub at Attica, near the port, to distribute goods from China into the Balkans and the rest of the continent.
The Chinese are also in talks to buy a share in the struggling state-owned railway in Greece.
-- Contact Peter T. Leach at email@example.com.