After reaching a preliminary agreement in November of 2012, Hewlett Packard has finally completed a transport deal with Chinese shipping giant COSCO, to move a key part of its regional supplies through the main Greek port of Piraeus. At the moment, the Piraeus port authority (OLP) has a 35-year concession agreement with the shipping industry leader (COSCO), to manage and maintain two of its container terminals.
According to the Greek development ministry, HP will move its central distribution hub for central Europe, the Middle East, North Africa, the eastern Mediterranean and eastern Europe to the port of Piraeus. Recent figures suggest that the US computer giant’s global supply and transport operation, could amount to as much as $50 billion (38 billion euros).
“Such investment helps our country deal with unemployment, which remains the top item on this government’s agenda“- Greek Prime Minister.
This is a welcome investment at a time when the country is suffering deeply, despite successive international bailout packages. Greece has been searching for investors to off-set the effects of a deep and crippling recession, which has now entered its sixth year. Moreover, restoring confidence in the general population as well as the international community, has been difficult for government officials; to say the least. Especially since a Coca-Cola subsidiary announced plans to relocate it operations, amid repeated austerity cuts and sales tax hikes that have seriously affected consumer demand, over the last four years.
In 2010, Cosco, the global shipping giant, which happens to be owned by the Chinese government, signed a deal with the Greek government, that allowed Cosco to lease half the shipping port of Piraeus. Since then the volume of cargo is more than three times the level it was at when they took over. The deal cost Cosco 500 million euros at the time, but it looks as though it is paying off for both sides. They are already working on building a second pier in anticipation for increased volume as Greece’s economy steadily recovers over time. The other half of the shipping port is still run by Greece, and lags well behind the Cosco-run operation.
Cosco requires an investment of close to $400 million to upgrade and modernize their side of the shipping port, if they hope to handle the increase in container volume, which is estimated to reach 3.7 million in the future. If the shipping port reaches their forecast, it will make the port one of the 10 largest in the world (in terms of container traffic), and present opportunities for private investors looking to profit from their shipping container investments; as well. This year, Cosco’s side of the port has more than doubled their volume over last year, by processing 1.05 million containers.
If all continues to go as planned, Cosco has designs on owning the whole port, if Greece ever decides to sell or lease the whole port; in the future. In the shipping port business, location is everything and the port of Piraeus in Greece, is one of the most desired gateway locations to Southern Europe; and the Balkans. It seems China has got one foot in the door and could eventually take the port over completely, when the opportunity presents itself.
Greek politicians and leaders are looking to stimulate their economy, by encouraging international investment, particularly from China. Greece believes that it’s ambassadors to China, can encourage Chinese investors to invest in many different sectors, such as renewable energy, technology and the tourist industry.
“We firmly believe Chinese companies might be interested in some of the privatized assets … We have very good infrastructure, educated personnel, and legislation that is business and investment friendly. I think, like previous Chinese investment, new investments can be profitable both for the investors and the Greek economy.” – a Greek Ambassador to China.
This approach makes sense for both parties, since Greece has no reserves of it’s own capital to draw from when considering where to invest for the future, and China is looking to increase it’s international investments; particularly in the shipping industry.