The Port of Gdansk: tipping the balance in Baltic Europe

23.01.2009

It has been widely assumed among media analysts that the measure of a seaport's ranking position is best described by its continued growth in turnover. While this is an apparently logical proposition, it contains the error of ignoring the fact that seaports are merely chain links in terms of market functioning in the field of the economic policies pursued by a large number of countries. Additionally, the Act on Seaports and Harbours, which has been effective in Poland since 1996, requires that the Polish ports remain compliant with the policy exercised by the government currently in power.

I suggest, therefore, that we look at the Port of Gdansk turnover figures at the close of 2008 keeping the above in mind and through the lenses of the political and economic guidelines outlined by the Polish government half a century ago. The port development strategy under the agenda of the Council of Mutual Economic Aid required that the role assumed by the port was predominantly that of a coal exporter and a champion in handling liquid fuels. These assignments gave rise to the construction of a new port facility, the Northern Port, located outside the existing port, with an infrastructure boasting an annual throughput capacity of 10 million tonnes of coal in export alone and 33 million tonnes of processed liquid fuels. This investment project has paid for itself, although it has never reached the full projected capacity.

Now, let us look back from the present perspective. The year 2002 - the best in terms of coal exports - closed slightly below 7 million tonnes. The top turnover result of 13 million tonnes for crude oil (mainly transit from Russia) was reported in 2006. Generally speaking, the first half of this decade was record-breaking for the Port of Gdansk as it handled a volume of 23 million tonnes of cargo. Until today, this figure represents a record that has never been broken by any other Polish port in the aforementioned ranking. While implementing services ancillary to the requirements of the national economy, the port authorities are held accountable for their financial results. These, on the other hand, are not necessarily representative of the amount of work performed.

The quantities illustrating the 2008 turnover results at the Gdansk port have already been calculated. The nearly 18 million tonnes of cargo handled have enabled the satisfactory benchmark set over the last decade to be maintained. This volume, however, entails a substantial qualitative change: it shows that only 10% of the coal terminal throughput capacity and a third of the liquid fuels infrastructure potential have been utilized, together with trace quantities of iron ore, but also indicates that the high volume of grain handled (0.646 million tonnes) have been maintained. It is also worth noting the effects of the deepwater container terminal, DCT - a great success in terms of investment - which over the last eight years has brought a tenfold growth in container handling (from 18 thou. TEUs in 2000 up to 185 thou. TEUs in 2008) providing top quality services to satisfy the requirements of such a shipping tycoon as "Maersk Line", who as of 1 December last year relocated to Gdansk its entire operations in the Polish maritime market.

The municipal authority of Gdansk - a shareholder in the Port of Gdansk Authority SA - is becoming increasingly concerned by the relatively small growth in the interest in the Gdansk port among the European and worldwide travel agencies. The daily service to Nynäshamn in Sweden fails to satisfy the aspirations of promoting this historic Hanseatic city. The DFDS service to Trelleborg and Copenhagen inaugurated in October 2002 by the ferry "Duke of Scandinavia" was discontinued after a year of operation. The Westerplatte Ferry Terminal, which is well suited to handle passenger traffic and boasts efficient connections to Gdansk's tourist attractions, has yet to win due recognition as its increased popularity is expected in view of the European Soccer Championships EURO 2012.

There is, however, one more type of cargo at the Gdansk port, with its volumes exceeding all analysts' expectations - motor vehicles. Undeniably, this is a great success of the port operating company "Port of Gdansk Cargo Logistics". The benchmark that was set very high by the Far Eastern manufacturers in terms of the quality and safety of car handling has brought about a streak of success for the Port of Gdansk. As a result, the year 2008 saw the number of vehicles handled in ship-to-ship operations alone slightly below 204 thou. cars shipped via Gdansk to the Russian and Ukrainian markets. During this time, the image of the storage yards kept changing day by day. None of the analysts, however, was able to predict the crisis that affected the global financial system towards the end of last year. Is it the case that the view of the over 10 thou. cars that are now crowding the quays and storage yards of the Gdansk port, as the recipients from behind the eastern border seem to have... forgotten all about them, could herald the factual end of the thus far successful transfer? Or is it no more than a momentary drop in demand on the otherwise ready market represented by our eastern neighbours.

Poland - a country that has traditionally built on its "black gold" resources - is now buying cheaper coal from other countries for its own purposes. The Port of Gdansk must create its own technical means aimed to convert its infrastructure from exports to imports in order to satisfy its obligations towards the national economy. The diversification of liquid fuels supplies and the strategy implementation of the national energetic security pose requirements that rarely coincide with commercial interests. Last but not least, there is another vital issue relevant in this area that has recently re-occurred, namely a guarantee to provide the national economy with sufficient LNG supplies.

The technological and economic offer presented by the Port of Gdansk has failed to gain in time the support of the government. The economy however, like the natural environment, cannot tolerate a vacuum. Neither can it tolerate political imponderables. With little risk, therefore, the perspective can be drawn that the natural conditions represented by the Gdansk port may determine that the gas port investment project be located right here. Likewise, they will continue to determine that coal, liquid fuels and containerized cargo be shipped via Gdansk. The Port of Gdansk will become a hub both in terms of the Baltic shipping services as well as the transportation chains between the Far East and Central and Eastern Europe, thus tipping the balance in favour of Baltic Europe. Gdansk is, indeed, particularly favoured by geography - whilst the statistics only reflect the momentary temperature of economic needs across the Old Continent and the world.