THE PROSPECTS FOR THE EMERGENCE OF GREECE AS AN INTERNATIONAL TRADE CENTRE IN THE NEXT DECADE

The significant progress that Greece has made in its effort to develop into an international freight centre and logistics hub, as well as the major challenges it will face in the future, are presented in the second edition of the EY Greece survey, “Greece: International Freight Center” (2021).

The survey features the growth that has occurred in the Greek transport and logistics industry in the last few years since its first edition in 2017 which was held along O.MIND CREATIVES, because of the country’s strategic geographical location, economic reflation and more welcoming investment environment. It notes, however, that this development is mainly due to developments in the shipping and maritime supply chain sectors, as well as road infrastructure, concluding that a more intensive effort will be required in terms of rail and air freight transport, logistics infrastructure of the hinterland (hinterland logistics), the market for the provision of logistics services to third parties (third party logistics - 3PL), customs services and, above all, the interconnection of these distinct elements of the Greek transport and logistics sector.

The Greek shipping industry and the country’s road network as catalysts for the development of transport and logistics

The dominant position of the Greek shipping industry, which represents 15.6% of the global merchant fleet based on deadweight tonnage (deadweight tonnage DWT), has been the main driving force that has given impetus to the development of the Greek shipping complex, accenting it as one of the most important and competitive maritime centres worldwide. Moreover, at a time when trade flows between Asia and Europe continue to increase every year, Piraeus offers a highly competitive alternative option for direct connection to Far Eastern ports, making it at the moment – for the second year in a row – the largest trade port in the Mediterranean and the fourth largest in Europe, based on the total number of transported containers (TEUs), despite the adverse effects of the pandemic on global trade.

At the same time, the privatization of the port of Thessaloniki and the corresponding investments that are being implemented, as well as the planned construction of the freight station in the former Gonou camp, are expected to upgrade Thessaloniki to an imperative European port for the South-Eastern Europe region. Corresponding prospects are generated for several of the country’s 25 important commercial ports, five of which have been recognized by the European Union as ports of strategic interest.

The research also includes an “x-ray” of the Greek 3PL market, which is fragmented, consisting mainly of medium and small businesses which have to operate in a competitive environment.

In addition, the prospects created by the construction of the freight centre in Thriasio Pedio are analysed, which, when completed, will be considered as one of the largest land ports in South-eastern Europe, significantly strengthening the inland logistics infrastructure of the port of Piraeus, while a reference is also made to the development of supply chain business parks in Oinofyta and Igoumenitsa.

Regarding road freight transport, the survey documents the significant development of the Greek road network in the recent years, which now exceeds 2,145 km of motorways, while new planned out projects, such as the Northern Road Axis of Crete (VOAK), are also being considered. However, the small size of the sector’s enterprises, the low profit margin of transport services and the relatively limited penetration of the thirdparty transport sector into the overall road freight transport activities, are emphasised as well.

The survey also refers to the development of air cargo transport at Greek airports in the recent years, the construction of the new airport in Kasteli, Crete, as well as the upgrading of the 14 ceded regional airports, and the prospects that these developments create for the promotion of Greece as the gateway of South-eastern Europe for cargo air transport.

Finally, it analyses the progress made in the legal and regulatory framework for logistics and customs, which has contributed to improving the country’s international ranking in terms of trade facilitation and competitiveness and its performance in the logistics sector.

How does the market evaluate the performance of Greece as a logistics hub

The survey also records the opinions of business representatives from various economic sectors, regarding the functions and infrastructures of the individual elements of the Greek logistics hub. Participants are largely satisfied with the progress made in port infrastructure, road network and road transport, while they notice significant room for improvement mainly in customs services, 3PL / 4PL services and infrastructure and the rail network.

42% of respondents assess Greece’s competitiveness as a regional transit centre and logistics hub as “adequate”, with 12% answering that it exceeds their expectations. On the contrary, 43% identify further room for improvement, deeming that the competitiveness of the country’s logistics is “low”.

Measures to strengthen the desirability of Greece as

an international freight transport and logistics centre.

The survey comes to a series of conclusions and recommendations, emphasizing that, in order to increase its desirability as an international freight transport centre or as a leading regional logistics hub, Greece should focus on four priorities:

• Improving connectivity with global trade channels and other hubs, leveraging mainly – but not exclusively – the Greek shipping ecosystem

• Improving port infrastructure and supply chain infrastructure, with investments in logistics parks, as a continuation of the progress made in port infrastructure

• Strengthening the financial ecosystem, to provide high-level financial and business services

• Upgrading technological infrastructure, innovation, and human capital, to facilitate the development of new business models and the realization of the required transformation of supply chains

These priorities are specified with individual recommendations concerning ports, the road network, the 3PL / 4PL sector, air and sea freight transport, the rail network, customs, human capital in the transport and logistics sector, as well as the commercial identity (brand) of the country.

Messrs Thanos Mavros, Partner in the Consulting Services Department of EY Greece and Head of the Supply Chain and Cross-Business Operations Department of EY Greece and EY Central, Eastern, South-eastern Europe and Central Asia (CESA), and Giannis Pierros, Partner of EY Greece, Head of the Advanced Industry Sector (Assurance Services) and EY’s Automotive and Transportation Sector in the CESA region, stated the following in regard to the new EY survey: “The COVID-19 pandemic has significantly impacted the transportation and logistics market worldwide. As the market transforms in the coming years and strives to find new, more intelligent ways to function, building resilience will be a top priority for businesses operating in it.

Today, Greece and the businesses in the sector are investing in infrastructure and technology, in order to be able to utilise the country’s great comparative advantage - its geographical location - at a time when competition from commercial centres and logistics hubs in Asia is intensifying. For our country to be able to meet the big challenges and commercial demands of today, tomorrow and beyond, and to stand out from the competition, it should, among other things, focus on innovation, technology and the upgrading of human capital , to offer an desirable package of transport and logistics services with high added value”. www.grammadas.gr

IOBE (The Hellenic Institute of Economic & Industrial Research) recently revised down the estimate for reflation in 2022, to 5.2%, in nonfluctuating values, mainly due to the lesser expansion of exports (5.8%) and the decrease in public consumption (-1.1%), while an increase in private consumption (7.7%), investments (12.1%) and imports (9.1%) is expected, as mentioned during today's presentation of the IOBE's quarterly report on the Greek Economy.