Making Connectivity Work: Transforming the Port of Thessaloniki into a Top Hub for Southeast Europe and Beyond – Panagiotis Paschalidis and Georgia Anastasiou
- The Thessaloniki Port has all the necessary elements to become a top regional, South-East European and international trade hub.
- The Thessaloniki Port Authority has adopted extrovert and proactive policies for strengthening cooperation with neighboring countries.
- The Thessaloniki Port’s impact can become even stronger if it is approached and designed on the basis of the notion of connectivity.
- Connectivity entails the upgrading of both technical and material aspects such as trade and commercial infrastructure (hard module) as well as the institutional and policy framework of cooperation such as agreements at the bilateral and multilateral level with neighboring countries (soft module).
- The drastic normalization of relations between Greece and North Macedonia can be viewed as an example of a comprehensive upgrading of connectivity with tangible benefits for the improvement of the Port’s regional and international role.
You may read the Policy Brief by Panagiotis Paschalidis, Research fellow, South-East Europe Programme, ELIAMEP; Adjunct lecturer, University of Western Macedonia; Researcher, Public Opinion Research Unit, University of Macedonia and Georgia Anastasiou, Research Analyst, Tradeviews; Postgraduate student in International Trade and Shipping Management in pdf here.
“Since the privatization, there has been a clear emphasis on outward-looking policies. The new leadership is seeking to strengthen its position as a regional hub through cooperation with neighbouring countries.”
The Port of Thessaloniki is the second largest port in Greece after the port of Piraeus. It is also one of the most important ports in South-East Europe. Its history and geography have sealed its political and economic significance for Greece and the South-East European region, and it has functioned as a commercial and trade node between both East and West and North and South for centuries. The Thessaloniki Port Authority was established in 1970, incorporated in 1999 and privatized and sold to “South Europe Gateway Thessaloniki” in 2018. In February 2021, “Belterra Investments Ltd” became its main shareholder. Since the privatization, there has been a clear emphasis on outward-looking policies. The new leadership is seeking to strengthen its position as a regional hub through cooperation with neighbouring countries. In this policy brief, we reflect on such initiatives, developments and policies through the useful concept of connectivity.
Over the course of 2020, ELIAMEP’s South-East Europe Programme published its second joint publication with the Analytica think tank from Skopje, North Macedonia (“Broadening Multilevel Connectivity Between Greece and North Macedonia in the Post- Prespa environment”). This research project was the fourth to receive funding from the Swedish Ministry of Foreign Affairs in the context of the “Confidence Building Measures Between Greece and North Macedonia” project. Bilateral relations were approached in the aftermath of the landmark Prespa Agreement through the notion of connectivity. The Port of Thessaloniki was one of various sectors examined within this framework.
Some concepts have the capacity to reorganize the ways in which we make sense of reality in a very meaningful and also productive way. In the 2010s, the growing focus on the concept of connectivity provided opportunities to reflect more systematically on the strong and weak points of cooperation within bilateral and multilateral frameworks (China’s Belt and Road Initiative, the Berlin Process, the EU-China Connectivity Platform etc.). At a first level, connectivity can contribute as a diagnostic tool, assessing the number and quality of connections with regard to trade, transport and energy infrastructures—the hard component—as well as connections at the level of governance (the number of bilateral Agreements and Protocols) and society (tourist flows, education, culture, civil society)—the soft component.
“…ports, particularly those with regional appeal and impact like the Port of Thessaloniki, constitute important platforms of connectivity.”
At another level, the concept can also have a prognostic value and enable the development of strategies and synergies within bilateral or regional frameworks with a view to maximizing mutual benefits (joint infrastructure projects, the upgrading of transport and cross-border stations). The basic premise is that the increase in connectivity will translate into measurable outcomes such as development and growth. In general terms, ports, particularly those with regional appeal and impact like the Port of Thessaloniki, constitute important platforms of connectivity. It is therefore important to consider the case of Thessaloniki from this viewpoint.
Aspects of “hard” connectivity
One of the biggest advantages of the Port of Thessaloniki, the factor that makes it so important, is its geographical position and in particular its proximity to most if not all of the capitals and other ports of South-East Europe. The Port of Thessaloniki is the natural gateway to Balkan markets and beyond; it is a key gateway for the supply chain of the entire Balkan peninsula and for both East-to-West and South-to-North commercial activities.
“As a transit port for South-East Europe and the Balkan countries, direct connectivity with these countries is crucial.”
As a transit port for South-East Europe and the Balkan countries, direct connectivity with these countries is crucial. This connectivity can be achieved through the upgrading of road links and train connections, which are very close to the major European transport corridors IV and X. Thessaloniki has to be a railway gateway to the Balkans, a goal that is high on the agenda for the new management of the Greek Railway Organization. A highly efficient network could significantly improve the Port’s commercial development. Indeed, following the recent privatization of the Thessaloniki Port Authority, significant steps have been taken in the direction of improving the Port facilities’ road and railroad connections.
“The Port of Thessaloniki has the potential to become a logistics hub of an international standard which could serve the combined transportation of the whole of South-East Europe and the Balkans.”
The creation of “dry ports” in the countries that constitute the direct market of the Port of Thessaloniki—and Serbia, North Macedonia and Bulgaria in particular—is an investment that directly reduces distance and enhances the efficiency of connectivity. These inland terminals, which will be directly connected to the port by road or, preferably, by rail, will enhance and further boost the Port’s potential to serve as an important regional hub. The Port’s quays all have double or triple rail-lines and are linked to the national and international railroad network; the main issue now is expanding their use. In turn, this investment will lead to reduced costs for local importers and exporters as well, making this port an even more attractive choice. The Thessaloniki Port Authority began work on its first intermodal terminal, in the capital of neighbouring Bulgaria, in November 2020. In addition to Bulgaria, the creation and expansion of dry ports in Romania, Serbia and North Macedonia is also a high priority, as mentioned above. The completion of the connection is very important, as it will contribute significantly to the further development of the port’s activities by facilitating the movement of heavy vehicles, reducing the time they require to reach and leave the port and relieving local traffic. The Port of Thessaloniki has the potential to become a logistics hub of an international standard which could serve the combined transportation of the whole of South-East Europe and the Balkans.
Also in the foreground is the extension of the Container Terminal, which will allow the Port of Thessaloniki to provide main liner container services and accommodate Ultra Large Container Vessels of 24,000 TEU capacity. Investment plans like these which seek to upgrade the port’s facilities are crucial. The expansion of the sixth pier will also help to turn the port into an international transport hub for the Balkans and South-Eastern Europe; appropriate infrastructure is essential if Thessaloniki is to be able to compete with high-quality international ports that maintain the highest standards.
The Port of Thessaloniki is undoubtedly on a growth trajectory. Multiple factors are contributing to this objective: First of all, a number of development projects are underway in the wider Thessaloniki area, which will hopefully be completed in the near future. The city transportation system will be strengthened with the opening of the metro. Another extremely important project is the renovation and expansion of “Makedonia” airport, which constitutes a significant upgrade for the city. The privatization of Thessaloniki Airport was finalized in December 2015. In January 2021, Fraport Greece completed five years of upgrades: the airport now has a second terminal, while the original terminal has been renovated, expanded by 30,988 m2, and provided with new access.
In such a constantly evolving environment, the Port has to establish itself as an international transport hub for South-East Europe and the Balkans. The conditions are clearly favourable. In addition, it must be emphasized that the Port of Thessaloniki also contributes decisively to economic development in Thessaloniki and the wider region. It functions, too, as a cultural centre which connects people, cultures and products from around the world, and provides a fine example of how ports can connect with their local communities. Another important aspect is the growth of the area around the port. While the port facilities are located in a central part of the city, the area’s potential does not seem to have been fully exploited, offering many opportunities for development. The proper utilization of the surrounding area would benefit the city as well as the port and its operations.
Aspects of soft connectivity
“In the case of the Port of Thessaloniki, it is important to stress the overwhelmingly positive perspectives opened up by the landmark Prespa Agreement (2018).”
The Port of Thessaloniki serves as an example which perfectly illustrates that positive outcomes depend on both components of connectivity: infrastructure and governance. One could argue that the soft component is of key importance in this case, due to a generalized climate of instability stemming from the legacy of the wars of the 1990s, the difficulties the Western Balkans continue to face in their progress towards EU integration, and long-standing disputes such as the one between Greece and North Macedonia. It is therefore important to take note of the bilateral and regional aspects of connectivity’s soft component in South-East Europe. In the case of the Port of Thessaloniki, it is important to stress the overwhelmingly positive perspectives opened up by the landmark Prespa Agreement (2018) which brought the dispute to an end, but also provided an upgraded and comprehensive framework for bilateral cooperation on multiple levels including transport, trade, commerce and energy infrastructure, but also for increased interaction between the two societies through inter alia education, tourism, culture and civil society.
It is important from the standpoint of connectivity that this upgrade in bilateral cooperation took the form of Agreements and Protocols, which is the most formal and long-term framework for fostering cooperation. There are several provisions that mention the Port of Thessaloniki explicitly in reference to inter alia the upgrading of road and rail connections and the bolstering and upgrading of cooperation between the relevant authorities in the two countries. There are also numerous provisions which, though they do not relate explicitly to the Port, will certainly facilitate its development: these include the new rail and border stations and crossing points between the two countries.
“…the settlement of the dispute between Greece and North Macedonia has sped up the implementation of connections and processes needed to improve both the infrastructure and the institutional framework, with the latter extending beyond the bilateral framework.”
It is clear that the settlement of the dispute between Greece and North Macedonia has sped up the implementation of connections and processes needed to improve both the infrastructure and the institutional framework, with the latter extending beyond the bilateral framework. From the viewpoint of the Port of Thessaloniki, this development is very reassuring for the long term: viewed through the prism of connectivity, this multiplication and upgrading of connections will inevitably lead to concrete and measurable outcomes that will turn the Port into an uncontested regional and international trade hub.
It is also noteworthy that the Thessaloniki Port Authority has been granted the Authorized Economic Operator (AEO) Licence for Security and Safety (AEOS) by the Independent Authority for Public Revenue, strengthening its role in the development of the international supply chain connecting Thessaloniki with neighbouring Balkan and South-East European countries. Authorized Economic Operators are recognized as secure and safe business partners in the international supply chain. As such, they enjoy several benefits including faster processing of customs transactions, international recognition through the Mutual Recognition Agreements between the EU and third countries, and enhanced recognition of reliability at an international level through the right to use the registered AEO logo.
“…the Port will certainly grow in significance as a regional hub, but also within international trade and commercial configurations.”
To sum up, it is very promising that the Port of Thessaloniki is on a developmental track that befits its numerous strong points with regard both to its geographical position and other advantageous economic and political parameters. One of our key arguments put forward in this policy brief is that, perhaps for the first time, multiple favourable conditions seem to have coincided. These include the outward-looking policies of the Thessaloniki Port Authority which have proactively sought regional and international cooperation and the impactful normalization of bilateral relations between Greece and North Macedonia, which can of course also be viewed in the wider context of relations between Greece and the countries of the Western Balkans and South-East Europe. By evaluating the prospects of the Port of Thessaloniki through the concept of connectivity, we have emphasized the importance of coupling improvements in infrastructure with the upgrading of the policy and institutional framework at the bilateral or multilateral level. This is a crucial element that can make the outward-looking policies of the Thessaloniki Port Authority more effective. From this standpoint, one is led to conclude that the factors which have hampered the development of the Port of Thessaloniki are being progressively removed. If this continues, the Port will certainly grow in significance as a regional hub, but also within international trade and commercial configurations, particularly those in which players such as the EU, the US and China are involved.
 The research for this policy brief was conducted in the context of the “Confidence Building Measures Between North Macedonia and Greece” project which has been financed since 2016 by the Swedish Ministry of Foreign Affairs. For more information, visit: Projects : ΕΛΙΑΜΕΠ (eliamep.gr).
 ‘Big powers vie for Greece’s ports’ | eKathimerini.com.
 ΟΛΘ – Press Release 12.11.2020 – Establishment of dry port in Bulgaria from ThPA S.A.
 “Η σύνδεση λιμανιών – τρένων βάζει το εμπόριο στην… ταχεία” – Ειδήσεις – νέα – Το Βήμα Online (tovima.gr).
 “Λιμάνι Θεσσαλονίκης: Κόμβος Συνδυασμένων Μεταφορών στη Νοτιοανατολική Ευρώπη”, Naftemporiki, (naftemporiki.gr).
 The Future of the “MAKEDONIA” airport | Thessaloniki Airport (SKG) (skg-airport.gr).
 ΟΛΘ – Press Release 08.12.2020 – ThPA S.A. has been granted the Authorized Economic Operator License (ΑΕΟ).