The intangible value of Piraeus

pireusWhy COSCO wants all of Piraeus, not only the containers

By Costis Hadjimichalis[1]

What exactly did the Hellenic Republic Asset Development Fund (HRADF)[2] and the Greek government sell to COSCO at the shockingly low amount of 280.5 million Euro at once and additional 90 millions in five years? We know that the sale was a commitment of previous governments, but ultimately how were these 370.5 millions calculated? “What you see in a harbour,” says Tony Teragkosa, president of the port of Valencia in Spain, “is only 10% of what makes it powerful and famous. The other 90% is its hidden, intangible value.” The reputation and most of the intangible characteristics that give value to Piraeus are known. But it is worth briefly recalling the most important ones in order to understand why the Chinese want all of Piraeus (since they already have the containers on which they specialize) and why they paid “a little more” in order to acquire its intangible value, too.


1. OLP, (Piraeus Port Authority) container terminal 258.400 sq.m, rebuilt in 2000. It has two docks 500m long and 18m deep and 320m and 12m deep with 7 cranes (4 over Super Post Panamax and 3 Panamax 1), 1 movable port crane Panamax type and 8 cranes in rail tracks, plus a lot more of loading/uploading equipment. 20-30% of Piraeus container traffic goes via this terminal.
2: A former OLP container terminal 814.418 sq.m which since 2008 it is operated by PCT, a subsidiary of COSCO Pacific Limited, from China. 70-80% of Piraeus container traffic goes via this terminal; it operates as a “free customs zone” and has an International Ship and Port Facility Security (ISPS) Code[1]. It has three docks 700m long and 17m deep, 787m long and 18m deep and 385m long and 17m deep. 16 cranes (8 over Super Post Panamax and 6 specially build in China) operate in this terminal plus other advanced equipment.
3. Container terminal under construction by PCT (to be ready by 2015), 720,560 sq.m and with 1.1 million TEUs capacity, with 600m long docks 16-18m deep.
4. Car terminal with up to 700.000 cars capacity, 190.000 sq.m, 11m deep.
5. Terminal for conventional, non-containerized commodities, 135.000 sq.m, with several large storage facilities in neighbouring Shistos hill.
6. Rail station, in partial operation connecting terminals with national rail network


  1. The first is the geostrategic position made up of three components: a) proximity to the Suez Canal and a slight divergence from the international sea routes serving the China-Europe trade, b) natural protection and high depth that allow the docking of third generation container carriers, without dredging costs, tides and ice and c) presence in the Euro-zone and Schengen area, ensuring financial stability and limiting customs’ paperwork after checking into Piraeus, so that containers can move freely in the EU. The installation of COSCO in Piraeus in 2009 was a strategic choice of the Chinese government and, as well as investments in other ports in the period from 1990 to 2008, it preceded the announcement of the ambitious project for a “Marine Silk Road” in 2013. The reason is obvious: first you guarantee your presence in geostrategic locations, such as ports, blocking out competitors, and then you announce the global project that connects them, thus limiting “unreasonable” demands by the host countries.
  1. The second feature of the intangible value is the existence of a railway freight centre in the Thriassio plain, which is not yet operational but which was naturally taken into account by the Chinese for the selection of Piraeus.The centre in Thriassio is one of the biggest in Europe and stands out of the rest because of its position in the interface between 4 modes of transport (ships-ports, rail, road, airports), given that 60% of the other competitor European freight centres are only connected to two modes of transport. It is a unique advantage for Piraeus – a kind of hinterland satellite port which, apart from size and transport links, provides additional capacity (new warehouses, cheaper land), combined transport capabilities and also services that increase its value added. Additionally, it creates the conditions for further development of a business logistics zone, which is already operating in the region. Of course, the Chinese interest in Thriasio is not a coincidence.
  1. Piraeus is a developed maritime cluster (spatial concentration of similar businesses) with high skills and productivity, global connections, the centre of the EU’s most important maritime power. The proximity to the largest urban centre in the country, Athens, offers additional financial links, beside commercial benefits. This is the third characteristic of the intangible value of the first port in the country. The new buyers find this important intangible infrastructure already in place, with no need to create it. And they are ready, of course, to appropriate for themselves the value added generated by the maritime cluster of Piraeus.  Positive multiplier effects for the city and the national economy, resulting from future development, to which COSCO will have contributed, will be limited because of the company’s monopoly control in the whole port. This was also the case with its dynamic presence at piers II and III. Since COSCO moved in, Piraeus has become the fastest growing port in the Mediterranean and the EU. But the experience of 2009 showed that the highest percentage of positive multiplier effect was appropriated by COSCO and ultimately, together with the opacity of its activities and bad labour relations, it functioned rather as a pocket and not as a functional part of the harbour. Now, besides no longer paying rent to the Piraeus Port Authority (OLP), it is possible that it will convert the entire harbour into a pocket, as shows the experience from other Chinese businesses in Africa and Latin America.
  1. Theglobal trend in old harbours with functional contact with the city, such as Piraeus, is the transformation of the uses of the coastal zone into shopping centres, leisure facilities, luxury hotels andexclusive yacht moorings, an intangible value which for the time being is dormant. The reorganization of ship moorings to the islands by the new owner, will give ample room for speculative real estate under the existing spatial planning framework of the memoranda[3]. The operation of the Metro line 2 will bring additional millions of passengers (islanders and tourists) who travel all year round; in the future, cruise-ship customers may find before them uses and premises similar to those of airports, shopping malls or leisure centres, after disembarking or before boarding the ship.
  1. The fifth feature of the intangible value and a key incentive for the Chinese is that Piraeus, besides being a transportation centre for containers, it is also a multipurpose port with multiple users whose activities span both commercial and passenger transport.It is the largest passenger port in Europe with an annual traffic of more than 15.5 million passengers, an important cruise port (port of call & homeport), from which more than 2 million passengers are transported yearly, with projections to double its traffic. In the wider area operates the largest concentration of the country’s shipbuilding enterprises with qualified personnel. If real estate is added to the above, then multiplicity of uses increases. This diversity and variety of products, specialised and targeting specific markets, allows the port system to be more flexible and adaptable, both to changes in demand and changes in the external environment. Possible decline in one sector of activity can be compensated by the stability or development of another activity. Thus, the existing flexible specialization of Piraeus, allows greater diversification in the production of the port “commodity” and hence greater diversification of risk and of port revenue, in order to maintain profitability in the short and long term.

How had previous governments assessed the above when the initial agreement took place in 2008, later when the “friendly settlement”[4] took place and, finally, when the commitment to sell of the port occurred? Have the present estimates by HRADF and the SYRIZA government taken them into account in their contacts with the Chinese government? Why is the final price to be paid, along with the promise of investment, lower than the market value of the land of the Port Authority of Piraeus? As for the argument that intangible value cannot be calculated, it is not valid, as there are many known ways of doing so.

I believe that Piraeus needed cooperation with some large transnational transport company to emerge from marginalisation and to become an important hub in the Mediterranean and internationally, a strategy implemented by all competing ports. Unfortunately in a global market of tough oligopsony, such as that of container management, ensuring cargo and creating demand is an important comparative advantage, which unfortunately again, can only be ensured by few global companies. But if Piraeus needed this cooperation, the final sale of the totality of the port to COSCO means that the intangible value and its multiplier effects will go to China and not to Piraeus or the Greek society and economy. Because, let’s not forget it, great ports in old cities are more than piers, containers and the port area.

Translated from Greek by Ares Kalandides


[1] Costis Hadjimichalis is Professor Emeritus, Department of Geography, Harokopio University. The text draws on the study “The Coast-transport complex Piraeus Thriasio: identification and evaluation of competitive features and assets in view of asset developmet procurements for foreign investors” (2015), prepared by the author in collaboration with Paschalis Samarinis and Thodoris Styliadis. The article first appeared in Greek in “Ethemata Avgis” the weekly supplement of the newspaper Avgi, on January 31st 2016. In its present form it also appears on the site Analyze Greece.

[2] According the HEDAF’s site: “The sole mission of the Hellenic Republic Asset Development Fund’s (HRADF) is to maximize the proceeds of the Hellenic Republic from the development and/or sale of assets. This should be construed as the virtual sum of the proceeds from the transfer of assets to the private sector and the economic benefits from ensuing direct investment in these assets and the opening up of the respective market sectors.”

[3] This refers to the three Memoranda of Understanding between Greece and its creditors.

[4] The deal between COSCO and the Greek government in 2011 to change the concession agreement without a new international competition

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