BEJINIG: China Overseas Shipping arrived in Greece five years ago, it was met with a month-and-a-half-long dockworkers’ strike and a banner along the waterfront “Cosco Go Home.”
We are successful in Piraeus,” said Fu Cheng Qiu, chief executive of Cosco’s Piraeus subsidiary. A new Cosco-built container terminal here has created 1000 jobs, silencing most union unrest. After pumping in a billion dollars and promising another half billion, it has also transformed the port, just outside of Athens, into one of the biggest and fastest-growing in the Mediterranean.
The investment now ranks as one of the most successful Greek privatisations in recent decades. It has also been a rare public-relations victory for Beijing. Critics have accused China-backed firms of overpaying for a number of big resource plays in the developed world from oilfields in Canada to mines in Australia and then bungling their management.
Industry watchers say Cosco probably overpaid in its Greek gambit, too. But its transformation of the Piraeus container terminal is being hailed an operational success so far, for both the company and the port.
Cosco, founded in 1961 amid China’s Great Famine, bet big on Greece after a decade of minority investments in a handful of foreign ports in Singapore, Suez and Antwerp. Its investment in Piraeus has helped catapult the company into the major leagues of global port operators, alongside giants like Danish shipping giant Moeller-Maersk unit APM Terminals, and Dubai-based DP World.
In 2008, the year before Cosco came to town, Piraeus moved just 433,582 containers. Last year, that number had grown more than sevenfold to 3.16 million containers — 80 per cent of that thanks to Cosco.
After a few years of talks between Greek and Chinese officials, Beijing committed to making Greece a hub for Chinese exports. In 2008, Cosco put in a €490 million bid for a 30-year concession. Some industry and government officials familiar with the deal said the offer was about five times the market value of the concession.
Cosco has since tried to revisit the terms of the deal. The concession has been extended to 35 years, and the current government recently consented to an agreement that would allow Cosco to expand its operations. It has granted it the rights to build a third wharf at the container terminal, without going through a competitive tender.
In October of 2009, when Cosco took control of the container terminal, Greece’s militant dockworkers union, emboldened by the incoming socialist government that would win elections a few days later, launched a six-week-long strike that crippled the port. The strike left some 4500 containers stranded at the terminal for weeks, and dented Greece’s already wobbling economy.
The Greek government, Cosco and the Piraeus Port Authority agreed to a deal that helped restore labour peace on the docks. Cosco was allowed to operate its part of the container terminal unfettered by the union wage scales. Most of Cosco’s workers are now hired through a third-party, non-unionised employment agency.
They earn around €1200 ($1750) a month, a better-than-average wage in Greece, but roughly a third of what unionised dockworkers earned five years ago, and less than what workers still earn at the rival PPA controlled wharf abutting the Cosco docks.
Meanwhile, Cosco has further plans to expand moves that the company expects will boost volumes to more than six million containers by 2016. Cosco has installed 11 new loading cranes.
