CLOSE
Loading...
12° Nicosia,
19 June, 2024
 

The plague of the Cyprus port industry

The gaps in transit advantage, the main competitors and the side effects of wars

By Andreas Karamitas

Cyprus holds a pivotal role as a major trading hub and a crucial maritime center, leveraging its strategic geographical position and island status to foster maritime transport development. This sector, if optimized, has the potential to contribute significantly to the republic's economic growth, amounting to millions of euros. Despite the ongoing conflicts and Houthi attacks, the port industry, at least for now, remains unaffected. However, these events underscore the need for proactive measures.

Cypriot ports, in contemporary times, boast high-quality services facilitated by port management companies investing in innovative technical equipment to align with modern trade requirements. Over the years, transit trade alone has injected millions of euros into the Republic of Cyprus, with the potential for substantial growth if the government addresses necessary changes advocated for by involved stakeholders. Any delay in implementing these changes results in substantial financial losses for the country, hindering the strengthening of the Cypriot economy.

The privatization of ports has notably contributed €364 million to Cyprus's economy, showcasing optimal performance by port managers and their investments in modern technology and employee training. However, discussions during the contract conclusion phase lacked foresight on the role of transit trade, leading to a clause allowing maximum fees. This compromises Cyprus's appeal as a transit trade center. For instance, the Republic of Cyprus retains only 63% of tariffs, with the remaining 37% allocated to cover management costs. In contrast, our competitors charge significantly lower fees, making Cyprus less competitive.

To address this, the government must expedite the review and modification of contract terms to enhance flexibility, competitiveness, and alignment with the global economic landscape. Legal concerns should be addressed, seeking approval from the European Commission after consultation with the legal department.

Key factors necessary for the growth of the port industry and the economy include political will, an entrepreneurial vision, and modern technocratic processes. The government must swiftly finalize a robust institutional framework, incorporating feedback from existing customers and the business community. A comparative study with main competitors, such as Greece and Malta, is crucial to enhance Cyprus's competitive edge.

In the face of global geopolitical developments and active wars, the shipping and international navigation sector confronts new challenges. Given that 90% of world trade relies on sea transport, disruptions in this industry have global repercussions. Escalating container prices due to current conflicts raises concerns about household goods' soaring costs. Governments worldwide, at the urging of shipowners, have a duty to ensure the smooth operation of international shipping, including transit trade. Additionally, consolidating the sector contributes to Cyprus's aspirations to become an international shipping hub. These critical times necessitate strategic actions to avert a new economic deadlock and safeguard the global economy's sustainability.

[This article was translated from its Greek original and may have been edited for brevity]

TAGS

Business: Latest Articles

X