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Klaus Holm Laursen: Small vessels will Continue to Provide Flexibility and Commercial Opportunities for the Cargo Owners

Interview with Klaus Holm Laursen Managing Director of APM Terminals Poti.

In recent years, specialists talk about the fact that Georgia, which has ambitions of energy and transit hubs in the region, loses its freight that are of vital importance for the country’s economics. The transit corridor of the country is not competitive, it loses strategic and regional function. Do you share this opinion and what do you see the reason is?

The primary market supported by the corridor is Georgia, Azerbaijan and Armenia, and I am convinced that the strategic importance remains very high for this market. A true transit ambition includes focus on the markets east and south of the Caspian Sea and beyond. The competition for these markets is very strong because the logistic fundamentals are in the competing corridors favor (distance, border crossings, terrain, extra handling due to the Caspian Sea etc). Because of these fundamentals, the Caucasus corridor always was an alternative to the main corridors, that has to be more efficient to be competitive or benefit from short term geopolitical aspects to direct the cargo flows. I believe the stakeholders in the Caucasus corridor have opportunities to improve the efficiencies to reach international standards in handling, and hence can be more competitive to fulfill more of its strategic potential.

Many are saying that the freight rates in the port of Poti are one of the highest in the world and it’s one of the reasons for the reduction of cargo turnover. Do you agree with this and why it is not possible to implement flexible tariff policy in Georgia?

The cost competitiveness of the corridor is determined by the total cost and transit time – on land, in the ports and on the sea, combined. It is worth noticing that the port handling cost and sea freight are just in most cases are just a minor contributor to the overall cost picture, and as such the allegation is unfounded. The Caucasus corridor is complex with multiple borders and extra handling for cargo from the eastern side of the Caspian Sea. I am convinced that the primary opportunity to improve the competitiveness of the corridor is to be found in the cooperation between the many stakeholders in the logistic chain.

Another reason for the reduction of freight turnover is insufficient transport infrastructure, lack of specialized wagons and ferries on black and Caspian seas, weak bandwidth of corridor, also artificial barriers and delays in cargo. How reasonable are these reasons?

We are also from time to time confronted with comments referring to crossing on the Caspian Sea as well as lack of certain rolling material etc, even at today’s volumes levels. However, in APM Terminals Poti, we are focusing on improving elements on which we have control or influence, such as reducing port closure and improve efficiencies in the port operation. This very often depends on cooperation with many stakeholders, who preferably should share our ambition to operate at international standards, in order to be successful.

As they say, the Port of Anaklia is being built to receive big ships. I wonder if there is a large volume of ships in the Poti Port and in your opinion, will it be capable Anaklia deep-water port?

The market location and size defines what large vessels means for a given market – so it is unlikely that truly large container vessels will call in the Eastern Black Sea in years to come, and smaller vessels will provide more flexibility and commercial opportunities for the cargo owners.

You mentioned in one of your interviews that the market volume is 400 thousand container annually and Anaklia port is targeted at 2 million container, deep water port construction is announced in Poti too. Based on what do you think the market will increase at least five times more?

I don’t think anybody within the industry believe in such growth.

In closing, will Poti’s deep-water port be the rival of Anaklia port?

Poti Sea Port has for 160 years been the main entrance into the Caucasus corridor, and from point of economy it is most beneficial and likely that it will remain to be the case.

About Poti Sea Port:

Poti Sea Port is the largest port in Georgia, a multi-purpose facility with 15 berths for cargo and RoRo service, with total quay length of 2,900 meters and more than 20 quay cranes. APM Terminals assumed a controlling interest in Seaport Poti in 2011, and to date has invested over USD 80 million in refurbishing and improving the port’s infrastructure and equipment. APM Terminals Poti handled 319,000 TEUs in 2017.