Thessaloniki Port to Integrate Operating System of China Merchants Port Holdings; Company Agrees to Promote Port as “Gateway” to Europe

On July 10, the Thessaloniki Port Authority in Greece signed two agreements for strategic cooperation with China’s state-owned China Merchants Port Holdings (CMPH) and subsidiary China Merchants Holdings International Information Technology (CMHIT).  Both agreements pertained to the integration of CMPH’s container terminal operating system by the operators of Thessaloniki port, making it the first European port to install the CMPH software. 

CMPH’s subsidiary, China Merchants Holdings (International) Information Technology Co., has touted these agreements as significant to their overall efforts to be competitive in the information and technology industry as it relates to the European ports and logistics market.  As part of the agreement, CMPH has reportedly agreed to promote Thessaloniki – Greece’s second largest port – as a “gateway” for Chinese freight traffic to Europe. 

CMPH already has an indirect stake in the Thessaloniki Port Authority via its French joint venture, Terminal Link (in which, CMPH holds a 49% stake and France’s CMA CGM owns a 51% stake).    In March of this year, however, there was speculation in the Greek media, based on unnamed sources, that Terminal Link was likely, ultimately, to be fully acquired by CMPH. This appears to have been based on reports of CMA CGM offloading nearly 10 ports to its consortium with CMPH, reportedly as part of an effort to improve its liquidity.  These efforts have been underpinned by almost $968 million in funding by CMPH towards the Terminal Link joint venture. 

Many see the substantial financial role CMPH is now playing in the joint venture and CMA CGM’s increasing focus on other business ventures as indicators that CMPH is on a trajectory to assume a much larger equity position in Terminal Link.  Although the plausibility of this scenario remains unclear, including how and when it acquisition would transpire, such an event, if it happens, would substantially elevate CMPH’s equity position in Thessaloniki Port.

For its part, Thessaloniki Port Authority, the current operator of the port, has three major stakeholders.  One of them, South Europe Gateway Thessaloniki (SEGT), which reportedly has a 67% stake in the port operator, is 33% owned by Terminal Link.  The SEGT’s other two shareholders are Deutsche Invest Equity Partners GmbH (47%) and Belterra Investments Ltd. (20%), the latter a Cyprus-based company controlled by Russian-Greek businessman Ivan Savvidis.

China already controls Greece’s largest port, the Port of Piraeus.  In 2016, state-owned COSCO Shipping acquired a majority stake in the port and has since invested significantly in the development of the trade terminal.  Piraeus is a critical node in Beijing’s Belt and Road Initiative (BRI).  The combined access of Piraeus and Thessaloniki would offer Chinese interests even greater access to European trade networks.  The ports permit efficient access to Serbian and Hungarian railway systems (which have also received significant technical and financial support from Chinese companies) to fulfill a vision for improved transport capacity into Europe.