Sea change

Cosco takes control in Piraeus, despite port worker protests

View of the Piraeus Container Terminal, near Athens

Piraeus: under new management

“Learn from the Germans! Work hard, never be lazy and always work seriously. Hard work, happy life.”

That was the lesson last year from Fu Chengqiu, head of Cosco’s container terminal business at the port of Piraeus in Greece. He was talking to Der Spiegel, the German media group, so he may have been playing to the crowd. But the sermon won’t play as well in Piraeus itself where Cosco’s bid for a controlling investment has just been endorsed by the national parliament.

The state-controlled shipping giant first invested in Piraeus in 2009, paying for the rights to operate two of the piers at the container terminal. Discussions then began for an equity stake and a deal was struck earlier this year for a two-stage investment in which Cosco will pay €368 million ($405 million) for a 67% holding in the port. The Chinese are committing to invest another €600 million in other areas including new berths for cruise liners.

Cosco’s arrival in Piraeus has been transformational with handling volumes picking up from less than 600,000 containers when it arrived to more than 3 million containers last year. Much of this is the transshipment of goods carried by Cosco’s shipping line. In the bigger picture Piraeus has a prominent role in Beijing’s ‘Belt and Road’ blueprint for Chinese goods passing through the Suez Canal (Cosco has taken additional stakes in Port Said in Egypt, close to the canal’s entrance, and in Turkey’s Kumport at the mouth of the Bosphorus).

Cosco has also invested heavily in deepwater docks and cranes to handle the largest container vessels, and new track linking the port with Greece’s national railway network. Xu Lirong, chairman of Cosco’s holding company, promised earlier this year to “spend capital, even our blood for this port” and – laying it on thick with imagery from classical history – he proclaimed: “Piraeus is like the Argo. Let it open its sails and bring the Golden Fleece.”

The future doesn’t look quite as golden for some of the state-employed workers about to come under new management.

“For the moment they are civil servants,” Thanos Pallis, the head of a local shipping association, told Reuters earlier this month. “That means that they have a job for life.”

Those kinds of assurances seem set to disappear once Cosco takes control. “The union leaders promise their members more money for less work,” Cosco’s Fu complained to Spiegel last year. “How is that supposed to work? If you want a higher salary you first need to work hard. Not lie on the beach and drink beer.”

When it took over the two piers under the original agreement Cosco cut headcount, reduced wages and curtailed union activity. That made Piraeus competitive, it says, and underpinned the surge in traffic that has crowned it the fastest growing port in Europe.

The container operation that stayed under the management of the Piraeus Port Authority, a Greek state-owned entity, didn’t perform in the same way, however. Hampered by the traditional working practices and lacking the same funds to invest, the government’s pier always looked destined for a takeover, and its employees fear changes to their working conditions now that Cosco is taking control over it.

In a forlorn display of defiance the dockworkers have been running 48-hour strikes against the takeover, disrupting operations in Piraeus and in Thessaloniki, Greece’s second-largest city.

But it was made pretty clear who holds the cards at the start of July when the Greek parliament backed down from last-ditch efforts to secure additional guarantees for the port’s workers. Cosco had immediately protested about the proposed changes, and the contract was ratified in its original form. Greek Prime Minister Alexis Tsipras – once an opponent of foreign involvement in the port – headed for Beijing the day after the vote, keen to drum up more investment in his cash-strapped country.

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