Tuesday, December 4, 2012

Guest Article: Chinese look to Italians to improve their infrastructure

taranto [italy] | lungo il corso dei due mari
taranto [italy] | lungo il corso dei due mari (Photo credit: Paolo Margari)


The Chinese Are Waiting for Infrastructure

The city of Taranto, cite of the Ilva steelmill—the threatened shutdown of which could cost thousands of jobs, the future of Italian steel and maybe even 1 percent of the country’s GDP—is also a port with immense potential.
Over the course of five years, two Chinese multinational corporations—Hutchinson Wampoah from Hong Kong and the Evergreen from Taiwan—have invested 50 million euros to control the commercial harbor. Supposedly, they are even ready to raise the stakes. Yet they are waiting for the Italian port authorities to complete infrastructural works: the digging of a couple extra meters from the bottom to allow the arrival of freight container supercarriers and the construction of a breakwater dam to protect ships from storm waves.
The port represents an enormous fulcrum for the city, the south and ultimately the entire country. The Chinese, and Asians in general, look at Taranto and see a hub for Mediterranean and European traffic, both as a starting point for railway dispatching and as a trans-shipment location.
Here, a ship-railway hub would cost 15 percent less than in any European port. That is why even Rotterdam’s Dutch authorities and their German counterparts showed interest in the development of the port of Taranto.
In fact, the city is blessed by geography. It is the closest docking point to the Suez Canal, on the north shore of the Mediterranean; it is a few kilometers away from the Adriatic thoroughfare, which allows a hurdle-free passage to the entire Italian peninsula, all the way to the Alps; its inland has no mountains but rather a large flat area where the development of industries can be easier than elsewhere.
The potential of this kind of geography is limitless. At the port, there are already completed plans for the construction of a fifth dock, an enormous platform for the processing of containers, which would allow Taranto to pass from the current 1 million containers a year capacity to 6 million to 7 million, exactly like Rotterdam, the largest port in Europe.
These prospects, however, require rigid timetables and development plans. Geography alone is not sufficient.
In fact Rotterdam employs about 40,000 workers in its port. Proportionally speaking, Taranto should employ at least 5,000. But the problem is, Rotterdam processes freight containers. They are opened, repackaged and put on trains, while goods get processed and transformed, too.
All Taranto does is move freight containers from large ships onto smaller ones. They never leave the port an consequently, have little impact on the city. Hence the total number of employees remains in the hundreds.
Shipment companies should be offered the option of loading freight onto trains and also processing goods locally. This would translate into savings for all those involved because it would avoid the passage to smaller ships and, at the same time, would create new work and development opportunities in the southern part of the country.
That is why an area behind the docking point has already been identified—and its development planned—for the processing of freight containers and the relocalization of companies that might consider moving operations to Taranto.
As far as railway logistics, meanwhile, a container transport service should be initiated soon. Then, in the medium term, once the service is in full force, the rail line connecting Taranto to Bari should be doubled up. It is only 68 kilometers long and is currently single track.
These are substantial, yet not gigantic, commitments. But there could be an interest in these projects by Chinese or other foreign investors who could finance them with long-term investments that would not cost the state much, while creating enormous opportunities for growth.
These direct foreign investments would be much more effective in bringing about growth and development perspectives than the (also necessary) treasury bonds. Moreover, foreign groups might feel safer and more protected if involved in concrete industrial and infrastructural investments rather than ones on Italian debt.
That is why, besides its geography, Taranto needs a political world that would go beyond mere emergency management and the strength to implement already prepared plans.

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