Cyprus has capitalized on strategic location to turn itself into a key regional transport hub, with modernized port facilities and airports linking the island with all corners of the globe.
As a focal point for the East Med region’s burgeoning energy sector, a center of global business and commerce and a magnet for tourists, Cyprus has leveraged its strategic location and built the infrastructure to become a major transport and logistics hub for sea and air traffic. The potential to expand this role is enormous.
Major global players like ExxonMobil, ENI, Shell and Total have chosen the island as the natural service center for their regional operations. At the same time, investment at Limassol port by Dubai’s DP World and Germany’s Eurogate International has pushed Cyprus into the top league of destination ports for the biggest cargo and cruise ships. Meanwhile, the number of arrivals by air continues to rise, with the island’s two airports continuing to attract more airlines, offering greater and more convenient connections to the rest of the world.
Cyprus has a long and solid reputation as a maritime center. It has built on that experience to develop Limassol port into a state-of-the art facility, equipped to compete with regional rivals such as Piraeus and Haifa. DP World Limassol, in partnership with G.A.P. Vassilopoulos Ltd, operates three core areas of the port:
- oil and gas,
- the cruise sector; and
DP World is heavily investing in all aspects of the port, including offshore oil and gas, multipurpose general cargo, roll-on and roll-off, and further development of the new cruise terminal. Operating the container port is Germany’s Eurogate International GmBH, in partnership with Interorient Navigation Company Ltd and East Med Holdings SA, who have invested millions in a high-spec information technology system to process information flow at high speed between customs, clearance and the customer.
The operators of Limassol’s redeveloped multipurpose port have capitalized on the increased importance of the east Mediterranean in world shipping. This increase has resulted from enhanced trade, regional port expansions, the discovery of natural gas deposits in its waters and the expansion of the Suez Canal, which currently handles 7% of global maritime trade.
The Hydrocarbons Boost - Cyprus’ transport and logistics sector has already seen big benefits from the discovery of natural gas in Cypriot, Israeli and Egyptian waters. Cyprus-based logistics companies have been able to capitalize on the island’s geographical advantages to offer specialized support to oil and gas companies such as ExxonMobil and ENI as they operate both in Cyprus’ own offshore gas fields and those of its regional neighbors.
DP World Limassol has established a 100,000 square meter, environmentally compliant oil and gas logistics center at the port with capacity to support as many as three offshore explorations at any one time in the Eastern Mediterranean. Its Limassol operations encompass both oil and gas exploration and production. It has a bulk handling plant, a pipe storage plant and three covered bonded areas where goods can be stored in transit, and provides maintenance and service of supply vessels.
New Energy Port
Occupancy at the DP World Limassol oil and gas area and dedicated berth is expected to increase sharply as exploration of the region’s offshore fields gains momentum, with energy giants ENI, Total and ExxonMobil all expanding operations in the area. In a bold move, intended to significantly expand the capacity of the island’s hydrocarbon service infrastructure, the Cypriot government has announced plans for the development of a new dedicated energy port at Vassilikos, midway between Larnaca and Limassol, at a cost of €250 million. Tenders will soon be invited on a design, build, finance, operate, transfer (DBFOT) basis.
Sophisticated Distillation Terminal
The island’s reputation as a leading logistics and support provider for the oil and gas industry in the East Med is complemented by its emerging role as a center for the processing, storage and re-export of fuel. This is largely due to the development of a new sophisticated fuel distillation terminal at Vassilikos operated by VTTV, the Cyprus subsidiary of Dutch multinational VTTI.
VTTV is the first energy terminal of its kind in the Eastern Mediterranean which connects Europe and the Black Sea with markets in the Middle East and Asia. Product fuel oil from the Black Sea area heading to markets in Asia must first be transported in small ships because of shallow waters in the Bosporus. At Vassilikos, VTTV helps to ‘build bulk’ and processes the cargo to the correct specifications for it to be exported economically via much larger vessels to the more distant markets of Asia.
The existing VTTV terminal consists of 28 tanks and has a capacity of 544,000 cubic meters, a 1.5km long deep-water marine jetty and four berths, capable of accommodating vessels from 5,000 to 160,000 DWT. These facilities mean that it is ideally placed to benefit from the growth in ship-to-ship cargo transfer operations in the region.
Streamlined Container Traffic
The rapid expansion of the transport and logistics sector is not exclusively connected to the hydrocarbons industry. Limassol port’s role as a multipurpose hub for regional maritime commerce was assured when the contract for its container handling operations was awarded to Eurogate International in 2016. Subsequent multimillion Euro investments in the latest operating systems are already yielding results. A new, state-of-the-art IT system, which processes information flow at high speed between customs, clearance and customer, enables the latter to locate a container at any time during the clearance process and take possession of it just 20 minutes after the ship carrying it has berthed.
The acquisition of two bigger, super-post-Panamax cranes, capable of servicing vessels 23 or more containers wide, has further enhanced the terminal’s efficiency, enabling it to attract the larger transshipment vessels now in use. In 2018, the terminal experienced 14% growth, handling almost 394,000 TEUs or standard containers per year, most of them from the ports of Thessaloniki and Piraeus and other parts of Europe. In anticipation of further growth, two more super-post-Panamax cranes will soon be installed, while the storage area will be expanded to maximum capacity, enabling it to handle 1.1 million containers per year.
Processing, Re-Exporting and Transhipment
The rapid modernization and expansion witnessed at Cyprus’ main port at Limassol and its two airports, at Larnaca and Paphos, have coincided with growth of logistics services companies. They are investing heavily in technology, equipment and warehousing, in response to growing demand for transshipment, processing and reexport services.
A leading company in this field is Eurofreight Logistics. Around 40% of its focus is on consumer products logistics, providing warehousing and distribution services, with additional expertise in temperature-controlled and frozen food logistics. Pharma logistics account for around 20% of Eurofreight’s business. As well as facilitating trade between East and West, the company has clients in countries such as Germany, Switzerland and the United Kingdom that send pharmaceuticals and cosmetics to Cyprus for processing and then have them sent back home. Even with transportation costs, it is still cheaper for such companies to process their products in Cyprus, thanks to tax and other savings.
Another major transport and logistics concern is G.A.P. Vassilopoulos Group, which handles the multipurpose terminal at Limassol port with DP World, and marine services there with P&O Maritime. The group provides sea freight, air freight and land forwarding services through its representation of DB Schenker, as well as specializing in freight forwarding by air and land, warehousing and distribution.
Cyprus has long been a favorable position to act as a stop for cruise ships in the Eastern Mediterranean, being a single day’s sailing from such destinations as Rhodes, Crete, Alexandria and Port Said. However, Cyprus’ status as a destination for cruise liners soared after May 2018 when the new Limassol cruise terminal was inaugurated. The facility is set to promote Cyprus tourism to a new level, as it will allow the biggest cruise ships, in excess of 400 meters length overall, to visit the island for the first time. The dedicated terminal provides safety, stability and reliability for cruise itineraries focused on the Eastern Mediterranean and further afield. DP World places high priority on the cruise industry and with the opening of the terminal aspires to put Limassol on the map as a new home port destination of choice for cruise lines.
Air Links Around the Globe
For Cyprus’ two international airports, the story is one of steady growth. More records were broken in 2018, with Larnaka (LCA) and Pafos (PFO) together handling close to 11 million passengers, up almost 1 million on the previous year. The two airports are host to 70 airlines from around the globe, connecting to 120 destinations in 40 countries – with further expansion of global connectivity expected in 2019.
Hermes Airports offers an extensive package of incentives designed to support airlines that develop their business in Cyprus. The key areas of growth are linked with efforts to establish Cyprus as a year-round attraction for visitors, and connect the island with destinations beyond Europe and the Middle East, in particular those in North America and Asia.
A number of major projects are being undertaken in 2019, including the redesign and reconstruction of the shops and restaurants in the two airports’ commercial areas, expanding the range and accessibility of the services on offer. At the same time, as part of efforts to safeguard the environment, a solar park will be established to generate 20-30% of the energy needs of the airports.