News

Window of opportunity opens for Italian ports

24 January 2019Shipping News

The centrality of the Mediterranean in international trade is being revived by the Belt and Road Initiative

Relations between China and Italy have deep historical roots and Italy has always played a crucial role as a bridge between East and West. Rome was the point of arrival for the ancient Silk Road, the set of land, sea and river routes, more than 8,000 kilometers in length, along which the cultural and commercial exchanges between the pinnacles of world civilization took place.

Today there are new opportunities for collaboration between China and Italy, within the framework of the Belt and Road Initiative, the strategic project launched by China that aims to create a majestic network of connection to the far reaches of Western Europe and East Africa. The goal is to improve cooperation between the countries of Eurasia through the opening of two infrastructure corridors between the Far East and the European continent along the ancient Silk Road routes.

Italy can play a strategic role in the Silk Road Economic Belt and the 21st Century Maritime Silk Road, thanks to its particular geographic advantage and logistics system. From the view of maritime transport, new connections could allow Europe to benefit from a greater flow of goods and people, largely destined for southern ports. Italy is directly interested in the project by virtue of the fact that China, with an annual interchange of over 27 billion euros ($31 billion), is one of its greatest partners in terms of maritime imports and exports.

China intends to deliver a huge boost to Euro-Asian economic relations and in this scenario the Mediterranean appears to have a central place, from which all Italian ports can benefit: The Adriatic ports-Venice, Trieste, Taranto and Ravenna - that represent a strategic way to accommodate ships that, through the Suez Canal, arrive from the Far East; the ports of the South which may be the point of arrival for goods destined for the population centers in Central and North Central Italy, such as Florence and Rome; and the ports of Northern Italy that can be the gateways to the markets of Central Europe.

It can therefore be affirmed that the whole maritime, Adriatic-Ionian-Tyrrhenian arch can assume the role of being the primary gateway to the national economy from north to south.

China is also considering opening a European logistics center in Italy for sorting products in transit. The terminal, operating in Vado Ligure, would be able to accommodate container ships of any size, thanks to the fact that the covered warehouses constitute an integrated logistic pole unique to Italy that can provide ample space for the storage of goods in a temperature controlled environment.

It should also be noted that while Italy represents an excellent landing place for Chinese container ships, the acquisition of 67 percent of the port authority of Piraeus, by the China Ocean Shipping Company, threatens to reduce traffic to Italian ports. However, despite this, the ports of Genoa, Venice and Trieste, are better situated for direct arrival of goods whose final destination is the central European market.

Responses such as the North Adriatic Port Association, founded in 2010 by the four port cities on the Adriatic Sea - Venice, Trieste, Koper and Rijeka - have so far had little impact. The aim of the cooperation is to coordinate the port activities of the Adriatic cities in order to represent easy access to continental Europe. In 2015, however, the North Adriatic Port Association as a whole moved less goods than the port in Piraeus. Rather than compete with the Greek port, the Adriatic ports should be complementary, as the Italian ambassador in China Ettore Sequi says.

It is also essential that all ports are connected to the railway and motorway network to optimize total transport capacity. For this reason it will be necessary to strengthen the connection hubs with the national railway system. And once these investments have been made, the system must be able to support the new demand for transit to and from China.

The opportunities offered by the Belt and Road Initiative will certainly bring with them challenges and risks that should not be underestimated. The corridors will pass through Africa, Asia and Europe, exposing states and companies involved to political, credit and security risks.

Although there are many strategic and security challenges yet to be overcome in view of the effective implementation of the entire project, it is undeniable, in light of the data available so far, the strategic importance that active participation in the Belt and Road has for each country which is included in the scope described by the Initiative. It is therefore desirable for Italy to have a diplomatic mobilization to make agreements with China, in order to avoid the danger of isolation from the trade routes that will come to be established in the years to come.

The constitution of the China Task Force by the Italian government in August has been a positive sign. Among the Task Force's main objectives are strengthening the relationship between China and Italy in the fields of trade, finance, investment, R&D and cooperation in third-party countries, and guaranteeing Italy a position of leadership in Europe vis-??-vis China's Belt and Road Initiative.

In this context, developing a strategic role for Italy within the New Silk Road is a major challenge facing the Italian political and economic system. The Belt and Road Initiative not only offers the possibility of opening the doors to new markets in Asia, but also of reducing the commercial costs and creating a more important international role for Italy.

Despite the economic weaknesses and a burdensome debt that strongly limits investments, the return of the centrality of the Mediterranean in international trade and the prospect of carrying out the important function of commercial hub is an opportunity that Italy cannot miss to revive its economy.