Klaipeda Port CEO Algis Latakas: “Our port is like a long-lasting blow-resistant punching bag”

  • 2023-01-23
  • Linas Jegelevicius

Like the other Baltic seaports in the Baltics, Klaipeda Seaport, one of the engines of the Lithuanian economy, has recently been dealt several blows, rolling one on another. “Indeed, the year of 2022 was quite extraordinary. But to use the rhetoric of kickboxers, our port has proven over the years to be like a long-lasting blow-resistant punching bag. Having been pummelled with punches from all sides – some of the kicks are still being thrown our way, we, nevertheless, persevered and are sailing assuredly through some major storms,” Algis Latakas, CEO of the Klaipeda State Seaport Authority that manages the Port of Klaipeda, told The Baltic Times Magazine.

The year of 2022 has been a once-in-a-lifetime experience: war rolled on the abating COVID pandemic. How did the Port of Klaipeda manage to sail through the storms?

I just want to remind the sequence of the adversities – sanctions on Belarus and the subsequent termination of transportation of Belarusian fertilizers through our port, the COVID pandemic and then the war. The silver line of the otherwise gloomy picture this year is that crises like this make us search for inner reserves, new opportunities, which we did. 

Speaking of the pandemic, we did remarkably well in 2020, addressing the issue of our employees’ health, learning how to safely, public health-wise, bring cargo vessels into the port. Despite the complicated period, our port handled 47.8 million tons of cargo in 2020 and was the absolute leader among the ports of the Baltic countries, and it is basically the only port in the eastern region of the Baltic Sea which concluded the year with a cargo load increase.

For us, the consequence of the political instability in Belarus in late 2020 was the loss of roughly 2 million tons of oil products – they went to Russian seaports. Comparably, an insignificant amount of cargoes have been redirected from our port to the Estonian and, especially, the Latvian ports, which we deem them our partners, not competitors.

For example, iron ore, which, as a cargo, was problematic in our port due to environmental concerns – and which was stevedored in the terminal in central Klaipeda, now is hauled to Riga Port.

For comparison, in 2021, the volume of Belarusian fertiliser cargo stood at 32 percent in our port, while the other eight percent, or so, comprised Russian, Ukrainian and Chinese cargoes.

This year, however, the part of the Belarusian cargo was just a mere 11-12 percent of the total cargo quantity in our port.

Needless to say, with the start of war in Ukraine in late February 2022 and the subsequent sanction packages (against Russia – TBT), the 35 percent of transit cargoes we had, just disappeared.

Of course, it was a blow to us, but we took it as a signal that being just mostly a transit port cannot work for us any longer.

Considering what happened, we were predicting a gloomy end of 2022 in our port. However, we’re finishing the year much better than we were expecting – the general cargo handling volumes in the Port of Klaipeda in 2022 fell 19.7% during 10 months of the year, yea-on-year, and was was at 30,02 million tons.

Against the adverse geopolitical picture, it is quite a good result.  In some sectors, like liquid cargo or containerised cargo, we did even better than we expected. 

What drove the container stevedoring numbers up?

The container stevedoring grew the most in the segment of general cargoes consisting of containers, ro-ro, iron and steel, metal constructions and refrigerated cargoes. 

With less than a month to go till the finish of the year (the interview took place on November 29 – TBT), I am already quite convinced that, in the Port of Klaipeda, we will see a record in terms of container stevedoring. Very likely, for the first time ever, we will exceed the coveted mark of one million TEU per year. A very good landmark result.

Going back, the decision of MSC, a world leader in global container shipping, to open its hub in the Port of Klaipeda and direct its oceanic cargo vessels to it has been very important for us. Thanks to it, this year, some new routes, even as far as Pakistan, India, New York and Ecuador, have been added in the MSC’s and, subsequently, our, cargo geography.

The Port of Klaipeda has two container terminals and they have been very busy throughout the year. One of them contains a lot of American cars, some of which will travel further.

The element of stevedoring is very important for any port. What makes it complicated is the slow pace at which it can be implemented. And then you have multiple regulatory requirements, permits, budgetary requirements to follow, and so on. But those ports that invested in the improvement of their infrastructure – built additional infrastructure, explored new potential routes and so on, did win. We are among them.

Can you, please, speak of investments in the port infrastructure in 2022?

One of the latest ones was the reconstruction of quays intended for container stevedoring. It has been finished in the southern part of Klaipeda Port, in Malkų Bay, and a new depth parameter was achieved. 

The investments of the Port Authority now make it feasible for UAB Klaipedos konteineriu terminalas (en. Klaipėda Container Terminal Ltd) to receive vessels of bigger parameters, of type Post Panamax (Post-panamax means vessels with an overall length greater than 1200 feet, or 366 metres and beam greater than one hundred and 160 feet, or 49 meters and a draft of up to 49.1 feet or 15.2 meters – TBT), hence, increasing stevedoring capacities and the company’s competitiveness.

Receiving vessels of bigger parameters, of type Post Panamax, for stevedoring, means not only  greater attractiveness of the Klaipeda seaport, but also a more effective logistics chain for cargo consignors. Stevedoring of cargo containers is growing the fastest in Klaipeda Port at present. The exclusive conditions of dues are also applied on this type of cargoes, thus, I believe, that implementation of this project opens new competitive conditions for us.

The quay reconstructions were started in 2019 and finished in the middle of 2022. In total, the section of 781-meter length was reconstructed, erecting a new grooved wall in the quays, an extra under-crane rail for new cranes of STS type, and rainwater collection grids were reconstructed. 

In other development, a Dutch company soon will start dredging works in the inner shipping channel of the Port of Klaipeda. Under the 45.8-million-euro contract, part of the inner harbour will be deepened to 15.5 metres.

Deepening of the shipping channel will enable more heavily loaded vessels to moor in the port. We see that, over the last 10 years or so, the average capacity of the ships that came to the Port of Klaipeda increased by 35 percent. Besides, the ability to accept larger ships will mean a lesser intensity of the port, which is good for environmental causes. In addition, that will be a strong boon to the competition.  EU structural funds are expected to co-finance 85 percent of the harbour deepening project. The Dutch company has previously undertaken dredging works at the Klaipeda port.

Another similar project aims to deepen the outer harbour to 16 meters, thus, vessels coming to the port will be able to carry more goods and this will decrease the expenses of shipping cargo. 

In future, to stay competitive, the depth will need to go up to 17 meters, but for that, compensatory environmental mechanisms need to be installed to prevent entering of saline seawater into the Curonian Lagoon, a freshwater lagoon separated from the Baltic Sea by the Curonian Spit.

To accommodate mega cruise ships, the Port of Klaipeda looks forward to shoring up the cruise ship terminal embankments, so larger cruise ships will be able to moor here. In 2022, in all, 61 cruise ships visited Klaipeda. On average, Klaipeda loses around 10 cruise ships yearly due to the inability to accept very large cruise ships. The port also looks forward to designing and, subsequently, building a new cruise ship terminal, which is slated for 2025-2026.

Will geopolitical tensions not throw Klaipeda Port’s eco sustainability goals backwards?

Sustainability objectives set out by the EU and the national legislature have been embedded in the agenda and strategies of all ports. And the Port of Klaipeda is not an exception. To comply with the regulations, by 2030, our port will need to have infrastructure that would enable it to accept electric power-driven vessels, which are already replacing coal-fired vessels.

Looking forward, the largest ports, like Antwerpian or Rotterdam, are already now exerting many efforts aimed at creating an additional value – to the port, the city they are in and the country – not through stevedoring, but by becoming industrial and energy, especially LNG and, later, hydrogen energy, distribution hubs.

Due to the limited area of Klaipeda Port, we may not be able to compete in this regard with one of the largest European seaports, though we already have an LNG terminal in the territory of the Klaipeda Port. But we’re certainly aware of the trends and furthermore – we have proceeded with the implementation of what a future seaport will look like. In May 2022, Klaipeda State Seaport Authority and Klaipeda Sea Cargo Company (Klasco) signed an investment agreement to develop the port infrastructure required for the planned development of offshore wind farms. The Port of Klaipeda, with its planned wind farm of around 700 MW in the Baltic Sea by 2030, is expected to become a crucial platform for the resources needed for this project.

Under the agreement, the Port Authority undertakes to provide the infrastructure on the Smelte peninsula to enable the development of production, assembly or storage activities for offshore wind power plants and components.

On the Smelte peninsula, the quays will be reconstructed to accommodate the loading and assembly of wind turbines. Around 20 hectares of land will be used for these activities. 

Diversifying activities and creating conditions for such activities in the port that create high added value is one of the goals of the Port Authority.

The ultimate goal of the Port Authority is to develop the port’s infrastructure so that the complex of infrastructure and structure, formed together with the companies operating in the port, would generate financial return and would create added value to the state and Klaipeda city.

I am convinced we are on the right path despite the afore-mentioned adversities we’ve been dealing with and handling quite well recently.