The Constanta and Galati ports are likely to become significant hub and transit platforms in the Black Sea, playing a major role in the Trans-European Transport Network (TEN-T), attracting new commercial flows through investments in modernization and digitalization, as shown in the study conducted by the Naval Supervision Council (CSDN) within the Competition Council.

CSDN analyzed, within the study, 44 relevant activities carried out in the Constanta port by 639 companies and 10 relevant activities carried out by 26 firms in the Galati port.

Thus, CSDN found that maritime traffic in the Constanta port increased by approximately 12% in 2022 compared to 2021, amid the Russia-Ukraine war, while traffic in the Galati port decreased due to the increased costs of maritime transport routes through the Sulina Channel, following the rise in fuel prices and maritime insurance.

In this context, freight logistics have been reconfigured, opting for rail or road routes. In the first quarter of 2023, the cargo traffic represented 54% in Constanta port and 37% in Galati port of the traffic for the year 2022, due to the war at Romania's border.

However, goods in Constanta port are limited to five major product categories, namely cereals, crude oil, various articles, petroleum products, and ores, with their share exceeding 76% in the second quarter of 2023.

In the Galati port, ores/coal/coke, laminates, cereals, scrap metal, and petroleum products are the main goods in maritime traffic, representing over 90% of the total, while quarry and gravel products accounted for 67% of fluvial traffic in the second quarter of 2023. Additionally, the fluvial traffic of raw materials unloaded in the Galati port has decreased, and the production capacity of steel on the steel platform in the port has decreased after imports and exports of raw materials from Russia were banned.

To avoid port dependence on these goods, CSDN recommends attracting new commercial flows through infrastructure modernization, digitalization of operations, and reducing administration fees.

Regarding infrastructure modernization, CSDN recommends building new port terminals, extending docks, deepening navigation channels, and improving port facilities for handling goods in the Constanta port. Furthermore, developing a specialized barge terminal would increase the traffic of cereals, fertilizers, oilseeds, and solid mineral fuels, which are usually transported by barges. Currently, the number of large ships is low due to the few specialized docks at great depths.

Moreover, there is a limited number of companies with technical equipment that can handle large quantities of goods in a short time. As for the prices charged by companies in the Constanta port, they have increased since 2022, and the trend has continued, with a few exceptions, in the first three months of 2023.

Port competitiveness, however, is at risk due to the high number of port administration fees, which companies and professional associations argue are too high compared to other competing ports. Furthermore, the frequent change in fees set by the Maritime Ports Administration (APDM) is an impediment to the attractiveness of the Galati port. In this regard, the Competition Council recommends simplifying the tariff policies of administrations and reducing the number of fees charged to lower transport costs, thereby increasing freight traffic and attracting new commercial flows.

It is also necessary to establish, through legislation, a reasonable profit margin, as most port administrations are organized as commercial companies but have a dual role, performing public authority duties entrusted by the state and commercial activities. Therefore, the separation of these two types of activities is essential.

Among the recommendations made by the Competition Council is the development of a naval transport strategy that integrates all types of transport: naval, rail, and road, with the need for the rehabilitation of railway tracks in the port and their connection to the European infrastructure.

Thus, transit time and transport costs would be reduced, benefiting consumers. The strategy should also leverage Romania's transport potential and promote national ports and services, given their positioning as major hub and transit platforms.

In this regard, the Master Development Plans of the Constanta and Galati ports should be finalized, and investments monitored for the establishment of a unified development strategy, a commercial strategy, and an integrated investment plan. It is important to revise the management of naval transport infrastructure so that ports are managed by a single administration.

This recommendation comes as the Galati port is administered by both the Maritime Ports Administration, a company under the authority of the Ministry of Transport, and the Free Zone Administration Galați, an autonomous agency under the authority of the local Council of Galați Municipality.

The competition authority also recommends digitizing port operations, implementing automated cargo flow solutions, and connecting the public and private port community.

Digitalizing port activities, including implementing a Port Community System (PCS) that streamlines activities and processes, reduces working times, and integrates companies in the logistics chain, is crucial. Additionally, implementing computerized solutions for managing road traffic, correlated with creating parking lots adjacent to ports, would relieve road traffic congestion within ports.

Regarding the regulatory framework and administrative procedures in the naval domain, these should be reviewed and simplified, including adapting working hours and increasing the number of allocated personnel.

Another recommendation is to lease port lands based on the use of docks by companies, commercial strategy, and investment plans of port administrations to facilitate the entry of new companies, ultimately increasing competition.

Currently, leasing lands favors companies that own superstructure elements on those lands, leading to long-term contracts. To encourage port development, the Competition Council encourages private sector involvement and the development of public-private partnerships to attract investments for the modernization and development of existing terminals, docks, reconfiguring unused space, and providing facilities for investments, while adhering to state aid regulations.

Last but not least, the Constanta port can benefit from the status of a regional hub by attracting cargo flows from the Caspian Sea, increasing the volume of transit goods and developing intermodal transport services.

The study on "Infrastructure of the main port services, related services, and relevant economic activities in the most important Romanian ports in the TEN-T network: Constanta and Galati" is available for public consultation on the competition authority's website.

Observations can be submitted until 13.02.2024, by email, at the address [email protected].