Klaipeda Port CEO Algis Latakas: “We can turn the Port of Klaipeda into a Singapore-like seaport”

Those days when seaports were used only by ships to moor and offload or onload cargo, build vessels and repair old ones are gone. “Ports are becoming green energy production and storage hubs, home for enterprises in circular economy and a lot more. Klaipeda Seaport is not an exception. Furthermore: we’re regional pioneers in tapping the potential of green hydrogen,” Algis Latakas, the CEO of the Port of Klaipeda, Lithuanian economy’s major driving force, told The Baltic Times Magazine.

It is quite gloomy outside the window – literally and figuratively, and the Port of Klaipeda may be off from its best numbers, yet were there any silver linings for it in 2023? 

When the sun always shines, man finds himself in a comfort zone, however the daylight ends at some point. With the sun in shadows, or with a heavy rain pounding, man is compelled to leave the comfort zone and look for ways how to adapt and make his life more comfortable. However, it was the year that made us to look for new decisions in addressing the thick geopolitical clouds we are engulfed by.

Against that background, in terms of cargo handling, the year has not been very bad, especially in comparison with some other ports nearby the slump of which ranged from 10 percent to 30 percent, whereas ours is around 10 percent. Honestly speaking, we were expecting a bigger drop because of the deterioration of geopolitics. Not only is the Port of Klaipeda fourth on the ranking of cargo handling in the Baltic region this year, but, notably, our all-time record of last year (2022) for container throughput in a single year – over 1 million TEUs – was mashed this year with some weeks still to go (the interview took place on December 8 – TBT) 

Among the other cargo groups which saw an increase in handling in 2023 were timber and forestry cargos – up by 30 percent, year-on-year, also agricultural products; particularly grain cargos were up in 2023. The handling of LNG also grew – from 1.9 million tons over 11 months of 2022 to 2.2 million tons over the year’s 11 months, a 15 percent increase. Notably – again a pleasant surprise for us – this year, more passengers were carried by Scandinavia-bound ferries. Over 11 months of 2023, the number stood at 337 thousand, up by six percent, year-on-year. 

Meanwhile, over the period, 41 cruise ships with about 42 thousand holidaymakers aboard moored in Klaipeda Port this year so far – another good number. At the end of the day, the better-than-expected numbers offset the losses in other categories of cargo handling. It is the fertilizer cargo handling that dragged all the other cargo statistics down. The reason is sanctions against Belarusian fertilizers, which until recently, made up approximately one-third of the port cargo turnover. Our shipbuilding and repair yards situated in the territory of the port also turned up some nice results – with the year not over yet, 55 vessels were repaired – among them, an MSC vessel, 9 were reconstructed and 1 was built from scratch. 

The latter was ordered by the German Government – one dedicated for marine salvage operations, quite big in size. The global shipbuilding industry is riding on a high wave now, and the Port of Klaipeda is part of it. In fact, here we have orders for the next couple of years. Among the other things I’d like to mention is the new juridical status we have assumed since January 1, 2023 – we operate now as a joint stock company. Before we were a state enterprise. The change allows us to make decisions faster and be both more aggressive and flexible in the market. For the record, despite the challenges, the port has invested significantly in 2023. Importantly, in the environment protection field, this year, the Port of Klaipeda has made a stride in receiving the ESPO’s Port Environmental Review System (PERS) voluntary certification which we expect in 2024. This environmental management system is the only European port specific certification given to 32 ports as of date. 

Looking ahead, in 2023, our port got ready for further expansion, especially in the southern part, by completing environmental impact assessment studies, thus paving the way for new investments. As ports exert more social responsibility, our port, notably, does not fall behind the others in the striving – we augmented public beaches with additional sand, collaborated with both secondary schools, colleges and Klaipeda University in popularizing the importance of engineering studies and prompting the local youth to pick the profession, which is key in every port. Besides, our Seaport engaged with the local community, helping it organize various sport events, community fests. For the first time ever, an adrenaline packed F2 Water Formula World Championship qualifying race took place in Klaipeda shipping canal in August.

In all, 44 million viewers from all over the world set eyes on it, thus making the Port of Klaipeda a great envoy of Lithuania – globally! Just recently, few could imagine this happening in our port. I am proud of the fact that our harbour has become a big spot of traction. 

It came across my eyes that the port was attempting to find new investors. How did they play out? How to find an investor that is not too wary of our relative proximity to the warzone in Ukraine? 

Despite the mentioned adversity, even today, finding an investor is not the most difficult thing perhaps. In fact, there is plenty of money out there – be it from international funds, various pension funds et cetera. But finding an investor is not enough nowadays – we need one able to bring cargoes, or a production line, or any other activity that would ensure a return on investment. That makes things a little bit more complex. To look out for investors adhering to the same set of values we have, we use different ways – be it direct talks with major shipping lines, investment funds, governments. For example, in 2023, we met representatives of such far-flung countries as the United States, Australia and Singapore. Personally, I am especially impressed by the latter – Singapore is a very tiny country with a population like that in Lithuania – around 2.8 million people, but its territory is 10 times smaller than ours – just around 700 thousand square meters. However, its port is the world’s second-largest in terms of size. 

What I find so fascinating about it is that Singapore does not have a particularly developed industry, however its port has been driving the Singaporean economy very successfully. Indeed, the country is situated in an extremely good geographic location – China, Philippines, South Korea and Australia are pretty close to it – but considering its efficacy, the ability to retain the leading positions worldwide (Shanghai, the Chinese port, is the world’s No1 port, in terms of loading) I see Singapore as a good example for our port. 

I sincerely believe that, with the southern part of Klaipeda Port expanded and developed properly, unravelling the huge potential of Lithuanian business there, we can turn the Port of Klaipeda into the Baltics’ Singapore. 

Why is the expansion of the southern part of Klaipeda Port so important?

The Port of Klaipeda, one of the key engines of the Lithuanian economy, speaking illustratively, has outgrown its shirt – in order to be able to compete with the other ports, the port needs more various state-of-the art infrastructure. When speaking of the future of the Seaport, for a long time, two options were on the table – either build a deep-water outer port at sea, an extremely costly project, or expand its southern part with a new territory of nearly 100-hectares. We chose the latter. The aim of the development of the southern port is to allow for the expansion of cargo terminals with the possibility to provide additional value-added services and to accommodate vessels of maximum parameters. In 2021, following the required procurement procedures, we picked the winner, an American company, that rendered us four possible variants of the southern part expansion.

In 2022, with the help of the Lithuanian Maritime Academy, we concluded a navigational study of the territory. It was done in Lithuania, a sign of how modern and reliable the Academy is. Already in early 2024, we’re expecting to have an environmental impact assessment report ready, meaning that we will be able to move forward with the designing stage. A separate study being underway now is tasked to say what could be there besides cargo handling. Perhaps renewable energy generating facilities. Let’s wait a little bit to see what comes next there. Sooner or later, it will be important to say what model of operation will be used there – concession, a PPP (public and private partnership), or we will see the state’s larger involvement.

Looking forward, in 2024-2025, we expect to have the technical project of the territory ready, meaning that the port already now needs to look for a reliable partner to implement the project. Of course, the issue if financing still needs to be resolved – we are talking about big numbers: the initial estimate of the project was 500 hundred million euros, but, considering inflation and the rising construction costs, it may go up to 750 hundred million euros. This is what I believe. If all goes well, the project should be implemented by 2028. 

The Port of Klaipeda is also becoming a green hydrogen production and storage hub. Can you talk about this, please?

Indeed, nowadays, ports are not the old-fashioned ports anymore. Like many other ports, Klaipeda port is becoming an energy centre, one generating energy, not just a cargo, shipbuilding and repair base. One of the green projects we earnestly embraced is green hydrogen production and storage, which is in line with the EU green energy policy. The use of hydrogen in the industrial and transport sectors should significantly reduce carbon dioxide emissions and gradually reduce the impact of these sectors on the environment (Lithuania’s Ministry of Energy has approved for the first time, a support scheme for green hydrogen in the transport sector of several cities, including Klaipeda – TBT). Having secured EU financing, currently, we are nearing the end of environmental impact assessment and, also currently, we’re already ordering the necessary equipment for the green hydrogen production facility, including storage. Already in 2025, we aim at launching a green hydrogen production station in which an electrolyser (a machine in charge of the production process) will be key. Its annual capacity is planned to be 300 tons of green hydrogen.

Besides, we will install two green hydrogen refill stations – one will be stationary to be used to fill vessel tanks with green hydrogen and the other (will be) mobile and will be used to transport it to green hydrogen-powered public transport buses. The implementation of the project will definitely boost the reputation of the Port of Klaipeda as a sustainable, modern and environment-friendly seaport. All the major shipping lines are already making the transitioning or are about to start tapping green hydrogen, methanol and other eco-friendly fuels. I am proud that the Port of Klaipeda is one of the first (ports) to start the transitioning and furthermore – we are deemed pioneers in the process.