Infrastructure Talks are led by Dmytro Pavlenko, Tax & Legal Partner, Leader of Infrastructure Industry Group at Deloitte Ukraine.
Dmytro Pavlenko talked to Philip Sweens, Managing Director of HHLA International GmbH.
Hamburger Hafen und Logistik AG (HHLA) is one of the leading European groups in port logistics, a German logistics and transportation company specializing in port shipments, container, and transport logistics.
Current state of business in Ukraine
Dmytro Pavlenko: HHLA owns Container Terminal Odesa (CTO), the largest container operator in Ukraine, being the biggest German private foreign investor in Ukrainian infrastructure and economy overall.
We appreciate HHLA's operations and presence in Ukraine, despite the unprecedented challenges faced by the port industry, including the blockade of ports and shelling of port infrastructure. In July 2024, the first international cargo ship Levante F of 700 TEU of MSC arrived at the Container Terminal Odessa (previously, only T Mare feeder of 373 TEU arrived at Chornomorsk). It was a powerful signal for the maritime sector.
What is the current state of business? What is the current number of ships entry to CTO? Do you see any prerequisites for increasing cargo turnover?
Philip Sweens: The terminal is open and operational. We are handling container and also other vessels (eg. Grain, General Cargo). Thevolumes handled are quite low for the time being compared to the situation prior to the war, even if they are gradually increasing. Still, the CTO plays a crucial part in securing supply chains in Ukraine, and this role would be even more important in the course of Ukraine’s restoration after the war.
Road to Odesa seaport
Dmytro Pavlenko: Odesa’s seaport is vital for Ukrainian export and import. However, it faces several bottlenecks that hinder its further development. The main issues include the limited capacity of port transport stations and the lack of access roads to the port. Concerning the latter, there's a long-standing issue that began around 10 years ago. Currently, there is only one road leading to the port, which passes through private property, necessitating a toll for its use. The Ministry of Infrastructure of Ukraine announced that this issue would be resolved by the end of 2022. However, following russia's full-scale invasion, this matter has been put on hold.
Do you see a possibility for this project to be re-launched and potentially financed by the German government and/or international donors?
Philip Sweens: I hope that there is a possibility to restart this project in the short term. It is not only unseen that tolls need to be paid to transport cargo to / from the port but it also hinders the efficient flow of goods as well as artificially increasing transport costs.
There are ongoing discussions on this topic which I hope will lead to a solution in the foreseeable future.
Multy-modality – dry ports
Dmytro Pavlenko: I recall our meeting and your speech at Odessa infrastructure forum in 2021 (even though virtual due to pandemia). You announced the establishment of intermodal operator in Ukraine (in 2020, HHLA Intermodal Ukraine and Ukrainian Intermodal Company were established). During wartime and blockade of seaports there is a new need in establishing transshipment and dry ports nearby Ukrainian boarder with EU.
At the beginning of summer this year, HHLA announced on acquiring 60% of share in Eurobridge Intermodal Terminal LLC in Batiovo, Transcarpathian region. Thus, HHLA has expended its presence in the intermodal market in Ukraine.
As we understand, the terminal in Batiovo will be integrated into HHLA’s European logistics network. In other words, this terminal will serve as a hub for Ukraine and act as a connecting link with the European network.
What opportunities will be available to your customers in relation to the acquisition of the terminal in Batiovo?
Philip Sweens: This new terminal in Batiovo, located in Ukraine very close to the border to Slovakia and Hungary and accessible both through standard gauge rails (1435mm) as well a broad gauge (1520 mm), aims at providing an efficient hub for the interchange of goods between the EU and Ukraine.
Together with a local partner and in very close cooperation with our sister company METRANS, we are developoing a terminal that will be fully integrated in the METRANS network. This will enable fast and efficient connections from the Ukraine to continental Europe. The terminal will operate as a neutral and open-access /common user terminal, available to all operators who wish to use our services.
Dmytro Pavlenko: What are overall perspectives of Ukrainian intermodal market nowadays?
Philip Sweens: Ukraine’s geographical characteristics makes it ideally suited for rail transport. However, the intermodal sector remains below it’s potential – in parts due to a lack of adequate infrastructure.
We are convinced that trade and cargo volumes between the EU and Ukraine will strongly increase in the future. At present, however, growth is often hindered by the shortage of suitable terminal facilities near the border to handle the change of gauge. With the terminal in Batiovo, we aim to address this gap and provide a long-term solution to facilitate transports between the EU and Ukraine.
Multy-modality – railways
Dmytro Pavlenko: HHLA has an intermodal services provider subsidiary – Metrans. Last year, Metrans acquired 100% stake of Adria Rail Group, which operates in Serbia and Croatia. This transaction contributes to the expansion of Metrans’ European network in Southern and Eastern Europe. We see that HHLA is developing intermodally across Europe.
Railway as a vital part of intermodality. And liberalization of Ukrainian railroad market is another trend in Ukraine. We expect unbundling of the state monopoly giant Ukrainian Railways into several companies and prospective admission of private operators to the railroad market.
Any business opportunities for Metrans in Ukraine in the context of your acquisition of the terminal in Batiovo?
Philip Sweens: Ukraine is important for us, as we were among the first Western companies to establish a presence in the logistics sector in the country. We strongly believe in the country’s potential. The Batiovo investment, undertaken by HHLA International, is carried out in close cooperation with METRANS, a subsidiary of HHLA. We jointly review opportunities in the Ukrainian market and assess potential projects. Whenever we identify an initiative that aligns with our strategic goals and offer strong prospects, we are open to consider such investments.
HHLA and MSC
Dmytro Pavlenko: In November 2024 MSC (one of the leading international shipping lines) successfully completed acquisition 49.9% stake in HHLA. Due to HHLA presence in Ukraine this transaction was also cleared by the Anti-Monopoly Committee of Ukraine (even though with some delay and complications). It is an important deal in the global port industry. We presume that MSC is interested in Ukrainian market and hoping that the deal effects positively CTO operations.
Are these expectations justified? How does this transaction affect HHLA overall and Ukrainian business particularly?
Not only is HHLA expanding its intermodal capacities in Ukraine, but MSC is also doing so. There is information that Medlog SA, an affiliate of MSC, has acquired a 50% share in the Ukrainian intermodal logistics operator N’UNIT and a 25% share in the transborder terminal Mostyska.
Do HHLA and MSC have a joint strategy for intermodal logistics in Ukraine? How does MSC’s acquisition affect HHLA and the Ukrainian intermodal market?
Philip Sweens: MSC and HHLA do not have a joint strategy in the Ukraine, but we cooperate in areas where it makes sense for both companies, as we would also do with other shipping or logistics companies.
We view MSC’s acquisition of a stake in NUNIT - particularly in the terminal in Mostyska – as a positive development. It represents a step towards further professionalising Ukraine’s intermodal market and attracting much-needed foreign investments into the country.
For us, the terminals in Batiovo and Mostyska serve distinct markets and complement each other. This creates opportunities for further cooperation and mutual growth.
Logistics and politics
Dmytro Pavlenko: In February 2025, pro-Ukrainian political power led by Friedrich Merz won federal elections in Germany. What are the key tasks of the new collation and upcoming government in transport and infrastructure field? How both German and Ukrainian government support further investments to Ukraine?
Philip Sweens: The new coalition in Germany has reaffirmed it’s commitment to supporting Ukraine – not only in military terms but also in driving economic development. Especially in today’s geopolitically uncertain environment, this clear committment represents an important message.
There is also a recognition that Ukraine’s reconstruction and restoration are already underway, and Germany must define its role in this process. In times when a more nationalist approach sometimes prevail – for example, the recent minerals deal between the US and Ukraine – it is essential to establish mechanisms that ensure effective support for German companies seeking to invest in the Ukraine.
Global uncertainty - new routes and competition
Dmytro Pavlenko: HHLA operates a cargo terminal in Estonia. Logistics routes that existed before 24.02.2022 have changed. Ukrainian ports were completely blocked for a long time, Baltic countries experience reduce of cargo flow with russia.
Do your Estonian capacities compensate somehow decrease of Ukrainian turnover? Do these cargo routes compete and compensate for each other at all?
Philip Sweens: Each of the ports we operate has its own natural catchment area and thus there is little ‘compensation’ between them – particularly when they are geographically as far apart, as Odessa and Tallinn. In Estonia, for example, while in the past many goods transited to Russia, these volumes had already strongly decreased after 2014 and were a very small share of the port’s throughput even before we acquired the terminal in 2018.
Our aim is to strengthen an efficient connections both at sea and inland, linking the ports with the hinterland and creating new trade routes. Tallinn, located at the crossroad of North – South traffics (from Finland towards Turkey), is steadily increasing its links to the EU. We are also developing connections from Tallinn to Italy (Trieste).
Overall, our Estonian port operations remain very stable, with volumes continuing to grow. This success is supported by targeted investments in efficiency, delivering solid returns for the Group.
Dmytro Pavlenko: Coming back to traditional competitive environment in Black Sea, what competitive advantages can Ukraine have compared to its neighbors across the region (Bulgaria, Romania, Turkey)?
Philip Sweens: Once the war is over, Ukraine will, in my view, have a significant competitive advantage. The country has a large, well-educated workforce, low production costs and ample available space. With companies increasingly shifting their operations close to home and “near shoring”, Ukraine has strong potential to attract a wide range of industries and services and to follow a development similar to that of Poland in recent years.
However, realizing this potential will require ensuring that the rule of law is upheld and that corruption is effectively addressed.
Global uncertainty - Gulf of Aden
Dmytro Pavlenko: Since last year, the situation in the Red Sea has become tense. The Houthis (Yemen based terrorist organization according to some countries) have launched attacks on around 100 ships in the Red Sea and Gulf of Aden, according to BBC.
How does the Houthis’ attacks of commercial shipping affect the operation of HHLA and European port overall? How many ships pass through the Gulf of Aden to HHLA terminal in Hamburg?
Philip Sweens: The rerouting of ships due to the situation in the Red Sea affected us most noticeably at the beginning, as ships were no longer operating according to schedule. While we are still experiencing some effects in ports, the impact is generally felt more by the shipping linesrather than by terminal operators.
Global uncertainty - tariffs
Dmytro Pavlenko: Nowadays, there are a lot of talks about USA’s tariffs and their impact on global trade. How tariffs affect your business?
Philip Sweens: Ports and shipping are highly dependent on the overall economic development and often act as early indicator of both positive and negative development. Tariffs as well as other trade related measures can have an immediate impact on the cargo flows and volumes. At present, we do not expect a significant effect from potential tariff increases on short notice, as substitution options exists for most goods. However, in the event this leads to a broader economic downturn, higher tariffs could amplify negative trends and reduce trade volumes.
HHLA and TEN-T
Dmytro Pavlenko: In summer 2024, European Commission adopted Trans-European Transport Network (TEN-T) policy. TEN-N is a network comprises railways, inland waterways, sea routes and roads linking urban nodes, maritime and inland ports, airports and terminals across the Europe. Ukraine is also a part of TEN-T.
How this policy affects HHLA both in EU and Ukraine?
Philip Sweens: The TEN-T network has been in place for some time, with priority investmens planned along those key corridors. All our ports are located on these routes, and we benefit by the increased investments made which improves the efficiency of the hinterland transports. With Ukraine’s recent inclusion in this network we expect a positive impact on the development of the key transport corridors linking the EU to Ukraine, from which our new terminal in Batiovo will also profit.
Future is coming - digitalization and automation or present (digitalization and CO2 emissions)
Dmytro Pavlenko: Digitalization has transformed the world and port industry. When I visited HHLA terminal in Hamburg, I saw unusual reconstruction works underway: installation of transponders for unmanned trucks and transshipment equipment. The changes are impressive. Tell more about the innovations that HHLA is implementing.
Philip Sweens: Digitalization and innovation have been key drivers for HHLA. In 2002 we opened our Terminal Altenwerder in Hamburg, one of the first fully automated terminals worldwide. Since then, we have continued to prioritise automation, most recently at our largest terminal in Hamburg, Burchardkai. Also, our international terminals in Tallinn and Trieste are advancing automation and digitalization. In Tallinn we are testing commercial operation of automated and driverless trucks to transport the containers within the terminal. The expansion of the terminal in Trieste will also feature a high degree of automation. We also have plans for our terminal in Odessa, but these will likely need to wait until after the end of the hostilities to be implemented.
Future is coming - CO2 emission
Dmytro Pavlenko: Currently, a lot of efforts are being made in logistics to reduce the carbon footprint. The Hamburg Port Authority has set the target of reducing its carbon emissions by 50% by 2025 and becoming carbon neutral by 2040.
How does this goal affect HHLA and what steps are you taking to achieve it?
We understand that this topic is not currently a priority for Ukraine, however, are there any plans for CTO to take measures in this direction?
Philip Sweens: HHLA has committed to become carbon neutral by 2040 and is working on the detailed measures to achieve this goal. Our focus is on identifying and adopting energy solutions of the future, such as green hydrogen to operate climate neutral terminals.
Our commitment extends to our terminal in Odessa. Before the outbreak of the war we had already plans and investments scheduled to reach cabon neutrality there. Due to the current situation these have been put on hold but as soon as the circumstances allow, we intend to proceed with the implementation. This will also have the advantage for CTO that it will benefit from the experiences and best practices developed at our other terminals.
Logistics as a profession
Dmytro Pavlenko: Mr. Sweens, you are the managing director of HHLA International GmbH, one of the leading logistics companies in Europe. Your professional way is subject to a separate comprehensive talk. But if I may ask you briefly, why and how did you choose this profession and what makes it different?
Philip Sweens: I have always been fascinated by transportation in all it’s forms, perhaps because, as one of my previous bosses said, it is ‘big toys for big boys’.
On a more serious note, while the transport and logistics industry had for many years not been seen as particularly “glamorous”, it is undergoing a significant change. The growing recognition that our daily lifes depend on logistics, combined with rapid digitalization as well as the impact of geopolitical disruptions is transforming how we do business. This constant changes makes the industry especially dynamic - there is no one day comparable to the other.
Lastly, I value the people in this sector. The people in the transport and logistics industry are a special, friendly and mostly ‘no-nonsense’ type. Working in this industry means connecting with like-minded professionals all over the world.
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