Rotterdam (fot. Rudy and Peter Skitterians, Pixabay)
NO ONE JOURNEY IS THE SAME
Traveling has never been so easy and is usually associated with a long-awaited vacation. However, next to holiday travels, giving the opportunity to spend time in a more or less active way, there is a second category of travel, which is the opposite of a carefree trip in the summer. I am thinking here in particular of foreign trips related to the provision of work and emigration to places where, due to specific economic and political conditions, decision-making centres have been installed that have an overwhelming impact on a given area of the economy. To a large extent, the routes of these journeys are not determined by the parties themselves, but rather by strategic flows on which individuals have no influence.
In this text I would like to present my thoughts and reflections on this second, seemingly less attractive, category of travel. I spent the last few years of my life abroad. It was a time of hard work and study, but also observation of social and economic phenomena surrounding me. I would even lean to the claim that the journey I am describing here confirms the accuracy of the saying indicated in the first sentence of this text. I decided to anchor this story in my personal history, where the journey from Medyka to Rotterdam is symbolic, pictorial, although in reality it took place. This trip lasted quite a long time by modern standards, because it took me almost 20 years. However, this is not about physical movement, but rather about mental or, to some extent, even intellectual travel. I also assure you that the duration of this trip will not translate into the length of this text.
LIFE ON THE BORDER
By their very nature, border areas function as buffer areas and, consequently, cultural crucibles. It is here that we observe the daily direct clash of the interests of neighboring societies and on a macro-national scale. Border areas are characterised by great cultural diversity and thus have their own colour, often appreciated by tourists. In addition to simple human openness and tolerance, it is particularly important for the development of cross-border relations to establish rules governing trade and human capital flows. It is these rules that define which areas achieve a supreme position, and which – often despite high potential – must invest much more time and energy in their development.
I was brought up in exactly such a borderlands. I come from the small town of Medyka, located about 10 km east of Przemyśl. Historically, it is assumed that the very name of the place probably comes from the word “med” from the Russian language, which means honey. Medicinal linden forests were famous for this beekeeping product, where local residents founded beehives – this tradition is continued to this day by the beekeepers of Medyka. On the modern map of Poland, Medyka is an important place because it is home to a Polish-Ukrainian border crossing.
THE CRUSH ZONE
The strategic location of my hometown and nearby Przemyśl can historically be considered both a blessing and a curse. On the one hand, the location on the main trade route leading from Ruthenia to Kraków and further to the West provided enormous opportunities for economic development through participation in trade on a supra-local scale. On the other hand, for centuries, rulers ruling beyond the eastern border of the Polish Republic as the target of their attacks and armed aggression in the first place chose the Przemyśl Gate, which often brought disastrous results. A certain historical curiosity, but also a confirmation of the importance of Przemyśl and its surroundings for the effective building of eastern policy is the fact that the first of the Jagiellons on the Polish throne – King Władysław II Jagiełło, while traveling from Kraków to Ruthenia, visited Medyka repeatedly. From historical reports we learn that Jan III Sobieski also visited this picturesque town, and during his reign the defence of the eastern border of Poland was particularly important for preserving the integrity and power of the then Polish state.
This area functioned for centuries as a buffer zone (although in this case the more explicit term – “crush zone” fits better), on which the turbulent history of the last century has left an exceptional mark. Przemyśl and the surrounding area were heavily fortified first by the Austrians (Przemyśl Fortress intended to stop Russian aggression), and then by the Russians (Stalin’s line and Molotov’s line intended to stop German aggression). The example of this city clearly shows how countries achieve their goals by managing space, depending on the current geopolitical situation.
After World War II, only in 1948, as a result of the correction of the Polish-Soviet border, was Medyka again incorporated into Poland. Such seemingly insignificant, high-level decisions can have very far-reaching effects on economic and social life. For example, people from the generation of my grandparents spent the first three years of education in a Russian-language school and even in their writing the influence of Cyrillic still breaks through, not to mention the specific local dialect.
“DRY PORT”
However, the symbolic journey that this text deals with begins in a more specific location. From the time of my youth in the 1990s, I remember that the economic life of Przemyśl and Medyka was largely centered around logistics, the transport of goods and people. A special place was occupied by the railway transhipment area in Medyka, through which huge quantities of goods flowed on the East-West line. That railway terminal once functioned as the largest in Europe, the so-called “Dry Port”, where various types of products were transhipped from wide Russian tracks to narrower European tracks. It was and still is a logistics hub with huge potential. The first transhipments at the Medyka terminal were made as early as 1947. Then, the region was significantly expanded until a record 16 million tonnes of transhipped goods per year was reached in 1975-1979 (currently it is about 2 million tonnes per year). I learned from older people that the Dry Port’s successes and subsequent record-breaking transhipments in Medyka were even reported on national TV news, for propaganda purposes, of course. The dominant assortment in transhipment was iron ore, mainly for the supply of Huta Kraków and Huta Katowice. Metals, chemicals, vehicles (cars and tractors) also constituted a large commodity group.
Dry port in Medyka (photo: www.repozytorium.fn.org.pl)
The operation of the Dry Port had a huge impact on the economic development of the region. The scale of value added created by the terminal is very eloquently illustrated by the example of one of the employees operating the gantry crane at the turn of the seventies and eighties. In one of our conversations, this person boasted that in times of local prosperity she earned up to one hundred thousand zlotys a month, which was indeed confirmed by entries in the employee’s book. At first, it didn’t make a great impression on me because from history lessons I remember that the purchasing power of the zloty during the Polish People’s Republic was subject to large fluctuations. To my surprise, after verification of hard data, it turned out that the amounts that the gantry crane operator earned monthly (as a manual worker) corresponded to or even exceeded the average annual “salary”. The authorities of that time were well aware of the strategic importance of the Przemyśl-Kraków-Śląsk railway line. Therefore, a huge number of inhabitants of the region could find employment on railways, in forwarding, logistics, customs agencies, etc. The development of that region was additionally intensified by the free flow of goods and cross-border trade with people living “on the other side” – as the older generation used to say. Medyka had relatively easy access to Soviet production articles (e.g. electronics, household appliances) and undoubtedly benefited economically.
The dry port in Medyka as it looks today (photo: Pkp Cargo Terminale)
However, it should not be forgotten that all these interests around the Dry Port did not mainly serve the purpose of Polish policy, but were focused on serving the economy of the Soviet Union. This inefficient economic model certainly blocked the real growth potential of the terminal at Medyka, and yet its impact on the region’s economic development cannot be questioned. The collapse of the Soviet Union and the gradual shift of the centre of gravity of Poland’s geopolitical interest from Eastern Europe to Western Europe left a degrading mark on the position of Przemyśl and Medyka. The place that once constituted a strategic location in relations with a difficult Soviet partner (which mostly made the decisions) began to be associated more with the extreme point of the European Union, economically lagging and with poor transport accessibility.
ON THE ROAD!
I began my life and professional path in conditions marked by memories of the well-being of my hometown, but also by the bitter science of geopolitics, whose principles inexorably and incessantly define the reality that surrounds us, creating a privileged position for some areas at the expense of others. The Dry Port’s casus naturally directed my interests towards the logistics industry, supply chains, location of flow nodes and related properties. I consider it to be an absolute phenomenon that in the present day such a prosaic act as clicking the “Purchase” button in an online store can set in motion a huge logistic machine supporting the transport of goods between points distant from each other by many thousands of kilometres.
Shortly after graduating from the University of Warsaw, I went to a country that in many respects can be a model for the effective management of my own space – the Netherlands. In Amsterdam I had the opportunity to work for one of the world’s largest corporations operating on the logistics real estate market. Access to the global perspective in the functioning of supply chains, combined with the possibility of using the highest quality Dutch infrastructure every day, was a very valuable experience for me. The Dutch masterfully not only regulate the level of internal waters with the help of complex structures such as Afsluitdijk, Maeslantkering or Deltawerken, but above all they conduct a rational and very effective policy of managing strategic flows. The Netherlands boasts the best transport network in Europe (4th place in the world), which gives them a huge political and economic advantage.
Taking advantage of the wide possibilities of integration with the Dutch community, I noticed that these technical and political components of the success of the Netherlands are also perfectly complemented by the local culture. The Dutch, as a nation of sailors, have commercial capabilities in their blood and this is manifested on many levels. First of all, the Dutch are able to communicate perfectly, both privately and in business relations. Thanks to the natural openness and understanding of the essence of customer service, dealing with all formal and business matters in the Netherlands seems child’s play. A reflection of open communication is the so-called afspraak culture (from Dutch – ‘meeting’, ‘contract’, ‘agreement’) – Dutch employers promote the active participation of staff at various levels in making important business decisions. There is no shadow of this, because already at the level of primary school, the education system places the greatest emphasis on open communication and language learning. In turn, Dutch children learn this flair for trade even during the annual holiday Koningsdag (King’s Day), when street trade is formally exempt from taxes and entire city centres are turned into huge flea markets.
A SEA GATE TO EUROPE
Despite the relatively small territory, the Netherlands offers a lot in terms of tourist attractions. The Dutch have made world-famous gems like the Rijksmuseum, Park Keukenhof, Madurodam, Zaanse Schans, the Amsterdam canals and many more. However, the place that made the biggest impression on me, which certainly does not belong to the priority destinations of tourists visiting the Netherlands – was the Sea Port of Rotterdam.
One March weekend, in a typical Dutch rainy weather, we decided to visit Rotterdam. This city, compared to other Dutch cities, stands out at first glance for its modern architecture. The centre of Rotterdam suffered heavily during the bombing that Germany carried out here in May 1940. Luftwaffe planes dropped 97 tons of bombs at the time, leveling the city with an area of approximately 2.5 km2 and killing about 1,000 inhabitants. The purpose of this shameful attack was to intimidate the civilian population and, consequently, force the Dutch army to surrender. After the war, the centre of Rotterdam was rebuilt and this is one of the reasons why it breaks with typically Dutch architectural solutions. When I got acquainted with this story, by the way, I noticed some analogies with the situation of post-war Warsaw, of course maintaining the real proportions and taking into account the historical context.
The flagship of modern Rotterdam is the largest seaport in Europe. It is very significant that one of the main parts of the port is called Europoort, which means “Gateway to Europe” in Dutch. In the context of the importance of the Rotterdam port for the European economy, this name certainly does not exaggerate. The port covers an area of 105 km2 and stretches over 40 kilometers. Goods collected in Rotterdam are transported to destinations on sea ships, river barges, by rail and by road. One of the most important factors strengthening the position of the port in cargo transport is the availability of navigable and regulated rivers in the Maas and the Rhine. Through these rivers, the Gateway to Europe gains access to the Ruhr in Germany, Switzerland, Belgium and France. The significance of this combination is clearly demonstrated by an unusual situation which occurred in the second half of 2018. At that time, the record low water level on the Rhine meant that inland waterway transport using this river had to be significantly reduced or was even impossible on some sections. The global media sounded the alarm, emphasizing that about 80% of German inland waterway transport is on the Rhine. In 2019, the situation practically repeated itself. The position and role of the Netherlands in relation to the largest European exporter – is perfectly reflected in the old German saying “Let the Germans produce it, and the Dutch will transport it”.
I am of the opinion that nothing appeals to the imagination like hard numbers and the right reference point. Therefore, to illustrate the importance of the port of Rotterdam for the Dutch economy, I would like to provide some data. In 2018, a record 469 million tonnes of goods were transhipped at the port, including 14.5 million TEU containers. For comparison, at the port of Antwerp, the second largest European port, in 2018, ‘only’ 235 million tonnes was transhipped, which is twice as low. As many as 384,500 employees are employed in the Rotterdam port. It is estimated that the value added generated directly and indirectly by the port is equal to 6.2% of the Netherlands GDP. In 2018, the revenue generated by the port amounted to over EUR 707 million (i.e. the equivalent of about PLN 3 billion), while in the same period, e.g. the revenue of the port in Gdańsk did not exceed PLN 220 million. Last year for the Port of Rotterdam was also unique in terms of investment expenditure, which increased by as much as 91%, i.e. to EUR 408.1 million. Many innovative solutions are used in the port area. Among others, the first applications and software using the latest generation of 5G mobile network have been introduced, which support production processes, device and space functioning, as well as enable the operation of sensors collecting a gigantic amount of data allowing for efficient use of port resources.
Rotterdam guarantees the proper functioning of connectivity between continental Europe and the Atlantic World and Asia. When I had the opportunity to observe this gigantic structure, mooring container ships, cranes serving them and employees rushing to perform their tasks, subconsciously I confronted all these images with the starting point of my journey about 1500 km east – the Dry Port in Medyka – once the largest European transshipment node of this kind. Given of course the scale and differences in the operation of both ports, it was impossible not to notice one important relationship, i.e. the strong impact of changing strategic flows and geopolitics on the development potential of both these hubs.
THE GREAT EMIGRATION
My direction of travel was not accidental. The shift of economic gravity from East to West, which Poland experienced after the fall of communism, resulted not only in the form of the transfer of economic capital, but also – and perhaps above all – human capital. According to the Central Statistical Office, around 2.5 million Poles were temporarily based abroad at the end of 2017. It is a huge crowd of mostly young people of working age, mobile and willing to take professional risks. It is this social group that is the locomotive for the development of any economy, which is why the loss of this capital may have catastrophic consequences in the future. Among EU countries, the largest number of Polish emigrants were in Great Britain (793,000), Germany (703,000) and the Netherlands (120,000). These numbers certainly give a lot to think about, but only when I had to travel by car from the Netherlands to Poland on the night of December 23, 2016, the day before Christmas Eve, could I see the scale of this emigration with my own eyes. Driving in the middle of the night in the centre of Germany I passed a huge wave of cars with Polish license plates, and long lines of queues formed at gas stations. In addition to Polish registrations, there were also French, Belgian, Dutch and of course British registrations – these were also our compatriots hurrying to family homes to celebrate Christmas.
Flows of human capital in Europe in the East-West direction are well used by the countries of the “old” Union. The employee deficit on the local labour market is being supplemented on an ongoing basis, including by Polish emigrants and to an increasing extent this applies to highly qualified employees. Western countries dominate this game not only by taking advantage of differences in economic potential, but also by pursuing a thoughtful policy encouraging foreigners to take up employment abroad. For example, in the Netherlands, foreigners working there are granted income tax exemption of 30% of their annual income. The condition is that these individuals demonstrate that they have skills that are not present on the Dutch market or are difficult to access. Currently, exemptions are granted for a period of 5 years (once up to 10 years!). I know from experience that meeting these criteria is not difficult and even foreigners from the so-called back office industries such as finance, accounting and IT can count on obtaining preferential tax conditions. The Netherlands, thanks to wise fiscal policy, has become another tax haven, and it is this country that the largest corporations are increasingly choosing for their European headquarters, the de-facto decision centres (e.g. Nike, Adidas, IKEA, Tesla). Furthermore, when working in Amsterdam, more than once I was honestly surprised by how flexible and liberal an approach Dutch legislation takes when dealing with issues related to corporate issues, including those connected with cross-border transactions and the financing of business ventures.
The examples presented above are only a small part of the success components in the game for human capital, the game of which most arguments are still in the hands of Western countries. The very shape of strategic flows today favors this part of Europe, but Western countries are well aware of the fact that happiness should be helped, and they are also consistently doing so. It is enough to mention that Amsterdam currently has a population of more than 180 different nationalities.
NEW SILK ROAD – NEW DEAL?
In the context of the symbolic journey from East to West, which is discussed in this article, it is impossible not to raise the subject of the New Silk Road (Belt and Road Initiative, or ‘BRI’) – i.e. the new sea and rail routes connecting China with Western Europe. BRI is assumed to function as a route network. The Railway Belt will connect China with Central Asia and Western Europe, while the Sea Belt will connect the Far East with the Middle East and Africa. The goal of the initiative is to build new communication routes and infrastructure investments in countries along the route. The potential of this project is enormous and so can its impact be on existing geopolitical dependencies. Although it is not possible to precisely quantify the economic effects of BRI at the moment, such attempts are being made.
Creating a convenient rail route for transport from Asia to Europe can significantly affect the functioning of supply chains for specific product segments. As indicated in the study “The Silk Railroad. The EU-China rail connections: backgrounds, actors, interests” issued by the Centre for Eastern Studies (OSW): “most forecasts are based on the assumption that only a few percent of the total volume of goods between Asia and Europe can be transported by rail.” Rail will probably never be seen as the right means of transport for example raw materials or unprocessed metals. On the other hand, the case of the Dry Port in Medyka shows that this cannot be ruled out, and at medium distances the economic justification for such a solution increases. Nevertheless, railways may play a large role in the future in transporting products with high margins and those that are aging quickly due to the development of technology and high competition on the market. For example, sea transport from Chinese Chengdu to Warsaw takes about 48 days. A freight train will cover the same distance in just 15 days, while air transport will take about 7 days (e.g. due to customs procedures and time-consuming reloading).
A natural consequence of the development of BRI will be a change in the arrangement of European communication nodes and a potential strengthening of the position of the logistics sector in Eastern Europe, including Poland. For example, a report commissioned by the Dutch Ministry of Infrastructure and Water Management stated that the Port of Rotterdam foresees noticeable but mild competition from rail transport (a noticeable but mild competition is to be expected). A simulation was also made as to what extent BRI can affect the position of European ports by 2030. In absolute numbers, the Port of Rotterdam will be the most affected by this change. It is estimated that the change in the model of transport from sea to rail will result in a decrease in the number of transshipped TEU containers by 368,000 units in 2030. Given that in 2015 over 12 million TEU was transshipped in Rotterdam, this is not a significant change (a decrease of about 3%). However, given that 3 million TEUs were transported from and to China in the Rotterdam port in 2015, the potential for a decrease in the number of containers in this direction is as much as 10%. Paradoxically, the Dutch report estimates that one of the ports that will be most affected by competition with the new rail road will be the port in … Gdansk.
HOME SWEET HOME
Time will show how new communication routes and technologies connecting Asia and Europe will develop. It seems that the New Silk Road can be a great opportunity for currently economically marginalised eastern Poland, including Medyka, to which I am sentimentally returning in this text.
In parallel with the development of infrastructure that can change the course of strategic flows, we are witnessing a progressive liberalisation of the flow of employees from the former republics of the Soviet Union and distant Asia to Poland. Let’s hope that a long-term model of cooperation based on reciprocity will be developed, where Polish economic and human capital will also find development conditions in the East. This opening to the East will require a lot of effort on both sides. Until now, border crossings with Ukraine (e.g. in Medyka) could have been associated with the “iron curtain” shifted to the east, rather than the gateway to the European Union. The mental change in the perception of this space is also crucial – from the region where the Western World ends to the place where it actually begins, not only formally or culturally, but above all economically.
Dry port in Medyka, as it looks today (photo: author)
Every, even the greatest journey must come to an end. However, when it comes to travels determined by strategic flows, this rule does not seem to apply. These flows are subject to constant fluctuations and changes. Rather than a river with a marked source and mouth, they resemble the endless process of circulating water in nature. Therefore, I do not undertake to determine whether closing this text with a kind of buckle in the place where this symbolic journey began can be considered as its actual ending or as another stop marked on the map by the forces ruling the world of geopolitics.
Autor
Marcin Kulaszka
Attorney-at-law, a University of Warsaw graduate, a keen observer of existing correlations and adjustments being applied in the global economy and societies. He specializes in business legal support, with particular emphasis on international entities, and a broadly defined law of contracts. Marcin was involved in numerous non-standard projects, including those of cross-border nature, requiring „outside the box” legal solutions. In Amsterdam he worked for one of the largest American corporations managing a global logistics real estate portfolio. Currently, working for a state-owned company established to develop one of infrastructural projects of strategic economic importance.
In Marcin’s view, the key for the growth of societies and wealth creation is care for quality of interpersonal communication, promotion of interdisciplinary knowledge and continuous development.
Strategy&Future
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