Port of the month

Port of the Month: Port of Reykjavík (Iceland)

30 May 2016

This month, we are taking you to Iceland, ESPO’s new observer member. The Port of Reykjavík, which merged together with three other ports under the umbrella of Associated Icelandic Ports (AIP/Faxaports), will be celebrating its 100 years anniversary next year . Let’s have a closer look at this port!  

ESPO: Can you briefly tell us about the Port of Reykjavík? What are its main characteristics and challenges?

Port of Reykjavík: The Port of Reykjavík is part of a harbour company for Reykjavík and a number of municipalities in the vicinity. The old Port of Reykjavík was built in the years 1913 - 1917 and is therefore celebrating its 100 years anniversary next year. The old harbour is the main fishing port in the area, but is also a service port with an ever growing harbour dedicated to tourist activity (for example whale watching). The main gateway to and from Iceland is through Sundaport in Reykjavík, which is an ever growing container port that has been operational since 1968.

ESPO: The cruise business is a core activity of your port. What are the main challenges? Do you foresee a bright future for the cruise business in your port?

Port of Reykjavík: For many years, effort has been put into marketing the Port of Reykjavík as a perfect destination. This has worked out well, with cruise ship traffic growing rapidly. In 2016, there will be 113 cruise calls at the port hosting more than 100.000 passengers. We expect to see growth in the coming years both for large cruise ships and for expedition ships.

ESPO: In 2005, the Port of
Reykjavík merged with three other harbours to form Associated Icelandic Ports (AIP/Faxaports). What was the motivation for merging together?

Port of Reykjavík: The three harbours merged on the 1st of January 2005. The motivation for the merger was to have a stronger strategy for investment in the Faxabay area, where four harbour areas each got their long-term part within the new harbour company. Each associated port has its own peculiarities: Sundaport is a container port, the Old Harbour in Reykjavík a fishing-, tourist- and service port, Akranes a fishing harbour and Grundartangi an industrial port. The cooperation and the merger have already proven to be successful.

ESPO: As Iceland is a relatively remote island, the Port of Reykjavík functions as an important hub to import and export goods. Consequently, cargo handling plays an important role in your port. What are the main types of cargo in your port? What are the main connecting EU ports? How is the business evolving?

Port of Reykjavík: The cargo port in Sundaport is the main gateway to and from Iceland and handles general cargo. The majority of the goods are delivered to companies in the capital area where about 65% of the population in Iceland is located. The port is very well situated both logistically and environmentally, even though there is always need for more land. Today, we are preparing a part of the port for the next generation of cargo ships with more draft. The import in the industrial harbor consists of raw material for an aluminium smelter and a ferrosilicon factory, and the export there is of course their final products. The industrial port in Grundartangi is a very interesting area for development. There, we will put emphasis on projects with minimal impact on the environment and the use of green energy.

As Iceland is an island, sea transport infrastructure can be considered as fundamental for the country. Only 100 years ago, Icelanders started to take the transport of goods into their own hands. Progress has been rapid in the years that have past and now Iceland has a strong sea network with EU ports such as Rotterdam, Immingham, Aarhus, Helsingborg and Hamburg. The whole network covers Scandinavia, northern Europe and America.

The economic crisis in 2008 caused a sharp downturn in cargo, especially on the import side. However, we have recovered fast and last year cargo was at a high record with a good prospect for the coming years.

ESPO: What are the main investment projects in the Port of Reykjavík for the upcoming years? Could you briefly describe the importance of these investment projects for the port and the city?

Port of Reykjavík: Faxaports are self-sufficient regarding investment and without any contribution from the state. The main project now is a new berth for the next generation of cargo ships and is expected to open in 2018. In the industrial area, we are preparing a large project as Silicor Materials will hopefully build a solar silicum factory with a new and green method to produce solar silicum for solar panels. As harbour related tourism is growing fast, our projects also include installations for whale watching and in the future we will improve facilities on land for that activity.

ESPO: As the amount of Arctic ice is declining, Arctic shipping routes will become more accessible and thus more appealing. Given your location near the Arctic Ocean, will this have an impact on your port?

Port of Reykjavík: In recent years more and more ships sail in the North Atlantic - and they are getting bigger as well. Further developments will without any doubt have an impact on Iceland and Faxaports. There are already speculations about a large cargo hub in Iceland, but it is too early to say how the development will involve Iceland. There are opportunities but also things to avoid or meet with preparation. One obvious factor is the call for an emission controlled area in the North around Iceland, from Greenland to the Faroe Islands. Another issue is the need for stronger and coordinated security measures, especially with regards to cruise ships and the transport of oil.

ESPO: What are the Port of Reykjavík’s environmental priorities?

Port of Reykjavík: Faxaports is now in the process of certifying its environmental policy. Within that policy, we are strengthening our electrical system to connect as many ships to shore as possible. Land connections have been operated since 1980, but we can do much better in that area. There will be some time needed until we will be able to operate high voltage connections. Environmental issues are taking more and more effort and are situated in many areas. Ports and ships are causing an environmental impact, but it is our duty to reduce that impact to a minimum.

ESPO: On 23 June, the United Kingdom will decide on whether they will remain member of the European Union. If the British people were to vote to leave the EU, one of the options could be that the United Kingdom would become part of the European Free Trade Association and thus have access to the European Economic Area (EEA) which provides for the free movement of persons, goods, services and capital within the internal market of the EU and EFTA Member States. Iceland is currently an EFTA Member State. How does your port asses the added value of being an EFTA member? Would EU membership be more beneficial to the Icelandic port sector?

Port of Reykjavík: As in some other countries, EU membership is highly debated in Iceland. However, at the moment EU membership for Iceland is not to be expected in the near future. Membership could in some areas be beneficial for Icelandic ports, but with positive sides there are always obligations as well. Iceland has decided to stay outside the EU and is therefore financing all its infrastructure without EU support and operates with a vulnerable currency. Iceland does however apply a lot of EU regulations. This calls for a sharp political strategy to keep the economy healthy and move safely forward. But one of the main obstacles with membership will always be the discussion on fish and the resources in the sea as Iceland is highly depending on fish and fish industry. In that area the Icelandic ports are very cautious and in fact reluctant regarding EU membership. The EEA contract between EFTA and the EU has had an impact in Iceland but not so much regarding ports. Perhaps the main influence is situated with tariffs and the social sector, but there are also EU regulations that apply to ports such as waste, ISPS and environmental regulations. It has been an effort to apply to the regulations, but in the long run we hope that it will be worth the effort.

ESPO: On 2 and 3 June, ESPO will be holding its annual conference in Dublin. One of the topics that will be addressed at the conference is the Transatlantic Trade and Investment Partnership (TTIP) that is currently being negotiated between the EU and the United States. Iceland is an EEA EFTA member state, participating in the EU’s single market, which means that TTIP is relevant to Iceland as well. Therefore, can you briefly explain how this trade agreement could be of interest to your port?

Port of Reykjavík: If an agreement will be reached and both the EU and USA consider the agreement as beneficial to both areas and with economic growth, Iceland has been and will always be in the middle. With a robust transport net both on sea and in the air, Iceland could see opportunities in a TTIP agreement. Iceland also has free trade agreements with countries in Asia i.e. China, and that could lead to positive developments for Faxaports.

ESPO: ESPO is a partner of PORTOPIA an FP7 project that aims to measure port performance. What is
Reykjavík’s approach for measuring the port’s performance?

Port of Reykjavík: As Faxaports is by far the largest port in Iceland, benchmarking and measurements of performance is of little importance. In comparison with large European ports, we are relatively small but the operation is fundamentally the same though on a different scale. Compared to Scandinavian ports, we are in the top ten category regarding TEU´s, but in Northern Europe we are of course impressive with regards to fish! Measurement of port performance is always of interest for ports - even though they are not the largest in the world. We all learn from each other and the port family in Europe is not only the nest for economic growth but also keen on further improving ports in Europe for a safer transport.

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