Report_Addressing Transportation Challenges in the Adriatic-Ionian Region

In the framework of the 9th EUSAIR Forum that took place in Šibenik on the 15th and 16th of May 2024, the Forum of the Adriatic and Ionian Chambers of Commerce organized the Adriatic and Ionian Initiative round table titled Addressing Transportation Challenges in the Adriatic-Ionian Region, in on-site modality with live streaming on YouTube. The event was followed by 27 participants on-site.

Transport and connectivity are essential for economic development, as they foster better regional integration and improve relations between neighbours. The Adriatic-Ionian region faces critical transportation challenges, necessitating immediate action to streamline goods flow across EU-Western Balkans border crossings. Slow freight movement poses mounting obstacles for businesses, highlighting the pressing need for infrastructure improvements and enhanced coordination. Border Crossing delays not only disrupt supply chains but also pose safety risks and undermine overall transportation efficiency. The effect of such a situation has significant negative knock-on effects not only for the trade between the Union and the Western Balkans but also affecting the trade between EU Member States that cross the region in transit.

The ongoing review of EU regulations regarding the Trans-European Transport Network (TEN-T) beyond Union borders, and the recent adoption of goals outlined in the EU Strategy for Sustainable and Smart Mobility underscore the importance of increasing the share of rail transport and establishing multimodal, better road transport connection and railway corridors. The AII Round Table, organised by the Forum of the Adriatic and Ionian Chambers of Commerce, aims to address the concerns of the stakeholders in the Area, who are urging political decision-makers to take action to expedite and facilitate the movement of goods across the EU and the Western Balkans at the border crossings in the Adriatic-Ionian Region.

Prof. Pierluigi Coppola moderated the discussion and thanked the Adriatic and Ionian Initiative (AII) for its valuable role in creating connections with stakeholders. He stressed the importance of linking societal needs with decision-makers to ensure effective and inclusive regional development.

Ambassador Fabio Pigliapoco, Head of the Adriatic and Ionian Initiative Permanent Secretariat highlighted the importance of round tables as a crucial tool for the Adriatic and Ionian Initiative. He expressed gratitude to all the participants for their involvement and contributions.

Ms Mirjana Čagalj, Vice President for Construction, transportation and Connectivity, Croatian Chamber of Economy held a keynote address

Issues with TEN-T Corridors: Ms Čagalj highlighted the need for additional funding for connections and facilities to finance the Trans-European Transport Network (TEN-T) corridor projects. Croatia’s inclusion in four TEN-T corridors—Mediterranean, Rhine-Danube, Baltic-Adriatic, and Western Balkans-Eastern Mediterranean—presents an opportunity for the country to become a logistic centre for Southeastern Europe. Emphasizing the importance of infrastructure for alternative fuels and digitalization, she noted the significant role of the Port of Rijeka in the Baltic-Adriatic corridor. The revitalization of the ports of Zadar, Šibenik, and Split is essential, as their cargo capacity is underutilized due to poor railway connections. By 2050, EU policies aim for 70% of cargo to be transported via rail, reducing CO2 emissions and fostering sustainable development. Improving the railway network will also enhance passenger transport conditions. It is crucial to prepare railway infrastructure, including the dimensions of tunnels and bridges.

Benefits from EU Funds for Infrastructure Development: Ms Čagalj discussed major projects, including the renewal of the railway network by 2035, covering 800 km of railways with an investment of 6.2 billion euros. Additionally, projects funded by the European Investment Bank involve revitalizing 400 km of international, local, and regional railway networks not eligible for EU funds. Modernization of two international corridors, RH1 (Slovenia-Serbia) and RH2 (Rijeka-Hungary), is also planned. However, all these projects are currently delayed.

Challenges and Cooperation: Ms. Čagalj addressed the issues between EU countries and non-EU countries (Western Balkans) at border crossings. Cooperation with the Serbian Chamber of Commerce is crucial to address these border crossing issues. Shortening the supply chain and strengthening transportation between Serbia and Croatia is vital for both economies. An initiative by the Croatian Chamber of Economy (CCE) and the Serbian Chamber of Commerce and Industry (CCIS) aims to adopt urgent measures by national governments and the European Commission to accelerate and facilitate the flow of goods at border crossings in the Adriatic-Ionian macro-region. Long wait times at Serbian-Croatian border crossings, often exceeding 24 hours, necessitate improvements and faster border checks for goods and people. Inspection and control procedures at railway border crossings also need to be expedited.

Mr Aleksandar Radovanovic, Head of the Centre for Regional Cooperation, Chamber of Commerce and Industry of Serbia

How does the Centre for Regional Cooperation view the potential impact of the extensions of the TEN-T network in the Western Balkans on regional trade and logistics?

The Centre for Regional Cooperation recognizes the significant impact that the extension of the TEN-T network into the Western Balkans could have on regional trade and logistics. Integrating the Western Balkans into the TEN-T network represents a crucial acknowledgement of the connection between the EU and this region, which is essential for Serbia and the Western Balkans’ integration into the European Union. This integration opens up possibilities for financing infrastructure projects aimed at resolving border issues, improving road transport, and specifically enhancing railway networks.

Movement of Goods and Connectivity: The movement of goods and connectivity is vital for the economic integration of Serbia and the Western Balkans with the EU. Improved infrastructure will facilitate smoother and more efficient trade routes.

Border Crossing Issues: One of the critical issues faced is the significant loss of time at border crossings, particularly between Croatia and Serbia. This problem is also prevalent in Bosnia-Herzegovina. Road border crossings between Serbia and Croatia are notably problematic, resulting in substantial direct costs. Each truck incurs a loss of 5 euros per hour, leading to an estimated annual loss of around 800 million euros due to long wait times. On average, trucks wait 10 hours at the borders, with peaks reaching up to 36 hours in some cases.

Investment in Railways: There has been a longstanding lack of systematic investment in railway infrastructure, leading to many existing infrastructures being inoperable and inefficient. Additionally, not all goods can be traded via railways due to restrictions such as phytosanitary inspections, which are often only possible via road transport. The Centre emphasizes the need for investment in railway infrastructure to connect Northern Italy with the Western Balkans, extending through the peninsula to Greece and connecting with Istanbul and the Middle East.

Appeal for Investment: The Centre calls on national governments and the EU to invest in infrastructure projects that will enhance connectivity and address the border crossing issues. This investment is crucial for improving the efficiency of trade routes and reducing the economic losses incurred due to long wait times at borders.

Overall, the Centre for Regional Cooperation hopes that the Western Balkans will be actively involved in resolving these problems to ensure better integration and connectivity with the EU, ultimately fostering regional trade and logistics development.

What are the main challenges and opportunities for firms and businesses in Serbia?

One of the primary challenges for businesses in Serbia is the significant shortage of drivers across all sectors. This shortage severely impacts the efficiency and reliability of transport services. Additionally, administrative obstacles, such as constantly changing regulations, create further difficulties. A particularly restrictive rule is the limitation on drivers from the Western Balkans, who are allowed to work only 180 days a year in bilateral transport services, effectively limiting their productivity to half the year.

Despite these challenges, there are numerous opportunities. Harmonizing national regulations with EU standards offers significant advantages. This alignment not only improves the quality standards of transport services but also provides Serbian businesses with better access to the European transport market. Another promising opportunity lies in enhancing transport efficiency. For instance, reducing wait times at border controls by just three hours could potentially increase the GDP of the Western Balkans by 3% in the medium term, with some countries possibly experiencing even higher growth rates.

Improving the quality, safety, and reliability of transport services while simultaneously reducing costs can significantly boost competitiveness and attract more investments. Intermodal transport, which integrates ports, railways, and roads, represents one of the areas with the greatest potential. Expanding terminal facilities and enhancing port connections can greatly improve transport efficiency. Moreover, investing in railway connections is crucial. Currently, Serbia has only one international train route between Belgrade and Bar, with no other international connections to cities like Trieste, Thessaloniki, and other neighbouring regions. Expanding and improving these connections is vital for regional integration and economic development.

Addressing these challenges and leveraging the opportunities requires the attention of both national governments and European institutions. Implementing urgent measures to resolve border issues and investing in critical infrastructure will support seamless transport and foster economic growth in Serbia and the broader Western Balkans region.

Mr Saša Subotić, Senior Expert Advisor, Transport and Communications Sector, Croatian Chamber of Economy

Which measures could be undertaken to ensure seamless travel on the existing transport infrastructure and what is the role of the Chambers of Economy to better facilitate collaboration among stakeholders in the area?

In Croatia, the primary issue is not the availability of funds but the workforce at border crossings, both in terms of numbers and skills. There is a law in Croatia that mandates the retirement of two civil servants for every new hire. This leads to a significant loss of experienced personnel, leaving new hires unprepared and “lost.” The Croatian Chamber of Economy is actively pressing the government to change this law to maintain a skilled and adequate workforce at the borders.

Another major problem is the state of infrastructure, which is often inadequate. Upgrading these infrastructures takes a considerable amount of time—typically 4 to 5 years—to even begin the work. The delays not only prolong the completion times but also increase the costs.

In recent years, several billion euros have been allocated for upgrading the existing railway network and constructing new lines in Croatia. Significant investments are also being made in ports, particularly the port of Rijeka, which is receiving both public funds and private investments from companies like Maersk. These investments are expected to establish direct connections between Croatia, Asia, and Africa, significantly increasing the volume of containers passing through the port.

In the coming years, trade with Africa and Asia is expected to grow exponentially. This will necessitate an increase in the workforce in sectors like ports, customs, and inspections. However, this growth can only be achieved if workers have the necessary skills and competencies.

To address these challenges, it is crucial to implement better coordination and organization among existing sector entities. For example, synchronizing the working hours of the Croatian Border Police Inspection Services and Custom Services could improve efficiency.

Finally, there are also significant difficulties in public procurement. Often, the problem is not finding the money but spending it effectively and efficiently. The Chambers of Economy play a critical role in advocating for better policies, ensuring skilled workforce availability, and facilitating collaboration among stakeholders to improve infrastructure and operational efficiency.

What key actions need to be prioritized in order to maximize connectivity in the Adriatic–Ionian region?

Transport Management System: Firstly, Croatia needs to develop a modern transport management system. The current Croatian railway network is outdated and lacks a management system that meets current demands and standards, resulting in significant transport delays. For instance, it takes an average of 12 hours to travel by train from Zagreb to Sibenik. Implementing an effective transport management system would allow for better control and coordination, which is essential before addressing issues of interoperability.

Interoperability and Coordination: The Western Balkans already have a core network for road transport, but what is needed is better coordination. In Croatia, the slow speed of trains is not due to the poor condition of the tracks—they can support speeds up to 160 km/h—but due to issues with management and communication. Additionally, many lines are single-track and need to be doubled to improve efficiency.

Intermodal Terminals and Port Connectivity: With the creation of the Maersk intermodal terminal in Rijeka, there will be a significant increase in container traffic through the port. However, some challenges need to be addressed. For instance, currently, long freight trains must be disassembled and reassembled in a nearby location before they can be sent to or from Rijeka. This process is inefficient and increases road traffic. Therefore, enhancing rail connectivity with Slovenia and Italy is crucial. The ports of Rijeka, Koper, and Trieste should work together rather than compete, as they serve the same market.

Cybersecurity and Data Storage: Another important aspect is to improve cybersecurity within the transport sector. There is a lack of capacity for data storage, which is essential for managing modern transport systems securely and efficiently.

Overall, the actions to be prioritized include:

Developing a modern transport management system to improve efficiency and coordination.
Enhancing interoperability and doubling single-track lines to increase rail capacity.
Improving connectivity between ports and railways, especially between Rijeka, Koper, and Trieste.
Investing in cybersecurity and data storage capacity to support the digital infrastructure of transport networks.

Mr Francesco Baldelli, Councillor for Roads, Infrastructures, Territorial Government, Public Works, Policies for Mountains and Internal Areas, Marche Region

What are the specific initiatives and investments planned by Regione Marche to support the development of transport infrastructure in the Adriatic–Ionian Region?

Regione Marche recognizes the strategic importance of the Mediterranean Sea as a natural infrastructure that can serve as a land bridge, facilitating dialogue and connectivity between the Balkan region and Western Europe. Italy, situated at the centre of the Mediterranean, plays a crucial role in this connectivity.

In Marche and Ancona, significant investments are being made in strategic infrastructure that not only benefits Italy but also the broader European system. A total of 5 billion euros is being allocated to improve accessibility and transit through central Italy, focusing on the following key infrastructures:

Port of Ancona: Investments are aimed at enhancing the port’s capacity and accessibility, making it a critical hub for the Adriatic-Ionian macro-region and the European system.
Marche Interport (Jesi): This intermodal freight terminal will be improved to better serve the logistics needs of the region.
Ancona – Falconara Airport: Upgrades to the airport will ensure it supports the macro-region’s connectivity and integration with the rest of Europe.

Part of these investments is specifically earmarked for improving access to the Adriatic-Ionian macro-region, highlighting the following projects:

Enhancement of the Port of Ancona: Increasing its capacity to handle more cargo and improve its logistical capabilities.
High-Capacity and High-Speed Rail Line between Ancona and Rome: This project will connect Ancona with Rome and the Port of Civitavecchia on the Tyrrhenian Sea, facilitating faster and more efficient transport.
E78 Fano-Grosseto Road Link: This road will connect the Port of Ancona and Marche’s infrastructure with the Port of Livorno and other Tuscan ports, enhancing east-west connectivity across central Italy.

Additionally, Regione Marche is committed to strengthening cooperation with the eastern Adriatic and Ionian coasts. This includes intensifying relationships and increasing investments to foster regional development and integration.

These initiatives and investments underscore Marche’s strategic role in enhancing the Adriatic-Ionian Region’s transport infrastructure, promoting economic growth, and facilitating seamless connectivity within the broader European context.

What key actions need to be prioritized in order to maximize connectivity in the Adriatic–Ionian region?

Regional crises are posing significant challenges to our economic interests and dialogue. We must urge Europe to accelerate its infrastructure investments, not only for Italy but for the entire macroregion and for Europe as a whole, which should increasingly be seen as a system of values and relations between diverse peoples that respect and connect. This is essential to circumvent dangerous regional crises that have erupted in the heart of Europe and major transport corridors, such as the Suez Canal.

Southern Europe offers a significant opportunity for Northern Europe, Africa, and the Middle East. We represent a secure transport corridor of countries that engage in dialogue and share their strategic infrastructures. Investments in the port of Ancona by the Marche region, for example, benefit the entire macroregion. We propose to the EU the creation of a corridor that not only extends north but also connects the Iberian Peninsula to the Balkans, reducing transport times.

We are a diverse Europe in composition but share a common interest in competing globally together. We must leverage this and propose to the EU rapid investments in our countries. The creation of corridors should not only favor Northern Europe but also Southern Europe. The infrastructures in the Balkans are also Italian and European, and vice versa.

In summary, the key actions to prioritize are:

Urging the EU to accelerate infrastructure investments to enhance connectivity and stability in the region.
Developing transport corridors that connect Southern Europe with Northern Europe, Africa, and the Middle East.
Promoting the use of shared strategic infrastructures across countries to facilitate dialogue and cooperation.
Proposing new corridors to the EU that connect the Iberian Peninsula to the Balkans, reducing transport times.
Emphasizing that investments in Balkan infrastructures benefit Italy and Europe as a whole, fostering a united approach to infrastructure development.

Mr Dejan Lasica, Rail Policy Coordinator Transport Community Permanent Secretariat

What is the state of play of the current development of transport infrastructure in the Western Balkans?

The current development of transport infrastructure in the Western Balkans faces several critical issues, particularly in the railway sector. These issues are not limited to infrastructure but also extend to workforce challenges.

One of the primary problems is not the lack of maintenance or funding, but the shortage of human resources. The Transport Community has recently launched a public call to establish the Regional Railway Centre of Excellence. This centre will not replace schools but will serve as a training hub for the current staff of transport and railway companies. To address these challenges, it is essential to make the railway sector attractive to young people starting their careers. Given that the railway sector is predominantly public, there is a need for reform in the public sector, starting from education and extending to the management of public companies.

Over the past 20 years, more than 20 billion euros have been invested in the Western Balkans’ railway infrastructure. However, the average speed of railway transport remains at 50 km/h, the same as it was 20 years ago. This indicates that these investments have not yielded the desired outcomes, primarily due to the lack of qualified personnel.

Currently, there are 15 infrastructure projects underway in the Western Balkans, with a total investment of approximately 7.5 billion euros. The New Western Balkans Corridors present a significant opportunity for the region’s development, involving eight EU member states and six Western Balkan states. The main issues include:

Workforce Challenges: The primary issue is the shortage of skilled workers. Efforts are being made to address this through initiatives like the establishment of the Regional Centre of Excellence to train current staff.
Attracting Young Talent: There is a need to make the railway sector more appealing to young professionals. This involves reforming the public sector and improving education and training for railway careers.
Ineffective Past Investments: Despite significant financial investments over the past two decades, the average speed of railway transport has not improved. This underscores the need for better planning and utilization of resources.
Ongoing and Future Projects: There are several ongoing projects aimed at improving infrastructure, which represent a critical opportunity for the region’s economic growth and connectivity.

The development of the New Western Balkans Corridors is particularly promising, as it aims to enhance integration and connectivity between the EU and the Western Balkans, fostering economic development and reducing transit times.

What are your concluding remarks, after all the considerations discussed during the round table?

The enhancement of railway infrastructure emerged as a pivotal point of discussion:

Infrastructure Optimization: It has been highlighted that even a modest increase in speed on the line entails considerable cost, and the time saved is not sufficient to justify the expenditure. Instead, a decrease in waiting times at border checkpoints presents significantly lower costs for the same amount of time that would be saved with structural interventions on the line.

The average waiting time at border checkpoints for passenger trains is 35 minutes. Collaborative efforts between law enforcement and border authorities could simplify and expedite these processes, thus saving time and resources

Regional Collaboration: Positive examples of cooperation, such as agreements between Albania and Montenegro to streamline checkpoints, were underscored. The importance of fostering regional collaboration, including with neighbouring EU countries, and leveraging synergies among stakeholders, including academic institutions, was emphasized.

While the discussion centred on infrastructure, the significance of prioritizing maintenance over new projects was stressed. This pragmatic approach ensures the sustainability and efficiency of railway systems in the region.

Mr. Gino Sabatini, President of Forum AIC – President of Marche Chamber of Commerce,

Final remarks and closing

The crucial link between the economic system of the Adriatic-Ionian Region and the efficiency of its transport infrastructure must be emphasised. Seamless transportation of goods and people is essential for economic development and social cohesion in the region, especially in the face of increasing global competition.

The upgrade of the TEN-T network with the introduction of the new European corridors of the Western Balkans and the Eastern Mediterranean is of paramount importance. These developments offer opportunities to enhance connections with European markets, strengthen the centrality of the Adriatic Sea, and create new business prospects for local enterprises.

However, realising this potential requires not only investments in infrastructure but also close cooperation among countries to address physical and non-physical barriers to trade. This includes streamlining customs procedures, harmonising legislation, and leveraging information and communication technologies to improve efficiency at border crossings.

Another fundamental aspect is the adoption of common standards and regulations to reduce the complexity of customs procedures and enable more efficient logistics chains along the corridors. Additionally, ICT measures such as digital platforms and electronic data interchange standards like EDIFACT will increasingly play a significant role in optimising customs clearance times and enhancing visibility and security along transport routes.

In conclusion, leveraging investments in trans-European transport networks to improve connectivity in the Adriatic-Ionian region is essential. More than infrastructure is needed and operational and administrative barriers must be addressed to support the development of an integrated transport single market. Collaboration and commitment among countries are crucial to fully harnessing the economic potential of the region.

As a tangible outcome of the event, there will be the establishment of a working group dedicated to amplifying the voices of stakeholders on transport issues in the AI region. Professor Coppola, Coordinator of Pillar 2 “Connecting the region,” has expressed readiness to incorporate the input from this newly formed working group, share it, and discuss it within the Thematic Steering Group (TSG) of EUSAIR transport. This collaborative effort will foster ongoing dialogue and action to address the transportation challenges and opportunities in the Adriatic-Ionian Region.