Milković: Rijeka Becomes a New Gateway for Chinese Cars to Europe

The arrival in Rijeka of one of the most modern specialized RO-RO ships for transporting vehicles, which on August 24 delivered more than a thousand Chinese vehicles directly from Shanghai, officially marked the opening of a new logistics route for Asian car manufacturers to European soil.

The scale of this logistics surge in Rijeka is best reflected in the data: with 22 thousand transshipped units in the first half of the year, total vehicle traffic by the end of the year will jump to as much as 60 thousand. The main driver of this logistics expansion is Emil Frey Logistics, part of a large European group that imports and distributes cars across Europe. We spoke with its director, Ivan Milković, about how the entire operation started, how it developed, the resistance from competitors, and what the future plans of this automotive logistics provider are.

Automotive logistics in the Port of Rijeka had been lagging behind the competition in Koper or Monfalcone for years, and then a turnaround occurred, and suddenly we are witnessing thousands of cars at the Rijeka docks. What was the turning point for Emil Frey Logistics’ entry into the Rijeka port, and what was your primary motivation for activating this transport route?

– Our initial motivation was purely internal: optimizing the operation of our own fleet. The Emil Frey group is the largest private importer and distributor of cars in Europe, with more than twenty thousand employees and an extensive network in many European markets. Within the logistics segment, we had already developed our fleet of about a hundred specialized trucks that operate exclusively for our members, but since we became active in Croatia and have operations here, we noticed some inconsistencies in the flow of transport routes across Europe. For example, it was incomprehensible to us that dozens of vehicle transport ships, so-called RO-RO ships, were anchored in front of Koper and Monfalcone for weeks, while the Rijeka port had been completely outside these main logistics flows for decades.

What did you then undertake?

– We began gradually taking over the logistics processes: first road transport, then rail in cooperation with carriers like HŽ Cargo, and finally the maritime part. We decided to leverage Rijeka’s geographical position as a natural entry point for the markets of Croatia, Slovenia, Bosnia and Herzegovina, Serbia, Bulgaria, the Czech Republic, Slovakia, Hungary, and Austria. The Emil Frey group is the exclusive importer and logistics provider for a number of markets in Central and Eastern Europe. We bring cars from European and Asian factories for our colleagues in Slovakia, the Czech Republic, Hungary, Switzerland, etc.

The Croatian market, viewed in terms of our group’s revenue, has a share of a modest three to five percent of the total volume, which only meant that Rijeka was not the final destination for those vehicles. Therefore, launching a new shipping route was an important logistical undertaking because shipping companies are reluctant to change established routes unless they are guaranteed a steady volume, efficiency, and competitive conditions. The significance of these long-awaited changes for the domestic transport sector is best illustrated by the fact that HŽ Cargo has not had a locomotive transporting cars to Rijeka for more than thirty years, and the Adriatic Maritime Service in Rijeka has not dealt with the acceptance and towing of specialized RO-RO ships for over two decades.

How is a corridor established to a port that had not previously been on the automotive logistics maps?

– It was quite a challenging project that required a lot of effort and cooperation from various stakeholders. For example, Rijeka was then more expensive than Koper, and we had to resolve that. However, to discuss this, you must first keep in mind one important fact. Italy and Slovenia have held a complete monopoly on automotive logistics in this part of the Adriatic for decades. From southern Italy all the way to Trieste and Koper, a whole network of specialized ports has been built. When we started redirecting Emil Frey’s and Stellantis’ vehicles to Rijeka, operational teams and interest groups in Italy and the neighboring regions exerted tremendous pressure to torpedo the Rijeka project and keep volumes in their ports.

How?

– We managed to resist this and push the project through to completion solely because Emil Frey is an exceptionally reputable group in the automotive world. We leveraged our strength, our position as the largest importer, and strong partnerships to initiate this strategic route through Croatia.

The first cars that arrived at the Rijeka port last year were owned by the Emil Frey Group, and then you continued with the integration of Stellantis vehicles. What does this business collaboration look like?

– Primarily, our road fleet collects vehicles daily from Stellantis’ factories in Spain and Portugal, from Vigo and Mangualde, where commercial vehicles like Berlingo, Partner, and Doblò are produced, as well as from Zaragoza and Villaverde, where C4, 208, and Corsa are produced, and from Tramagal, where the Mitsubishi Fusa factory is located. All these vehicles are transported to the storage terminal in the Spanish port of Tarragona. There, we accumulate them and twice a month load dedicated RO-RO ships that sail directly to Rijeka. From the Rijeka port, the vehicles are further distributed by trains and trucks to the Czech Republic, Slovakia, Hungary, Austria, Slovenia, and Bosnia and Herzegovina.

The second flow we established is already an extremely dynamic line between Turkey, Slovakia, and Rijeka. From the Bursa factory in Turkey, we transport light commercial vehicles three to four times a month via a shipping line from the port of Yalova to Rijeka. To ensure that the ships do not sail back empty, we organized land transport of vehicles from the Slovak factory in Trnava. Every week, we secure 300 to 400 trucks and dedicated freight trains that bring cars produced in Slovakia to Rijeka, from where they are loaded onto the same ships and transported to the Turkish market.

Why are vehicles from Spain and Portugal not transported directly by trucks to Central and Southeast Europe, but instead combine three types of transport: first truck, then ship, and then truck and train again?

– The key is in cost-effectiveness and optimization of empty kilometers. Transporting cars exclusively by trucks over a distance longer than two thousand kilometers, from Portugal to Central Europe, is extremely expensive and environmentally unacceptable. The newly established flow through Rijeka has resulted in a faster, more economical, and environmentally friendly logistics solution, all to satisfy our end customers. Through combined transport, we achieved complete optimization: our trucks drive short and efficient collection routes in Spain and Portugal to the nearest port, and then maritime transport takes over a mass volume of several thousand vehicles at once, drastically reducing the cost per car.

When the ship arrives in Rijeka, our trucks and trains take over the vehicles, which drive shorter distances to Central European countries. With this model, we managed to reduce the share of empty kilometers in our road fleet from the previous 15 to 20 percent to only three to five percent. Thus, we not only preserve margins but also maintain a stable transport price, while drastically reducing carbon dioxide emissions, which is no less important.

Are you planning to further expand these European routes through Rijeka?

– We are constantly expanding the network. We are expanding cooperation with the Gliwice factory in Poland, from where we will bring vehicles to Rijeka by train and truck for export to the Mediterranean. We are also in the final stages of negotiations to redirect part of the production from Kragujevac in Serbia through the Rijeka port for Turkish and other overseas markets.

Recently, an impressive ship with a thousand vehicles from the Chinese group Chery also arrived in Rijeka. How was this cooperation established, and what does this breakthrough of the Chinese automotive industry mean for European ports?

– The arrival of Chinese brands is the result of a drastic increase in their market share in Europe. In the first half of last year, these brands held between 3.2 and 3.5 percent of the European market. This year, that share has jumped to over seven percent. This means that Chinese manufacturers have doubled their presence on the European continent in just one year. This explosive growth has created huge bottlenecks in traditional Northern European ports, including Koper. Any larger RO-RO ship with a capacity of five to seven thousand vehicles, if waiting at anchor in front of the Koper port for 10 to 15 days, incurs a standing cost for the shipping company of 15 to even 50 thousand euros per day!

It is clear why manufacturers and shipping companies are feverishly seeking alternative hubs. We seized the opportunity and offered the Chinese group Chery, which operates in Europe with the brands Omoda and Jaecoo, a fast and efficient alternative. This summer, we took over the first ship with 3200 cars, shortly after that a second with 1100 vehicles, and in October, a new ship with over 4500 cars is arriving. The scale of this sudden jump is best illustrated by the situation two weeks ago when we had more than 400 trucks in the port in just one day! The customs system and local freight forwarders have never encountered such a volume of work and the issuance of hundreds of transit documents and bank guarantees in 24 hours, but the system responded successfully, and everything was completed without delays.

Is there still room for growth?

– Absolutely, and this is clearly visible in our data. For comparison, last year we transported a total of about 10 thousand cars. This year, we expect to process between 60 thousand and 80 thousand cars in the Rijeka port. For Rijeka and what it was just a few years ago, that is already science fiction, but we expect the real scale of growth only next year.

What is the maximum annual capacity of the Rijeka port?

– For now, it can handle between 100 thousand and 120 thousand cars per year. We use the entire Vienna coast in the Rijeka basin, and with the volume we plan to reach next year, which is precisely those numbers, we are bringing the capacities of the Rijeka port to the maximum. Further growth without investments will not be possible. If we want to step further and take a large share of the pie in Central Europe, and there is indeed interest from large Chinese and European manufacturers, we urgently need to activate additional locations. The key solution and strategic project for us is the plateau of the former coking plant in Bakr.

Why Bakr?

– Bakr has space that can be easily and relatively quickly repurposed. At that location, we could build modern storage capacities and dedicated PDI (pre-delivery inspection) centers, i.e., workshops for technical inspections, deconservation, and preparation of vehicles before delivery to dealerships across Europe. Part of that space would be used for transshipment of quantities coming from Turkey, and part that is currently used for coal and bulk cargo would be repurposed so that we can support strong growth and the entry of other large Chinese manufacturers.

We are now intensively negotiating with several leading Chinese automotive groups, including brands like Geely and other leading manufacturers from China looking for new routes to enter the European market. By activating Bakr, the capacity of the Rijeka automotive logistics pool would jump from 100 thousand to 300 – 350 thousand cars per year. Only with such capacity can we have equal discussions with new Chinese and European manufacturers and take a significant share of logistics for all of Central Europe.

You mentioned that at the very beginning, the arrival of ships in Rijeka was extremely expensive compared to the competition. How did you solve that problem?

– When we entered this business, the fees upon announcing the arrival of a ship at the Port of Rijeka were drastically higher than in other ports on the Adriatic; the arrival of a ship in Rijeka was 10 to 20 thousand euros more expensive than in Koper. We did not want and could not pass that additional logistical cost onto our importers and end customers, as we would otherwise lose competitiveness. To solve this problem, we were first helped by the leaders of the Port of Rijeka, who, along with our group, provided maximum support and intervened with the Ministry of the Sea, Transport, and Infrastructure.

The Ministry recognized the geostrategic potential of this and helped us reduce the costs of the entire taxation, which enabled the opening of this new automotive corridor through the Rijeka port. Without this quick reaction from the state and operational support from the Port Authority, Rijeka would still be outside all automotive logistics flows.

Does this mean that the Rijeka port is now cheaper than Koper?

– No, but no one wants to build the competitiveness of our port on price cuts. Koper has a built and high-capacity system that processes about 900 thousand vehicles per year, and we cannot yet compare with it in terms of volumes. However, our key advantage should not be a discount on port fees, but the speed of flow and the absence of waiting at anchor. In today’s automotive logistics, fast and efficient service is worth much more than the price itself. With us, ships come to berth immediately, unload goods in a day or two, and continue sailing.

What are the multiplier effects of such automotive logistics on the broader Croatian economy, and what does the arrival of so many vehicles mean for small and medium-sized enterprises?

– They are enormous. Every arrival of an RO-RO ship generates income for the state and local community due to the payment of port fees, light dues, maritime property fees, and contributions to the Port Authority and agencies. Then, every truck and train that departs from Rijeka pays tolls to HAC, buys fuel at local gas stations, and pays transit fees. HŽ Cargo is activated on the railway, as well as the entire local freight forwarding and customs system that charges for its services when issuing transit documents. A very large part of that pie goes directly to small and medium-sized enterprises.

As part of our external fleet of about a hundred specialized trucks for transporting cars, we engage one hundred percent Croatian carriers, local craftsmen, and drivers. These are private companies that buy trucks here, refuel, maintain vehicles, and pay taxes in Croatia. So many trucks, compositions, and equipment in constant motion also require strong technical support, so local mechanics, tire fitters, hydraulic service providers, and specialized upgrades in the Rijeka area have a guaranteed steady volume of work. We also need specific services in the port: whenever a vehicle fails to start or cannot be moved during unloading from the ship, we regularly use the services of a small local craftsman with a tow truck and towing service that resolves such situations.