Andrei Savelyev: Congestion in the port of Saint Petersburg results in cargo outflow to the Baltic countries and Finland
Forwarding agencies often play a key role in a long chain of cargo transportation from manufacturers to buyers, which may be located at the other side of the world. Forwarders arrange the supply chain of the route ensuring scheduled delivery of the goods. Andrei Savelyev, Director General of Greenway holding company, has told PortNews IAA about specific features of this business.
- Adrei Ruslanovich, your company is one of the leaders at the forwarding market of the RF North-Western region. Could you please tell about this year results for Greenway HC? Have you preserved your position at the market?
- We specialize mainly in import cargo. Over half of cargo forwarded by Greenway come to Russia via the port of Saint Petersburg. The rest volume of cargo is carried by trucks via land customs.
First of all, we specialize in container transportation. We handle a wide range of cargo – industrial equipment, construction materials, different types of chemical cargo, meat and meat products. Late in 2006 we have finalized a number of contracts on transportation of equipment for Gazprom OJSC, which started in 2002. This year we have carried out transportation and customs clearance of over 400 containers under these contracts.
As for the whole year of 2006, our final results may be not as high as those of 2005. I think our turnover will total 12 thou unit loads by the end of the year against 13.1 thou unit loads forwarded in 2005. The decrease should be mostly attributed to customs problems. Any management reshuffle of the customs always entails different inspections resulting in delays of document execution. The port was in a severe fever at the beginning of the year resulting in delay of cargo. It is spring decrease that resulted in negative dynamics of the year.
- What are the ways to raise transportation efficiency under situation of possible customs problems or other negative factors at the port of Saint Petersburg?
- This year decrease falls mainly on the cargo going via the port of Saint Petersburg. However, the market managed to respond promptly to the situation. Part of sea cargo was re-oriented to land routs with consequent increase of transportation costs for cargo owners. Cargo coming by highways were cleared at Saint Petersburg, Moscow and regional customs. Thus, these customs had higher cargo turnover in 2006.
If the cargo is manufactured in Europe and we have certain problems in the port of Saint Petersburg, we recommend our customer to carry it by motor transport. Of course, it increases transportation costs, which are to be incurred mostly by cargo owners.
It is quite a usual practice. When the customer needs to receive the goods in time regardless transportation costs, the goods are carried by trucks. In this situation the costs are higher but the time needed for transportation is less than in the case of sea transportation via the port. If transportation costs are more important than delivery period the cargo will be sent in container via the port. Of course, almost all cargo coming from overseas (America or China) are transported by sea. But the routes for this cargo flow are very different being not limited to the port of Saint Petersburg: containers may come to Russia via Finland, Baltic countries, Germany or Netherlands.
- What are your forecasts for 2007? What are the plans for Greenway development within several coming years?
- In 2007, we may have a record turnover growth - by 25% provided that we manage to fulfill all our plans.
First of all development program of Greenway HC implies opening of a new warehouse terminal at Kotka (Finland). I believe, the terminal will be put into operation early in 2007. The terminal covers the territory of 5,000 square meters, its capacity is 5,000 TEU per year. Cargo from Finland is to go to the customs of Saint Petersburg or Moscow depending on supply chain selected by the customer. Today our customers are ready to fill 70% of the new warehouse in Kotka.
Our second foreign project is to open Greenway representative office in China. Its organization is under way: we currently solve legal and personnel issues. The opening has been scheduled for February 2007. In future we plan to rent or to purchase a 1,000-2,000m2 warehouse complex in the port of Shanghai.
- What is the share of Chinese cargo in Greenway’s total turnover? What services are to be rendered at the representative office in China?
- About 70%. We count for a 20% growth of Chinese cargo in the first year of our new office operation (about 1700 TEU).
Those who buy Chinese goods often have certain difficulties in direct communication with Chinese side. We often encounter a situation when the goods coming to the customer’s warehouse differ from those the customer has ordered. It becomes clear only in Russia, which entails lots of problems with goods return. So an office representing Russian forwarding company will be of a great use in China.
Our personnel will perform reloading of containers, integration of cargo and surveyor control. The customers will be able to get containers with mixed of goods. Greenway will control delivery of the customer’s goods to Shanghai warehouse, check their quality, amount as well as fill containers, which are to be sent to Russia.
- You have told about Finnish and Chinese projects as part of international program for development of Greenway. What are the company’s plans for Russia?
- A 5,000 m2 warehouse center is under construction in the town of Shchelkovo (Moscow region). It is to be opened in spring-summer 2007. The warehouse will be used for storing of different types of cargo, handling and classification works not related to customs. The warehouse has been designed to place 7.5 thou pallets simultaneously, which is about 625 TEU. Cargo turnover of the warehouse may be about 10 000 TEU per year.
Besides, we are going to continue registration under a license for a Temporary Storage Warehouse and organization of a customs post there. Preliminary procedure for cooperation with customs has been determined already, though the project will be considered to be implemented as soon as the warehouse is built and put into operation. I hope we’ll have the license late in 2007.
- What is the value of the development program?
- Greenway will invest about EUR 10 million in 2006-2008. The program may be corrected so its final value will be clear as soon as the program is implemented. Besides the project above we have spent about $50 thou for re-branding.
- Speaking about cargo volume decrease in the port of Saint Petersburg we cannot but mention congestion at the approaches to the port. Cargo often has to stay in the port waiting for taking out, which results in high losses for both cargo owners and companies in charge of cargo delivery. What is the scale of these losses?
- Today we have a situation, when cleared container may spend up to a week in the port before they are moved out. We have big problems with it. On the eve of the New Year we will see congestion aggravation again. Volume of cargo usually multiplies on holidays and the port will be in a fever again, when carriers fail to manage taking out and the port fails to control loading.
One day of the container truck spent in the port means the loss of $150, or EUR 200 for a refrigerator container. It is usually difficult to explain the delay to the customer. It is not his business. We undertake to deliver cargo in time regardless any congestion so we have to incur extra costs or to include season factor into the costs.
Forwarder’s prompt attention may decrease the time, which containers spend in the port. Competence and promptness is of high importance in the port: it is necessary to find a devoted person, who is ready not to sleep thorough the whole night. Extensive experience is necessary here.
If our port at least vaguely resembled that of Europe there would not be any problems. We have recently visited the port of Hamburg to show our personnel the way the port operates. We could see that it takes about 15-20 minutes to take the container out of the port after it was unloaded to the berth. There is no congestion there at all. Everything is different there – the port is larger, the access roads are available, there is much more space there...
- Who is responsible for congestion in the port – port administration, customs, stevedores, forwarders or city authorities?
- The port is actually located in the center of the city. It is an old system not designed for large volumes of cargo. It is necessary to take away part of houses and to build roads so that trucks could enter the territory easily. I think it is important to invest into the port itself. It needs a state program. The western high-speed road is probably to solve part of the problems, but the construction has not been started yet.
Additional information from PortNews IAA
Marine forwarding holding Greenway was founded in 1995 in Saint Petersburg. Today Greenway is a group of companies operating at the market of customs and legal services, logistics, sea and motor transportation, oil products trading. At the market of customs services, logistics and transportation, the holding is represented by Greenway-Customs Broker, Greenway-Neva and Greenway-Moscow. Greenway has over 1000 customers including Amtelshinprom – subsidiary of wire holding Amtel; logistics company ATL Holding; Gazcomplektimpeks LLC – subsidiary of Gazprom OJSC; chemical plant GRINN-Plastic; fruit corporation JFC; construction hypermarket Maxidom (Laverna Trade House), Sibur AK oil company; Era-Henkel plant of household products; Lazertach textile company; TEKS PAINTS chemical company; Phoenix perfume-and-cosmetics company; Heineken brewing concern. GREENWAY-CONSULT provides complete range of legal services for Greenway customers.