Automobile flow for a competitor
A number of projects related to construction of sea automobile terminals are in progress in Russia today. Though automobile market is growing actively, the capacity of Russian terminals handling automotive equipment are insufficient. Analysts forecast that sales of foreign cars are likely to grow by 20-30% by the end of the year. However the majority of them will be handled by Finnish ports. If all the announced projects are implemented, national ports will get the possibility to handle flows, which enter Russia via Finland today.
By-passing Russia
Automobile market of Russia has been demonstrated active growth dynamics in recent years. In the first half of 2007, total volume of automobile import grew by 42% in Russia. According to the data provided by the Federal Customs Service, in the 6-month period, Russia imported almost 700,000 cars the value of which exceeded $9 billion according to customs’ statistics. However the majority of these cars were handled by Finnish ports.
“As of today, Russia has no terminal specializing in transshipment of new imported cars,” Yuri Pognayev, Director General of Company Ust-Luga OJSC, told in an interview to PortNews IAA. “At the same time the country is short of such facilities." And, of course, part of our cargo flow is handled by foreign ports. Today some 75% of all cars going to Russia from Europe and South-Eastern Asia go via the ports of Finland and then transported by road via land border, which results in higher prices and congestions at customs points. The rest of cars imported to Russia (25%) are distributed between the Far Eastern ports and terminal of the Baltic states, which are also interested in drawing over of Russian import.
New terminals on the way
Today Russia witnesses implementation of a number of projects for construction of specialized automobile terminals. From September of the current year new specialized terminal is in operation in the port of Vladivostok700 meters are to be put into operation at the 3rd and the 4th berths to be used for loading of autorack wagons and platforms. The project is operated by Vladivostok Automobile Terminal LLC specializing in unloading, storage and forwarding of automobile equipment. In future it is to serve as customs broker as well. Experts say that reasonable logistics of the terminal with centralization of all procedures related to shipment of automobile equipment under one umbrella (from unloading in the port of Vladivostok to railway transportation) will be able to return former flow of cars from the Finnish ports to the Far East. However, this terminal is, perhaps, the only specialized terminal in the region. at the territory of the largest stevedoring company Vladivostok Commercial Seaport LLC. The terminal’s facilities include 3 warehouses for storing automobile equipment including new 10-tier parking for up to 1,000 cars. In the early stage of operation the terminal is supposed to handle up to 7,000 units per month, while by the end of the next year the capacity is to grow to 10,000 units per month. In the nearest future, railroad sidetracks with total length of
The majority of projects concentrate in the North-Western region of Russia close to its major competitors – Finland and Baltic states.
Two automobile terminals have been built in St. Petersburg within two recent years. In 2006, Russian Transport Lines LLC and Oslo Marine Group opened a multi-purpose transshipment complex Onega in the port of St. Petersburg. However, the terminal does not have its own berth. “This terminal was designed as a rear terminal. Today it accepts automobiles in one place and then they are transported to Onega to wait for further transshipment. I think rear terminals have low perspectives,” Stanislav Zingerenko, Logistics Director of Sterh corporation told in one of his interviews.
According to Konstantin Skovoroda, Director General of RTL LLC, transshipment of automobiles in the port of St. Petersburg is more expensive as compared with Finnish ports. “However, reduction of a supply chain and time of delivery to Russia as well as liquidation of idle time related to operation of Russia-Finland border and hence decrease of customs costs, direct delivery to Russian port makes it possible to save from $300 to $500 per car,” Mr. Skovoroda says.
Another terminal specializing in transshipment of automobiles was opened in June 2007 by St. Petersburg value of the terminal totaled $1 million. Theterminal’s facilities include a storage ground for 2,500 cars. According to the company the terminal will be capable of handling 240,000 cars per year. stevedoring company Sea Fishing Port LLC jointly with RTL. The
Besides recently implemented projects there are plans for construction of similar facilities at the shore of the Gulf of Finland announced by a number of Russian companies.
In particular, Sea Port of St. Petersburg plans to complete construction of a terminal for 80,000 cars by the end of the year. The largest project in Leningrad region is operated by Company Ust-Luga OJSC, which is a customer-developer of Ust-Luga port. The company is building a multi-purpose terminal Yug-2 for transshipment of imported cars and ro-ro cargo. "Last year, the ports of Finland handled over half a million new cars, while design capacity of Yug-2 terminal is 360,000 cars per year,” Yuri Pognayev notes. “When Yug-2 is put into operation we will redirect this cargo flow to our port.” The terminal will cover the territory of some 100 hectares. At the initial phase (after quarter 4 of 2007) the terminal will handle 100,000 cars per year. The design capacity will be reached by Yug-2 in 2008-2009.
The second terminal in the Leningrad region – Novaya Gavan (New Harbor) – will also be built by Russian Transport Lines close to Vistino village of the Kingisepp region. Investments in to the project are to total $120 million. The first phase of Novaya Gavan (120,000 cars per year) is to be put into operation in late 2007. After the project is completed in two years it will be able to handle up to 250,000 cars per year.
Competitors’ possibilities
Meanwhile, turnover of cars is permanently growing in the ports of Finland. The port of Helsinki, Hamina, Hanko,Turku and Kotka specialize in handling of cars. Our main competitor – the port of Turku – plans to handle 300,000 cars in 2007. Besides, in autumn of the current year the port plans to expand its automobile ground from 20 hectares to 90 hectares.
According to data provided by St. Petersburg Committee on Transport-and-Transit Policy, Russia’s lack of specialized automobile port facilities results in annual loss of RUR 1.5 billion while Finnish ports earn at least $18 million within the same period when handling cars going to Russia. Experts say implementation of all the announced projects will make it possible for Russian ports to return part of the flows, which currently go to Russia via Finland.
Greenway-Customs Broker CJSC believes that Finnish ports are overloaded today. “Despite permanent increase of cargo flow running via the ports of Finland they are unlikely to continue it,” the company’s representatives say. At the same time, there is an opinion that new terminals in Vistino and Ust-Luga will decrease congestion at the border.
However, besides Russian projects in the North-Western region two other ports have good possibilities for construction of automobile transshipment complexes – the port of Paldiski (Estonia) and the port of RigaLatvia). According to Konstantin Skovoroda, the port of Riga has the best perspectives. “Complicated relations between Russia and Estonia will prevent sufficient development of this direction,” Mr. Skovoroda says. According to him, the advantage of Riga is its location in EU zone, which enables it to accept all types of ferries including ocean-going ones. Besides, it has convenient railway link with Russia and CIS countries. Among other advantages of the port of Riga, RTL Director General notes its experience in terminal management and existence of information system ensuring on-line data exchange between manufacturer, terminal, border and customs services and dealers. (
Experts forecast that import of new foreign cars will continue to grow in the nearest future. By the end of the year the sales will grow by 20-30%, which is to make $14 billion. By 2010, Russia will take the first place in Europe in terms of automobile sales. However Russian import will continue to go via neighbor ports if Russia fails to solve a number of urgent issues including optimization of customs procedures and tariff policy related to construction of new terminals.