General Director of Rostov Universal Port Andrei Leshchenko: “In 2010 our port will see a threefold rise in freight traffic volume”
Multimodal transport logistics hub Rostov Universal Port is an ambitious project that can change the usual logistical schemes of handling coal, grain, fertilizers, metals and containers in Southern Russia, including transportation via inland waterways. In a recent interview with PortNews IAA Andrei Leshchenko, General Director of RUP has told about the current project achievements, development plans, its advantages and prospects.
- Please tell us about the project and the benefits of the multimodal transport logistics hub Rostov Universal Port.
- The project to create a multi-modal transport logistics hub was developed in 2006, but the idea of building a new major port in Rostov is not new. 40 years ago a port had been projected at the current RUP construction site, but, for some reasons, the idea was not implemented at the time.
In recent decades, there has been an emerging trend of withdrawal of Russian freight flows to neighboring countries. If we talk about the southern direction, that is, of course, Ukraine, since all the major port complexes remained there. There is not enough capacity in the South to handle all the existing volume of export cargo traffic, which passes through the countries of the Azov-Black Sea Basin and the Mediterranean Sea. We are not able to handle our own goods and have to give it to the neighboring countries.
There are a lot of port facilities in the Don, but there is no modern universal port, which could process all kinds of cargo. Rostov Port has many advantages compared to existing ports of our region. Take, for example, such ports as Azov, Yeisk, Taganrog, they are all located in the city boundaries, and their further development is limited to residential neighborhoods. We have no such restrictions that allow us to create specialized centers, and thus make the cost of handling cheaper. Besides, we have transport interchanges, and the territory, making it possible to further develop the port.
There is still a high demand in the region. Delivery logistics (mainly to the Black Sea ports of Turkey) via the port of Rostov is very attractive in comparison even with the Ukrainian ports. The main advantage is the price. In addition, target markets for deepwater fleet and of river-sea going vessels (up to 5,000 dwt) are different. 50,000-70,000DWT ships operate on distant markets, and they turn out quite expensive to operate on the line, say, from the Ukrainian Yuzhny port to the Black Sea ports of Turkey due the charter cost. Therefore, we can easily let some freight volume through our region.
The project of a multi-modal transport logistics hub Rostov Universal Port (MMTLH RUP) is included in the Federal target program "Modernization of Transport System of Russia" under the subprogram "Development of exports of transport services”.
To date, the project general designer have been chosen in an open bidding for contract. RUP design development is carried out: layout of objects, roundabouts, traffic approaches, approach canal depths, etc., the Federal RosTransModernizatsiya is a customer of the project.
- What has been done and what remains to be built? How soon you will reach the target cargo transshipment volume?
- At the moment we have upgraded the port’s first cargo area and the first stage of the coal terminal has been completed. Currently three berths of the port has already started handling brand and energy coal. We have projected to transship this year the volume of 1-1.2 million tons of coal.
Currently the design of the second phase of the first cargo area is being carried out, which involves the creation of assembly lines for handling energy coal, installing car dumpers and other technological areas.
As a result, the development of the first cargo area of the port will allow handling more than 3 million tons of coal a year. Including, some 2,5 million tons of energy coal conveyor through conveyor transshipment, and some 1 million tons of brand coal by clamshell handling. We plan to launch this facility by the end of 2011 and it will be operating in 2012 by the beginning of the summer navigation.
- Which companies will supply coal to the port?
- Now our main partner in the supply of coal is Siberian Business Alliance Hodling, but there are smaller suppliers. We are negotiating with other industry leaders.
- What are the goods except coal, you plan to attract to the port?
- Speaking of other cargoes, in addition to coal, the calculations show that there are logistical advantages to ship fertilizer through our port. Actually, there are no terminals for handling fertilizer in Russia’s South region, they are in Ukraine, but with high transport fares.
- Please tell us about the project and the benefits of the multimodal transport logistics hub Rostov Universal Port.
- The project to create a multi-modal transport logistics hub was developed in 2006, but the idea of building a new major port in Rostov is not new. 40 years ago a port had been projected at the current RUP construction site, but, for some reasons, the idea was not implemented at the time.
In recent decades, there has been an emerging trend of withdrawal of Russian freight flows to neighboring countries. If we talk about the southern direction, that is, of course, Ukraine, since all the major port complexes remained there. There is not enough capacity in the South to handle all the existing volume of export cargo traffic, which passes through the countries of the Azov-Black Sea Basin and the Mediterranean Sea. We are not able to handle our own goods and have to give it to the neighboring countries.
There are a lot of port facilities in the Don, but there is no modern universal port, which could process all kinds of cargo. Rostov Port has many advantages compared to existing ports of our region. Take, for example, such ports as Azov, Yeisk, Taganrog, they are all located in the city boundaries, and their further development is limited to residential neighborhoods. We have no such restrictions that allow us to create specialized centers, and thus make the cost of handling cheaper. Besides, we have transport interchanges, and the territory, making it possible to further develop the port.
There is still a high demand in the region. Delivery logistics (mainly to the Black Sea ports of Turkey) via the port of Rostov is very attractive in comparison even with the Ukrainian ports. The main advantage is the price. In addition, target markets for deepwater fleet and of river-sea going vessels (up to 5,000 dwt) are different. 50,000-70,000DWT ships operate on distant markets, and they turn out quite expensive to operate on the line, say, from the Ukrainian Yuzhny port to the Black Sea ports of Turkey due the charter cost. Therefore, we can easily let some freight volume through our region.
The project of a multi-modal transport logistics hub Rostov Universal Port (MMTLH RUP) is included in the Federal target program "Modernization of Transport System of Russia" under the subprogram "Development of exports of transport services”.
To date, the project general designer have been chosen in an open bidding for contract. RUP design development is carried out: layout of objects, roundabouts, traffic approaches, approach canal depths, etc., the Federal RosTransModernizatsiya is a customer of the project.
- What has been done and what remains to be built? How soon you will reach the target cargo transshipment volume?
- At the moment we have upgraded the port’s first cargo area and the first stage of the coal terminal has been completed. Currently three berths of the port has already started handling brand and energy coal. We have projected to transship this year the volume of 1-1.2 million tons of coal.
Currently the design of the second phase of the first cargo area is being carried out, which involves the creation of assembly lines for handling energy coal, installing car dumpers and other technological areas.
As a result, the development of the first cargo area of the port will allow handling more than 3 million tons of coal a year. Including, some 2,5 million tons of energy coal conveyor through conveyor transshipment, and some 1 million tons of brand coal by clamshell handling. We plan to launch this facility by the end of 2011 and it will be operating in 2012 by the beginning of the summer navigation.
- Which companies will supply coal to the port?
- Now our main partner in the supply of coal is Siberian Business Alliance Hodling, but there are smaller suppliers. We are negotiating with other industry leaders.
- What are the goods except coal, you plan to attract to the port?
- Speaking of other cargoes, in addition to coal, the calculations show that there are logistical advantages to ship fertilizer through our port. Actually, there are no terminals for handling fertilizer in Russia’s South region, they are in Ukraine, but with high transport fares.
Its also more appropriate, to ship through our port metal, since we are experienced in handling metals: the company DonRechFlot had transported metals of Mechel Group with transshipment at Rostov Universal Port and further to its destination to Romania and Turkey.
As many of the largest grain producers are based in our region, it is also planned to transship grain cargo via our port. Grain terminal capacity could reach 1.5 million tons a year. These figures correspond to the volume of grain, which is cropped in the Rostov region and in the closest regions. The new terminal will be built in 2 phases, the first to be launched by 1 July 2011. We are now actively looking for co-investors among cargo owners for this project that would provide its cargo base, at least 50% of the terminal capacity.
Also, it should be taken into account the grain market of Kazakhstan, which has been traditionally linked to the south of Russia and seeking access to the water. Just to remind, the annual export potential of Kazakhstan is 12 million tons.
We are planning to handle containers at the new port. The major consumers of containerized cargo are now in the central regions of Russia. Delivery time of containerized cargo through the southern ports is 12 days shorter than via the north-west ports. However, in the Southern Russia, except the port of Novorossiysk, there are virtually no container terminals. And Novorossiysk is severely restricted in the development of transport infrastructure. As to our port it is located in the heart of many railway junctions. According to various forecasts, we will be able to handle by 2015 200 to 500 thousand TEUs. We also count on the growth of containerized cargo flows. While the average for Russia, containerization currently makes up 10%, on the southern basin it its only 3%, and the world average - all 40%.
This year it is planned to conclude contracts for the supply of equipment for the container terminal, under which you can use two additional quay walls being built at the port. And from early 2011, we are beginning to operate with containers, counting on significant box traffic growth from 2013.
- What is the ratio of river ships, rive-sea going vessels and seagoing ships?
- With regard to coal, we operate only the fleet of river-sea going vessels. Coal is loaded onto ships at our terminal from rail transport, which delivers coal from Siberia. Fertilizers and metals will be delivered to the port primarily by river vessels and then transshipped to the river-sea going ships for further export through the Azov and Black Seas.
- What is the total amount of investment directed to your project, and how much money has yet to be spent?
- In 2008-2009, total investment in the acquisition of basic infrastructure facilities, modernization of existing ones, construction of new infrastructure and equipment amounted to about 1,5 billion rubles. In 2010, we are planning to invest up to 600 million rubles, if the investment climate will be favorable. The funds will be spent on the construction of two additional quay walls 300 running meter long, the acquisition of cranes, the creation of additional railway lines, road interchanges, ie, for entire port infrastructure. Also, the funds will be directed to the design of future facilities.
- Is the railway infrastructure ready for the normal functioning of the project, how is your cooperation with RZD OJSC (Russian Railways) developing?
- It is also important that our project is part of the Federal program. In June 2010 a joint meeting will be held in Rostov-on-Don with representatives of the Russian Railways, where we will map out future development. It is now possible to raise the issue of providing the RUP project with rail capacity as a priority. At the same time RosTransModernizatsiya has intensified its work with the Federal Agency of Railway Transport. Their representatives are expected soon at the North-Caucasian Railroad to focus on increasing the capacity of railroads to meet the needs RUP project.
Now the main freight flow is passing through the Zarechnaya Railway Station, but there is still a spare Kazachiya Station, which had been mothballed. Now it is possible to put into operation this station and connect it with the MTLH RUP facility, which will fully meet their needs. In global terms, in terms of RZD plans, it does not require large expenditures. In fact, all that had been once planned, even in the Soviet Union, so we will not have to " re-invent the wheel".
- How much cargo was transshipped via the port in 2009, and how is projected to be handled in 2010?
- Last year the volume of transshipment amounted to 500,000 tons, and this year, according to my estimates, it will exceed 1.7 million tons. This is coal, feldspar, metals and scrap, grain.
- Has the project been adjusted in connection with continuing negative trends in the global economy?
- Grain and coal are those goods, which volumes never dropped even during crisis, and continue to grow. Fertilizer volume dipped, but it will quickly recover.
Coal demand remains stable, with a tendency to increase. This was due to the difficulties with gas supply in Europe, and the tendency to reduce dependence on gas. Demand for fertilizer is also constant, since it is used for grain production. As for grain, the demand is traditionally high as the major food.
- The customs and logistics terminal has started operating at the port. Have the plans for its development been coordinated with the development of the port facilities?
- Of course, its development is part of the overall MTLH RUP project, it will contribute to the attractiveness of the overall project. Currently it processes the goods that are transported there by road. From 2012 the terminal will process containers, then it will interact with the port directly.
Interviewed by Vitaly Chernov
As many of the largest grain producers are based in our region, it is also planned to transship grain cargo via our port. Grain terminal capacity could reach 1.5 million tons a year. These figures correspond to the volume of grain, which is cropped in the Rostov region and in the closest regions. The new terminal will be built in 2 phases, the first to be launched by 1 July 2011. We are now actively looking for co-investors among cargo owners for this project that would provide its cargo base, at least 50% of the terminal capacity.
Also, it should be taken into account the grain market of Kazakhstan, which has been traditionally linked to the south of Russia and seeking access to the water. Just to remind, the annual export potential of Kazakhstan is 12 million tons.
We are planning to handle containers at the new port. The major consumers of containerized cargo are now in the central regions of Russia. Delivery time of containerized cargo through the southern ports is 12 days shorter than via the north-west ports. However, in the Southern Russia, except the port of Novorossiysk, there are virtually no container terminals. And Novorossiysk is severely restricted in the development of transport infrastructure. As to our port it is located in the heart of many railway junctions. According to various forecasts, we will be able to handle by 2015 200 to 500 thousand TEUs. We also count on the growth of containerized cargo flows. While the average for Russia, containerization currently makes up 10%, on the southern basin it its only 3%, and the world average - all 40%.
This year it is planned to conclude contracts for the supply of equipment for the container terminal, under which you can use two additional quay walls being built at the port. And from early 2011, we are beginning to operate with containers, counting on significant box traffic growth from 2013.
- What is the ratio of river ships, rive-sea going vessels and seagoing ships?
- With regard to coal, we operate only the fleet of river-sea going vessels. Coal is loaded onto ships at our terminal from rail transport, which delivers coal from Siberia. Fertilizers and metals will be delivered to the port primarily by river vessels and then transshipped to the river-sea going ships for further export through the Azov and Black Seas.
- What is the total amount of investment directed to your project, and how much money has yet to be spent?
- In 2008-2009, total investment in the acquisition of basic infrastructure facilities, modernization of existing ones, construction of new infrastructure and equipment amounted to about 1,5 billion rubles. In 2010, we are planning to invest up to 600 million rubles, if the investment climate will be favorable. The funds will be spent on the construction of two additional quay walls 300 running meter long, the acquisition of cranes, the creation of additional railway lines, road interchanges, ie, for entire port infrastructure. Also, the funds will be directed to the design of future facilities.
- Is the railway infrastructure ready for the normal functioning of the project, how is your cooperation with RZD OJSC (Russian Railways) developing?
- It is also important that our project is part of the Federal program. In June 2010 a joint meeting will be held in Rostov-on-Don with representatives of the Russian Railways, where we will map out future development. It is now possible to raise the issue of providing the RUP project with rail capacity as a priority. At the same time RosTransModernizatsiya has intensified its work with the Federal Agency of Railway Transport. Their representatives are expected soon at the North-Caucasian Railroad to focus on increasing the capacity of railroads to meet the needs RUP project.
Now the main freight flow is passing through the Zarechnaya Railway Station, but there is still a spare Kazachiya Station, which had been mothballed. Now it is possible to put into operation this station and connect it with the MTLH RUP facility, which will fully meet their needs. In global terms, in terms of RZD plans, it does not require large expenditures. In fact, all that had been once planned, even in the Soviet Union, so we will not have to " re-invent the wheel".
- How much cargo was transshipped via the port in 2009, and how is projected to be handled in 2010?
- Last year the volume of transshipment amounted to 500,000 tons, and this year, according to my estimates, it will exceed 1.7 million tons. This is coal, feldspar, metals and scrap, grain.
- Has the project been adjusted in connection with continuing negative trends in the global economy?
- Grain and coal are those goods, which volumes never dropped even during crisis, and continue to grow. Fertilizer volume dipped, but it will quickly recover.
Coal demand remains stable, with a tendency to increase. This was due to the difficulties with gas supply in Europe, and the tendency to reduce dependence on gas. Demand for fertilizer is also constant, since it is used for grain production. As for grain, the demand is traditionally high as the major food.
- The customs and logistics terminal has started operating at the port. Have the plans for its development been coordinated with the development of the port facilities?
- Of course, its development is part of the overall MTLH RUP project, it will contribute to the attractiveness of the overall project. Currently it processes the goods that are transported there by road. From 2012 the terminal will process containers, then it will interact with the port directly.
Interviewed by Vitaly Chernov