• 2016 January 26

    Liquid bulk Baltic

    There was a trend in operation of the Baltic Sea based Russian ports in 2015: the terminals throughput statistics showed a shift from handling best-paying loads to raw commodities. The trend will likely continue in 2016.

    Container dream
    In 2015 total freight throughput at Big Port St. Petersburg fell year-on-year by 16% with container traffic volume sinking by 27.8% to 1.71 million TEUs. And this happens in the Baltic basin ports that are the country's major container gateway...

    The notable decline in containerized cargo is indicative and is attributed to global geopolitical and economic processes. Since the consumer goods and food products are imported in containers, the demand for them is suffering primarily due to counter-sanctions, ruble devaluation and falling household income. Interestingly, the seaports have seen the same decline in container traffic during the crisis of 2009. Accordingly, the terminals handling imported vehicles were also hit amid plummeting automobile market.

    There several Russia's terminals in the Baltic Sea that handle containers: PKT, Petrolesport, Ust-Luga Container Terminal, Moby Dik (Global Ports Group), Container Terminal Saint-Petersburg (Sea Port St. Petersburg Group), partly Neva-Metal (Severstal Group), Yug-2 (Ust-Luga Company), Baltic Stevedoring Company (Kaliningrad), Sea Fishing Port (St. Petersburg), Rusmarine Forwarding (St. Petersburg). Some of the above facilities also transship Ro-Ro cargo: Petrolesport, Sea Port St. Petersburg, Sea Fishing Port, Yug-2 and Novaya Gavan.

    The list was expanded with a newcomer, outer harbor Bronka, a multipurpose transshipment terminal in St. Petersburg. The facility is set to reach its projected annual capacity of 1.4 million TEUs and 130,000 cars in 2016.

    Conterization of freight has appeared to be a solution for some terminals. So, the companies FosAgro and Ultramar (Russia's largest carrier of conainerized fertilizers) created their own operator Smart Bulk Terminal for handling fertilizers using a yard of Yug-2. Fertilizers are stored in containers but then loaded onto ships in bulk.

    However, to revive the Russian container terminals should try to attract their portion of container flows coming to Russia from the ports of neighboring countries, which is about 200,000 TEUs a year, as we covered the issue in an earlier article >>>>

    There is a solution that could potentially help Russian container terminals: to attract Chinese transit flows, to have a branch of Silk Road route in the Russian Baltic. But it is an ambiguous question and not in the short term.

    Since it is unlikely that oil prices will likely not grow significantly this year, we won't see as well a noticeable recovery of Russian container terminals. In a perfect world, we would like to see how our import container terminals eventually turn into export ones, but it is only a dream.

    Liquid bulk changes

    Liquid bulk volumes at Russian ports in the Baltic Sea grew by 6.7%  to 140.7 million tonnes, including 72.7 million tonnes of crude oil (+9.5% YoY), 68 million tonnes of oil products (+3.9%).

    Surprisingly, if we talk about crude oil, its volume growth was driven by the commodity prices slump on the global markets. Russia has joined the global price war, trying to keep their market share.

    In 2015 Russia exported via the Port of Primorsk 45,14 million tonnes of crude oil or 7% more than a year before, crude shipments through the Port of Ust-Luga grew by 15%, reaching 26,81 million tonnes. It should be noted that according to previously announced plans of Transneft the flow of oil through Primorsk should not grow as there is a conversion of the pipeline for pumping Euro 5 standard diesel fuel.

    With regard to the Ust-Luga, crude oil is handled at the terminal Neva Pipeline Company. The design capacity of the facility is 38 million tonnes of crude oil per year. Accordingly, in the case of the further growth of oil exports through the Baltic Sea region major volume of the commodity will be largely transshipped at Ust-Luga.

    Big Port of St. Petersburg saw a decline in petroleum products with a simultaneous increase in volumes at the Port of Ust-Luga with a 19% gain to 30.5 million tonnes thanks, primarily, to the development of the terminal Ust-Luga Oil. In 2015 the terminal reached its full capacity limit of 30 million tonnes per year. The terminal exported about 10.7 million tonnes of light products, including 8 million tonnes of stable gas condensate (SGC) produced by NOVATEK and 17.5 million tonnes of heavy fuel oil. Thus, the terminal has partially attracted some fuel oil volumes previously exported through St. Petersburg, where, among other things, offshore transshipment terminals did not operate last year. The decline in products volume at St. Petersburg was also attributed to problems with inland navigation.

    In the Port of Primorsk, a 29-percent spike in oil products volume (14.5 million tonnes) is associated with the above mentioned specialization of the pipeline.

    Last year also saw an increase in products volume at Port Vysotsky, at the offshore transshipment terminal RPK Vysotsk LUKOIL-II. In 2016 throughput of the terminal will continue to grow as the Primorsk-Vysotsk pipeline should start to supply diesel fuel up to 3 million tonnes per year (increasing capacity to 5 million tonnes annually).

    Coal and something else

    Rosterminalugol in Ust-Luga and Port Vysotsky are major export coal terminals in the Baltic Sea. Also, coal is exported through the ports of Vyborg and Kaliningrad, but in much smaller volumes. Overall, coal throughput at the region's ports increased in 2015 by 9% to 28,18 million tonnes. The above terminals reported growth. From August 2012, the coal terminal at Vysotsk port started handling Panamax bulkers. Development of coal terminals in the Russian Baltic facilitated reorientation of this cargo in Russia. For example, coal shipments through Baltic Coal Terminal at Latvia based Port of Ventspils plummeted by 45% to 1.9 million tonnes.

    Fertilizers, is another cargo for the Russian Baltic ports. Overall, its volume rose 17.1% to 10.27 million tonnes. Talking about this type of load, it should be noted the creation of a new stevedoring company in Ust-Luga – the aforementioned terminal Smart Bulk Terminal, which also attracts some fertilizer volume from the ports of neighboring countries (2015 – about 1.5 million tonnes).

    Throughput of Kaliningrad port fell by 9% to 12.7 million tonnes. This port is a kind of hostage to the geographical situation of the Kaliningrad region, where freight traffic to and from depends on the railway tariffs of Lithuania and Belarus. Authorities in the region have long lobbied for plans to build a deep-water container hub in the region that could compete with European harbors (Read more >>>>). However, the budget deficit and economic dubiousness of this project makes it unfeasible.

    Generally speaking, it may be noted that the situation in the Baltic ports reflects the state of the Russian economy: increasing commodity exports amid falling demand for imported goods due to lower purchasing power. At the same time, a weak ruble opens up opportunities for investors, with USD, EUR revenues, to invest in infrastructure development. The main thing is that it should be in demand later.

    Vitaly Chernov.