• 2017 September 4

    Iron horses bound for Saint-Petersburg

    Well known macroeconomical and geopolitical events have led to absence of demand for car handling facilities at the port of Ust-Luga. The remaining amount is flowing via Big Port St. Petersburg – MSCC Bronka, Petrolesport and Fish Port. Novorossiysk is still in demand for new cars imports to the southern regions of Russia.

    Logistic traditionalism

    Following the devaluation of rouble in 2014-15 the car market of Russia has shrunk. According to the Association of European Businesses, about 2.49 mln of passenger cars and commercial vehicles were sold in Russia in 2014, down 10.3% as compared with the year of 2013. In 2015, sales dropped by 35.75%, year-on-year, to 1.6 mln. In 2016, the decline slowed down to 11% - 1.42 mln of automobiles were sold. In the first half of 2017, the car market demonstrated a 6.9-pct growth with some 718,500 cars sold in Russia.

    Although the purchasing power keeps decreasing, the deferred demand is seen as well as tolerance to new prices. The growth is also expected in the second half of 2017 and in 2018. 

    Another trend is seen I the market: more and more car brands are manufactured in Russia allowing for reduction of their cost price. 

    Most of foreign cars are still imported to Russia via the terminals of the North-West Region and Novorossiysk. 

    As Anna Komarova, Head of FVL Commercial Department at GEFCO Russia, told IAA PortNews, imports of vehicles features a stable structure. Few manufacturers change logistic processes opting for new points of entry or Incoterms.

    Key sales market is the European part of Russia, primarily Moscow and Saint-Petersburg. Therefore, vehicles delivered to the ports of the North-West Region and the storage facilities of Moscow by car carriers have advantages in terms of the time of transit to the end dealer centers.
    Novorossiysk is handling flows from Turkey and southern Europe. 

    The expert also says that the mentioned routes are popular due to well developed infrastructure allowing for fast and proper handling of vehicles.

    “Stable” of Saint-Petersburg

    The years before the vehicle market fall saw implementation of large scale investment projects on construction of car handling terminals in the North-West of Russia. However, unforeseen events of 2014 led to absence of demand for such facilities and to using those terminals for other types of cargo.

    Among them are the terminals of Ust-Luga – Novaya Gavan (RTL Group) and Yug-2 (Commercial Sea Port of Ust-Luga). The mentioned terminals are currently handling general cargo, container and other Ro-Ro cargo. 

    The terminal of Big Port St. Petersburg (Sea Port of Saint-Petersburg OJSC) also changed the speciality. Sea Port of Saint-Petersburg told IAA PortNews that the company is not handling passenger cars amid the current market situation but it is handling other Ro-Ro cargo including special vehicles, trailer trains and trucks (more than 80,000 in the first half of 2017). 

    “We have focused on a different and promising cargo – containers. In December of the previous year, Sea Port of Saint-Petersburg launched a container service, which, apart from standard transshipment operations, includes additional services. Earlier, containers were delivered to the company’s terminals as cargo accompanying project/heavy/oversized cargo or in small batches by non-dedicated vessels. Now, Sea Port of Saint-Petersburg offers a Sea Connect line”, says the company. Therefore, from the beginning of 2017, containers showed a considerable growth - their transshipment via the terminal of Sea Port of Saint-Petersburg surged almost 3-fold to 11,900 TEUs (not including Container terminal Saint-Petersburg).

    As RTL Board member Konstantin Skovoroda told IAA PortNews, the growth is mostly seen in the sector of automobile assembled in Russia. So the ports do not feel the growth of car imports.

    Rough estimate of IAA PortNews shows that the share of imports in the sales of new vehicles does not exceed 15%.  

    Among the terminals which managed to withstand tough competition for car flows is Petrolesport (Toyota) and Fish Port in the North-West Region and the port of Novorossiysk in the south of Russia. 

    New terminal Port Bronka holds a special position – it managed to take over a flow of Wolkswagen cars from the Big Port St. Petersburg. In our opinion, if imports of vehicles grow, Port Bronka will account for that since the terminal enjoys the most advantageous location and extensive reserved space. Throughput capacity of Port Bronka’s Phase I is 260,000 Ro-Ro units.

    Vitaly Chernov