Mind the closing window to Europe
In March 2022, container throughput of the Baltic Basin ports affected by the sanctions fell by 44% to 123,000 TEUs. The market players expect further plunging of container turnover to 95%. What is the future of container facilities the excess of which continues aggravating?
Great Port of Saint-Petersburg used to be considered as the sea gate for containers. According to the Administration of Russia’s Baltic Sea Ports, container handling in the port totaled 101,000 TEUS in March 2022, 44% less versus March of the previous year. In the port of Ust-Luga, it sank by 82% to 'ridiculous’ 573 TEUs, while the result of Kaliningrad totaled 21,800 TEUs having dropped by ‘only’ 36%.
The situation is clear: no other outcome could be expected when supply of consumer goods and equipment from western countries was terminated and major container lines rejected working with Russia.
According to Delo Group, major operator of container terminals in the Baltic Basin, out of 20 international container lines working with Russia, 14 lines accounting for about 70% of cargo turnover have left the country.
Even without the current extreme sanctions, considerable excess of container facilities in the Baltic Basin has been seen for the recent years. Infra Projects estimated it at 40% in pre-pandemic period. When the pandemic began and freight rates for deep sea shipping surged, Baltic terminals partially lost their container flows and the excess of facilities grew to 60%.
“The North-West region has been affected most of all — 90-95% fall (of volumes handled in ports - Ed.) is expected from May. With the North-West ports actually out of action, cargo shifting is underway, particularly to the Far East,” Dmitry Pankov, General Director of Management Company “Delo”, said at the plenary session of TransRussia conference.
However, the consequences of sanctions can be mitigated by altering logistics and containerization of cargo, Delo Group told IAA PortNews.
“The result of the year is expected to show a decrease, although smaller one as compared with that of the first two months, as well as gradual adjustment of logistic chains and the market,” Delo Group comments. Besides, the group’s terminals in the region handle considerable volumes of general cargo and the number of calls in the segment of dry bulk carries has seen a slight decrease.
The loss of cargo flows can be set off by launching new container services and new container routes as well as attraction of new clients.
Cargo containerization can also contribute to the process. The Baltic Basin of Russia now sees more exporters with used to transport non-containerized cargo via the Baltic states.
The loss of cargo flows can be set off by launching new container services and new container routes as well as attraction of new clients.
“In the North-West region, just like in other regions, the Group’s terminals have always had excess capacity since investment projects on development of port infrastructure normally feature a capacity margin. Evidently, the excess will exceed normal one amid the current situation but the terminals have all the strength, resources and competence to support the production potential of its facilities. The multi-profile portfolio of terminals in the North-West allows for effective handling of various cargoes both in Saint-Petersburg and in the Leningrad Region. We are not going to change the profile of our terminals,” said the Group.
Maxim Shishkov, Strategy and Development Director of FESCO Transportation Group, earlier told IAA PortNews about several factors able to facilitate containerization. When it comes to export, they include modernization of Russian companies focused on exports, creation of container yards and development of container infrastructure, interaction between exporters and carriers on calculations and long-term contracts in the part of container logistics, entry to new foreign markets, enhancement of container usage modalities.
Among the factors essential for internal transportation are improvement of storage facilities in the regions, creation of freight villages with railway and storage infrastructure within a single territory, modernization of the existing container yards.
Perhaps, amid the current transport blockade from the side of the European Union and challenges of land transportation to and from the Kaliningrad region, it could be reasonable to resume discussions on organization of a container line between Saint-Petersburg and Kaliningrad. MSCC Bronka could be a terminal of dispatch in Saint-Petersburg.
Anyway, large-scale structural transformation of Russian economy is expected in the second-third quarters of the year, Bank of Russia Governor Elvira Nabiullina has said recently. Obviously, this transportation will also cover logistics. The Baltic Region seems to lose its status of Russia’s container gate while the cargo flows will continue shifting eastwards and southwards.
More industry-related content is available on our social media pages: YouTube, Telegram, Twitter, Yandex Zen
