Results of the year of 2022
Having partly recovered from the turbulence caused by the coronavirus pandemic, the shipping community expected the freight rates to be more predictable and the congestion in ports to be fixed in 2022. However, since February, life has made it adjustments in the world trade logistics again. IAA PortNews review is focused on how Russian business has passed through this year and what is expected in 2023.
Seaports of the Russian Federation entered the year of 2022 with a positive throughput dynamics: in January-December 2021 they showed a growth of 1.7%, year-on-year, to 835.2 million tonnes. In the 6-month period of 2022, the ports’ throughput fell by 0.5%, year-on-year, to 410.0 million tonnes. According to Zakhary Djioev, head of the Federal Marine and River Transport Agency (Rosmorrechflot), the authorities expect the results of the previous year to be kept and even exceeded by 2 million tonnes having reached 837 million tonnes. When speaking at the Eastern Economic Forum in Vladivostok, Russian President Vladimir Putin noted the positive dynamics of Russian seaports despite the attempts of external pressure.
“Over the past years Russia has implemented big plans for the development of transport infrastructure, railways and roads, seaports and pipelines. These timely decisions have made it possible for businesses to quickly rebuild logistics in today's conditions, and redirect cargo flows to those countries that are ready and willing to trade with Russia. Far Eastern ports are seeing a real logistics boom. The volume of cargo transshipment and container handling is such that specialists are working 24/7 to handle the workload,” the President said in September.
Shipping and logistics
The highest growth of throughput in 11M’2022 was seen in the ports of the Arctic Basin (+3.7%, 89.9 million), the Far East Basin (+1.6%, 209.4 million tonnes) and the Azov-Black Sea Basin (+1.9%, 238.3 million tonnes). Due to external factors, throughput of seaports in the Baltic Basin fell by 2.3% to 225.2 million tonnes.
The reduction of calls at Russia’s Baltic ports caused partial redirection of cargo to the southern and far eastern ports. We saw a growth of coal handling in the port of Taman but coal handling dynamics at the terminals of Russia’s North-West became positive again.
Amid high loading of the Eastern Polygon of Russian railways, debated between cargo shippers have intensified – coal producers, container operators and RF Government try to find a balance when using limited capacity of BAM an Transsib.
One of the major deals in 2022 was the purchase of Sakhalin Shipping Company (SASCO) by Delo Group for RUB 2.48 billion. Now, the transport and logistics company runs over 30 vessels and plans to extend its fleet with bulkers.
The issue of creating the national commercial fleet has been raised several times since February 2022. The need to operate independent vessels has become more acute after the insurance and chartering of vessels became complicated due to sanctions from the EU, the US and other countries. IAA PortNews used to report about the insurance market restructuring and the related problems back in the spring. However, the business is not quite interested in the construction of a specialized fleet in the Russian Federation so far. Many transport companies have not yet publicly announced the preparations for the construction of container ships or bulk carriers. The experts tell IAA PortNews that there are no examples of such projects in Russia while the terms of implementation risk going beyond the contract. However, signing of the first contract for the construction of dry cargo container ships in Russia for the North-South ITC was announced in the end of December.
The development of transport corridors has been given special attention by the government this year. The North-South ITC can take over part of cargo flows, which do not transit Russia today. Nevertheless, this corridor infrastructure, both port and railway one, needs to be developed in all transits states.
In the end of the year, the shipping industry saw news about the lawsuit involving FESCO. The Meshchansky Court of Moscow confiscated the shares of the FESCO Transportation Group, owned by the co-owner of the Summa Group, billionaire Ziyavudin Magomedov, who was sentenced to 19 years in prison. The next court hearings are scheduled for January so we are going to see the continuation of the story in 2023.
Shipbuilding and ship repair
In 2022, the alternative route of Russia, the Northern Sea Route, was strengthened with nuclear-powered icebreaker Ural of 22220 series which is under construction at Baltiysky Zavod shipyard. Ural is the second serial ship of Project 22220. The lead icebreaker Arktika and the first serial icebreaker Sibir have already been put into operation. The shipyard is currently building the Yakutia and the Chukotka icebreakers. Their delivery is scheduled for 2024 and 2026 accordingly. The contracts for construction of the 5th and the 6th icebreakers is to be signed in the near time.
Yet another significant segment of shipbuilding is the construction of tankers. In the very end of the year, Shipbuilding Complex Zvezda in Primorye delivered the lead oil tanker in the series of two Aframax ships ordered by Sovcomflot. The new LNG-powered tanker is named Okeansky Prospect. A total of 20 orders for modern ships with a total deadweight of about 2 million tonnes have been secured by Zvezda with participation of Sovcomflot. Among them are tankers for crude oil and petroleum products as well as Arctic gas carriers. The Shipyard’s order portfolio currently numbers 39 vessels (59 vessels including options) including ships for NOVATEK. However, it was hard to get comments from Zvezda this year. This indirectly confirms the words of IAA PortNews sources about the problems with the timely delivery of ships amid sanctions and disrupted supplies of equipment. Implementation of some orders can be thus delayed by at least a year.
In general, the authorities expect the programme for leasing of sea and river ships until 2030 to cover over 45 mid-size and large-size ships as well as over 50 small-size ships of mixed river/sea class including Arctic class ones, said Evgeniy Ditrikh, Chief Executive Officer of State Transport Leasing Company (GTLK).
Russia’s demand for construction of new ships by 2035 increased to 1,500 units, according to Victor Yevtukhov, Deputy Minister of Industry and Trade of the Russian Federation. He says the previous plan for construction of civil ships and equipment was based on the demand until 2035 estimated at slightly over 1,000 units. However, the Ministry of Transport and the Ministry of Agriculture have declared the need for additional units. The scope of capital investments needed for modernization of Russian shipyards so that they could build large ships is estimated at RUB 400-500 billion minimum, said Victor Yevtukhov. In his interview with RBC, the official confirmed that, RUB 130 billion will be allocated from the National Wealth Fund (NWF) for construction of 250‒270 civil ships. In September, the Ministry of Industry and Trade spoke about the allocation of 2.2 times larger amount – RUB 286.5 billion. The entire programme was then estimated by the Ministry at RUB 477 billion. The current version of the programme foreses the construction of ships only in 2023–2027 while earlier the resources were requested for a period up to 2032.
The last thing is to determine where those ships are to be to built. As of today, only Far Eastern shipyard Zvezda is capable of building such ships today. Dry dock of Severnaya Verf shipyard is not to be delivered before 2023. The third shipyard of that kind can appear on the Kotlin island (Saint-Petersburg), according to earlier statements of Rosatom. It can be loaded with the orders from Far Eastern Shipping Company. The parties are looking into building 16 universal dry cargo container ships and 8 tugs.
One more ambitious project should be mentioned – in August 2022, Russia’s first ice-resistant self-propelled platform, Severny Polyus (North Pole) built by Admiralteiskie Verfi shipyard was put into operation. It joined the fleet of the Arctic and Antarctic Research Institute (AARI). By today, the Severny Polyus has been operating for three months in the Arctic Ocean.
Read more about the projects announced by the investors on implementation of port projects in a dedicated article of IAA PortNews.
IAA PortNews is grateful to its audience for their attention in 2022! Our results are covered by a dedicated video in Russian! We wish you comfort and wisdom for the year of 2023!
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