Ports of Russia’s Southern basin in focus amid new conditions
Amid the eastward pivot of logistics, the ports of Southern sea basin began to play with new colors. The ports in the South get good opportunities in the segments of grain, coal, fertilizers and reefer containers. However, it is necessary to develop railway infrastructure and organize new regular services to ensure the potential realization.
The situation in the ports of Russia’s Southern sea basin and their prospects were discussed at the 19th Transport Forum ‘YugTrans-2023’ held with the participation of IAA PortNews. In the first half of 2023, the ports of the Southern basin demonstrated the best dynamics as compared with other basins and accounted for the largest share in the total throughput.
The highest dynamics was demonstrated in the segment of dry cargo (+33%) while liquid cargo showed a lower growth (+12%).
The Southern basin ports have virtually no alternatives when it comes to handling of grain and the have good prospects for handling of mineral fertilizers and, under some conditions, coal. The situation with containers is more difficult: as the loaded imports and especially exports are decreasing, handling of reefer containers is increasing and there are preconditions for launching of new services. The need to develop railway approaches to the ports of the basin is marked in all cases.
By bread alone
The ports of the Azov-Black Sea Basin have no alternatives for grain exports from Russia: they account for some 90% of all grain shipments by sea while there is a shortage of dedicated grain terminals in the ports of other basins. Certain growth of grain handling is possible in the ports of the Baltic basin since some facilities have changed their focus to grain (Port Vysotsk), However, that does not change the general situation so far. In the first half of the year, the ports of the Azov-Black Sea basin demonstrated the growth of grain by 2.3 times to 30.6 million tonnes. A considerable growth was seen in the Caspian basin but the absolute figures are not high.
In general, grain exports from the ports of Russia are forecasted to grow. In 2022, the country exported 45.2 million tonnes, by 2024-2025 – grain exports can reach 60 million tonnes.
In 2022, the ports of the Azov-Black Sea basin showed an impressive growth of coal – by almost 20% amid the decrease of grain handling in the ports of the North-West Region and a slight growth in the Far East ports. The situation was explained by the launching of a coal terminal in the port of Taman able to handle large bulkers with a deadweight of up to 220 thousand tonnes.
In the first half of 2023, the situation changed and the ports of the Southern basin handled 13% less coal than in the same period of the previous year amid the growth in other sea basins. That is due to the change of the price situation in the global coal market: after a sharp increase in 2022 the prices started showing as sharp decrease to the level of 2021, thus making coal shipment via the North-West ports profitable again. Nevertheless, the Southern basin is still seen as a promising one for coal exports thanks to availability of a deep-water terminal while the price situation is changeable.
To fertilize the market
One more promising type of cargo for the ports of the Southern basin is fertilizers. In the first half of 2023, the ports in the basin increased handling of mineral fertilizers 1.7 times to 2.4 million tonnes although major dedicated facilities are located in the Baltic area. In fact, the ports of the Southern basin have a shorter transport leg as compared with the Baltic ones when it comes to the redirection of exports to Asia and Africa while there are no dedicated terminals in the Far East.
Containers: it’s complicated
The situation with containers in the Southern basin is quite challenging. On the one hand, there is a decrease in both import and especially export of loaded containers. On the other hand, there is a growth in the segment of reefer containers.
As Aleksey Garmash, General Director of Novomorsnab, said at the Forum, exports of loaded containers in the first half of 2023 fell by almost 30%, year-on-year, while loaded imports saw not that sharp decrease — about 6%.
“Export of loaded containers, which had been the main driver over the recent years, fell quite strongly in 2022, and also experienced a significant drop in the first six months of 2023. This is due to the fact that the geography of new container services was focused primarily on imports, while exports, being cheaper and more likely to compete with the bulk cargo, lost volumes, hence a large increase in handling of empty containers. Loaded imports did not sink so much and by the end of 2023, they will most likely be comparable to the results of 2022,” commented the head of the company.
Aleksey Garmash also marked a significant growth of diversification in the market of container operators.
“We have got lots of new players, competition in the market has intensified and, as part of the general trend towards lower rates, this is a positive development for shippers, but, unfortunately, not for line carriers. The leading players from unfriendly countries have been replaced completely, including with domestic ones. There are also lines from friendly countries: Chinese, Arab, Turkish,” the expert said.
At the same time, limited capacity of railway routes drives the launching of new deep sea container lines. As Anatoly Markin, head of FESCO’s commercial block in Novorossiysk, minimum frequency of such a service accepted by the market is one in two weeks, optimal capacity of the fleet — 2,000 to 4,000 TEU. If stakes are put on a company’s own fleet, significant investments are needed as well as an access to the freight market (for major players). An alternative is a partnership with the third players via the alternative transshipment ports. The key directions of such services are as follows: China – Saint-Petersburg, China – Istanbul – Novorossiysk, China – Vladivostok.
As IAA PortNews wrote earlier, Andrey Severilov, Chairman of FESCO BoD speaking at TransRussia forum in April 2023 shared FESCO plans to put 5-6 ships on Deep Sea route from China by the end of 2023.