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2014 February 27

Inspection is coming

The headquarters of Saint-Petersburg Government on lowering of administrative barriers suspects container terminals and shipping lines of cartel agreement. However, experts say the rates in the North West ports are lower as compared with the Far East ones which see the boosting container flow now.

Jumping over the barriers

The meeting of Saint-Petersburg Administration’s working group on improvement of customs administration and export support has been recently held by the headquarters of Saint-Petersburg Government on lowering of administrative barriers. A decision was taken to submit to the Federal Antimonopoly Service and the Federal Customs Service a proposal on inspection of container terminals and the largest shipping lines of Big Port St. Petersburg in order to find out if there is a cartel agreement for overrating of their services.

It should be reminded that no price control of natural monopoly entities is currently applied at seaports of the Baltic Basin including Big Port St. Petersburg with the terminals setting their own rates.

The year of 2013 saw a stagnation of container throughput growth rates at Big Port St. Petersburg. The argument against the rate policy of Saint-Petersburg companies says that container throughput in the Northern capital gained only 1.7% in 2013 while the Far East ports saw a 17.7-pct increase. However, in January 2014 container throughput of Saint-Petersburg terminals increased by 4.9% against 14.7% in the Far East ports. 

Meanwhile, market participants questioned by IAA PortNews say that the difference in the results does not speak for “price-fixing” at Saint-Petersburg port.

They believe the rates of the Far East stevedoring companies are much higher as compared with those in the Far East region but starting from 2012 customs clearance of Chinese consumer goods is more profitable in the Far East which was initially connected with the APEC summit and now is explained by the necessity to support the remote territories of the countries.

At port Saint-Petersburg, the rates of basin distribution of cargoes can hardly exert any significant impact. Most likely, they can influence the distribution of cargo flows between Russian and foreign container terminals of the Baltic Sea but that is exactly why overrating is not profitable for Saint-Petersburg stevedores.

We note that the coming inspection is not the first one in the container market.  In November 2013, Federal Antimonopoly Service of the Russian Federation initiated proceedings upon signs of a cartel agreement in the market of international container shipping against Russian agents of the largest ocean-going container carriers. 

Nevertheless, competition in the North West region will be really driven by the appearaence of new players rather than by administrative investigations. For example, Bronka, outer port of Saint-Petersburg, is supposed to commence operation in late 2015. The first phase of MMPK Bronka will be able to handle 1.45 mln TEUs of container cargoes and 260,000 of Ro-Ro units. Further, the complex capacity is to be expanded to 1.9 mln TEUs and 260,000 Ro-Ro cargo per year.

As of today, container cargoes in Saint-Petersburg are handled by First Container Terminal, Petrolesport, Moby Dik (Global Ports Group), Container Terminal Saint-Petersburg (UCL Holding), Neva-Metal (Severstal).  Ust-Luga Container Terminal (Global Ports Group) and multi-purpose transshipment complex Yug-2 (Ust-Luga Company) operate at port Ust-Luga.

Sophia Vinarova