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2017 March 7

Grain by grain ...

Last year saw a trend towards shifting of grain cargoes from the ports of Russia’s neighbors to domestic harbours. Russia started exports to the Far East while the terminals in the Southern region experience increased competition. Meanwhile, rouble strengthening presents a risk for the market.

Port growth

Association of Commercial Sea Ports says grain transshipment via the seaports of Russia in 2016 grew by 3.3%, to 35.5 mln t. In fact, grain transshipment via the ports of the North-West Basin grew by 16.5% to 1.2 mln t (mostly exports). Russia also started exporting corn and flour from the port of Vladivostok to China, Japan and N. Korea (exports via the Far East Basin totaled some 30,000 t).

As Andrei Nikitin, NitroShipping Freight Director, said at the International Conference ShippingRu 2017, transshipment in the North-West Region has intensified over the recent two seasons. According to him, it is not of mass character but there is a trend. “First of all, it is about transit cargo. There is a redirection of cargoes which over the recent decade has been handled by the ports of Baltic states, mostly via the port of Liepaja (Latvia).

It should be noted that grain transshipment via the port of Liepaja in 2016 declined by 0.8% to 2.88 mln t. Grain transshipment in the North-West Basin is performed mainly via the port of Kaliningrad (Sodrugestvo-Soya terminal, the largest one in the Basin- 1 mln t of grain in 2016) and via Big Port St. Petersburg.

So the trend of redirecting cargo flows to Russian ports covered by one of our recent articles >>>> is also seen in grain transshipment sector. Moreover, Andrei Nikitin believes all the cargoes of Kazakhstan will also be handled by Russia’s North-Western ports.

As for the Far East Basin, the volumes of grain handled by the Far East ports are quite moderate but they have good prospects in case of favorable market situation. In the Far East of Russia, grain is handled mostly at the port of Vladivostok, and minor volumes via the port of Petropavlovsk-Kamchatsky. However, there is a project of building a grain terminal at port Zarubino. The first phase with annual  capacity of 10 mln t is to be completed by 2020 with the phase-by-phase expansion to 33.5 mln t. According to Marat Shaidayev, Head of United Grain Corporation, “The Far East and Siberia have a huge potential in grain production which is now limited by insufficient infrastructure and sales channels. This potential is estimated at 3 mln t by 2020 and 5 mln t by 2030”.

Nevertheless, the Southern Basin of Russia has been and is still the main gate for grain exports. In the opinion of Andrei Nikitin, off-harbour transshipment at port Kavkaz will hold sway. Construction of new ports (grain terminal in Taman) and modernization of the existing facilities (Novorossiysk Grain Plant and Novorossiysk Grain Terminal) will encourage competition between large ports. “Owners of transshipment facilities will expand their storage facilities and improve transshipment technologies”, says the expert.

As for smaller seaports and river ports, introduction of several terminals at the ports of Azov, Rostov-on-Don, Astrakhan and on the Volga and Don rivers in recent grain seasons allows for keeping competitive rates due sufficient transshipment facilities. “Sea/river fleet flying the flag of Russia is getting obsolete which will have an impact on exports from the river ports”, says Andrei Nikitin. Besides, the development of grain transportation by rivers depends on construction of hydraulic systems (Bagayevsky, Gorodetsky and Nizhne-Svirsky).

The grain market significantly depends on hardly predictable factors like yield and currency rates. Exporters already complain about too strong rouble threatening with reducing all the results to nothing.

As Aleksandr Tkachev, RF Minister of Agriculture, has said recently, in the nearest decade the country is to boost grain production by over a quarter to 150 mln t per year.

“Our realistic task for the coming 10 years is a strategic build up of volumes to 150 mln t. First of all, we should increase productivity. We are not satisfied with the fact that many feature low qualification, absence of fertilizers or cooperation the science. This presents a huge potential,” the Minister was quoted by media.

Aleksandr Tkachev also sees the strategic task in the development of transport infrastructure in the Far East in order to move to the markets of the Asia-Pacific Region. According to the Ministry, this market is estimated at 27 mln t of grain per year and Russia’s share in it is almost zero.

Vitaly Chernov