2021 February 20
The flow of Russian cargo via the ports of the Baltic states, Finland and Ukraine dropped over 1.5 times in 2020 but the devil is in the detail.
According to the Analytical Department of IAA PortNews, handling of Russian cargo at the ports of the Baltic states, Finland and Ukraine fell over 1.5 times in 2020 to less than 30 million tonnes which makes about 3.6% of all Russian cargoes shipped via seaports. Albeit a minor share, it features some details.
Tears for the Baltics, laughter for the Finns
Remarkably, the flow of Russian cargo via the ports of Finland showed a growth last year and it was not inconsiderable - 7%. First of all, it should be attributed to the increase of ore transshipment via Kokkola port in the Gulf of Bothnia: in 2020, Finland handled almost 3 million tonnes of Russian ore (+26%), the Baltics – 2.8 million tonnes. Besides, Finland built up handling of Russian mineral fertilizers by almost 10% to nearly 1.5 million tonnes. So, that shows a deficit of dry bulk handling facilities in Russia.
When it comes to ore, the deficit of facilities is to be covered by the Lugaport project with its design capacity of 8 million tonnes per year and Primorsky UPK. Located close to the border with Finland the latter lets hope for redirection of the ore flows from Finland to Primorsk. With all else being equal, ore shipment via Primorsk is more reasonable as compared with shipment via Kokkola: the land leg is shorter (by about 500 km), no land border crossing, deeper berths (18 meters vs 6.1 meters in Kokkola).
Apart from ore, another source of concern is grain. Exports of Russian grain via the ports of the Baltic states rose to some 1.1 million tonnes in 2020. The growth should also be attributed to the lack of dedicated terminals in the Russian part of the Gulf of Finland.
It should be noted that not very large volumes of grain are handled by non-dedicated terminals of Big Port St. Petersburg (some 160,000 tonnes in 2020), somewhat larger volumes – by Kaliningrad terminals (more than 600,000 tonnes in 2020) but Kaliningrad is a story of its own due to its geographic location.
The bulk of grain handled in Kaliningrad is shipped from Sodrugestvo Soya terminal. Sodrugestvo Group has earlier announced a project on construction of a grain terminal in the Batareynaya Bay of the Leningrad Region. The project was suspended due to the protests of the locals and the environmentalists. According to the regional government, the project is not frozen while “the environmental aspect of the Batareynaya Bay in the Gulf of Finland is the priority of the Leningrad Region authorities”.
As for mineral fertilizers, their exports via the ports of the neighboring countries is stable at some 10 million tonnes per year. The State Duma has recently approved the bill making it easier to establish storage facilities for mineral fertilizers on the shore. That lets port investors create terminal dedicated for such cargoes. There is a number of ambitious projects in this segment as we wrote earlier >>>>
Coal shipments via the Baltics dropped 5.5 times to 2.8 million tonnes, via the ports of Finland – by almost 37% to 600,000 tonnes while coal exports from Russian ports of the Gulf of Finland rose by 8% to 45.2 million tonnes. Nevertheless, there is only one dedicated coal terminal in the Baltic Basin of Russia – Rosterminalugol with its best available technologies in this segment. So, there is a demand for such terminals. At the same time, it should be taken into consideration that Europe tends to shift away from the coal-fired power industry while the completion of the Eastern polygon works can result in redirection of some coal flows to the Far East. In this context, investors looking into building coal handling facilities in the Baltic region should think about diversification of cargo flows not focusing on coal alone.
The Primorsky UPK project foresees the construction of a coal terminal which will be actually able to handle a wide range of dry bulk cargo.
The terminal foreseen by the LugaPort project will be able to handle up to 8 million tonnes of ore and coal.
The coal terminal in Vysotsk is also considering diversification of its cargo base.
What about Belarussian cargo?
The calculations show that implementation of all port projects announced in the Baltic Basin can result in excess of facilities handling of mineral fertilizers, coal, ore and grain as we covered earlier >>>> . Therefore, redirection of Belorussian cargoes from the Baltic states to Russia can be an interesting target.
Russia and Belarus have recently signed an intergovernmental agreement under which oil terminals of Ust-Luga and Petersburg Oil Terminal (POT) plan to handle almost 10 million tonnes of Belorussian cargo in three years.
As it was announced at the signing ceremony, in the future Belarus will probably export its potash fertilizers via Russia as well. As of today, Belarus exports 10 million tonnes potash fertilizers per year.
Apart from fertilizers, Russian ports can handle timber and engineering products of Belarus. Aleksey Avramenko, Minister of Transport and Communications of Belarus, said “it requires a detailed elaboration from a variety points of view including sufficiency of handing facilities in Russian ports”.
Yet, we should not be overoptimistic about the prospects of Belorussian transit. Although Belarus has stopped exporting its oil products via the Lithuanian port of Klaipeda, there is no flow of tank-cars towards Russia so far with the deal between the countries not going beyond paperwork and ceremonies yet. Logistically, exports via Russia have never been considered reasonable and the neighboring country’s authorities used to exploit the climate in order to put pressure on Lithuania while avoiding exports via Russian terminals. Nevertheless, diversification of export routes does not hurt anyone.
By Vitaly Chernov