RLL Container Report - 21 December 2016
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 21 December 2016
A chip off the old block.
The global demand for wood pellets as a source of fuel is expected to grow from 7 million tons in 2015 to 59 million tons by 2020. The Scandinavian countries were quick to convert to wood pellets, followed by the UK and Italy. Sweden, which has large forestry resources but no oil, led the way, followed by its southern neighbour, Denmark. With 22% of world’s forestry on its territory, Russia has an abundance of biomass resources, which can satisfy the demand in western Europe for biofuel products, such as wood pellets. The forests in Russia occupy about 40 percent of the Russian landmass. Every year, large amounts of wood waste are produced by the forest industry and these can be easily converted to biomass products like wood pellets.
Russia, which has an embarrassment of energy riches, exports most of its wood pellets. In 2011, Russia’s largest pellet producer, VLK in Vyborg exported 220,000 tons to Europe. By 2012, total Russia exports of pellets had risen to 850,000 tons, the majority of which is transported to Denmark, Sweden and Italy, although there are also expanding markets for bio-fuels in Japan and South Korea. Russia’s dominant position as Europe’s largest supplier of pellets was threatened, when VLK had to reduce its production by half. Fortunately, at least four new wood pellet facilities are under construction in Russia with a combined capacity of 500,000 metric tons.
One of these producers is Novoyeniseysk, which on the 9th of November despatched the first 21 x 20’ containers with wood pellets destined for Europe. Another two shipments followed in the second half of the month. These shipments were arranged by TransContainer in conjunction with Krasnoyarsk Railways and it is projected that the volume of wood pellets from Novoyeniseysk will reach 160 containers by the end of the year. The factory is located some 5,000 km from the port of Ust-Luga, from where the pellets will be transported to their final destination in Europe.
Although wood pellets would seem to be a natural cargo to be transported in bulk vessels, when transported in bags inside containers the product is less susceptible to damage and to deterioration in quality. The end-user receives a delivery of wood pellets rather than a bulk delivery of sawdust, which has a far lower calorific value. The same principle applies to other traditional bulk cargoes, such as fertilisers. Take the fertiliser, pack it in a plastic bag and load it onto a pallet, then send it directly to a garden centre anywhere in the world and you effectively have a valuable product with its own identity and its own market value. Try pulling off the same trick with a bulk vessel load of fertiliser.
This is why it is so interesting to observe the development of traditional bulk ports, such as Ust-Luga, which handles large volumes of bulk cargoes in the form of wood pellets and fertilisers that are making this transition from simple commodities to trade-marked products.
John Keir, Ross Learmont Ltd.
21 December 2016
Copyright ©, 2016, John Keir