21 Мая 2014

From:	John Keir, Ross Learmont Ltd
Email:	 john.keir@telia.com 
Date:	21 May 2014

A significant major modal shift.

Statistics for container throughput via Russian Far East ports in the first quarter of the year provide a useful insight into how the region is developing. The first point to note is that container handlings rose by 6.1% to 358.600 teu. As usual, Vladivostok led the way in the first quarter with 183,600 teu but Vostochny is increasing its throughput at a faster pace (10.1% compared with 4.3%) to bring it comfortably over the 100,000 teu mark with 18,000 teu to spare. Recently, Vostochny announced ambitious expansion plans, while Vladivostok struggles to find space in its cramped city centre environs to keep pace with a rapidly changing transport market.

The situation is neatly summed up by the Russian phrase “порт мешает городу, город мешает порту” (the port hinders development of the city and the city hinders the development of the port”. In the end, something has got to give, and as it is easier to move a container terminal than it is a city, watch out for high-rise apartments and a large marina crammed full of very expensive yachts. With a nod to the English poet, Rudyard Kipling, the sales pitch for penthouse apartments is bound to be “Watch the dawn come up like thunder out of Japan cross the bay”. Container terminals can be built anywhere with deep water but property developers would kill for a view like that.

Before those in the container industry start cursing their luck that they did not opt for the oil and gas industry, where all the money is, take a closer look at the container statistics. The number of laden export containers via Far East ports rose by 25.2% to 34,100 teu, confirming that clients in Asia are attracted by the more competitive pricing of Russian products. Ironically, though, the really good news comes in the statistics for empty box exports. Each month, over 25,000 empty units are exported through Vostochny and Vladivostok. Every one of those units represents a potential source of income for an enterprising container operator. That is 300,000 laden teu, or translated in cargo volumes, a potential 3 million metric tons per annum. Furthermore, the number of empty return units will continue to rise as ever-larger vessels call at Russian ports. Find a use for a small share of this under-utilised transport resource and soon you too could be bidding for that penthouse apartment and tying up a yacht in the marina.

Lest you think this is a nice theory but it will be difficult to put into practice, then you need look no further than the new container service launched by Fenex. The Moscow-based operator “has seen the light” and announced it will ship grain using ISO containers. In contrast to dedicated grain carriers, containers can provide a regular, scheduled service to exporters. Fenex promotes the advantages of intermodal transport of grain by pointing out that by using containers, small and medium-sized producers can access both the CIS as well as the global markets. Indeed, they can compete on equal terms with much bigger rivals. Shipments as small as 200 tons can be accommodated on the Fenex container service. Furthermore, containerised shipments moving straight from field to end-user can command a premium of up to 15%. The ready supply of empty export containers also means that deliveries can be spread out over the whole year. This logistical approach may be of greatest benefit to producers in Siberia and the Far East regions of Russia, which can be granted easier access to a broader clientele in the Asia-Pacific Region. Finally, this approach also overcomes the problem of the shortage of dedicated grain ports equipped with elevators. There is no need to finance new port facilities, when the investment in container terminals, cranes and large, modern container vessels has already been made by third parties.

To make matters easier, block train services keep on coming. In May, Ruscon inaugurated a regular container block train between Moscow and Khabarovsk. Consisting of 77 forty-foot slots, the train will operate out of the MANP terminal in Moscow, which is also part of the parent company, GCS Group. Ruscon plans to offer additional block train services to other destinations in the Russian Far East. Of course, some might feel that targeting a figure of three million tons of additional containerised is wildly over-ambitious. Well, the terminal operators of Russia’s second city clearly have even higher ambitions. The Port of St Petersburg is proceeding with the construction of a dedicated facility to handle and containerise mineral fertilisers. The projected annual capacity is 4 million metric tons and the facility will include covered storage for up to 90,000 tons of fertiliser at any one time plus sufficient storage space for all the containers required. Similar fertiliser terminals are being set up in other Baltic ports.

The march of containerisation continues too in South America, where Ecuador’s largest banana trader, Noboa will switch shipments from conventional reeferships to containers. Through a slot agreement with Mediterranean Shipping Co., the Ecuadorians have been granted a weekly allocation of 260 reefer plugs on MSC`s 4,200 teu vessels serving this trade. The slot allocation is the equivalent of 300,000 boxes of bananas, which will be shipped to the main ports in North Europe. This plug-sharing agreement allows Noboa to withdraw its 20-year old fleet of five conventional reefer ships from this trade.

Other perishable commodities have made an even more dramatic shift to container traffic. Only a decade ago, most tomatoes were being transported by air, as this was the only way of guaranteeing that the delicate product would arrive at the market in a fresh condition. Nowadays, 100,000 teu of fresh tomatoes are transported in refrigerated containers. The change in transport mode has been driven by new technologies that may also see other fresh commodities switch from air to sea. Fresh fish, lettuce, pineapples and capsicum are joining the growing list of products now taking to the high seas.

John Keir, Ross Learmont Ltd.
21 May 2014

Copyright ©, 2014, John Keir