RLL Container Report - 27 August 2014
From: John Keir, Ross Learmont Ltd Email: john.keir@telia.com Date: 27 August 2014
Fortune favours the bold.
Currently, shipping lines are busy returning many containers laden with agricultural products destined for Russian ports. Ironically, the same shipping companies stand to benefit, as Russia looks further afield to South America, Turkey, North Africa and Asia to help restock its supermarket shelves. At the latest count, European agricultural exports to Russia were worth Euro 11 billion a year, some 10 percent of all EU agricultural sales. The European Union plans to redirect much of the fruit exports bound for Russia to schools throughout Western Europe. Fish and meat products can simply be channelled through normal commercial outlets such as supermarkets. Less than one percent of US agricultural exports go to Russia and the trade included re-stocking Russian farms with herds of Aberdeen Angus cattle to improve meat quality. Norway should have little problem in finding willing buyers for its salmon exports. The same trucks and vessels that carried agricultural products to Russia can simply do an about-face and deliver these products to a very large and highly developed market in Western Europe. Any surplus will find its way to export markets.
Faced with a potentially sharp rise in perishable cargo, RZD is to introduce a one-stop system. RZD has decided that Refservice will co-ordinate all shipments of perishable goods. Refservice will liaise with other RZD subsidiaries, such as TransContainer, RZD-Logistics and Gefco to ensure that prospective clients receive a seamless “one-window” service. In addition to temperature-controlled goods, Refservice can also offer services for temperature-sensitive products such as beer and fruit juices. As Russia has built few refrigerated wagons in the past two decades, rail operators may have to draft in more refrigerated containers to fill any gaps in the long supply chain.
The chairman of Singamas, a leading container manufacturer, advised that the steady growth in box demand could lead to a temporary shortage of containers as factory stocks are now reduced to a mere two months’ supply. Relief, however, is at hand, as a second producer announced plans for two new container plants in China. In March, CIMC started to develop a new container factory with a capacity of 750,000 teu in Dongguan. In June, the Chinese manufacturer followed this up with news of an additional plant to be built in Ningbo. The second facility near Guangzhou will costs USD 480 million and will have a capacity of 450,000 teu. The new factories will fuel the projected 22% rise in refrigerated containers, as more temperature-controlled cargo shifts from conventional reefer vessels to the big, new 18,000 teu containerships.
At the same time, projections are for tank container traffic to rise by 12 percent. The rise is due, in part, to the increasing use of foodgrade tank containers to transport foodstuffs, including vegetable oils and alcohols. A recent Tank Container Fleet Survey by ITCO estimates the global tank container fleet at around 400,000 units. This represents a 13% increase in the past twelve months. Of the global tank fleet, some 70% are under the control of dedicated tank container operators, while 30% are operated by chemical producers and other cargo shippers. In a very timely move, tank operator, Havila has just opened a tank cleaning station in Tambov. The station is located in an industrial park next to the Pigment chemical plant. Havila intends to set up a tank container repair facility next door to the cleaning station.
In these times of rapid change, the motto is: “Audentes fortuna adiuvat” or fortune favours the bold. And so, the prize for the boldest and most commercially-prescient intermodal operator must go a company in St Petersburg. Trans-Log Service had the foresight to sign a contract with Abakanvagonmash for 1,000 special bulk palletwide 20’ containers. Trans-Log Service plans to use the special containers to transport grain on the outbound leg, while on the return leg the containers will carry palletised cargo. Trans-Log is working on a second project that will involve the shipment of bauxite on the outbound leg and aluminium ingots on the return leg.
Timely investment has also been made in upgrading inland terminals to cope with increased container flows. Progress on the new logistics centre in Nizhny Novgorod is well advanced. This is the first in a series of TLCs being constructed by RZD in conjunction with its automotive logistics subsidiary, Gefco. The terminal occupies 12 hectares to the south of Nizhny Novgorod and can, when finished in the fourth quarter, accommodate up to 5.500 cars. Out in the Far East, TransContainer has been expanding its container terminal at Zabaikalsk on the border with China.
Foreign investors continue to see the potential for good returns in the region. Having just completed a deal for port developments in Primorye, the Noble Group of Hong Kong took over full control of Danube Shipping and Stevedoring Company, Ukraine, which owns terminal facilities in the Port of Nikolaev. Noble intends to use DSSC to tranship up to 3 million tons of grain and vegetable oil products via the South Ukrainian port. This latest acquisition provides the Noble Group with its second base in the Ukraine, having already acquired Belgravia’s elevator complex in the Dnepropetrovsk Region.
In Lithuania, work is progressing on a logistics park with a planned annual throughput of 55,000 teu. Currently, Lithuanian and Polish railways are constructing a standard-gauge line up to Kaunas, which will form part of the Rail Baltica line linking the three Baltic states. The new Kaunas logistics park will cost Litas 87 million and the owners plan to start paying back the investment by processing 5,000 teu before the year is out. The new logistics park will help Klaipeda to retain its position as the leading container terminal among the Baltic States. In the first half of the year, Klaipeda handled 253,000 teu, some 35,000 teu ahead of its local rival in Riga.
John Keir, Ross Learmont Ltd.
27 August 2014
Copyright ©, 2014, John Keir