Automobile logistics history is the one of ups and downs, Konstantin Skovoroda
Economic recession did not for a long time weaken interest towards projects on construction of rolling cargo marine terminals. Starting autumn, 2009 information on opening of new routes of foreign cars delivery to the Russian market appeared. Konstantin Skovoroda, CEO of Russian Transportation Lines (RTL) group of companies, provided its estimation of local Ro-Ro terminals development perspectives in interview with PortNews IAA.
Konstantin Vladimirovich, what is your estimation of perspectives and compatibility of Ro-Ro terminals construction projects implementation in St.-Petersburg and Leningrad region (MPK ‘Yug-2’ in Ust-Luga port, Petrolesport OJSC, projects of Seaport of St.-Petersburg OJSC, RTL terminals in the ports of St.-Petersburg and Ust-Luga (Novaya Gavan)?
- It is necessary to point out we are glad about competition that took place in this market. For along time we had been the only company offering this service on regular basis in the RF territory and North-West region in particular. It was uneasy to resist well-organized infrastructure of Finland alone. On the other hand we a glad the period when it was popular to claim on another Ro-Ro project implementation in North-West of Russia is over. Only actually working companies have staid in the market to the date, and it is rarer that we hear about ‘soap bubble’ projects. In considering the market of North-West region of Russia, I would conditionally divide it into two key parts: St.-Petersburg and Ust-Luga. St.-Petersburg is an actively working present. Ust-Luga with its potential and terminals put into operation is undoubtedly future of Russian Ro-Ro business. At the same time it more an issue of port specialization than that of terminals competition. Taking into consideration location, port and transportation infrastructure, state policy related to customs clearance, I am sure we will witness increase of operations in Ust-Luga commercial seaport. At the same time it does not mean such business ceased its existence in the Big Port of St.-Petersburg terminals operators of which pay great attention to their business management systems development. To construct an asphalt ground is only a part of business. Considerable investments into terminal IT system, quality control system, development and optimization of terminals and transportation companies co-operation are required further on. For example, RTL group terminal in St.-Petersburg fishing port has passed several audits on the part of European car manufacturers. It is not a secret that we are proud that service provided by us in St.-Petersburg is evaluated at the level of European terminals. Besides we exceed them in several processes. I hope we will things to become a surprise for our clients upon putting into operation of ‘Novaya Gavan’ terminal in Ust-Luga.
Can one expect competition between the aforementioned terminals for brands or will they overlap?
- There is competition and it will take place. It is an essential part of any business. Its occurrence makes us analyze our own business-processes and services provided as well as search for new ways of optimization and new ideas more actively. Because cars suppliers keep to the range of services provided and the staff when choosing the terminal.
We think main ambition of the Russian Ro-Ro operators is to compete not with each other, but with other European ports. Our common task is to develop port business to the level when car manufactures themselves want to redirect car-flows into Russian ports. And here great role is played by the state policy.
Unfortunately, we lag behind European ports in many key aspects that directly depend upon state decisions in this sphere: long-term storage in the port, the procedure of cargo movement between the customs control zones, opportunities of additional services changing the cost of the goods, transportation infrastructure etc. The state undoubtedly tries to take steps towards which is great. Russian Government supported the concept of relocation of customs clearance to external RF boundaries. Bu unfortunately we face the problems of implementation of these ideas.
What are your expectations regarding Russian car market? Do you still expect slumps or the marker has already reached its ‘bottom’?
- The history of automobile market development and that of automobile logistics is the history of ups and downs. We find it necessary and possible to work under the current conditions. Because market growth sets a number of tasks and unsolvable problems that we have to cope with nevertheless. As for the estimations, there are no grounds for market decline. It is first of all connected with a definite business activity revival and with the fact that state support measures did not have strong effect on the business, in our opinion, and the branch will not suffer much from stop of their activity unlike in other European countries. But we are prepared for any changes and we will hope our figures to improve both as a result of marker growth and due to efficient work of the group related to new assets introduction to Ust-Luga and in the South of Russia.
As for foreign cars import – are there any worries that due to protectionist measures of the Government and the tendency on localization of their manufacturing it will suffer from stagnation and decrease?
- As for the protectionist measures, we are glad our state pays more attention to this market. The issue of this policy implementation is more complicated. Here we can not agree that all the measures we efficient enough. Notwithstanding the fact RTL’s business is more import-tentative we realize Russian manufacturing has its future. Implementing the strategy of business development we hope for the work with manufacturers in Russia, active expansion of manufacturers of car components, spare parts and equipment to Russia we are from thinking of total import substitution in Russia. Both local and imported car models will be in demand.
A month ago ViDi Group and BLG Logistics Group signed a contract on foundation of joint enterprise BLG ViDi Logistics in the Ukraine for construction of logistics terminal. Is this project Russia-oriented in you opinion? Will the project implementation influence your business and to what extent?
- Irrespective of the fact RTL is implementing a number of projects in the territory of the Ukraine, our main interests are in Russia. In our opinion the terminal built near Kiev can be first of all aimed at needs of the Ukrainian market which is quite insignificant in its volume. I doubt the terminal will work for the Russian consumer. Car suppliers are interested in deep-water Ukrainian ports and not in the terminals inside the country. BLG is an acknowledged respected company in the European market of automobile logistics. We wish them good luck in their projects implementation and hope for effective co-operation.
Is large-scale cars delivery via Russian ports of Azov-Black Sea basins feasible?
- There is not a single deep-water port in the Black Sea of Russia except for Novorossiisk, the infrastructure of which does not allow developing good Ro-Ro terminal. We are sure it is necessary to improve Russian ports in this region. And we hope the project of w new Taman’ port construction will be implemented before other infrastructure projects arranged by the state. On our part we actively develop group’s business here. In particular, first call of foreign cars will take place at the Caucasus port in November to be transhipped via RTL terminal in Novoshakhtinsk. It is assumed to be our response to the question on the status and perspectives of Russian automobile market.
Does RTL have an investment program of further development? If there is such, what aspects and terms does it have?
- Yes of course, there is such a program agreed by the Group. Our strategy is to set up system logistics both for automobile and other cargoes first of all designed for automobile industry. We actively develop three main directions of cargo delivery for automobile industry: North-West, South, and East.
As for the North-West, construction of Novaya Gavan terminal within Ust-Luga port boundaries is among our projects. We are now at the first project stage completion envisaging Ro-Ro component creation. We hope to invite you for the terminal opening in the nearest future.
We are occupied in optimization of cargo transportation route ex ports of the Black Sea to our own RTL terminal in Novoshlhtinsk. This terminal meets all the requirements of new FCS concept. As it has already been mentioned in addition to the already existing transhipment of cars coming from the Ukrainian ports, transhipment of cars unloaded in the Russian port Caucasus is being commenced. Besides it is planned to implement intermodal freight project, including putting into operation of a railway terminal component. Total terminal area will be about 50 ha.
As for the Far East, we develop our co-operation with marine terminals in Vladivostock and Nakhodka. In Zarubino the Goup develops it business in co-operation with Railtransauto company.
Sofia Vinarova
Konstantin Vladimirovich, what is your estimation of perspectives and compatibility of Ro-Ro terminals construction projects implementation in St.-Petersburg and Leningrad region (MPK ‘Yug-2’ in Ust-Luga port, Petrolesport OJSC, projects of Seaport of St.-Petersburg OJSC, RTL terminals in the ports of St.-Petersburg and Ust-Luga (Novaya Gavan)?
- It is necessary to point out we are glad about competition that took place in this market. For along time we had been the only company offering this service on regular basis in the RF territory and North-West region in particular. It was uneasy to resist well-organized infrastructure of Finland alone. On the other hand we a glad the period when it was popular to claim on another Ro-Ro project implementation in North-West of Russia is over. Only actually working companies have staid in the market to the date, and it is rarer that we hear about ‘soap bubble’ projects. In considering the market of North-West region of Russia, I would conditionally divide it into two key parts: St.-Petersburg and Ust-Luga. St.-Petersburg is an actively working present. Ust-Luga with its potential and terminals put into operation is undoubtedly future of Russian Ro-Ro business. At the same time it more an issue of port specialization than that of terminals competition. Taking into consideration location, port and transportation infrastructure, state policy related to customs clearance, I am sure we will witness increase of operations in Ust-Luga commercial seaport. At the same time it does not mean such business ceased its existence in the Big Port of St.-Petersburg terminals operators of which pay great attention to their business management systems development. To construct an asphalt ground is only a part of business. Considerable investments into terminal IT system, quality control system, development and optimization of terminals and transportation companies co-operation are required further on. For example, RTL group terminal in St.-Petersburg fishing port has passed several audits on the part of European car manufacturers. It is not a secret that we are proud that service provided by us in St.-Petersburg is evaluated at the level of European terminals. Besides we exceed them in several processes. I hope we will things to become a surprise for our clients upon putting into operation of ‘Novaya Gavan’ terminal in Ust-Luga.
Can one expect competition between the aforementioned terminals for brands or will they overlap?
- There is competition and it will take place. It is an essential part of any business. Its occurrence makes us analyze our own business-processes and services provided as well as search for new ways of optimization and new ideas more actively. Because cars suppliers keep to the range of services provided and the staff when choosing the terminal.
We think main ambition of the Russian Ro-Ro operators is to compete not with each other, but with other European ports. Our common task is to develop port business to the level when car manufactures themselves want to redirect car-flows into Russian ports. And here great role is played by the state policy.
Unfortunately, we lag behind European ports in many key aspects that directly depend upon state decisions in this sphere: long-term storage in the port, the procedure of cargo movement between the customs control zones, opportunities of additional services changing the cost of the goods, transportation infrastructure etc. The state undoubtedly tries to take steps towards which is great. Russian Government supported the concept of relocation of customs clearance to external RF boundaries. Bu unfortunately we face the problems of implementation of these ideas.
What are your expectations regarding Russian car market? Do you still expect slumps or the marker has already reached its ‘bottom’?
- The history of automobile market development and that of automobile logistics is the history of ups and downs. We find it necessary and possible to work under the current conditions. Because market growth sets a number of tasks and unsolvable problems that we have to cope with nevertheless. As for the estimations, there are no grounds for market decline. It is first of all connected with a definite business activity revival and with the fact that state support measures did not have strong effect on the business, in our opinion, and the branch will not suffer much from stop of their activity unlike in other European countries. But we are prepared for any changes and we will hope our figures to improve both as a result of marker growth and due to efficient work of the group related to new assets introduction to Ust-Luga and in the South of Russia.
As for foreign cars import – are there any worries that due to protectionist measures of the Government and the tendency on localization of their manufacturing it will suffer from stagnation and decrease?
- As for the protectionist measures, we are glad our state pays more attention to this market. The issue of this policy implementation is more complicated. Here we can not agree that all the measures we efficient enough. Notwithstanding the fact RTL’s business is more import-tentative we realize Russian manufacturing has its future. Implementing the strategy of business development we hope for the work with manufacturers in Russia, active expansion of manufacturers of car components, spare parts and equipment to Russia we are from thinking of total import substitution in Russia. Both local and imported car models will be in demand.
A month ago ViDi Group and BLG Logistics Group signed a contract on foundation of joint enterprise BLG ViDi Logistics in the Ukraine for construction of logistics terminal. Is this project Russia-oriented in you opinion? Will the project implementation influence your business and to what extent?
- Irrespective of the fact RTL is implementing a number of projects in the territory of the Ukraine, our main interests are in Russia. In our opinion the terminal built near Kiev can be first of all aimed at needs of the Ukrainian market which is quite insignificant in its volume. I doubt the terminal will work for the Russian consumer. Car suppliers are interested in deep-water Ukrainian ports and not in the terminals inside the country. BLG is an acknowledged respected company in the European market of automobile logistics. We wish them good luck in their projects implementation and hope for effective co-operation.
Is large-scale cars delivery via Russian ports of Azov-Black Sea basins feasible?
- There is not a single deep-water port in the Black Sea of Russia except for Novorossiisk, the infrastructure of which does not allow developing good Ro-Ro terminal. We are sure it is necessary to improve Russian ports in this region. And we hope the project of w new Taman’ port construction will be implemented before other infrastructure projects arranged by the state. On our part we actively develop group’s business here. In particular, first call of foreign cars will take place at the Caucasus port in November to be transhipped via RTL terminal in Novoshakhtinsk. It is assumed to be our response to the question on the status and perspectives of Russian automobile market.
Does RTL have an investment program of further development? If there is such, what aspects and terms does it have?
- Yes of course, there is such a program agreed by the Group. Our strategy is to set up system logistics both for automobile and other cargoes first of all designed for automobile industry. We actively develop three main directions of cargo delivery for automobile industry: North-West, South, and East.
As for the North-West, construction of Novaya Gavan terminal within Ust-Luga port boundaries is among our projects. We are now at the first project stage completion envisaging Ro-Ro component creation. We hope to invite you for the terminal opening in the nearest future.
We are occupied in optimization of cargo transportation route ex ports of the Black Sea to our own RTL terminal in Novoshlhtinsk. This terminal meets all the requirements of new FCS concept. As it has already been mentioned in addition to the already existing transhipment of cars coming from the Ukrainian ports, transhipment of cars unloaded in the Russian port Caucasus is being commenced. Besides it is planned to implement intermodal freight project, including putting into operation of a railway terminal component. Total terminal area will be about 50 ha.
As for the Far East, we develop our co-operation with marine terminals in Vladivostock and Nakhodka. In Zarubino the Goup develops it business in co-operation with Railtransauto company.
Sofia Vinarova