As sanctions cause the shifts in Russian economy, Commercial Port of Vladivostok (CPV) enhances containerization by developing its facilities and acquiring equipment. By 2025, the port will be able to handle up to 1 million TEU while implementation of a joint project with Rosatom can double this result. Nikolay Yermolayev, Managing Director of CPV, PJSC tells about the port’s development in the new reality.
– What are the port’s results in the first quarter of 2023 in terms of cargo and ship calls? What are the trends?
– Commercial Port of Vladivostok continues the development of container cargo handling. Over the recent three years, it has been holding leadership in container throughput among the ports of Russia. In the first three months of 2023, the port’s total throughput rose by 5% to 3.2 million tonnes. Handling of containers increased by 11% to 213.1 thousand TEU having confirmed the trend of container specialization. We plan that container traffic in the port will grow by about 10%, to 840 thousand TEU in 2023. As for the number of ship calls this year, their average monthly result increased by 43%, year-on-year.
– In 2022, CPV achieved its record high result of 13.6 million tonnes. What are the plans on increasing the share of containers?
– As of today, containerized cargoes account for over 60% of the total volume and their share is increasing. There are reasons behind that. The growth is partly driven by the fluctuations in the currency market and their impact on some product groups. For example, handling of metal is decreasing although we have the required facilities. At the same time, the demand for containerized cargo is growing. Today, it is our key focus, key point of CPV development strategy.
– Are you going to stop handling coal?
– We are gradually moving in this direction.
– FESCO management has recently said that container throughput of CPV would surge about 1.7 times to 1 million TEU by 2025. How can it be achieved given the lack of territory and limited capacity of the Eastern Polygon? What is your outlook on the port in a decade?
– In my opinion, a port is not a storage facility and its turnover primarily depends on efficient organization of cargo handling and shipment. Of course, the territory is a limiting factor when certain volumes are achieved and it is hardly possible to reach the throughput of Busan with a relatively small territory of CPV. Nevertheless, the target of 1 million TEU is calculated taking into account the capabilities of normal operation. To ensure those capabilities the port is implementing a programme aimed at expansion and optimization of container facilities. The programme foresees the purchase of new equipment and modernization of IT infrastructure. We understand that each factor is essential to ensure the throughput growth. As for the railway capacity, all our plans to increase the turnover are agreed with the carrier. With our cooperation with Russian Railways and the assistance of the Transport Ministry we manage to prevent overloading during the peak seasons and to build up shipments. For example, in the beginning of the year we used to send 5.5 trains of 140 TEU each per day, in October the number of trains was over 7, now we count on sending 8 trains and later 10 trains per day. So, we systematically work on solving urgent problems by setting clear tasks. The question of what the port is going to be in ten years can hardly be answered by anyone. In the current situation, it is difficult to make long-term forecasts.
– What is the percentage of the port loading in the peak season last year? Why did some ships have to wait for unloading up to a month? What is the loading forecast for this year?
– Indeed, the load on Far East ports surged in 2021 and the cargo flow grew even more in 2022: the ports of our region accounted for 53% of the country’s total cargo turnover versus 38% a year before. CPV handled about 40% of that volume. Yes, the port was loaded to its maximum but it operated normally and handled cargo as fast as it cold. Between January and August 2022, average loading of the storage facilities was 23 thousand TEU, from September it grew to 30 thousand TEU. Delays of up to a month really happened but that was with ships coming beyond the schedule. Scheduled vessels were handled in time. With the above mentioned cooperation with Russian Railways we count on normal operation this year.
– How did the withdrawal of global container operators and getting of other, probably less streamlined companies, into this niche affect the market? How many container lines are serviced by the port now and what are they? What is the trend of 2023?
– Geopolitical situation has affected the list of sea carriers, indeed. Yes, the market was left by European companies but they were replaced by the domestic and the Asian ones. Among them there are large carriers with the level of business organization as high as that of the European companies. Nevertheless, establishment of new relations and synchronization of the schedules took some time, about half a year. Over that period of time, the carriers settled their schedules and arranged their operation in the Far East. Today, we work with both large and minor lines. In general, the fleet tonnage has decreased but the number of players has increased. That gives certain advantages. Diversification of lines offers more opportunities for cargo flows forecasts. It is difficult to say how many lines we have because the market is still settling. I would like to emphasize that we have no problems, we proceed as scheduled. Average loading of the storage facilities is about 25 thousand TEU.
– How has the port’s capacity been increased with the introduction of additional storage facilities – for cars and containers? What are the prospects of expansion in 2023 and in the near term? What territories can be added?
– Modernization of storage facilities will increase the capacity of the total container storage area by 20%. On 1 April 2023, new container storage yard of 13.5 thousand tonnes square meters was opened at Berth No 8. The new yard will increase the capacity of the storage facility by 5% (+1,113 TEU). In 2024, we are going to open yet another container yard of 900 TEU in capacity. Besides, we are going to upgrade the pavement at over 45 thousand square meters of the container terminal. We are going to begin this year. Besides, in January 2023, Automobiles Terminal of Vladivostok launched a new warehouse for temporary storage of cars. The capacity of temporary storage facilities has thus increased by nearly 30%, to 4.2 thousand cars.
– What are the plans on making the port deeper and on development of its berth infrastructure?
– Today, the port’s maximum depth is 13 m. CPV has a comprehensive programme on the development of railway and waterfront facilities. Berths NoNo 7, 8, 10, 11, 12 and 13 are under the reconstruction. The programme foresees the reconstruction of quay walls and the deepening to 14-15 m. Upon completion of the reconstruction, the berths will be fitted with new equipment, new cranes. The reconstruction of the berths is to be completed by about 2025-2026.
– Are there any plans on construction of dry terminals?
– Given the limited territory of the port we consider the construction of dry terminals in the future but it is early to speak about it yet.
– How do sanctions affect the port’s modernization including technical and software upgrade?
– CPV acquires equipment, spare parts and components mainly from the Chinese suppliers. As for the software, the port applies its own digital solutions – from mobile applications for clients to a comprehensive information system of the terminal, even a AI-based software “digital twin” – all of them accelerate port operations.
– How has the new software enhanced the efficiency of port operations?
– According to our estimates, container handling time has reduced by about 10-15% since the new software was launched in 2022. The service allows for online tracking of each container in the port and to monitor the arriving volumes. Big data analysis lets us find optimal routes for cargo movement and placement. The digital service is being developed, particularly taking into account the introduction of new equipment.
– Large-scale expansion of the fleet of equipment is planned for 2023. What is the scope and the schedule of procurement?
– Our development strategy until 2025 foresees the acquisition of over 170 units of equipment. 73 units are to be acquires this year. Something is already paid and is expected in 2023, some positions are being contracted. In 2023, we expect the supply of 20 RTG cranes, 3 STS cranes, 14 loaders and 1 trackmobile. In the second half of 2023, we are to take the delivery of 29 new semi-trailer trucks and 6 reachstackers.
– What about the project on creation of the Eastern Transport and Logistics Hub together with Rosatom. How is it going and what is its capacity and location?
– CPV has commenced the implementation of an investment project on creation of the Eastern Transport and Logistics Hub (ETLH) under the agreement signed in 2021. A modern deep-water terminal with two berths of 750 meters in length and 16.5 meters in depth is to be built in the port. The terminal, or Berth No 17, as we refer to it, will be located in the western part of the port, behind Berth No16. The new terminal will let accommodate PostPanamax ships of over 10 thousand TEU in capacity. Its territory will total 23.5 hectares. The terminal is supposed to generate over 850 jobs.
– How is the port’s maximum throughput of 1 million TEU by 2025 seen through the port’s territorial and logistics limits?
– ETLH terminal will be used for cargo transshipment from one ships onto others, more appropriate ones depending on the further destination, north or south. So, the load on road infrastructure will not increase.
– At what stage is the project today? What is to be done this year?
– As of today, design documentation is being developed. We a looking for a technical customer and conducting design and survey works. Then, the project is to obtain state expert approval before the construction begins.
– Energy supply was to be doubled by 2023, thus reducing the dependence on municipal networks. How successful is the project?
– The port really plans to increase its energy capacity in view of its expansion. The project on construction of an inhouse substation for optimization of power supply was launched in 2021. The works are underway. Contracts have been signed for designing and equipment supplies. We plan that designing will be completed this year and the construction will begin in 2024. As for the dependence on municipal networks, it is not a problem. In case of peak loads, the port can use reserve generation.
– A two-part question: what share of the port’s taxes goes to the regional budget and do you agree that the symbiosis of the company and the region would present a stronger foundation for the port development it the region was the company’s beneficiary?
– CPV has traditionally been among the largest tax payers and employers in the region. It numbers about 2 thousand employees with 850 new jobs to be generated by the port modernization. We are in close cooperation with the Primorsky Territory Governor Oleg Kozhemyako and the city head Konstantin Shestakov. We are implementing joint projects of sustainable development. As Vladivostok mayor has said recently, the port is historically an integral part of the city and the basis of the regional economy, a crucial element ensuring its future.
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