The strong performance of Russian ports in the first half of 2023 confirms the successful completion of the structural reversal of foreign trade to the East. At the same time, volume statistics revealed the shortage of railway capacity in the Far East direction. This leads to an increase in the popularity of the Southern Sea Basin, and cargo handling numbers in the North-West are also not as bad as one might expect.
Cargo volume handled at Russian seaports in the first half of the year increased by 10.5% on the same period last year reaching 453.3 million tonnes, Rosmorrechflot said.
The largest growth was demonstrated in the dry bulk segment, primarily grain, mineral and chemical fertilizers, coal and coke.
In terms of basins-related performance, the largest gain (+38%) in volumes was seen in the Caspian Basin (formerly a traditional outsider in terms of cargo throughput trends). It is followed by the neighboring Azov-Black Sea basin (+21.2%). In third place in terms of growth was the Far East basin (+7.5%), followed by the ports of the Baltic Sea (+5.2%) and the Arctic Sea (+2%).
In brief: The growth of the Caspian Basin is contributed to low base and development of the North-South International Transport Corridor (ITC), the Azov-Black Sea Basin – the growth of trade with the Middle East countries and the shortage of throughput capacity in the Far East. The region is actively developing container traffic capabilities. The Baltic Sea is gradually restoring container trade flows and increasing the handling of bulk cargo, while the Northern Sea Route is attracting more and more shippers.
Caspian leap
The impressive results of the former outsider, the Caspian Basin, are explained both by the low base effect (the share of the basin in the total volume of cargo at Russian ports is only 0.8%), and by the rather intensive development of the North-South ITC.
According to the Ministry of Economic Development forecast, in 2023 the volume of cargo traffic along the North-South ITC will increase to 19.5 million tonnes compared to 2022, and by 2030 - up to 31.7 million tonnes. It is planned, expert estimates show, to transport 12,500 TEU by 2024 and 240,000 TEU by 2051 along the corridor.
However, if we talk about ports and, consequently, about seaborne transport via the corridor, then a number of challenges arise. Thus, there is no liner shipping in the Caspian Sea, which should ensure the shipping of goods on schedule. It is also necessary to ensure guaranteed depths of 4.5 meters in the Volga-Caspian Sea Shipping Canal (VKMSK), which Russian President Vladimir Putin has repeatedly drawn attention to. These depths are expected to be achieved by the end of this year, and active dredging works are currently underway.
Another problem is the lack of a fleet. United Shipbuilding Corporation (USC) promises to complete the design of a large ferry for the Caspian Sea in 2023. David Adamia, Deputy General Director for the Development of Civil Shipbuilding Markets, USC, has previously said that USC’ preliminary portfolio of orders for the North-South route is 130 vessels. In addition to 25 container ships, USC also has secured orders for 10 dry cargo carriers, 5 chemical tankers, and in the case of a leasing financing scheme, there are orders from shipowners in the Caspian Sea for at least 90 different vessels.
The development of cargo handling in the Caspian basin is also intended to be facilitated by a special economic port zone and a project to ensure almost year-round navigation (10-11 months a year) according to the so-called "southern horseshoe" – the Astrakhan-Rostov-on-Don route.
Earlier, Denis Ilatovsky, Chairman of the Board of Directors of the Association of Commercial Sea Ports (ASOP) in an interview with PortNews, explained that the Caspian basin would develop rapidly towards medium-sized stevedoring companies. “An investor in stevedoring assets in this basin will be able to use a number of preferential regimes that will make it easier for him to make investment decisions,” added ASOP head.
South-bound course
A serious increase in cargo traffic in the ports of the Southern Basin is due to two main factors: this is, in fact, the growth of trade with the countries of the Middle East and Asia, as well as the acute shortage of carrying capacity of the Eastern Railway operating domain. Therefore, it is practically uncontested in trade with the countries of the Middle East, due to the short transport leg, and in trade with the countries of the Asia-Pacific Region (APR), it largely compensates for the impossibility of transporting certain volumes of cargo to the ports of the Far East.
The ports of the South Basin are traditionally the main "gates" of Russia for the grain exports: in other sea basins, there is a shortage of
specialized port facilities for the commodity export. And grain, in turn, is the most dynamically growing Russian export cargo. Thus, the volume of grain handling in January-May 2023 soared by 2.2 times to 28.2 million tonnes. At present, grain in terms of volumes ranks second after coal in the dry bulk segment.
In the container segment, the ports of the South are increasingly used to unload the congestion in the Far East Basin
Speaking of coal, it should be noted that it was the South Basin that demonstrated the highest growth trend in coal handling last year (due to the Taman deep-water terminal, which is capable of receiving the largest bulk carriers).
The South also showed an increase in liquid bulk cargo - by 3% (while the handling in the ports of the North-West decreased by 2.6%).
However, the Southern Basin also has its own problems – and they basically all rest on the same insufficient carrying capacity of railway access, which must be increased.
Longer voyages
Despite the fact that the Asia-Pacific countries, primarily China, are becoming the main trading partners of Russia, the ports of the Far Eastern basin grew much more modestly than the ports of the South. And this is explained by two main factors: the insufficient capacity of long-distance railway haul and the shortage of specialized deep-water terminals (primarily for handling grain, mineral fertilizers).
The Basin continues to play a critical role in coal exports, and container traffic has skyrocketed due to the reversal of logistics to the East. Terminals, which in previous years focused primarily on working with coal, are now forced to adapt to new realities. Thus, the stevedores, together with the railway workers, have debugged the technology of transporting containers in gondola cars (which were originally intended for the transport of dry bulk cargo).
A successful example of such work is the largest coal terminal of AO Vostochny Port.
“In addition to investments in a specialized coal terminal, Vostochny Port is actively developing a universal terminal. The port has confidently integrated into the import logistics container flows and already by the end of June we are processing the same amount in TEU as for the entire last year. Throughput increased almost three times compared to the same period in 2022,” said Irina Olkhovskaya, Director for Port and Railway Projects at UMMC. “In a short time, we quickly developed seven local specifications for loading containers into gondola cars, and today the speed of the process is almost equal to loading on container platforms. One train per day is a stable result,” she added.
The outlook of the Far Eastern Basin rest on the carrying capacity of the BAM and the Trans-Siberian Railway
Be that as it may, the further prospects of the Far Eastern basin rest on the capacity of the BAM and the Trans-Siberian Railway. Russian President Vladimir Putin speaking at the St. Petersburg International Economic Forum 2023 drew attention to the need for their accelerated development. In 2023 the carrying capacity in this direction should increase by 15 million tonnes per year and reach 173 million tonnes per year.
The long-suffering Baltic
The turn of logistics to the East, as expected, hit the Baltic Sea basin the hardest. If earlier the Baltic was Russia's "container gateway" to the world, then after the withdrawal of Western shipping lines and the tightening of sanctions, the basin's container terminals experienced a real shock. Thus, according to Global Ports Management, the share of the Baltic Basin in the total container throughput at seaports for 2022 decreased from 44% to 24%, while the share of the Far East Basin, on the contrary, increased from 37% to 53%, which clearly shows what was happening in the container segment.
Igor Pukhov, CCO, Global Ports, said at a meeting of the Expert Club of the Eurasian Union of Participants in Rail Freight Transportation,
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the capacity of sea container terminals in the North-West is 5 million TEU per year. According to the market participant, the capacity surplus will amount to 4 million TEU by the end of this year.
After the first shock, container traffic in the Baltic began to gradually recover
Nevertheless, after the first shock, container traffic in the Baltic began to gradually recover. Consistent recovery of cargo turnover occurs as a result of attracting new maritime container carriers to the North-West, which is facilitated by the above-mentioned shortage of carrying capacity of railway access lines to the ports of the Far East.
According to Global Ports, today there are 14 container shipping lines operating in the ports of St. Petersburg and the Leningrad Region. At the same time, their composition was updated by 80% over the year. Operators that withdrew from the market were replaced by companies from Russia, China and the Middle East. Thus, the container volume at the Great Port of St. Petersburg as of May 2022 recovered to 58% of the average for 2022.
If we talk about other types of cargo, there was a drop in liquid bulk segment, but a serious increase in bulk cargo (by about 17%), which occurred mainly due to an increase in the volume of fertilizers handling in the Port of Ust-Luga (at new specialized terminals), as well as coal.
Will the North help us?
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The railroad is not the only way to transport goods from the hinterland to the Asia-Pacific region and vice versa. The second route is transportation along the Northern Sea Route, which is still at the “rolling out” stage.
It should be noted that a subsidized line operates on the Northern Sea Route, provided by the nuclear-powered icebreaking container ship Sevmorput. The second subsidized voyage along the Northern Sea Route (NSR) is slated for October 10.
A landmark event was the opening of a regular container line of the Chinese operator NewNew Shipping Line between China and the ports of Arkhangelsk, the Great Port of St. Petersburg and Kaliningrad along the Northern Sea Route, the transit time will be 25 days. In 2023, four ships will be deployed on the China / Kaliningrad / St. Petersburg line, and one more ship on the line with the Port of Arkhangelsk.
According to General Director of Captain Company (specializes in transportation between China and Russia), the opening of regular container lines in the direction of China - Russia will significantly reduce the logistics costs for the transportation of relevant goods.
“From next year, with the support of nuclear-powered icebreakers, regular year-round navigation for the export of Arctic products towards Asia will begin”.
If we talk about the development of transportation along the Northern Sea Route as a whole, then, as Vladimir Panov, special representative of Rosatom for the development of the Arctic, said that previously test voyages were carried out on East-bound route, then from next year it is planned to carry out regular voyages of Novatek vessels.
Thus, every year the Northern Sea Route becomes more and more a real transport artery, an alternative to other routes.