Russian container market has been living in an absolutely new reality from February 24. Major marine operators have exited and the local players join hands with other foreign companies to launch new services and look for alternative ways of their container fleet expansion. FESCO, Novomorsnab and Ruscon told about the new export and import routes at the YugTrans Forum.
IAA PortNews used to tell about the pivot of container flows from the north-west of Russia to the country’s south and east amid the new circumstances and. Throughput of all large ports continues going down which is may stop by the end of the year only in the Far East, experts believe. In the south of Russia, some companies have already started building up the scope of export/import container operations.
When comparing the first 5 months of 2022 with the same period of 2021, the steepest fall of container throughput was registered in Saint-Petersburg, by 41% (according to FESCO basing on Morcenter TFC and MCC data). The port of Novorossiysk saw a decrease of 10%, the ports of Vladivostok and Vostochny saw a 10-pct growth while land border crossings Zabaikalsk and Naushki saw an increase of 11%.
“The picture is getting more interesting if we compare the first and the second quarters of 2022. We see that the container market crisis is aggravating considerably. The cargo flow in the North-West region lost 64%, in Novorossiysk — 23%. Besides, we see a decrease in the east: down 11% at ports and down 4% at land crossings. The third quarter is not likely to show a more promising picture,” Nelli Vladimirova, Director FESCO’s Novorossiysk branch, said at the YugTrans 2022 forum.
Ruscon is also pessimistic about the situation.
“The port of Novorossiysk had seen a drastic fall after February and it has not recovered yet with no clear understanding of time needed for the recovery. As for imports, they continue going down, there is no growth. At the same time, we see that almost 50% of import cargo coming via Novorossiysk are refrigerated cargoes. The reefer season is coming to its end and we will certainly see a steeper fall of volumes,” said Ilya Dirkonos, Commercial Director of Ruscon.
As for exports, the results of January and February are comparable to those of 2021. In March, when uncertainty arose, the throughput sank and it continues falling.
“The surge we saw in April reflects the decision of many companies to finalize the delivery of cargoes stuck at storage facilities, hence the growth,” explains Ilya Dirkonos.
By the end of the year, experts forecast a 30-pct growth of exports via the Far East. “This outlook is based on the fact that the recovery in the Baltic Basin not expected. Novorossiysk will probably retrieve part of its losses, but not in full,” says Nelli Vladimirova.
Lines running to Turkey
With global container lines having hated their operation in Russia, local players have been encouraged to intensify launching of their services. Turkey is among the key directions for Russian cargoes amid sanctions. Apart from Istanbul, TransContainer has organized services to Ambarly (4 times per month), Samsun (6 times per month) and launched a service to the port of Mersin in July (twice a month). According to Yevgeny Babich, Director of TransContainer’s North-Caucasus Railway Branch, the calls are stable with fully loaded ships.
“Imports from Istanbul are growing, there are cargoes in Turkey although more and more players enter it. Exports are also on the rise. The Mersin volumes are less in our company with its service frequency of 2-3 times per month while the service to Istanbul is weekly,” says Yevgeny Babich.
According to Ilya Dirkonos, many Russian traders established their storage and consolidation points in Turkey from where cargo across the world. So far, it is actually difficult to separate the Turkish export from the transit.
Experts have different opinions when it comes to covering the deficit of containers. Some believe that the volumes lost cannot be recovered while others say that is not needed as imports and exports will continue decreasing, hence there is no need for that much equipment.
In April 2022, FESCO launched its Turkey Black Sea service (FTBS). Later, FESCO announced its plans to increase cargo transportation by FTBS linking the ports of Novorossiysk and Istanbul.
“Its export/import capacity is 120 TEU now but in august we expand the ship capacity to 420 TEU. In Novorossiysk, we call at NUTEP terminal, in Istanbul – at Kupmort terminal,” said Nelli Vladimirova.
Besides, the geography expansion is under consideration with Izmir and Mersin to be added to the route.
According to Aleksey Garmash, General Director of Novomorsnab Ltd., new line services between Novorossiysk and Turkey have been launched by Global Line, Unity and Amethyst, apart from FESCO, TransContainer and Ruscon.
Apart from Istanbul
According to Yevgeny Babich, India is yet another promising direction: “The first ship came to Nhava Sheva from Novorossiysk and it is returning now. The second ship will leave in August, about August 12. Transit time — 14-15 days. The service is quite fast as compared with the land transportation. We delivery cargoes to India y land as well, but the sea route is an alternative. There are two regular ships. There are many goods in India, the local businesses has been yearning for our market.
“At first, India was less obvious destination for many. Practicing with Turkey no one was initially considering Indian ports as points of destination. Now, everybody sees how it works. However, it should be understood that the key factor of launching/non-launching of any service is a balance between export and import. Eventually, launching of any service in any direction is not a problem today, everything is obvious and clear. But there are directions for exports without a possibility to ensure import in the opposite direction. Let’s take Egypt. There is an enormous demand for grain shipments while 90% of imports from there is refrigerated cargo which cannot be delivered in non-refrigerated containers. Therefore, it does not work. The run of empty containers should be taken into account,” said Ilya Dirkonos.
One more direction is Vietnam which is also in the focus of Russian companies. In May 2022, FESCO launched its service from Vladivostok - FESCO Vietnam Direct Line (FVDL). The first voyage was on the A HOUOU of 850 TEU in capacity. FVDL is used for export of equipment, non-dangerous concentrates, milk powder and for import of tinned goods, sauces, clothing, footwear, textile, construction materials and plumbing equipment.
Among its potentially interesting markets Ruscon also mentioned Ashdod (Israel) where two voyages have been made already. The company is also planning to launch a regular multimodal container service to Shanghai. Cargoes from China are to come to Vostochny Port from where a regular container transport (once in two weeks) would deliver them to Novorossiysk.
Back to bulk
The withdrawal of major marine operators entailed the disruption of logistic chains and the deficit of equipment which is seen everywhere.
According to FESCO’s calculations, container fleet in Russia has reduced by 45% with the withdrawal of major carriers from the market. Additional 26% are represented by the blocked fleet of companies leaving Russia.
“Thus, 70% of equipment leaves the market. Such a shortage cannot be covered by local carriers no matter how intense their procurement is, especially when it comes to a short period of time,” says Nelli Vladimirova.
Moreover, there is another aspect associated with the deficit of containers – excess of container platforms which is to aggravate this year entailing even higher competition among operators, the company expects.
With the shortage of containers there is a trend towards using bulkers. “Over the recent 15 years we had been shifting cargo flows from bulkers to container ships and now we are reverting back,” emphasized Nelli Vladimirova.
A similar trend is noted by Aleksey Garmash, General Director of Novomorsnab: “That is quite serious. To put it clear: more than 60% of cargo at our terminal is non-containerized cargo, primarily timber and ferrous metal. Container terminal NUTEP has also started handling dry bulk cargo.
As IAA PortNews reported earlier, TransContainer was going to purchase 24 thousand containers this year. They will be acquired mainly in China since the required number of containers cannot be manufactured in Russia so far. Besides, the company slowed down decommissioning of its containers and stopped using them one way to ensure a guaranteed return.
“We are extensively involving the fleet of the third parties, Chinese and Indian companies, small owners available in the market. We take them on lease and under management. About 15,000 of containers are under our operational management now,” told Yevgeny Babich.
“Our fleet is not as large as that of TransContainer. Something is purchased, something is taken on lease. The operating fleet totals 3,000 TEU with 40-foot containers making the bulk of it,” added Ilya Dirkonos.
However, Experts have different opinions when it comes to covering the deficit of containers. Some believe that the volumes lost cannot be recovered while others say that is not needed as imports and exports will continue decreasing, hence there is no need for that much equipment.