• 2022 October 4

    In case of blockade: can Russia get a fleet of large ships?

    Russia’s own commercial fleet is able to handle slightly over 10% of the country’s total seaborne foreign trade. At the same time, Russia lacks shipyards able to build sufficient number of large ships. The problem could be solved through a program of preferential loans provided for the purchase of foreign ships.

    When it comes to general availability of port facilities, Russia does not depend on other countries (with some exceptions due to lack of terminals for certain types of cargo). The situation with seaborne cargo transportation is just the opposite. Experts say that Russian-flagged ships owned by Russian ship owners can carry only 90 million tonnes of cargo per year while annual throughput of Russian seaports makes about 800 million tonnes per year. Thus, Russia’s fleet can cover only slightly over 10% of the total demand. Amid sanctions and geopolitical tension, this situation can lead to a transport collapse.

    The problem of tonnage shortage is particularly acute in the segment of bulkers. When speaking at St. Petersburg International Economic Forum (SPIEF), Anna Tsivilyova, Chairman of the Board of Directors of Kolmar Group, emphasized that Russia has no bulkers of its own. “Russia has no bulk carriers of its own. And if now, for one reason or another, the ship-owning countries introduce some restrictions on the entry of ships, then all export companies will completely lose their only access to the Asian markets,” she said.

    According to Ivan Blagodatskikh, representative of TransFin-M, who spoke at the Maritime Congress in Moscow, Russia needs a fleet of bulkers with a total deadweight of 70 million tonnes to ensure its transport independence in the segment.

    Today, only two shipyards, SC Zvezda and Zaliv, can build large ships.

    Meanwhile, United Shipbuilding Corporation (USC) announced its plans on modernization of Severnaya Verf shipyard in Saint-Petersburg to ensure the construction of 60,000-dwt bulkers.

    When speaking at the Maritime Congress in Moscow, Sergey Lyashenko, Director of USC Technical Development Department, said that USC had designed bulkers with deadweight of up to 90 thousand tonnes which are to be fitted with equipment of domestic origin. The speaker emphasized that large ships would be built basing on a 'distributed shipyard' principle.

    “We are working with our customers in this respect. I think it will be in demand and we will try to fully meet our customers’ requirements,” said Sergey Lyashenko.

    However, modernization of Severnaya Verf shipyard is not to be completed before 2024-25. Meanwhile, cargo transportation should be ensured right now. As a temporary measure, Ivan Blagodatskikh suggested the development of a program of preferential loans in the part of building or acquiring relatively new ships abroad with their transfer to the Russian flag.

    According to the speaker, Handysize bulkers, which are the most in-demand, cost $30 million for a newbuilding, or $20 million for a 10-year old one. The expert believes that the pay-back period can exceed 30 years with the 10-year average freight rates. Such an acquisition is unprofitable for a shipping company.

    “We suggest the development of a program of preferential loans in the part of acquiring or building ships abroad for a short period of 2-3 years while Russian shipbuilders are not able to meet the demand for such ships in full,” said Ivan Blagodatskikh.

    Transfer of ships to the flag of the Russian Federation and co-financing by a Russian bank should be an obligatory condition under this program. With rates between 1.5% and 3% for 10 years, the pay-back period is not to exceed a decade for a new or a 10-year old bulker, making it affordable for shipping companies.

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Vitaliy Chernov