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Russia Shipping Report Q4 2011
Business Monitor International, Sep 2011, Pages: 102
Russia's weakening economic growth picture is at odds with throughput volumes at the country's ports. In Q211 Russian real GDP grew by just 3.47% year-on-year (y-o-y) compared with a 4.1% increase in Q111. The slowing growth is, however, leading BMI's country risk team to warn that Russia's economy appears to be settling into a significantly lower growth trajectory than in the years leading up to the global financial crisis.
While the economy might be slowing, throughput at the nation's ports is booming. Volumes through Russia's main container port, and second largest maritime facility in terms of total tonnage throughput, the port of St Petersburg are booming. Box levels at the facility for the first seven months at the facility increased by a massive 34%. While total throughput growth did not follow the same growth trajectory, volumes through the port grew by a respectable 8% in the January-July period.
Such is the port's growth outlook that BMI is forecasting that box volumes at the facility will recover to pre-downturn levels in 2011, with total tonnage throughput to make a full recovery in 2012.
BMI highlights further growth impetus in Russia's port sector from the country's privatisation drive and government funding. A stake in the port of Vanino has already been sold, with the port of Murmansk next up on the block (for the second time). Global terminal operators are also making an entrance into the Russian maritime sector with DP World acquiring a 25% stake in the container terminal at the port of Vostochny in 2009 and APM Terminals (APMT) reported to be considering investing in the new port of Baltysk, in the Kaliningrad region. Global port operators tend to stream line a ports operations making it more productive and with an extensive network around the world are able to offer considerable expertise, assistance and investment to drive port throughput up.
The government is also getting behind the nation's ports with a number of new port facilities being developed on Russia's coastline. The most recent example, which BMI explores in the Q411 Russian Shipping Report is the planned port of Taman, which the Russian government is set to commit US$1.8bn to develop.
Headline Industry Data
- 2011 port of Novorossiysk tonnage throughput forecast to grow 25.54%, over the mid-term we project a 27.2% increase.
- 2011 port of St Petersburg container throughput forecast to grow 20.5%, over the mid-term we project a 78.8% increase.
- 2011 total trade growth forecast at 12%. Key Industry Trends
Mixed Privatisation Success
While a stake in the port of Vanino has been sold, other maritime assets have not fared so well. The Murmansk Shipping Company (MSC) failed to garner any interest and a stake in the port of Murmansk is due to be auctioned for a second time when the first bidder dropped out. BMI expects the port of Murmansk to be second time lucky as a larger stake is in the offing.
Asia-Europe Link
The port of Vladivostok has once again highlighted its credentials as an entry point for Asia goods to be freighted by rail to other destinations in Russia or Europe. BMI notes that Russia's Far East ports, once neglected and considered the preserve of mining exports are finding a new lease of life as gateways for containers as the Asia-Europe landbridge scheme develops.
Partnering Up
BMI has previously highlighted the trend for commodity firms, such as coal miners to invest in the country's ports, a wise move if you want to be assured a bottleneck free supply chain.
Risks To Outlook
While throughput at Russian ports appears so far not to have been adversely effected by the slowing in Russian economic growth we are wary of what impact a prolonged or deeper economic malaise would have on the country's throughput. We are especially concerned by the weakening in consumer demand, which our CR team has highlighted, with consumers hurt by high inflation in H111, as the container throughput at Russia's ports has been mainly driven by the country's high consumption of manufactured goods.
As noted above in terms of driving throughput at ports up Russia is on the right course with a privatisation drive and investment, but the core factor remains, it doesn't matter if global port operators flock to a country's port sector and invest, if demand is not there throughput volumes will not increase.
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