Container turnover of North-West ports has increased by 121% since the beginning of the year

Container shipments from Northwestern ports, which fell sharply after the outbreak of hostilities in Ukraine, continue to recover. They were up 121% in the first two months of the year, although in February they were still 28% behind the 2021 monthly average. According to market participants, the growth is due both to the emergence of a sufficient number of maritime services to St. Petersburg and to the equalization of prices for container transportation between the Far East and the North-West. Difficulties in transporting containers by rail to the east also had an impact, which led to an outflow of export cargo to an alternative direction.

Container turnover of North-West ports in January-February increased by 121% compared to the same period in 2023, Denis Ilatovsky, senior vice president of Delo Group of Companies, said in his speech at TransRussia 2024. However, container turnover has not yet returned to pre-crisis levels, he clarified. Among the factors that determined the recovery are the arrival of new operators to replace the departed container lines, a reduction in transportation costs to a competitive level with the ports of the Far East, and the emergence of imports of Chinese passenger cars in containers.

The ports of the North-West, originally oriented toward Europe, suffered the most from the withdrawal of global lines and the closure of the largest container hubs for Russian cargo in the spring of 2022. In the first half of 2022, the decrease in container turnover relative to comparable indicators in 2021 was 60–85% (see “Kommersant” dated June 17, 2022). At the end of the year, according to Mortsentr-TEK, transshipment of container cargo in the Big Port of St. Petersburg, the largest container port in Russia at the end of 2021, fell by 54.7% in TEU and by 64.1% in tons, in the port Ust-Luga – by 38.2% and 50.5%, in the port of Kaliningrad – by 71% and 72.8%, respectively.

However, already in the first quarter of 2023, operators noted signs of market recovery and a growing interest in container lines new to the Russian market to the ports of the region (see Kommersant of April 18, 2023). Many Chinese, Turkish and Middle Eastern companies have appeared, as well as Russian market participants who have mastered maritime services. According to PortNews, the dynamics of transshipment (in TEU) in the Baltic Basin changed vector in the second quarter of 2023. The increase was 25.5%, in the third quarter – 150.3%, in the fourth – 118.1%. In 2023, the terminals of the Big Port of St. Petersburg increased container transshipment by 13.1%, to 1.05 million TEU.

General Director of Global Ports Albert Likholet notes that in 2021, container turnover of the North-West ports was about 179–180 thousand TEU per month. By September 2022 it had fallen below 40 thousand TEU. In January 2023, it increased only slightly from this level, to 43–45 thousand TEU. In December, it already increased to 121 thousand TEU, and in February 2024 it was higher than any month in 2023, amounting to 129 thousand TEU.

Mr. Likholet explains this for several reasons. Among them are the saturation of the destination with services, support for the logistics of individual industries, as well as competitiveness with alternative routes. “The key factor in the last two months is the leveling of the markets in the Far East and North-West in terms of transportation costs,” he explained on the sidelines of TransRussia 2024. “Freight rates have been declining all last year, especially in the North-West. Now they have reached an almost equilibrium state, having settled at the level of $4.5–5 thousand per container.” According to the top manager, they will remain at this level, although “upward adjustments are possible.”

Some market participants are considering increasing tonnage, intending to use vessels with deep draft, which the Ust-Luga terminals can currently provide. According to Albert Likholet, Global Ports may consider increasing the depths in Ust-Luga if there are several carriers who announce the placement of container ships with a capacity of more than 4 thousand TEU on the line and confirm the volumes with guarantees. In his opinion, container transportation in the North-West will continue to grow.

Kommersant’s interlocutor, close to St. Petersburg stevedores, nevertheless calls for optimism to be curbed. Noting the growth in container turnover, he nevertheless draws attention to the decline in total tonnage in the Baltic basin, associated with the outflow of cargo from there. In tons, it follows from the Mortsentr-TEK bulletin, the cargo turnover of the Baltic Basin for two months of 2024 is inferior to both the two pre-crisis months of 2022 (lower by 0.4%) and January-February 2023 (lower by 4%).

The head of Infoline-Analytics, Mikhail Burmistrov, notes that the restoration of container turnover in the North-West is not least due to difficulties with transporting containers by rail in the Far Eastern and Southern directions. As Kommersant wrote, at the end of 2022, and then in March, the number of schedule lines for container trains to the Far East was noticeably cut off, which caused a multiple increase in prices for the delivery of containers to the east of the country (see Kommersant on March 11).

A Kommersant source in the industry talks about the cannibalization of Far Eastern container export volumes by the North-West. Also, according to Mr. Burmistrov, growth in the North-West is associated with the emergence of a sufficient number of maritime services. In this regard, he believes that this year it is possible to achieve the level of 2021.

Natalya Skorlygina