VIII SeaNews FREIGHT 2011 St Petersburg, Russia

November 1 and 2 saw a select gathering of industry professionals at the Ambassador Hotel in St Petersburg Russia for the annual SeaNews Freight 2011 Conference. Alexander Rogan reports.

With the support of the Russian Ministry of Transportation and now in its eighth year, the focus of the event was discussion on containerised freight through the Russian ports and the surrounding areas. Delegates gathered from Gdansk, Hamburg, Rotterdam and Ust Luga ports provided interesting comments on their future plans.

A few of the discussions and presentations heard over the two day event are noted below.

Boris Wenzel, CEO of the Container Ship Terminal in Gdansk remarked on their impressive growth over the last few years supporting their sole client – the giant Maersk Line,  whilst Eduard Backer from Port of Rotterdam countered with their audacious expansion plans. Historically ports would look to the hinterland to provide the required space, but, no. The Dutch port has grown in the other direction and claimed many hectares from the North Sea to provide the necessary space to accommodate its continued growth.

Port of Rotterdam – new build reclaimed from North Sea

Hamburg Port, represented by Natalia Kapkaeva introduced the audience to the ‘green effect’ and how western European ports were changing their ways. Natalia demonstrated how the Port of Hamburg, whilst still chasing growth and providing the highest quality port services, also ensured that their neighbours live in peace and harmony alongside what is one of Europe’s busiest commercial sea ports.

I, in my capacity as CEO of Priority Freight CIS, made the point that the Russian ports and logistics providers had to step up to the challenge following the inward investment by the automotive sector  and the impact this will have on the Russian supply chain. Four foreign carmakers and their partners had now agreed to invest $5 billion under the revised customs codes (Decree “166” and “566”) on local manufacturing.

Ford’s partnership with Sollers will invest $1.2 billion while General Motors is investing $1 billion.   Inward Russian investment in Fiat production capacities and the engine plant will exceed $1.1 billion. Renault Nissan’s investment in Avtovaz marches on unabated as this manufacturer seeks a 60% market share of the Russian domestic market.

In addition to the western manufacturers, the Chinese have again entering the Russian market and, using overland rail bridges, are bringing cars, components and manufacturing expertise via a comparatively short supply chain. OEM’s and freight operators alike have to take notice that their logistics must improve in the face of such competition.

Each major car manufacturer may import one thousand FEU per week in to Russia, providing logistical support for the 1.2 million cars Russia will produce each year. These volumes exclude the Tier suppliers that support the car manufacturers. In addition to these volumes OEMs are storing up to 1000 FEUs in Russia as they hedge their bets on the stability of what has been, historically at least, a volatile supply chain. Not to be forgotten will be the growth generated by Russia’s accession to the WTO.

This anticipated growth would possibly explain why a market leader from the Indian Ocean was present at the Conference. It is not often that you have the ‘best of the best’ in the house but they were in St Petersburg on Thursday.

Keith Nuttall, Group Commercial Manager representing the Gulftainer Company noted that there are 3 kinds of lies: “lies, damned lies and statistics” and then proceeded to provide statistics showing that the Gulftainer Company processes container ships faster than any other port – anywhere. Of particular interest is Gulftainer Company joining forces with Ust Luga Port and is bringing its world class expertise to Russia’s newest and Eastern Europe’s biggest sea port.

With the combination of the large dollar investment in this all new world-class infrastructure and the noted management expertise, the new arrival should shake up the status quo and provide shipping lines, shippers, distributors and importers alike with reduced costs, greater choice and improved supply chains. An evolution in logistics is taking place on the Baltic coast.

Following from Nuttall’s introduction, Alexander Goloviznin, Deputy Director General at Ust Luga Port discussed the Ust Luga Port plans for combined logistics operations and the advantages of having secure warehousing, pick and pack operations or manufacturing plants at the first point of entry. Making the valid point that a 3PL operation situated in between a point of arrival, the port, and the market is a 3PL in the wrong place Alexander provided a presentation on how Ust Luga’s $2.5 billion investment has been spent and what facilities will be available to newcomers to the Russian market. Logistics providers, importers and distributors and manufacturers will be able to take advantage of green field developments within or adjacent to customs bonded areas and benefit from the influx of labour from the new Ust Luga city, currently under construction.

Elena Bormotova, and Larisa Korshunova, Directors of the Russian Federation Federal Customs provided examples of the progress Russian Customs has made in the paperless office and how extensive use of the internet and web-based systems was providing improvements in processes and time saving systems. Having first-hand experience at Sheremetyevo Airport with e-clearance I can confirm that the new systems are working extremely well.

All told it was an informative event and provided a little-repeated opportunity to get close to the operators and federal authorities who control the flow of cargo into one Europe’s few buoyant markets.

Any comments please contact alexander@automotivesupplychain.org

Tweet