Fragile recovery gains traction
Odessa is recovering from the dip, but things aren’t yet straightforward
In 2008 there were a number of shipping lines offering direct calls into the Black Sea, but the 2009 crash was an unmitigated disaster for the area.
It lost almost 60% of its volume and the bounce hasn’t entirely come back. Ben Hackett of Hackett Associates explains that there was a limited recovery in 2010 and in the first part of this year – but many places have not just dipped once but twice, denting an absolute confidence in recovery which isn’t helped by the Eurozone’s crisis next door.
Despite this, the size issue is pushing the envelope in all directions as people look for economies of scale. Steve Wray of OSC explains: “It’s not just the main arterial services, but also the secondary trades that will see the impact: recent newbuild orders means larger tonnage will start to fall from the main east-west routes, starting in 2012. This will mean facilities in the Black Sea should start to see the return of direct calls.”
In this climate, the Ukraine seems to be gaining a head of steam. It has a handful of major facilities, including Odessa and Ilyichevsk – which, respectively, account for a 17% and 15% share of the box market according to 2010 figures. Even so, Mr Hackett says that the recently announced 8,000 teu Maersk call at both these ports was something of a surprise, since it had been thought that the largest that could be generally economically accommodated through the Bosperous Straits was around 6,000 teu.
Mr Hackett explains that the country’s ports have caught the volumes falling from Constanta in Romania: although the 2010 figures still make Constanta the single market leader with a 28% share of the total Black Sea box traffic, this covers a 6% fall in volume in a year, and at 720,000 teu it is well short of its record 1.1m teu 2008 traffic. Constanta has suffered from slow customs clearance and “difficulties relating to cargo facilitation”, as Mr Hackett diplomatically puts it: in other words, unauthorised payment schemes.
That’s not to say that the Ukrainian ports are clear of all this: only in March Nikolay Melnykov of international law firm Interlegal was moved to write: “Vessels calling at the ports of the Ukraine undergo numerous and serious perils. And we certainly do not mean perils of natural character."
Further, Mr Hackett sounds a note of caution and points out that despite recent figures, the Ukraine’s economic recovery at present remains “fragile” as it is dependent upon a small number of export commodities around the bulks market, mainly agricultural and metallurgical goods. “If there is another slowdown, or Asian demand stutters, it will impact the area hard – and Asian demand is liable to soften, although not to the same extent as seen in the West,” says Mr Hackett.
Drewry's Eero Vanaale adds, despite steep increases the container volumes through many of the Black Sea ports are “still tiny” when taken by themselves. “The region just doesn’t have density of demand as yet, the container traffic is very much import dominated with little outbound cargo, so sustaining direct deep-sea calls in the region may be difficult especially in current conditions.” However, he adds, the region is still one of Europe’s major gateways for oil, grain and other bulk cargo.
On the other hand, if all goes well, the Ukraine’s domestic demand should begin to gather traction soon, but Mr Hackett adds that ports need to develop ways of looking ahead. “Following the last couple of years grain volatility, more than one port has now put a large grain silo in, unfortunately these are often situated right against the container quay and will cramp development. It just doesn’t show much in the way of foresight,” he explains.
Turkey, however, is still hot to prove its transhipment capability, and is promising to put in a canal to bypass the bottleneck of the Bosphorus Strait. While there’s some scepticism about the pre-election announcement, the Istanbul Canal might just come off, in which case it will soon be making itself felt in the whole region’s plans.
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