Grain trades drive Black Sea ports

Countries neighbouring the River Danube, plus Russia, Ukraine and the Central Asia state of Kazakhstan, which exports most of its commodities through Georgia, now control over 40% of global wheat exports.
 
The region’s share of the world market is set to increase further as production rates per hectare are ramped up due to more efficient farming practices, and costs continue to come down. In addition, the Russian Government has changed its agricultural policy, replacing a programme largely based on substituting imports with home-grown products to one where exports are now being actively encouraged. 
 
“I’d like to stress that our key goal is to keep growth rates in the agriculture sector and raise the competitiveness of Russian produce on international markets,” said agriculture minister Alexander Tkachev. “In 2016, the value of our food exports rose 5% to US$17B, and I expect this to be maintained in 2017.” The minister is also increasing the sector’s budget, with approximately US$B4 being spent on agricultural support programmes in 2017. This is expected to rise to US$4.4B in 2018. 
Vito Martielli, grains and oil seeds analyst at Netherlands-based Rabobank, is extremely bullish about the region’s prospects. “The Black Sea and Danube region has increased its cost competitiveness against rival suppliers in recent years, and growers have made full use of low freight costs and favourable exchange rates. It enables Russian wheat to be currently offered in South East Asian markets, sometimes more cheaply than US and Australian supplies,despite their shorter shipping distances.” 
 
Addressing delegates at the Global Millers’ Symposium, held in Hamburg earlier this year, he added: “These [Eastern European and Black Sea] countries will become even more important, as they have the scope to increase wheat production.” 
 
Martielli believes the Danube corridor could become as important in the global grain trades as the Mississippi River in the US. While volumes remain vastly different, China and countries in the ASEAN trading bloc are definitely sourcing more of their grain from Eastern Europe, Russia and Ukraine. 
 
Nations in sub-Saharan Africa are also buying more wheat from the region. Moreover, this demand is likely to increase strongly as populations rise, disposable incomes and the demand for processed foods and protein increase, and economies in the former region expand.
Under pressure
The surge in grain exports over the past five years has put pressure on grain handling facilities in the ports and on river and rail transport and logistics networks in general. But it has also resulted in significant investment, and private-sector companies, such as Archer-Daniels-Midland (ADM), Cargill and Bunge, have increased their presence in many ports. In addition, state sponsored projects have risen in number as all parties look to develop modern facilities and supply chain infrastructures. 
Romania’s port of Constantza has been one of the main beneficiaries of the boom in grain exports, with another record tonnage handled in 2016. The 20.4 Mt of grain processed, compared with 19.6 Mt in 2015, a rise of 4.1%. Grain  now accounts for more than 34% of Constantza’s total traffic.
Recent years have seen the port, which is located on the mouth of the River Danube, successfully expand its role as leading gateway for agrorelated businesses located in Romania, Moldova, Northern Bulgaria, Serbia, Croatia and Hungary, and this is set to continue.
Ports in Bulgaria have also benefited from the growing trade in grain, with exports between January and end-April 2017 totalling 3.9 Mt, up 62.5% on the corresponding period of 2015. 
 
Russian growth
In Russia, cargo handling facilities located in the AzovBlack Sea Basin have also posted a strong start to the year, with the total 80.7 Mt of cargo handled in the January/ end-April period, up 8.5% on the same period of 2016.
According to the country’s Association of Commercial Sea Ports, it was the export of agribulk commodities that largely fuelled this growth, and resulted in the near 9% rise in dry bulk tonnage handled in the region. The 32.5 Mt processed compared with 29.9 Mt (+8.6%) in the corresponding months of 2016. 
 
A number of important capital projects are being pursued in this region, with the expansion of the port of Taman, which saw its cargo volumes increase by 27.2% in the first four months of the year, hugely significant as it could  transform shipping patterns and cargo movements in the region.
The next four years will see the port emerge as Russia’s second largest port (on a capacity basis) in the region, with the ability to handle at least 73 Mtpa of cargo. Its current handling capacity is estimated at 20 Mtpa. 
 
Taman will handle mainly dry and liquid bulk cargoes, but with some berths and equipment allocated for general breakbulk and project cargoes. 
 
The main developments include: