Demand for grain and agribulk handling capacity is driving investments in bulk ports in the Black Sea region
The volumes of grain exported over Black Sea ports continues to increase, and with demand in China, South East Asia and Africa remaining strong, it is this sector that is driving investment at many ports in the region. It means existing grain handling facilities are being expanded and new ones built as port authorities, independent terminal operators and grain traders, such as Archer Daniels Miller Company, Cargill and Louis Dreyfus Group, seek to capitalise on the momentum.
The increasing importance of Kazakhstan, whose main outlet for grain is through ports in Georgia, Russia, Ukraine and Romania, is partly attributable to China’s strategy of buying from more suppliers and cutting its reliance on the US. The growing tension between China and the US has exacerbated this process over the past 12-18 months.
In addition, demand in Africa, which traditionally sources its grain from Europe, has been strong. Meanwhile, new markets are emerging in the Middle East, with Russian and Eastern European grain producers, in particular, keen
to capitalise on these opportunities.
But it is improvements in regional infrastructure and investment in the farms (new tractors, combines and growing/harvesting practices) that have also helped the region increase its global share of the grain trades, as the cost of producing and transporting the commodities has come down.
However, that does not mean that investment in better rail lines, inland terminals/processing centres and bulk storage facilities is not needed. Indeed Russia and Ukraine, often in direct partnerships with private investors, are spending huge sums of money on improving their grain exporting infrastructure.
For Russia, it is a fundamental part of its latest five-year plan that focuses on economic diversification. In particular, it means boosting agricultural production and reducing its reliance on oil and gas. The latter commodities have seen high levels of pricing volatility in recent years, and this has had a significant and adverse effect on the Russian economy. By 2020, it is hoped that Russia will be harvesting between 120 and 125 Mtpa of grain, and exporting between 35 and 40 Mt of this.
To support the industry, the country’s leading Black Sea port of Novorossiysk is being modernised, and investment in higher capacity dry bulk cargo handling facilities is a key part of the programme.
Recently, VTB Group, which is one of Russia’s largest financial services companies, acquired Novorossiysk Grain Terminal LLC (NGT) from Novorossiysk Commercial Seaport, the owner of the whole port. The complex handles mainly cereals and oilseed exports.
Elsewhere in the port, the Delo Group, which is one of the largest privately controlled freight transport and logistics companies in Russia, is investing heavily in its container and dry bulk handling facilities. It is a large player in Novorossiysk port and handled over 18% of its dry cargo volumes in 2018.
Although most capital is being channelled into the development of a new deepsea container terminal at berth 38, the company’s Kombinat Stroykomplekt (KSK) Grain Terminal is being improved. Cargill, the large US-based trader in agricultural commodities, holds a 25% stake in the facility and is fully behind the expansion plan.
It involves the construction of a new deepsea berth (40A) with a depth alongside of 16.9m and capable of accommodating large Panamax tonnage. It will boost the facility’s throughput capacity to at least 6.5 Mtpa.
In addition, the terminal’s static grain storage capacity is being most doubled from 116,000t to 218,000t, and access for trucks and trailers is being upgraded. It means 40 trucks and 15 railcars will be able to be handled each day.
In 2018, KSK handled 4.8 Mt of grain, a 14% increase on its 2017 volume, and it controlled about 19% of the port’s total throughput of this commodity.
The Novorossiysk Grain Plant (NGP) facility has also been expanded. Controlled by Moscow-based United Grain Company, its throughput capacity has been significantly increased from 3.4 Mtpa to just over 6 Mtpa. Like Delo’s plans at KSK, new storage facilities have been constructed, with the capacity of NGP raised from 140,000t to 250,000t.
In addition, the throughput rate of the facility’s conveyor belt system has increased from 1,600 tph to 3,500 tph. The terminal can also accept significantly more cargo by rail as these facilities have been upgraded and 14,500 t/day can now be processed. This compares with 10,350 t/ day previously.
Elsewhere in the port, the Ruscon Group, which encompasses the specialist multimodal transport and logistics activities of Delo, has installed an automated bagging plant for fertilisers. It means products including urea, ammonium nitrate and potassium can be crossstuffed from trailers and railcars directly into containers and/or big bags. This has raised efficiency levels of this operation considerably.
At Tuapse Sea Commercial Port (TSCP), which lies 125 miles northeast of Novorossiysk and is owned by the large international transport group UCL Holding, investment is focused on the dry bulk and breakbulk cargo handling sectors.
One of the biggest projects involves redesigning and buying new equipment for one of the port’s grain terminals. In addition to increasing the facility’s handling capacity to 3 Mtpa, it will allow a much wider range of grains to be processed. A threeyear project scheduled to be completed in 2021, it entails a capital spend of approximately US$64M.
The upgrade of the grain terminal is also important from a wider port perspective, as it also involves improvements to the port’s general rail infrastructure. This will significantly boost the system’s carrying capacity and allow other cargoes to be moved to/from the port by rail.
TSCP has also been investing in new equipment to boost its presence in the iron and steel sector. Last year, orders were placed with Vityaz for two large 50t capacity cranes with outreaches of 40m. The new cranes will allow the port to transfer large slabs of iron from rail cars to ships more efficiently, and they will also improve its competitiveness in handling large steel coils. These can weigh up to 32t each. To improve activities in the yard and storage areas, TSCP has acquired several forklifts with SWL capacities of up to 25t.
Elsewhere on Russia’s Black Sea coast, OTEKO has opened a new dry bulk cargo terminal in the port of Taman. Currently, it is the only maritime facility in southern Russia that can handle Capesize vessels of up to 220,000 dwt. It is designed to handle a range of bulk cargoes, including iron ore, coal, sulphur and mineral ores, and has a design throughput capacity for a massive 35 Mtpa.
The company’s newest terminal, which since late last year has been handling mainly coal, is part of an integrated investment programme by OTEKO to transform the port of Taman. The group has already built a 14.5 MT capacity grain terminal and a facility that handles project and heavy lift cargoes. OTEKO’s goal is to make Taman Russia’s second largest Black Sea port, and this strategy is moving closer to fruition.
In neighbouring Ukraine, grain exports have also soared, with a near doubling in traffic volumes recorded over the past five years. This period has been accompanied by significant investments in new terminals in ports such as Yuzhny, Berdyansk and Olbia.
These modern facilities, several of which have been backed by international investors, have improved the efficiency with which grain is handled, and they have helped propel the Ukraine into a more competitive position in the global grain trades. And this has been achieved despite the considerable political uncertainties in the country and issues associated with Russia’s annexation of Crimea.
The Ukrainian Sea Ports Authority (USPA), which controls 13 ports in the country, has also been active in signing cooperative deals with ports in some of its most important trading partner countries as a way of boosting trade. Currently, arrangements are in place with the ports of Alexandria and Damietta in Egypt and with Qatar Ports Management Company in Qatar.
The arrangements allow working groups to be established, information to be exchanged and a mix of parties, including shipping lines, traders and port operators, to work together and come up with new projects and ideas.
“The port of Odessa has a great experience of cooperation with the ports of Egypt,” explained Igor Tkachuk, head of the Odessa branch of USPA. “The cargo turnover between our ports is more than 4.5 Mtpa, and more than half of these cargoes are exports of agrarian products from Ukraine. The signing of the Memorandum will be an additional stimulus and a basis for the further development of bilateral cooperation.”
USPA is also involved in massive infrastructure improvement programmes, working through a series of public-private partnership deals, including for stateowned stevedoring enterprises in the ports of Kherson and Olbia. It is part of an initiative to improve efficiency levels in the ports, in the hope of generating higher cargo exchanges.
“This [strategy] will allow us to attract strategic investors in the development of port infrastructure, and this will contribute to the introduction of new technologies, automation of processes and attraction of new cargo flows,” said Raivis Veckagans, CEO of USPA.
Foreign investors are definitely interested in USPA’s reforms, with the trading group Louis Dreyfus among those companies saying that they would expand their interests and invest in the country. Currently, the France-based group operates grain elevators in Vinnytsia, Cherkasy and Zaporizhia regions. It is also involved in a joint venture with BrooklynKiev LLC in a grain terminal in Odessa.
A highly significant development project is the deepening of the port of Yuzhny so that fully loaded Capesize ships can be handled. Within the next two years, it is hoped that work on dredging the port to 21m will have taken place. This will improve the competitiveness of shipping iron ore, grain and coal through Ukraine considerably.
Meanwhile, Cargill (51%) and MV Cargo (49%) opened a new terminal in Yuzhny last year. It features 14 silos and storage capacity for 300,000t of cargo. With water depth alongside of 16m, large fully loaded Panamax ships can
easily call. The facility’s annual throughput capacity is estimated at 5 Mtpa, and a wide variety of grains can be handled.
In other developments, a new grain terminal is being built in the Azov Sea port of Mariupol, while cargo handling facilities at the port’s Berth 4 are being refurbished and upgraded.
Ambitious bulk terminal development projects are also underway in Georgia. The country believes significant opportunities exist in the gateway cargo trades with the Central Asia states, including Armenia, Azerbaijan, Kazakhstan and Turkmenistan, where exports of grain, fertilisers and certain mineral ores are important.
Despite alleged funding problems, work on the new deepsea port of Anaklia continues. The Anaklia Development Consortium, which is responsible for the project, has dismissed the reports and stressed that phase one, which includes a 1.5 Mtpa capacity bulk terminal to handle fertilisers, is still on target for an opening in Q1 2021.
In Georgia’s existing ports of Batumi and Poti, new terminals are also being constructed. In January 2019, US-headquartered Trammo, an international merchandising and trading company, announced plans to invest U$20M in a new facility to also handle fertilisers.
Meanwhile, in Poti, the US Overseas Private Investment Corporation is lending the Georgian-American transport company PACE Group US$50M to build a new terminal on a 25-ha site formerly occupied by a shipyard. In all, US$120M will be invested in the 650m-berth facility, which will be capable of handling 100,000 TEU a year and 2.5 Mtpa of dry bulk and general cargo. Ships of 50,000/60,000 dwt (mainly Handymax) will be able to call at the terminal.
However, a project involving APM Terminals and Poti New Terminals Consortium to develop a new bulk handling facility in Poti will not take place. In May, Georgia’s Minister of the Economy Natia Turnava cancelled the construction permit on the basis that it did not meet government planning criteria and its submission had violated various procedural issues.