Baltic blues

Southern Baltic ports had a rough ride last year and the beginning of 2010 has also been a wake-up call for those still thinking about the need to accommodate larger container vessels, writes Matthew Beddow

As shown in the table opposite, southern Baltic ports did not have a good year in 2009. Their collective container throughput collapsed by 30.4% due to the recession, down to 3,319,127teu, which was significantly worse than the average fall of 16% between Hamburg and Le Havre. Moreover, some of western Europe’s decline was only due to the collapse of transhipment cargo to/from the Baltic, without which its predicament would not have been so bad.

Eastern Europe’s economy will pick up again, no doubt, but in the meantime the word on everyone’s mind is "survival", rather than "expansion". Getting information out of the likes of Baltic Container Terminal in Riga, or its port authority, is not easy, therefore.

All is not lost for everyone, as Russia’s much-postponed Customs regime change on 1 November 2010 could result in more of its cargo passing through cheaper Baltic State ports, thereby reviving their dream of becoming major gateways into Russia once again. Moreover, Russia’s mighty import traffic is forecast to return to double-digit growth in 2010. Hamina and Kotka’s heavy losses last year stemmed from the fact that much of their traffic in 2008 consisted of overflow business from congested St Petersburg, which has since returned to St Petersburg due to congestion there no longer being an issue. They, too, will be watching Russia’s proposed Customs regime change with interest.

To make further sense of the way that ports in the Baltic are developing, it should be noted that this year finally saw the region’s first long-awaited direct deepsea vessels. The Maersk Taikung (8,200teu), deployed in Maerk Line’s AE10 weekly service from Asia, called at DCT Gdansk on 4 January, and the second, the Maersk Nimegen (2,560teu), deployed in the carrier’s weekly ECUBEX service from South America, reached St Petersburg on 24 January. It provides confirmation that unless ports want to remain as minor feeder vessel gateways in the Baltic, they need to start gearing up for larger vessels soon. Many are already "on message", including Helsinki in Finland and Ust Luga in Russia. The former is up and running at Vuosaari, and is capable of handling Panamax sized vessels; the latter, boasting many similar deep-water characteristics, is due to open in February 2011, but this will depend very much on demand.

Like many other container terminal expansion projects around the world, Ust Luga’s development was put on hold last year by NCC, pending surer signs of economic recovery. The port is not nearly so badly affected by ice in winter compared to St Petersburg, but vessels calling there all year round will still need to be ice-classed, as, on average, access without an icebreaker is possible for approximately 320 days a year.

The point is not lost on ice-free ports further to the west than Klaipeda, which claims to be the northern most ice-free port, including Gdansk. Asked to comment in December on the impending arrival of its first deepsea vessel, Boris Wenzel, CEO of DCT Gdansk, the port’s new state-of-the-art deep-water container terminal, remarked: "With Maersk, you have to take each day at a time. "We understand that a large part of the new traffic handled at our terminal will be transhipment cargo to/from Finland and Russia, which is currently being handled in Bremerhaven, and can be easily lost at any time.

"We have the opportunity to keep it, however, so will do our best to deliver the necessary service to ensure this. We already handle Maersk Line’s cargo for Poland, which is expected to boost our traffic in 2009 from 106,000teu to 170,000teu." Its latest refinement is a new border veterinary inspection office next door. Opened at the end of January, clearance of reefer cargo is now much faster. A continuing concern for all of Poland’s ports is the fact that as much as a third of the country’s cargo still moves overland to/from Hamburg and Bremerhaven, despite the improvements made in its container terminal management. Part of the problem stems from a quirky piece of legislation that permits Polish importers opting for the inland route to postpone payment of VAT for up to 90 days. Wenzel is one of many calling for a change, but no immediate cure appears on the horizon.

ICTSI’s Baltic Container Terminal (BCT) in Gdynia, just next door, is also ready and waiting for the change, having seen its traffic collapse by 49% last year, down to 227,000teu. Despite this, the purpose-built facility still had three new terminal tractors added in the period – the result of an earlier order. The port must be worried about the cargo success of DCT Gdansk, if not its financial success, as a second programme of dredging is planned for 2010 and 2011, to permit vessels drawing down to 12.7 metres to berth safely at BCT and Hutchison Port Holding’s GCT, on the other side of the dock. BCT’s renegotiated labour agreement, which allows multi-tasking, appears to be a success and remained stable last year despite another 100 employees being released. According to Captain Jan Nowak, VP of BCT, productivity has improved to 42 crane moves per hour at peak times, and averaged 30 moves per hour on average. Its traffic started to increase again in November, reaching 28% more in January, compared to the same month in 2009. The decision of General Motors (GM) to reduce the sourcing of its enormous car parts business for Russia from its distribution centre in Poland at the beginning of 2009 will not have been welcomed by either Gdynia or Gdansk. A well-known source of a short-sea service provider that was involved in the movement of this traffic comments: "In the end, we had to stop serving Poland because of it. Neither our service or Poland’s ports were at fault in any way. GM just decided to serve Kaluga in a different way, possibly because of the increased price of fuel, or a concession granted in Kaliningrad." Klaipeda’s claim to fame as an ice-free port just next door is a somewhat hollow call, as its two inner-city container terminals are draught restricted. The largest vessel to call there so far was the ill-fated MSC Nikita (2,472teu) in August 09, which went on to collide fatally with the Nirint Pride off Rotterdam on 29 August. Its maximum draught was 10.98 metres. Klaipeda’s aspiring port authority knows this, which is why it has been pressing for the construction of an outer deep-water harbour since 2004. Only in December it received partial funding approval from the European Commission, amounting to US$680,000, but much still remains to be done. Northern Europe’s bitterly cold winter since November has also badly affected most ports in the Baltic, even hitting Hamburg, whose lakes and canals froze over for the first time in years. The paintwork on Maersk’s vessels calling in Gdansk will not have looked pretty, therefore. In the meantime, Klaipedos Smelte Container Terminal (KSCT) and Klaipeda Container Terminal (KCT) will continue to fight over market share in the port. The former has been assisted by the transfer of MSC’s traffic since the beginning of 2009, following the acquisition of a stake by Terminal Investment Limited which manages the carrier’s dedicated terminal in Bremerhaven. KSCT offers a maximum draught of 11.5 metres compared with KCT depth of only 9.5 metres. On the other hand, KCT is a purpose-built container terminal, whereas KSCT is a reconstructed general cargo handling facility.

Baltic Container Terminal (BCTR) in Riga is also a purpose-built container terminal. It was intended to be a major gateway into Russia, being only 928km from Moscow, and approximately 65% of its traffic did indeed have Russian content in 1999, but since then much of it has disappeared due to Russia’s rail tariffs and Customs procedures favouring Russian ports. It still claims to be the western end of the Trans-Siberian rail route from the Far East.

The maximum draught alongside BCTR’s quay is understood to be 11.7 metres instead of 12.5 metres, although, as mentioned earlier, not much information is being released by either the port authority or terminal operator at present. Dredging last took place two years ago. BCTR’s latest improvements include a new electronic container terminal management system that facilitates the processing of vehicles and trains coming into and out of the terminal, and the restructuring of its reefer container storage yard. Rail continues to be important for the transport of hinterland cargo outside of Riga, and the fact that its traffic only fell by 11.7% last year, down to 182,980teu, suggests that the gateway has been better than most at hanging onto its Russian and Belarus cargo. In conclusion, the depth of the recession in Eastern Europe has badly affected all container gateways in the southern Baltic region to various extents. Whilst not much light yet appears at the end of the tunnel, Russia is beginning to offer a glimmer of hope for those bold enough to make long-term investment decisions.