Private initiative is important
The new reality asks a lot of the port of Odessa, which is seeking to improve its position in close collaboration with private investors. The ITJ spoke to the port authority’s Ruslan Sakhautdinov, as well as to private entrepreneurs in the hub.
The managers of the most important maritime gateway in the Ukraine are confident that they can run the hub at almost full capacity, despite a lack of Russian goods. The sobering fact is that Ukraine has lost five goods-handling centres, on account of Russia’s annexation of the Crimea in 2014.
Since then the ports of Odessa, Yuzhne and Illichivsk (in the city of Chornomorsk) have been the key maritime hubs for the struggling country, where consumption and imports are declining. Odessa was and remains a universal gateway. Its huge port compound enables it to handle conventional goods, as well as containers in its two terminals.
Foreign investors high on the agenda
Ruslan Sakhautdinov, deputy director of port handling operations, told the ITJ in Odessa that he is pleased that nigh-on 400 domestic as well as foreign private enterprises handle throughput in the port compound; and that they remain loyal to the hub in these less-than-rosy times too.
Last year the gateway handled a total throughput of 25 million t of freight, 4% more than in the previous twelve months. Further expansion depends on the manager’s hopes for foreign investors, who already have a strong presence in Odessa, as well as in the port of Illichivsk a few kilometres to the south. Sakhautdinov pointed out that the USD 500 million that the port authority has invested in the gateway’s infrastructure over the past few years has been augmented by another USD 300 million from private investors.
No less than 21 expansion projects are set to fortify Odessa as a hub for the hinterland as well as as a transit gateway for neighbouring countries – excluding Russia, as the ongoing political crisis has cut transit volumes to and from that neighbour practically to zero.
Sakhautdinov remembers how 10 million t of transit goods that used to pass through Odessa from Kazakhstan were lost from one day to the next, because Russia decided to direct these goods flows through its own Black Sea port of Novorossiysk. Ukraine’s northern, eastern and now also southern neighbour is doing all it can to stymie the Ukraine economically.
Last year the port handled 372,000 teu, or approximately 10% less than in the previous year. Imports and exports collapsed by approximately 30% last year, on account of declining consumer demand. On top of this the country has registered 43% inflation, with rising prices triggered by the falling value of the national currency, the hryvnia (UAH).
Terminals and partnerships
The firm HPC Ukraina has also felt this. The largest container terminal operator in Odessa, which is backed by Hamburg-based HHLA, handled no less than 250,000 teu last year. In a good year this figure used to come to 500,000 teu, HPC Ukraina president Klaus Schmöcker told the ITJ. HPC Ukraina has been active in Odessa since 2000; it won a tender to manage the container terminal in 2001 and invested more than EUR 100 million. 17 shipping lines call at Odessa, most of them at HPC Ukraina’s berths. Schmöcker is full of praise for collaboration with the port authority. “Despite the negative environment we’ve attained a positive result every year.”
The port’s second box terminal is operated by the Ukrainian TIS Group, which also runs four facilities for iron, grain, coal and chemicals in the hub. TIS CEO Andrey Stavnitser is also the Austrian honorary consul for the Odessa region. “Legal certainty is very fragile in Ukraine, and there is no political support for companies,” he said.
Rainer Staltner, who has worked in Odessa in various managerial positions since 1992, nevertheless remains optimistic. “Opportunities abound in Ukraine, but it isn’t always easy to make the best of them.” He closed by pointing out how important it is to find a reliable local partner, and to make sure that access is backed by the corresponding language skills.