Ukrainian ports overcapacity crisis

Ukrainian ports are continuing to under-perform because of huge capacity surplus, which a new report says there is no quick solution for.

The problem is that although capacity is up to 3m teu in 2014, supply only stands at 778,000 teu, according to 2013 figures.

Andrey Sokolov, projeсt manager, Informall, told Port Strategy: “If it were possible to return the traffic in the Baltic Sea to the Black Sea ports it would give Ukrainian ports an extra 100,000 teu, it would not solve the problem of overcapacity, but might increase container flow short term.”

The overcapacity crisis has many roots, some of them coming from a time of rapid development before the financial crisis of 2008, when many port development plans were approved.

Mr Sokolov said that there were container terminal projects on the table worth around 43m teu, but they have not come to fruition.

The study also revealed that the prospect of the P3 alliance holds missed blessings when it comes to dealing with overcapacity issues. But it will have a clear effect on ports because together, P3 provides more than 51% of container traffic through Ukrainian ports.

At Odessa, the Hamburg Port Consulting (HPC) terminal is expanding and doing quite well. Competing for attraction of lines and being one of the most productive terminals with expansion underway allows it to have a free window for berthing.

But the P3 alliance prospect could see it losing business to the neighbouring Brooklyn-Kiev Port (BKP) terminal – whose main client is CMA CGM, one of the partners in the alliance.

The TransInvestServis (TIS) container terminal at Yuzhniy port, partnered with Maersk, has shown 80% growth and will be another P3 contender because it has better navigational conditions and three STS super post-panama cranes.

P3 alliance aside, there are other issues to contend with. Container Terminal Illichevsk (CTI) is losing share due to having absence of funds to invest into a new terminal.

And even though it’s a cheaper option, the nearby Illychevsk fish port, where everything is ready for container handling, stands empty.

Mr Sokolov pointed out that the long term solution to the overcapacity crisis would be to increase of container transit to Russia. But this all down to Ukrainian customs performance at the border with Russia and the will of Russia to develop its own facilities in Novorossiysk and the construction of the new port, Taman.