Because of the military-political events in Ukraine, last year at the Odessa seaport was marked by a significant (up to 18 percent) reduction in container transshipment and a catastrophic reduction in cruise tourism. However, a general increase in the volume of cargo handling was registered as a result of other cargo traffic. The implementation of a number of major investment projects involving construction of transshipment facilities is continuing in Odessa, and construction of a deep-water berth is also planned. The port’s administration says that investor interest in the port remains high but insists that it is necessary to preserve the high rates of port charges to enable the port to implement infrastructure projects.
On finance
The “net financial result” of the Odessa branch of the Administration of Seaports of Ukraine (ASU) was about UAH 300 million. However, it is not entirely correct to call this figure an indicator because the Odessa branch is not a separate legal entity and does not pay a certain portion of mandatory payments on its own. This makes the ASU, in general, a legal entity located in Kiev. However, I can say that we achieved the target that was set for us for 2014 and even exceeded it by 5 percent.
On production
The Odessa seaport handled nearly 24.6 million tons of cargo, an increase of 6 percent compared with 2013. There was an increase partly due to the diversion of traffic from Crimean ports, mainly metal, oil, and gas. However, unfortunately, we incurred huge losses in strategic areas - container and cruise vessels - because of those same military-political events. On average, the volume of container handling in Ukraine fell by 15 percent (17.8 percent at the Odessa port, according to the press service of the port administration).
Export cargoes accounted for most of the cargo handled, having increased by 19 percent (to 66 percent) in 2014, and its share continues to increase.
On investments
Among the most important events of 2014, the first was the commissioning of the first phase of the container terminal at Quarantine Mole in August. A new water area called Lanzheronovskaya was created under this project, and it is a very significant event in the life of the port. Design of the reconstruction of the berth No. 7, the service life of which ended in 2014, was also started. In the future, the investor plans to a build transshipment complex behind this berth.
Overall, the port’s partners - these are 13 major stevedoring companies and a number of smaller ones - invested UAH 640 million in the port’s infrastructure in 2014 (UAH 432 million in 2013). Investments from the port administration’s own funds totaled UAH 173 million. Investor interest in the Odessa port remains high.
On cruise failures
The military-political events in the country affected the port’s cruise operations very negatively. To enable you to understand, I will say that the amount of port charges that the Odessa port receives from cruise ships entering it constitutes only 3 percent of the total amount of port charges. In this sense, the image of the city is more important to us than the financial aspect. Unfortunately, out of the 159 cruise ships that were expected to call at the port in 2014, only 32 actually called. For 2015, applications for 91 port calls were originally received, but judging by the information that we are receiving from operators, the number will again be a little over 30. The Odessa port cooperates with more than 30 cruise companies. They are all "monitoring" the situation literally online - for the events that are taking place and the relevant organizations’ recommendations on port calls.
The railway line has reached the limit of its capacity. The plan for development of the port includes an item on railway development, among other things
I will not predict when the cruise season will begin. Everything will depend on the political situation in Ukraine. I hope that it will begin as soon as possible. On our part, we are making every effort: we are informing operators and offering our opinion on the situation. Again, part of the cruise ships that planned to call at the port last year did call, and there is information that everything is calm here.
On dredging
We plan to conduct maintenance dredging in 2015 to bring water depths to the rated level. We will do it with our own resources, that is, using the ASU’s own watercraft. As for increasing the rated water depths, this will depend on developments at the Quarantine Mole and how the project is adjusted. The far-reaching plans include dredging to 15 meters at the Quarantine Mole, as originally envisaged by the project. However, it is not yet possible to say whether this will happen in 2015. I cannot state the cost of the project because it is currently undergoing expert assessment, after which the cost will be announced.
The project for construction of deepwater berth 1-Z was adjusted in 2014, and a government expert review was also conducted. Now, the central office of the ASU is preparing to invite tenders from contractors. Total cost of the project is UAH 1.2 billion, of which the port’s share is more than UAH 400 million. We have made provisions for money in the draft financial plan, and we think this is an important step in the development of the port.
The Brooklyn-Kiev company is continuing construction of a complex with facilities for simultaneous storage of 245,000 tons and transshipment of up to 4 million tons of grain per year behind its grain terminal. The terminal currently operates through another berth, and it has processed about 1 million tons.
On the capacity of the port’s railway
It is true that the railway line has reached the limit of its capacity. The plan for development of the port includes an item on railway development, among other things. A number of measures – both technological and engineering in nature – involving construction of a second entrance to the port and development of the existing railway infrastructure are being implemented. However, this is currently sufficient for us under the current situation, given the fact that cargo traffic is almost not increasing because of the tragic situation that has developed in Ukraine. At the same time, we are constantly working together with the Odessa railway.
On port charges
They are indeed higher, in several times higher than charges in European ports. However, in my opinion, we should not consider lowering it because Western ports receive sufficient funding from local or central government budgets. Their ports receive funds for implementation of major infrastructure projects. For example, Constanta (with a design capacity of 100 million tons of cargo per year but actually handling over 50 million tons), 5 percent of its total investment in infrastructure last year came from its own funds while 90 percent came from the European Regional Development Fund and 5 percent from the budget. They can afford to increase the attractiveness of their port through lower port charges. We, on the other hand, are forced to keep rates high because our ports finance all their infrastructure projects - dredging, construction of berths, breakwaters and other hydraulic engineering structures - with the ASU’s own funds without getting anything from the budget.
On expectations for 2015
We plan 25 million tons of cargoes, an increase of 2 percent. We expect petroleum products and grain to increase by 45 percent. The proportion of exports will increase, it will reach 75 percent of the volume of cargo handling; the proportions of import and transit cargoes will be approximately 12 percent each. Although, of course, I would not really want Ukraine to become an export-oriented country.
We intend to take measures to preserve the existing cargo traffic and attract new ones. For this, it is necessary to continue implementing the projects that have already been launched. However, this is impossible without approval of the port’s financial plan. We hope that it will be adopted earlier than it was last year.
See also: “Black Sea Hamburg: How the Largest Container Terminal in Ukraine Operates”
