Olaf Merk, a shipping expert at the OECD, raised an interesting issue in a recent article on Shipping Today: the European Court of Auditors audited 37 investment projects implemented in ports that receive financial support from the European Union. In its report, the European Court of Auditors concluded that investment in port infrastructure in the European Union is ineffective. According to the European Court of Auditors, one of the reasons for the ineffective use of funds is that the European Commission did not receive detailed and up-to-date data from member states of the European Union about their available capacity, the capacity they actually, used, or their future capacity needs. As a result, there was no European Union-wide monitoring of the capacity of the European Union’s key ports. In other words, there is excess container capacity in Europe.

Ukraine is also in the focus of attention of global container business operators today. A recent visit by DP World and Hutchison Ports is direct proof of this. This is a good sign, but the question arises: what is the situation regarding capacity utilization in Ukrainian ports?

After falling in 2014 and 2015, container transshipment in Ukrainian ports increased by 31% in the first nine months of 2016, according to the Ukrainian Port Authority. One can only hope that this is a long-term trend and that the rate of increase at the end of the year will be no less than the current rate. Containers are one of the few categories of cargoes to have seen a steady increase in transshipment volumes in 2016, compared with the previous year.

However, this growth is mainly from a low base. In terms of absolute figures, the picture for container terminals in Ukraine is far from rosy. Specialized terminals were constructed actively in Ukraine in the early 2000s, when container cargoes seemed to be the future. New facilities were introduced as time went on, but if the container volumes in Ukrainian ports increased at all, the increase was at a pace that was insufficient to utilize the capacities of the new facilities fully. Transshipment peaked in 2008, when 1.2 million TEU was transshipped in Ukraine. This was highest container transshipment volume among Black Sea countries. However, the container terminal capacity at the time exceeded 2.5 million tons and less than half of it was utilized.

In 2016, the capacity of container terminals is 3.1 million tons, and only 22% of it is currently being utilized. This is an extremely low indicator.

So, what do container terminals look like in Ukrainian ports and how are their owners fighting for cargoes?

HPC Ukraina The Ukrainian subsidiary of Germany’s HHLA, which is the operator of the container terminal at the port of Hamburg. HPC Ukraina currently owns a container terminal with a capacity of 550,000 TEU, which will increase by 600,000 TEU to 1,150,000 TEU after completion of its second phase. The company operates in the Odesa seaport and engages exclusively in transshipment of containers.

Brooklyn-Kiev Port Terminal Located in the Odesa seaport, it has a design capacity of 220,000 TEU per year. It is owned by the Ukrainian company Brooklyn-Kiev, which operates in the Odesa seaport and engages in transshipment of other cargoes, particularly ferrous metals and grain, in addition to transshipment of containers. The container terminal is used for its intended purpose, but it is forced to look for alternative types of cargoes. For example, a specialized grain handling system that uses containers for transshipment of grain onto bulk carriers was presented about a year ago. Specially modified containers are used solely as substitutes for buckets for transshipment of grain from trucks onto ships.

TIS Container Located in the Yuzhny port, this container terminal has a capacity of 750,000 TEU. The terminal belongs to the Ukrainian company Transinvestservis. In addition to this container terminal, the company owns terminals for transshipment of coal, iron ore, and fertilizers. To increase its capacity utilization, the container terminal handles imported coal, export grain, ferrous metals, and woodchips. In addition, one of the berths at the container terminal is used for loading vegetable oil from the Risoil and Allseeds terminals.

Chornomorsk port The port’s container terminal has a capacity of 1,150,000 TEU. The terminal is located in the port’s deepest deepwater berth (it has a canal draught of 14 meters). The depth factor and low capacity utilization have resulted in the terminal being used for transshipment of coal and ore.

Chornomorsk fishing port It has a capacity of 300,000 TEU per year. The terminal, like the entire port, belongs to the Privat group.

Mariupol seaport The seaport has a state-owned container terminal with a capacity of 100,000 TEU. The terminal is currently out of operation.

As we can see, owners of terminals are taking different approaches to utilization of idle capacity, with some being more successful in their approaches than others are. In fact, only the terminals located in Odesa operate as container terminals based on the patterns of the cargo traffic. The rest have switched to alternative cargoes, with containers moving into the optional category. These are primarily the terminals that especially need to attract container traffic.

In the meantime, capacity utilization of container terminals remains low despite the revival of the market in 2016, and there is obviously excess capacity. It can be said that the degree of success that Ukraine has managed to achieve on its own solely with private investment is similar to the degree of success that the European Union has managed to achieve with centralized funding of port projects. However, this is one case in which Ukraine should not be proud of the fact that it is "like the EU." This experience should be taken into account during construction of new transshipment capacities in ports. Otherwise, the European expert’s conclusion that there is "too little cargo for too many ports" would be an apt diagnosis for Ukrainian port businesses.