Port developments - Building for export

by Suzi Fraser Dominy
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The Commonwealth of Independent States (CIS) has transformed from a huge grain importer to exporter, with the potential to become a major grain exporting powerhouse. However the region’s ability to grow its export markets is severely hampered by inadequate grain handling facilities. Grain storage and transportation infrastructure throughout the region is groaning under the strain of inadequate capacity, outdated equipment and the bureaucratic legacy of the Former Soviet Union.

Russia, for example, will export 13 million tonnes of wheat in the 2002-03 marketing year, according to the U.S. Department of Agriculture — more according to some analysts — and this volume is set to rise. Speaking at a grain storage conference in Moscow in May, Russian Agriculture Ministry official, Valery Movchan, predicted that grain export potential could stabilize at 15 to 20 million tonnes a year by 2010. However, port capacity is estimated at between 6.0 million and 6.5 million tonnes only.

Inefficiencies in the rail system also continue to hamper Russian exports. Shortage of railcars is increasing as no new cars are being bought and repairs to existing cars are not being made. The cost of rail freight is one of the main components in the cost of grain. According to traders, the price of freight is more than seven times the price of feed wheat.

Storage is also a problem: Movchan says elevators are able to handle just 42% of total stored grain and said that by 2020 Russia’s demand for grain storage facilities would reach 110 to 115 million tonnes.

CASPIAN BUILDING BOOM

None of this has dampened Russia’s export ambitions and the country is making ongoing efforts to improve its grain handling capability. In August Russian Transport Minister, Sergey Frank, said the country has the potential to export 2 to 3 million tonnes of grain per year to Iran but acknowledged that the capacity of Russian and Iranian ports needed to be increased. More river-to-sea vessels are also needed, such as a ship launched at the Krasnoye Sormovo shipyard in September 2003. Built to international requirements, the highly maneuverable ship can operate in icy waters and is the first of nine ships of this class to be built for the Volga Shipping Line by 2007.

Both Russia and Kazakhstan recognize Iran’s strategic importance as a gateway to world wheat exports. Just across the Caspian Sea, it is considered the shortest and most economical route for wheat shipments from and through Kazakhstan, spurring a surge in investment in grain handling facilities on the Kazakh side of the water.

New grain terminals are under construction at the Caspian ports of Olya and Olya Makhachkala, in Astrakhan, reportedly with support of four or five large Russian grain companies, including one of the largest, the Razgulyay-Ukrros group, which has also invested U.S.$17 million in an all-weather grain port terminal on the Azov Sea, on the southwest Ukraine border. Construction of the Azov facility began at the end of 2002. It will be capable of shipping up to 1.5 million tonnes of grain, with 1 million tonnes planned for export in the agricultural year July 2003-July 2004.

Another grain terminal at the Caspian Sea port of Aktau is scheduled for completion in 2004, to facilitate grain exports to Iran, expanding throughput capacity to 1 million tonnes a year from 300,000 and storage capacity to 22,500 tonnes from 13,500. A new rail line will connect northern wheat areas to the port.

Construction of another grain terminal at the Kuryk port, 76 km south of Aktau is also under consideration.

There are hopes that some 1.5 million tonnes of grain from Kazakhstan, Siberia, and the Altai territory will be able to be exported through a new 1.5 million tonnes per year capacity grain terminal at the Vladivostok Commercial Seaport on the Eastern coast of Russia on the Sea of Japan, due for completion in 2003. An overhaul of the existing 10,000-tonne grain warehouse and an additional 20,000-tonne warehousing capacity is also planned.

Russian and Kazakh grain will also ship to Iran from a new grain terminal at the Volga-port of Astrakhan, the first phase of which was due for completion in September 2003. The port will have an initial capacity of 150,000 tonnes of grain per year, with grain traffic expected to reach 500,000 tonnes in 2004.

BLACK SEA PORTS NO BETTER

Because of the lack of rail cars and high transport tariffs in Russia, in 2002-03, most Kazakh grain shipments were made through Ukrainian and Russian ports on the Black Sea and via the Estonian Baltic Sea port of Muuga, which is connected to the port of Tallin. Traders are accustomed to using these ports, which were oft used

during Soviet times and are closer to some production areas than the ports in Southern Russia. However, conditions at Ukraine’s numerous Black Sea ports are also woefully inadequate, especially Odessa and Ilichevsk, which analysts and traders describe as ‘chaotic.’ Although the Kazak government has claimed export potential of 22 million tonnes of grain, bureaucracy and outdated equipment restricts export capacity to around 15 million tonnes.

Ukraine’s grain exports are claimed to be 10.7 mt in the 2002-03 marketing year (June-July), comprising 6.5 mt wheat, 2.9 mt barley, 280,000 tonnes rye, with the balance made up of corn and pulses. This is an increase of 17.6% over the previous year. The Ukrainian Grain Association forecasts that Ukraine’s grain exports will total approximately 2.7 mt in the 2003-04 marketing year. •

AUSTRALIA — SOUTH AUSTRALIAN PORTS UPGRADE

Flinders Ports Australia is investing approximately U.S.$26 million to upgrade three ports. The upgrades of grain ports at Wallaroo and Port Giles on the state’s Yorke Peninsula and at Outer Harbour in Adelaide are planned for completion by August 2005.

A$25 million is earmarked for a new Panamax grain berth at Outer Harbor, north of the existing container terminal that will connect to Ausbulk’s proposed Outer Harbor grain terminal by an 800-meter conveyer belt.

BRAZIL — GROWING GRAIN EXPORTS DRIVE PORT BUILDING BOOM

The São Paolo port of Santos is expanding capacity to cope with growing Brazilian grain exports. Brazilian rail concessionaire Brasil Ferrovias, and its agribusiness partners, Bunge and Maggi are investing in what is described as Latin America’s largest grain terminal. The "TGG" terminal is expected to come on line mid-2004, with traffic expected to grow from 3.5 million tonnes, and reach 10 million tonnes by 2010.

Also at Santos, Itamaraty Agenciamentos e Fretamentos is building new warehouses with a storage capacity of 60,000 tonnes in 4,700 square meters of terminal. A further 3,500-square-meter grain storage is planned by Cereal Sul Terminal Maritimo, a joint venture between Portway and Spartacus, that will handle 500,000 tonnes of grain a year. The port’s largest grain operation, T-Grao, is also set to increase its capacity to 1.5 million tonnes a year.

The Sao Sebastao terminal is also upgrading to cater for larger vessels and is building new warehousing facilities.

Two new terminals are also planned for South America’s largest grain port, Paranagua, to the south of Sao Paulo. Meanwhile, in the north, the port of Suape is developing an import grain facility with storage of 80,000 tonnes to serve the region’s poultry industry.

CANADA — ARCTIC SEAPORT GETS GOVERNMENT FUNDING

The Port of Churchill and the Hudson Bay Railway has received a C$2.2 million (approximately U.S.$1.5 million) boost from the Canadian federal government and the Province of Manitoba for infrastructure improvement and marketing.

The Western Grain Elevator Association and the Inland Terminal Association of Canada have strongly objected to the funding, which they say distorts an otherwise competitive market.

The Port of Churchill Advisory Board in April warned the port might be forced to close unless more shipments of grain and other commodities were sent through the northern gateway. The Port of Churchill exported 279,000 tonnes of agricultural product in 2002, compared with 478,000 tonnes in 2001 and 711,000 tonnes in 2000.

PAKISTAN — CHINESE INVESTMENT IN GWADAR PORT PROJECT

A deep seaport is under construction at Gwadar, about 460 kilometers from Karachi, with financial and technical assistance from China.

The first phase of the U.S.$248 million project, due for completion by the end of 2004, will be capable of handling up to 30,000 dwt bulk carriers and 25,000 dwt container vessels.

A second phase will comprise 10 additional berths, including three dedicated container terminals and bulk grain terminals with capacity to handle vessels up to 100,000 dwt.

PHILIPPINES — SAN MIGUEL BUYS GRAIN TERMINAL

Food and drinks company, San Miguel Corporation, has bought the country’s most modern grain handling facility, Mariveles Grain Terminal, in Bataan from Asian Terminals Inc (ATI) for around U.S.$38 million). The terminal moved 5 mt of grain in the first nine months of last year, up 22% on the same period last year.

UNITED STATES — TEXAS PORT TO SHIP GRAIN TO CUBA

Cuban government agency Alimport has signed an agreement with Corpus Christi Port, Texas, U.S. The deal calls for bulk shipments, followed by development of refrigerator and containerized shipping. C&S Shipping, headquartered in Australia, and Houston, Texas, U.S.-based United Americas Shipping Lines have obtained licenses to carry U.S. agricultural commodities into Cuba. Grain shipments to Cuba were slated to begin in September.

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