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Russia Shipping Report Q4 2012

  • Publication Date:October 2012
  • Publisher:Business Monitor
  • Product Type: Report
  • Pages:170
  • ISBN:146961

Russia Shipping Report Q4 2012

Includes 3 FREE quarterly updates.

BMI highlights three developments which are set to have a major impact on Russia's shipping sector over
2013 and beyond.
The first is Russia's recent membership of the World Trade Organisation. The impact of this development
won't be immediate, but over the medium term the country's shipping sector will benefit from increased
trade volumes, with the country's ports projected to be the major beneficiaries. In terms of the companies
set to benefit, BMI highlights port authorities, such as the Novorossiysk Commercial Seaport (NCSP) and
shipping lines such as FESCO, as well as other freight transport companies, such as rail freight operators.
The second development that is set to have a positive impact on Russia's maritime sector is the country's
privatisation drive. The program of privatisation is ongoing, for example a stake in Sovcomflot (SCF
Group) is still due to be privatised, but some concerns have already been auctioned off and so the benefit
of greater private participation in the maritime sector is on display. The most recent example was
evidenced this quarter, with the port of Murmansk's new major stake holder, the mining firm SDS-Ugol,
part of the Sibirskiy Delovoy Soyuz (Siberian Business Union) outlining its plans to develop a
US$200mn coal harbor project, to boost the facility's role in the global coal supply chain.
A major part of Russia's privatisation drive of state assets, while also raising revenue for the government
coffers, has been to ensure the development of the country's vital infrastructure interests and by offering
stakes to private firms the government can ensure that Russia's maritime sector is invested in and
modernised.
The third and final development, which is set to have a positive impact on Russia's maritime sector over
the medium term and boost throughput at the nation's ports, is the country's preparation for the 2014
Winter Olympics in Sochi. BMI projects the port of Novorossiysk to be the major beneficiary, but ports
in the Krasnodar region, including the newly completed cargo port on Sochi will also play a role. BMI
expects cargo throughput at port facilities in the region to increase, as they play a role in bringing in
building materials for the completion of construction of the Olympic facilities. Then in H113 and H114
we project a ramp up in throughput, particularly in the container shipping sector, as the last minute
exports are brought in to cater for a projected boom in consumer demand, with the influx of tourists to
watch the games.

Headline Industry Data

2012 Port of Novorossiysk tonnage throughput forecast to grow 5.5%; over the mid term we project a
63.7% increase.
2012 port of St Petersburg container throughput forecast to grow 5.0%; over the mid term we project a
51.3% increase.
2012 total trade growth forecast at 6.5%.

Key Industry Trends

APMT Breaks Into Russia
APM Terminals (APMT), the global port operator, has finally broken into the Russian market. APMT
has been seeking entry into this high-growth container shipping sector for a number of years and has sat
back and watched as its rivals have managed to gain entry. The wait for APMT was, however, worth it,
with the company set to possess the greatest exposure to Russia out of the foreign port operators that
boast facilities there.
Opening Up A Grain Front To Asia
The development of grain terminals at Russia's Far East ports will offer a shorter and cheaper supply
chain for Siberian wheat to reach the market and will also enable Russia to diversify its customer base for
wheat exports, which is currently heavily focused to catering for North Africa and the Middle East.
Murmansk Expansion Highlights Privatisation Success
Russia's port privatisation drive can count its first success, with majority stake owner at the port of
Murmansk, SDS-Ugol, preparing to construct a new coal harbour at the facility. The Russian government
embarked on its privatisation drive, not only as a means of boosting state coffers, but also to encourage
private participation to generate much-needed investment and expansion at the country's ports. The
project also highlights that while Russia's coal export investment has of late centred on the country's far
east, as Asian demand increases, Russia believes that European demand for the commodity will remain.
NSR Attracts Foreign Interest
The safe passage of SCF Amur, a Sovcomflot tanker, through the Northern Sea Route (NSR) once again
highlights the potential of this route for trade. Previously BMI has investigated the benefit for Russian
shipping firms and the development of the NSR to ship Russian dry bulk, oil and gas to Asia. The trade
route is, however, attracting attention further afield with European and Chinese interest in the route
increasing and with the NSR's main benefit being the time and cost-saving and this, in a period of high
bunker prices, is understandable.

Risks To Outlook

Russia is exposed to the downturn in the eurozone and so we have moderated our outlook for the Russian
economy. We would highlight the relatively high oil price, however, which could give the economy some
respite.
Over the medium term we highlight risk to the upside, specifically at Russia's Black Sea ports, as the
region prepares to host the 2014 Winter Olympics in Sochi. Preparation for sporting tournaments is
traditionally coupled with a ramp up in throughput at a nation's ports; this was the case when Shanghai
hosted the Olympics in 2008 and more recently at South Africa in the lead-up to the 2010 FIFA World
Cup. We note that Russian ports can look forward to another sport-related uptick in throughput, with the
country set to host the FIFA World Cup in 2018.
BMI Industry View ... 5
SWOT Analysis 8
Russia Shipping SWOT . 8
Russia Political SWOT 10
Russia Economic SWOT . 11
Russia Business Environment SWOT .. 12
Global Overview - Container Shipping 13
More Positive Box Outlook In H212 ... 13
Box Supply Demand Imbalance Worsens 14
Concerted Rate Push Must Continue .. 23
Bunker Price Still A Worry . 26
2013: A Year Of Mega Realisation . 27
Containerisation Revolution Hits Dry Bulk 34
Global Overview - Dry Bulk Shipping .. 37
Stockpiling: A Threat To Dry Bulk Shipping ... 37
Overcapacity A Long Term Problem .. 40
Bankruptcies To Continue ... 43
Vale's Forced Diversification Hedges Against China Slowdown . 47
Protectionism Trend Takes Off ... 52
Global Overview - Liquid Bulk Shipping . 57
Executive Summary: Unconventional Sectors To Outshine Traditional Crude 57
Dirty Tanker Index To Remain Depressed .. 58
Bunker Prices Down, But So Are Rates .. 63
Table: BMI's Bunker Fuel Forecasts, 2010-2016 ($/Bbl) ... 63
Iran Sanctions Continue To Affect Crude Shipping 66
Saudi Arabian Merger Bad News For Other Operators . 68
Table: Biggest Operators Of VLCCs & ULCCs .. 69
Bullish On Golar LNG Prospects ... 70
Tight Market Creates Boom Times For Rig Sector . 74
Industry Trends And Developments 78
Russia Container Shipping Market Overview . 85
Industry Forecast .. 97
Port of St Petersburg Throughput Outlook Q4 2012 97
Port of Novorossiysk Throughput Outlook ... 99
Table: Major Port Data, 2009-2017 ..102
Table: Trade Overview, 2009-2017 ...102
Table: Key Trade Indicators, 2009-2017 ...103
Table: Main Import Partners (US$mn), 2002-2009 ...104
Table: Main Export Partners (US$mn), 2002-2009 ...104
Company Profiles 105
Russia Shipping Report Q4 2012
4
Sovcomflot (SCF Group)105
FESCO Transportation Group (FESCO) ...109
Murmansk Shipping Company (MSC) 112
Primorsk Shipping Corporation (PRISCO)114
Maersk Line ...116
Mediterranean Shipping Company (MSC) .122
CMA CGM .126
COSCO Container Lines Company Limited (COSCON)133
Hapag-Lloyd ..137
Evergreen Line ..142
APL 146
China Shipping Container Line (CSCL) 151
Hanjin Shipping (Container Operations) ...157
Mitsui OSK Lines (MOL) (Container)161
Demographic Outlook . 166
Table: Russia's Population By Age Group, 1990-2020 ('000) .167
Table: Russia's Population By Age Group, 1990-2020 (% of total) 168
Table: Russia's Key Population Ratios, 1990-2020 ...169
Table: Russia's Rural And Urban Population, 1990-2020 .169
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