Who accommodates Russian container trade via the Black Sea today?

Informall BG a cargo analytical and consulting firm studied a key Russian container port on the Black Sea identifying the influence of the 6-month continuing war in Ukraine. Novorossiysk located on the East side of the Black Sea is connected by rail and highways to the main population and industrial centers of Russia, Transcaucasia, and states of Central Asia. The port is one of the biggest cargo hubs in Russia, serving the entire country´s geography as well as handling foreign exports to the international market. The container site of the port consists of four terminals including an in-land terminal that used to be owned and operated by Maersk’s ‘APM Terminals subsidiary until recent ‘APMT’ divestment move.

How the Russian container shipping market on the Black Sea has changed since the beginning of the Russian war against Ukraine?

Total container volume of Russia on the Black Sea in H1 2022 vs H1 2021 has shrunk by 7,73% while laden volume plunged by 11,1% owing to certain global shipping lines that have been rapidly decreasing their activities since March 2022 in response to the Russian invasion of Ukraine. Some global shipping companies [like Maersk] made a decision to exit the Russian container market suspending bookings fully or partially restricting to certain categories of goods.

Most of the global shipping lines presented in the port of Novorossiysk announced a booking suspension to and from the Russian ports in the first week of March following the invasion of Ukraine on Feb. 24th. The list of companies includes [but is not limited to] MSC, MAERSK, ZIM, Hapag Lloyd, CMA CGM, ONE, EVERGREEN, YANG MING however, only a few actually suspended their activities in Novorossiysk.

Informall chart below shows how the shipping line’s monthly container turnover share was changing in the port of Novorossiysk from January to June 2022 comparing pre-war and in-war MoM volume change.

Maersk container line paused bookings to/from Russia in the days after the invasion of Ukraine, however, actions to evacuate liner-owned empty containers from Russian ports continued. Many other ‘globals’, continued serving Russian container ports while still adapting to the sanctions.

For example, MSC – a major liner service provider in Novorossiysk that handled 22,2% of the total container turnover of the port in January announced on March 1st that it would halt bookings for Russian cargo and focus on delivering essential goods only. The MSC’s notice says: “MSC Mediterranean Shipping Company is introducing … a temporary stoppage on all cargo bookings to/from Russia, covering all access areas including Baltics, Black Sea and Far East Russia. MSC will continue to accept and screen bookings for delivery of essential goods such as food, medical equipment and humanitarian goods”.

MSC statement says that the company“…has been operating shipping and inland services to and from Russia in full compliance with international sanctions measures, applicable to it” and as data shows it allowed MSC to considerably increase its market share in Novorossiysk during H1 2022 period. While Russian container volume on the Black Sea has been shrinking since the beginning of war, Informall numbers shows that MSC gained 7,55% of total container turnover in Novorossiysk accommodating now almost a quarter [24,61%] of all Russian container shipments on the Black Sea in H1 2022.

Who picked up the ball?
Along with a global carrier MSC, other regional- and niche- scale carriers present in the Black Sea region have also benefited well from a significantly decreased activities of global shipping lines such as Maersk, ZIM, COSCO, Evergreen [EMC], ONE, Yang Ming [YML] and OOCL.

As per Informall chart above, Admiral, Arkas and Akkon shipping lines increased their presence in the Russian port of Novorossiysk since the beginning of the war in Ukraine mainly on account of those shipping lines which decided to exit the Russian container market. Along with that, European sanctions over Russian goods and services provided a further boost to the bilateral trade between Türkiye and Russia where transportation of goods is largely facilitated via both Turkish and Russian shipping companies.

Although carriers in both Turkey and Russia are currently not able to fully compensate for all previously existing global liner services in Russia, the market conditions created opportunities for liner business growth and service development. While Russia explores alternative import/export cargo destinations willing to make up for the lost European market, there are liner operators ready to accommodate the demand despite international sanctions over Russia says Daniil Melnychenko data analyst of Informall BG. The list of alternative Russian markets includes but not limited to the countries of Southeast Asia (Vietnam, Malaysia, Indonesia, Thailand), India, Bangladesh and Pakistan, which currently do not have well-established logistics connections with Russia.

Informall market study revealed that decreased activities of global shipping lines in the Russian container ports provided room for growth among domestic Russian shipping companies previously not being extensively involved in international liner shipping operations. For example, Russian owned ‘Ruscon’ (part of the Russian logistics holding ‘Delo Group’) burst into the container shipping market following the ‘Delo Group’ acquisition of Maersk [APMT] 30,75% shareholding in ‘Global Port Investments’ in Russia. Importantly, that the share-transaction includes an option for ‘APMT’ to re-enter the partnership with ‘Delo Group’ in the future.

‘Ruscon’ features priority access to the NUTEP container terminal in Novorossiysk which is owned and operated by ‘Delo Group’. Having access to ‘Delo Group’ logistics resources as well as raising market demand due to ‘globals’ exit from the Russian container market allowed ‘Ruscon’ to quickly gain momentum in the port of Novorossiysk and significantly increase its volume amid war in Ukraine.
Between January and June 2022, ‘Ruscon’ [as a liner operator] has increased its container shipping volume via port of Novorossiysk by over 2900% [from a few hundred TEU per month to thousands] mainly owing to new service set up from Russia to Türkiye, India, Israel and China.

Alexander Khromov project manager of Informall BG says – “If we compare Russian [Novorossiysk] laden container turnover H1 2021 period with H1 2022 the volume drop is not dramatic as some could expect – it’s only [-]11,1%. Considering the circumstances currently surrounding Russian economy we [Informall] forecast that Novorossiysk laden container volume is due to drop by -35% by the end of 2022. Indeed, plunging laden container turnover is a looming threat to the Russian business, manufacturing and logistics sectors. However, geographical positioning of Russia allows them to diversify their cargo flows to those alternative countries [destinations] which preferred to not follow international sanctions imposed over Russia”.

Informall experts point out that the real impact of shipping lines decreasing activities in the port of Novorossiysk can be seen from the month-over-month total container turnover chart of H1 2022 where actual volume drop January VS June is (-)26% Currently limited empty equipment availability, longer shipping and transit time, higher shipping rates, extra shipping costs and other sanction related obstacles will drag down the total container turnover of Russia on the Black Sea.

Vassiliy Vesselovski CEO of Informall BG shares: “While some ‘globals’ are leaving the Russian container market there is a real chance that the shortage of vessels capacity in Russian ports as well as deficit of container equipment will be compensated via regional- and niche- scale carriers and Russian private-owned shipping companies that began to actively utilize small- and mid-size chartered container vessels for this needs”.
Source: Informall