Freight turnover in Russian ports showed by the end of 2015 a small increase, but in terms of the transshipment of containerized cargo falling by more than a third. Next year is forecasted a positive trend in terms of turnover, but to win back recession the market is unlikely, experts say.
MOSCOW, 31 Dec. The outgoing 2015 for port business in Russia was a kind of test: the difficult economic situation, restrictions from the West have forced companies to slow down the implementation of major projects and transactions and focus more on reducing their debt.
Freight turnover in Russian ports though and show in General a slight increase by the end of 2015, however, the transshipment of containerized cargo falling by more than a third. Next year experts predict positive trends in terms of turnover, but to win back the decline of certain segments of the market are unlikely to succeed in full.
It is not excluded that the statistics will help to improve the far Eastern ports and the orientation to the markets of the Asia-Pacific region, but much will depend on the tractability of the Eastern partners in implementing joint projects.
The market
According to transport Ministry estimates, the turnover in ports of Russia by the end of 2015 could increase by about 3-4% to 645-650 million tons. For comparison, last year this indicator amounted to 623,4 million tons, and taking into account the ports of the Crimea returning to Russia in March last year.
However, according to forecasts of the Ministry, for the year significant drop — up to 30-35% will be for container cargo. The volume of transshipment of containerized cargo during the first 11 months decreased by 15.2%, to 36.6 million tons.
If not for the strong drop of the container market, growth of turnover was much more significant. According to the head of Agency InfraNews Alexey Bezborodov, the fall was due to the devaluation of the ruble, as the containers — the most sensitive segment.
According to forecasts of experts, next year will also be the growth of cargo turnover and, most likely, a small increase in containers taking into account the strong fall in 2015.
“Next year will be growth: containers a bit equalized, no significant events that may change the balance, not expected”, — said Bezborodov.
The ports of the Crimea will continue to increase the turnover, however, due to infrastructure constraints, this growth will moderate, said the expert, adding that the technical condition of the ports leaves much to be desired.
Debt reduction
In 2015, major market players focused on reducing debts formed using the various available financial instruments.
Global Ports has decided to issue bonds. In early December, “First container terminal” (“daughter” Global Ports group) has registered a bond program for a total amount of 30 billion rubles. Proceeds from the bond issue will be used to refinance existing debt portfolio of the group.
Group FESCO has decided to repay the debt by modifying the terms of outstanding rouble bonds, repurchase at a lower value of ruble and Euro bonds and issuing new ones.
“Novorossiysk sea trading port” has signed an additional agreement with Sberbank, the company issued in 2011 a loan of 1.95 billion rubles for the purchase of “Primorsky commercial port”. The agreement provides for the calculation of the change in the restrictive terms of the stock price. Since the covenants were regularly violated, “savings” had every reason to demand early repay debt, so to NCSP was extremely important to sign the agreement.
The NCSP management stated that the company has no plans in 2016 borrowing, while not ruled out the use of the program of rouble bonds. The duty to “Speranca” NCSP was not going to pay ahead of time.
Free port and new opportunities
In the autumn of the outgoing year came into force the law on the free port of Vladivostok, in case of successful realization of which ports of the region will not only bring hundreds of billions of dollars of investment, but also to become a full-fledged hub for the trade of Russia with the Asia-Pacific region.
The act provides for the mode of “single window” at the border, non-stop at checkpoints, simplified visa regime with obtaining an eight-day visa at the border, the regime of the free customs zone for the residents.
Residents will receive tax benefits and administrative benefits. The President of Russia Vladimir Putin also asked the government to consider the distribution of free port of Vladivostok in addition to other harbours of the Far East.
The first results of the introduction of this mode will be visible in the end of 2016. According to Bezborodova, now investors, especially Asian, there was an interest, which in future can be implemented in projects.
Free port regime imposed on the territory of 15 municipalities of Primorye, is aimed at expanding cross-border trade, development of transport infrastructure and the inclusion of the Primorsky region in the global transport routes.
In the zone of action of this mode includes major international transport corridors, such as “Primorye-1 and Primorye-2”, the implementation of which is aimed at ensuring the transit of goods from the North-Eastern provinces of China to the ports of Primorye dispatch ships to the Asia-Pacific countries. Russia has already incorporated these corridors into the list of its priority projects, hoping to support them in the development of the Chinese partners in the framework of the implementation of the ambitious ideas of the PRC on creation of the Economic belt of the silk road.
Freeport is also expected the creation of a network of logistics centers with special conditions of transportation, storage and partial processing of goods, as well as the organization of non-primary export-oriented industries. To support these initiatives have already stated a number of Asian investors, particularly from China and South Korea.
From West to East
At that time, as large state projects in the port sector are gaining momentum, the difficult economic situation in Russia and in the world can not affect private business.
In July 2015 it became known that the group “Summa” refused construction of a loading terminal in the port of Rotterdam. The company explained then that the decision is connected with changes in the macroeconomic situation and the oil market.
According to the contract, the group was required by 2017 to build a terminal for Urals oil from the port of Primorsk and the sale of raw materials FOB. The creation of a platform should reduce the price gap between Urals and North sea Brent and Russian to make the brand more competitive. Investment in the construction of the terminal was estimated at 1 billion euros.
With “Amount” in the Dutch port remains stable bunkering business, said a company representative.
More successful and promising for the group “Amount” is for projects in the far East the construction of the Zarubino port and coal terminal at Vostochny port, the company said.
Currently the group is seeking investors and loans for these projects. So, China Merchants Group and is one of the largest global port operators DP World (Dubai Port World) said about the interest in the project on construction of port Zarubino.
The port a total capacity of 100 million tons of cargo per year will combine grain terminal at 40 million tons, container terminal 2 million TEU, the terminal ro-ro (ro-ro) cargo by 1.5 million units per year, the terminal for transshipment of General cargo (25 million tons) and several others.
Summa also wants to attract a partner in the project in East port, offering 35% to the coal terminal. The company an ideal partner sees the trader to access the terminal had different players, and he is not turned into a captive.
The projected capacity of the coal terminal will amount to 20 million tons per year. He will specialize in transshipment of Russian coal exports to the Asia-Pacific region. The first phase of the terminal capacity of 7 million tons per year is scheduled to launch in 2018.
“Sum” for the construction project of Zarubino port in may to become a resident of free port of Vladivostok, but for this it is necessary to determine the sources of financing of the project.
Tidbit
Unlike the port business, shipping the expiring year was successful, particularly for companies related to export, including due to the devaluation of the ruble.
The long-awaited privatization of the largest Russian shipping company “Sovcomflot” in the past year never happened. The state is not the first year lays the sale of this asset in the list for privatization in 2016, the company is worth. Sovcomflot and its leadership are not on the sanctions lists.
The financial condition of Sovkomflot is now very stable. In the first nine months of 2015, the company increased its net profit under IFRS by 2.7 times, up to 298.8 million dollars. Gross revenue increased by 7.9%, to 1,143 billion. Revenues from time-Charter equivalent amounted to $ 946,6 million dollars, an increase of 18.9%. EBITDA increased by 38% to 567,9 million dollars. The debt burden of the group of companies declined to 44%, the ratio of net debt to EBITDA for the last 12 months — to less than four.
The head of “Sovcomflot” Sergey Frank noted that the results achieved in conjunction with a positive forecast of development of the tanker market conditions allow the company to count on good results in 2015 in General. According to the company, a favorable ratio of supply and demand in the most important for the company segments of the tanker market will remain during the 2016-2017.
In November, the international rating Agency Fitch upgraded long-term Issuer default rating of Sovcomflot to ‘ BB ‘ c “BB-” with a stable Outlook. In December, Moody’s improved its Outlook on the rating of “Ba2” to “SCF” to stable from negative.
The structure of the privatization of “Sovkomflot” suggests that the first stage will be sold a package in 25%. The Russian authorities assess the income from the privatization of state-owned shares of “Sovcomflot” to 24 billion rubles, the budget will reach 12 billion rubles.
