By Jason Craig, CBH Group General Manager Marketing & Trading
Bottlenecks at key grain ports in Russia have forced the country to find workarounds that will push through their ever-bigger harvests to markets where demand continues to grow.
As Russia starts its new crop harvest, the expectation is for a wheat crop of between 68 million and 70 million tonnes. While this is well down on the previous season’s 85 million tonnes, exports are expected to decrease by only five million tonnes to 35 million tonnes. This is due to the country’s improved supply chain logistics that is resulting in the majority of the southern Russia wheat crop now geared towards the export market.
These exports are predominately from the Black Sea region, with the large majority from the Novorossiysk port. The significant growth in exports has been facilitated through small increases in storage at the ports however capacity growth has largely come from shipping select products or grades.
For example one of the three terminals in the port has been focussed on Russian 11.5 per cent protein wheat. This has allowed the terminal to increase its throughput and maximise the storage based on only one grade. Similarly the other two terminals have also focussed on either specific grades and/or grain types at certain times of the year.
While this has allowed for greater efficiencies, it’s fair to say it has not come with its own issues such as long waiting times for vessels to load, which in turn create large demurrage issues.
It’s not too dissimilar to the year of deregulation in Australia where ports were under extreme pressure and significant delays were evident. Since then in Australia, CBH and other bulk handlers have looked at ways to improve upcountry logistics, and a more organised shipping slot system to manage and maximise supply chain efficiencies.
Southern Russian port terminals have implemented a similar system, with shipping capacity agreements based on shipping slots throughout the year.
The Russians have also found another workaround in the Black Sea’s neighbour, the Sea of Azov, which is the shallowest sea in the world with a reported depth of between 0.9 metres and 14 metres.
Using smaller boats, upriver ports in Rostov-on-Don, located in the Sea of Azov, are now ferrying grain to an anchorage point in the Kerch Strait, which lies between Crimea and the Russian mainland. The small 3,000 to 5,000 tonne boats discharge grain into larger Panamax ocean vessels in the middle of the Strait, providing another way for Russian wheat to reach its markets.
It’s reported that about 20 per cent of Russia’s grain exports were exported via ship-to-ship transfers, up from just two per cent in 2013.
All of this is allowing Russia to efficiently handle their ever-bigger harvests and ensure their wheat is on the world market at a competitive price.
Picture - Port of Novorossiysk