2012-09-02 17:05:14 - New Transportation market report from Business Monitor International: "Ukraine Shipping Report Q3 2012"

While last quarter it was developments in the box shipping sector offering upside risk to our forecasts, with Ukrtranscontainer (UTC) resuming its operations at the port of Illichivsk, after a three-year absence, this quarter its is Ukraine's dry bulk shipping sector offering upside risk to our total tonnage forecasts, with developments in the handling of soft commodities at both Ukraine's port of Odessa and Illichivsk.

The port of Illichivsk has resumed its handling of sugar cargoes offering upside risk to our short- and medium-term forecasts. The first ship carrying raw sugar, of what is set to be regular monthly calls, has pulled into the port of Illichivsk and unloaded 45,500 tonnes of cargo. The port has not handled sugar cargoes since

2010, but has kept the required equipment installed.


Full Report Details at
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The resumption of sugar handling at the port, with the Illichivsk port authority reaching a preliminary agreement with the cargo owner to facilitate regular monthly calls, offers upside risk to our already bullish total tonnage forecasts.

Dry bulk accounts for only a small percentage of the port's total activities (18.4% according to April throughput figures) with liquid bulk the major operation (65%). Dry bulk handling does, however, offer considerable expansion potential and is a factor behind the 2.3% increase in throughput that the port posted in the first four months of 2012, with the facility handling 5mn tonnes in this period.

At the port of Odessa a new grain terminal is being developed, as the country's maritime sector strives to keep pace with its role as a major exporter of grain. The development offers upside risk to our mediumterm throughput forecasts for the port.

Construction work is now underway to expand Odessa's grain handling capacity. The grain terminal project will be the port's fourth and will be capable of handling 4mn tonnes of grain a year. The terminal is being developed by Brooklyn Kiev, which operates one of the container terminals at the port - Odessa Terminal Holdco (OTHL). The company is stumping up US$40mn of the US$125mn cost of the project and expects it to break even in five years. The terminal is due to come online in September 2013.

BMI notes that considerable investment is being made into Ukraine's grain logistic supply chain. In August 2010 a grain handling facility was opened at the Port of Odessa, with a per annum handling capacity of 125,000 tonnes. Grain shipment is a major operation at Odessa, with the commodity the thirdlargest dry cargo shipped through the port in 2011 - grain accounted for 12.9% of the total cargoes handled at the port in that year.

Grain throughput at the Port of Odessa has been steadily growing. In 2011 the port handled 3.3mn tonnes of the commodity, a year-on-year (y-o-y) increase of 38% and an increase of 167.6% on the port's throughput in 2001.

Headline Industry Data

* 2012 Port of Odessa tonnage throughput forecast to grow 3.5%, over the mid-term we project a 21.5% increase.
* 2012 Port of Odessa container throughput forecast to grow 2.85%, over the mid-term we project a 17.6% increase.
* 2012 total trade growth forecast at 5%.

Key Industry Trends

Yugreftransflot To Diversify Into Dry Bulk With Helping Hand From EBRD

The European Bank for Reconstruction and Development (EBRD) loan to Ukrainian shipping company Yugreftransflot (YTF) will enable the company to acquire two multi-purpose dry cargo vessels of 5,190 deadweight tonnes (DWT) each, which are due to be built in 2012. The two vessels will diversify YTF's fleet, which currently consists of nine reefer vessels. The vessels are expected to be used to ship coal and grain in the Sea of Azov, the Black Sea and the Mediterranean.

NCC Facility Renamed

Ukrtranscontainer terminal, part of Russian port operator National Container Company (NCC), has officially been renamed to Container Terminal Ilychevsk (CTI). NCC said it changed the name to emphasize its business area and geographical location as the only terminal in the Illichivsk port. Ukrtranscontainer began operating the terminal again in February 2012 after having its concession withdrawn in 2009. UTC invested over US$61mn in the container terminal and increased box throughput by 130% between 2005 and 2008,

Qatar Invited To Join LNG Terminal Project

In April the head of state national projects announced that a new US$1.13bn LNG terminal would be built at the port of Yuzhni. Some 70% of the project's financing will come from borrowing, and the planned final completion date is sometime in 2018. By 2016 the terminal will have a capacity of 5bn cubic metres, which will double to 10bn cubic metres upon completion. A further EUR113mn will be budgeted for the construction of a pipeline to bring the fuel to consumers.

Risks To Outlook

UTC's resumption of work at the Port of Illichivsk offers upside risk to our container and total throughput forecasts for both the short and medium term. The port's box throughput suffered from the twin forces of the loss of UTC in 2009 and the global downturn, with container throughput falling by 59.5% y-o-y. The port has struggled to recover from this and our current projections indicate that the facility will not be able to recapture the 670,556TEUs handled in 2008 in the medium term. We expect UTC to address the issue of the port's comparatively low box throughput and so there is upside risk to our current forecasts.

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