How a small company from the province challenged stereotypes, and made it to the market leaders

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APK-Inform

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Generally, it is widely stated in the port environment and transportation industry, or it is even such stable stereotype since the Soviet period, that the ports of Odessa area: Illichivsk, Odessa and  Yuzhny port, are the leaders at all indicators among 27 sea and 11 river ports of Ukraine (including the ports of the temporarily occupied Crimea). Of course, they are really ones of the largest ports of the Black Sea region, and in fact the largest ones at the territory of the former Soviet Union. But whether their parameters significantly exceeded all other ports?

It is common practice to compare cargo turnover capacities of the ports (annual volumes of shipped cargoes in tonnes), because it is the absolute measure covering the sizes and capacities of the port. In addition, specialists can estimate the ports by the length of berths and their number, as well as vessel draft at the berths (minimum depth alongside the berth and midchannel, limiting sizes of the vessels for approaching to the port, etc.).

Of course, the sea ports of Illichivsk, Odessa and Yuzhny are the leaders by all reporting indicators.

 

Ukraine became the absolute global leader by the exports of sunflower oil, with 60% share in the world exports. But the Odessa area ports were not the leader of sunflower oil shipment, but the port of Nikolaev, in particular the terminal EVERI, which is part of the group of companies OREXIM. During four months of 2015/16 MY (September-December of 2015), the share of EVERI totaled more than 24% of such shipments, in the season 2014/15 - 19.5%. The sea ports shipping agricultural products, as well as agrarians, realize their calculations based on the season of crop production.

 

EVERI Terminal can be regarded as a competitor to the Illichivsk terminals, where the transnational  GLENCORE and the Ukrainian giant and biggest producer KERNEL also handle  veg-oils , as well as two independent terminals - OLIR and RISOIL. Also, the port of Yuzhny  where  ALLSEEDS constructed its oil extraction plant and shipment terminal in the port.

How did Nikolaev manage to achieve such results? According to the Director of the terminal EVERI, Vitaly Belov, rather hard work of OREXIM stuff, who structured the strategy of sales and customer service for 5 recent years, as well as continued investing in further development, assisted in reaching of the current positions.

 

History of the terminal EVERI launches

  • March 2010 – commissioning of the first line of construction
  • December 2011 – commissioning of the second line of construction
  • February 2012 – commissioning of the third line of construction
  • November 2013 – commissioning of the fourth line of construction
  • March 2015 – commissioning of the fifth line of construction.

 To date, the terminal EVERI reached the first position in terms of the commodity shipment among all other terminals of Ukraine, and the second position by its storage. The general single storage capacities of liquid cargoes total 141 thsd tonnes. Such capacities allow shipping at least than 1.5 mln tonnes of vegetable oils per year. The complex can simultaneously work with the motor and rail freight transport in all directions (transport-to-ship, ship-to-transport, transport-to-tank, etc.). In addition, EVERI shows effective unloading of vegetable oils from rail and motor transport into standard sea containers using flexi-tanks.

In 2016, EVERI plans to construct four new tanks, and increase the storage capacities of vegetable oils by 24 thsd tonnes, which will make it as the largest terminal in the Black Sea region at all indicators.

The second important factor which creates a stereotype of some backwardness all other sea ports except of Odessa ports, includes the sea port dues, paid by the shipowner for pilotage services to the berth, mooring, towing and other infrastructure charges. The major problem is that Nikolaev is located at the mouth of the Dnieper-Bug Estuary channel. And in order to bring the vessel to the Nikolaev berths, it is necessary to cruise the vessel with a pilot for 64 nautical miles from the South raid port and roadstead near Ochakov through the mouth of the estuary. The costs for such services are not cheap at all, since pilotage services are the government monopoly, and the state-owned company Delta-Pilot  realizes such work only. For example, the general sum of sea port dues, paid by the shipowner, for berthing a vessel to unload of Handysize type with deadweight of 30 thsd tonnes, will total more than 60 thsd USD in Illichivsk, nearly 100 thsd USD in Yuzhny, and over 103 thsd USD in Nikolaev.

 

Cost of vessels calling with deadweight of 5, 10, 20, 30 `000 tonnes to the ports of Illichivsk, Mykolaiv, Yuzhny (without overtime)

 

 

 

Illichivsk

Mykolaiv

Yuzhny

DWT

 

5000

12800

20000

24400

Maximum length

105

 

Width

16,8

 

Vessel draft

7,4

 

DWT

 

10000

21000

35000

38300

Maximum length

130

 

Width

17,7

 

Vessel draft

10,2

 

DWT

 

20000

40200

68900

68800

Maximum length

150

 

Width

24,2

 

Vessel draft

12,8

 

DWT

 

30000

60200

103500

100000

Maximum length

174

 

Width

29,4

 

Vessel draft

13,7

 

  

 

It should seem to be a good confirmation of the notorious stereotype – it is cheaper to get such vessel to Illichivsk than to Nikolaev. But there's more to this than meets the eye. If one compares the rates of port charges with the general volumes of cargoes taken aboard, then the cost of port dues in Mykolaiv exceeds the index in Illichivsk by 1-1.5 USD/t only, or it is even lower compared with the same index of the port Yuzhny. At the same time, the cost of cargo shipment, i.e. loading aboard ship, is almost the  same  at all terminals. And the costs for shipping of vegetable oils from the regions of oilseeds processing and growing to port, became the major determinative factor.

 

Cost of the sea port dues, USD per deadweight tonne

 

5000

10000

20000

30000

Illichivsk

2,56

2,1

2,01

2,00667

Mykolaiv

4

3,5

3,445

3,45

Yuzhny

4,88

3,83

3,44

3,33333

 

 

Since Poltava, Kharkiv, Zaporizhye, Kiev and Cherkasy areas are the main regions producing oilseeds in Ukraine, they are geographically closer to Nikolaev  than the sea ports of Odessa area.

 

Advantages in the delivery cost of liquid bulk cargoes to the port of Mykolaiv, USD/t

Company

Transport

Spread of Mykolaiv-Illichivsk

Spread of Mykolaiv-Yuzhny

Kirovogradolia PJSC, Gradoliya LLC, Creative Group

rail

1,88

0,91

Kirovohrad (Cargill, Creative, Kernel)

motor

8,05

4,47

EcoTrans LLC

rail

15,33

16,63

Mykolaiv (Kernel)

motor

4,69

5,03

Bandurka oil-extraction plant LLC

rail

0,91

0

Mykolaiv area, Bandurka (Kernel)

motor

4,92

4,47

Vovchansk Vegetable Oil Extraction Plant PJSC

rail

3,32

2,38

Kharkiv area, Vovchansk (Kernel)

motor

8,05

4,47

Prykolotne Vegetable Oil Extraction Plant LLC

rail

3,32

2,38

Kharkiv area, Prykolotne (Kernel)

motor

8,05

4,47

Poltava Crushing Plant – Kernel Group PJSC

rail

3,32

2,52

Poltava (Kernel)

motor

8,05

4,47

Vasishchevo plant of vegetable oils LLC

rail

3,17

2,37

Kharkiv area, Vasishchevo (Kernel)

motor

8,05

4,47

АТ Cargill LLC

rail

4,37

3,39

Kherson area, Kakhovka (Cargill)

motor

8,05

4,47

Zaporizhzhya Fat-and-Oil Plant PJSC

rail

7,57

6,78

Zaporizhye (Cargill, Optimus)

motor

8,05

4,47

Dnipropetrovsk Vegetable-Oil Extracting Plant CJSC

rail

4,96

3,51

Dnipropetrovsk (Bunge)

motor

8,05

4,47

LLC Peresechansky oil extraction plant, Kharkiv area, Dergachevsk raion, Peresechnoe (Glencore)

rail

3,17

2,37

motor

8,05

4,47

PJSC Myronivsky Plant of Greets and Feed Stuff

rail

3,72

2,39

Kiev area, Myronivka (Mironivsky Hliboproduct)

motor

2,68

4,47

LLC Katerynopilsky Elevator

rail

3,77

2,82

Cherkasy area, Katerynopil raion, Yerky (Mironivsky Hliboproduct)

motor

0,45

2,24

Vinnitsa area, Ladyzhin (Mironivsky Hliboproduct)

rail

3,29

2,38

motor

0,45

1,34

Pology Oil Extraction Plant PJSC

rail

7,66

6,85

Zaporizhye area, Polohy (Pology)

motor

8,49

4,47

Melitopol Oil-Extracting Factory OJSC

rail

4,26

3,45

Zaporizhye area, Melitopol (Melitopol)

motor

8,05

4,47

Chuguev oil extraction plant

rail

3,82

2,37

Kharkiv area, Chuguev

motor

8,05

4,47

Ineffective delivery to Mykolaiv

Odessa oil-extraction plant LLC

rail

-3,61

-2,81

Odessa (Creative)

motor

-5,03

-5,03

Illichivsk oil extraction plant CJSC

rail

-10,21

-3,77

Illichivsk (Kernel)

motor

-8,05

-3,8

 

The represented data show that the geographical location plays in favour of Mykolaiv, and saving on the costs for rail and motor transport shipping of veg oils from most production regions to EVERI reaches more than 7 USD/t compared with the terminals of Illichivsk and Yuzhny. And the reporting extra charges for the port dues, caused by more distant location of Nikolaev port at the mouth of the Dnieper-Bug Estuary, are completely compensated with some other geographical advantages - closeness to the main centers of oilseeds production and processing. 

And another fact is quite obvious: to date, the exports of agri commodities became the major driver of the Ukrainian economy, and the ports of Nikolaev hub play rather significant role. As a result, the OREXIM team, inspired by the success of the terminal EVERI, is ready to go on and realize many new projects in the nearest future. And according to the managers from OREXIM, the projects are rather ambitious - construction of the biggest grain terminal, an  off-shore loading of mega-bulkers,  and development of inland river navigation  by the Dnieper. 

APK-Inform Agency

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