Shippers who transport cargo via Northwest Russia, and in particular via the Big Port of St. Petersburg, will be able to save at least 10 percent to 15 percent on shipping costs, thanks to a new community within port boundaries that unites major, local stevedore companies and forwarders.
The new community, approved by the Russian Federal Anti-Monopoly Service and the Federal Customs Service, will work to speed port operations and and decrease shipper costs.
Currently, the charge to handle a TEU at the Big Port is $480 and up, depending on the ocean carrier. Weighing costs an additional $140 to $150 per TEU.
New community to follow German, Finland examples
Yuri Kovalev, board member of GPU VED HERMES State Enterprise — a public association of leading stevedore and freight companies in Northwest Russia, and one of the major initiators of the new community — said the new institution will follow the example and experience of Germany’s Port of Hamburg and Finland’s Kotka seaports, where such communities already exist, and specialize in and lobby local/state bodies regarding the interests of stevedores and shippers.
Kovalev added that the new community will also take on bureaucratic issues shippers and forwarders encounter at the Big Port, as well address arbitrary actions by regulators. Regarding the latter, the number of such cases remains high.
Moreover, shippers — members of the Russian Union of Industrialists and Entrepreneurs — confirm that arbitrary actions by Russian regulators remains one of the major reasons for shipper losses, both in terms of time and money, during customs clearance of cargo at St. Petersburg and at other Russian seaports.
The Russian Association of Commercial Seaports (FACS) estimates that bureaucratic actions by various state officials involved in Russian port operations usually increase shippers’ costs by 7 percent to 17 percent.
FACS experts add that there are even cases of extortion of additional payments from shippers by the Russian Customs Service officers and by other regulators. These additional fees are usually accompanied by threats of additional checks of cargo and by wrongful arrests.
An IT system for customs clearance
While helping to prevent the above, the new community will also analyze and modify Big Port operations, with the goal of making them substantially quicker. One way time will be saved and costs reduced: the new community will establish one IT system for customs clearance procedures.
Despite improvements introduced by the Russian government for State Customs Service operations, a significant part of customs procedures at Russian seaports continues to be outdated and paper-based. Shippers believe the new IT system, which will systematically collect and categorize all shipper and transport company data at the Big Port, will speed and streamline the cargo handling process.
Currently, Big Port import container clearance time takes three to six days; the new community expects to reduce that to two to four days.
Still, despite indisputable advantages associated with the establishment of the new community, some shippers operating at the Big Port fear the new institution may lobby for specific interests of some stevedores in the Customs Service, providing them with a competitive advantage over other stevedores.
Further, they fear the new institution, thanks to a direct relationship with regulators, will try to act as a monopoly and dictate shipper conditions. One possible scenario: setting monopoly-esque high prices for stevedore services — a tactic that would hurt trade, given that steverdore prices at Russian seaports are already among the highest in Europe.
As noted, the new community will attempt to introduce efficiencies and take other actions to lower costs and reduce container handling times, but it also will likely benefit from market forces that will have a similar effect. According to an analysis by the Russian Association of Commercial Seaports, due to the ever-growing competition among stevedores at the Big Port and the ongoing development of Bronka seaport, stevedore tariffs in Northwest Russia should decline by 10 percent to 15 percent in the second half of 2018.
Contact Eugene Gerden at email@example.com.