HHLA "CTO" : HOLDING LEADERSHIP DESPITE FIERCE COMPETITION
Anastas Kokkin told about competition at the market and the Company’ development plans
According to the ASPU, in 2018, domestic container terminals handled 846.5 thousand TEU. At the same time, the lion's share, 338 thousand TEU, belongs to SC "CTO". In other words, the container terminal of Odessa port continues to lead among other Ukrainian terminals.
How, despite the container market competition, the company manages to hold the lead? What is done to save customers and attract the new ones? What are the plans of the management team of SC "CTO" for 2019? Anastas Kokkin, the general director of the largest container terminal in Ukraine, answers these and many other questions.
- The volume of containers handled by our team in 2018, according to some indicators, is a record for the last 10 years. For example, in December, for the first time since 2008, we managed to have handled 34.9 thousand TEU. In comparison with 2017, last year the total volume of container handling went up by 15.7%. Considering that the Ukrainian container market grew by 17 percent, it is obvious that our terminal meets the growth trend. Therefore, given the highest level of service and reliability, we manage to maintain leadership among domestic terminals handling containers. It is clear that such growth in container handling demanded the development of terminal facilities.
- Do you mean the construction of new areas in the rear of the berths 1-k, 2-k?
- Creation of new facilities and their technical equipment is provided for by the terminal development program “Quarantine Mall”. It is economically justified. In addition, the capricious domestic container market pushes us with its inherent sharp increase of the average dwell time for containers at the terminal during peak seasons due to various factors. For example, in the fourth quarter of 2018, when we noted the highest volume of container handling, our terminal had difficulties with their placement at existing areas. Last year, we started construction of two sites with a capacity of 2,900 TEU. We plan to put them into operation this summer. Then we will install RTG cranes on this site. The final stage of the tender for their purchase is currently hold in Germany. The new capacities will allow the most efficient planning of the placement and storage of containers at the terminal, increase our abilities in handling the growing container traffic, and enable, in conjunction with other measures, to minimize certain complications with the speed of cargo handling characteristic for peak seasons.
- What is the range of cargo handled in 2018?
- In addition to growth of the main container volume for the terminal, 2018 became significant for us in terms of expanding the types and range of cargo handled. As previously reported, we are successfully implementing the program for turning our terminal into a multifunctional one. I.e., in addition to standard containerized cargo, we began to load vessels with grain by a special technology, using special containers with an automatically opening bottom, together with stevedoring companies of the port. Over the past year, more than 100 thousand tons were loaded onto vessels. Of course, such volume is not big for grain terminals, but for us it is a successful start for the development of a new direction, business diversification. And not only for us, because due to the developed technology, the grain terminals of Odessa port are able to load the Panamaxes at our deep-water berths at the Quarantine mall almost to their full capacity, thereby raising their competitiveness. This year we plan to carry on cooperation with the port operators of grain terminals and to increase the handling volumes of grain crops. In addition, we continue to raise the handling of oversized cargo. If their volume was 8 thousand tons in 2017, last year it was 12 thousand tons. These are drilling rigs, cranes, various equipment, mobile asphalt plants, etc.
- Growth of the cargo traffic, especially during the peak season, probably demanded expanding of the handling equipment park and other investments didn’t it?
- Last year we purchased nine Terberg terminal trucks, which can carry two twenty-foot loaded containers at the same time. A year earlier, our park was replenished with ten Terbergs. Thus, the company continues the course of replacing old equipment with new and high-tech one. In addition, in order to improve the quality of service provided to our customers, we also invested in the development of IT-technologies. At the end of 2018 we acquired a state-of-the-art integration platform which allowing us to integrate all existing terminal systems quickly and efficiently. It will also make possible for our customers to instantly receive information about their cargo, terminal operations, to issue applications for terminal services and communicate with all participants of the transport process in the port through a new Web-portal, which is currently being created. The new Web-portal will enable gradual switching to electronic document flow. Such technologies correspond to the level of service provided in European ports, including Hamburg. Our specialists are currently engaged in the development and implementation of this technology. They are working on the introducing of the first phase of the Web-portal. In addition, this year we are planning to invest in expanding the terminal’s railway capacity in order to increase the efficiency of container handling on the railway transport, strengthen the existing one and further develop the container block-train service at Odessa port, which is demanded by the market.
- In this case, I have a question: does SC “CTO” not use the information system of the port community (ISPC), which provides for electronic document management? What is the difference between ISPC and technology implemented by the company?
- Of course, we are active users of the port community system. Moreover, our new technology allows us to organize cooperation with almost any modern systems, including the existing and future ones. At the same time, I would emphasize that the IT technology we are introducing is, first of all, an opportunity to significantly improve the terminal service for our clients, and to accelerate the receipt of information by clients. This is the level of European service that our founders give special importance to. They believe in our terminal, see its prospects in terms of business development, the opportunity to contribute to the development of the economy of Ukraine. It is no coincidence that the government of Germany and Ukraine support our project, since it expands the domestic intermodal transport infrastructure. It is impossible to evolve foreign trade, export-import operations and eventually the economy of Ukraine without such infrastructure and high-quality service. Our state-of-art technologies will create more opportunities for the integration of information flow for participants of the transport process in Odessa port.
- By the way about your clients. In recent years, they have frequently changed. What lines are currently the main customers of the company?
- We have several key customers. These are ZIM, ÌSC, HAPAG LLOYD, YANG MING, ARKAS LINE and THE ONE. For example, the last one is to say a “symbiosis” of the Japanese container lines MOL, K LINE, NYK, which merged and started work under a new brand in the spring, 2018. The united most powerful company holds leading positions in the ratings, is actively expanding the container volume in the Ukrainian market. We have signed a contract and hope, including for the account of their cargo, to increase the volumes. For many years, MSC confidently takes the second place among the world container lines, and ZIM historically has a very strong position at the Ukrainian market and shows one of the best growth dynamics of container traffic. For us, this is a very promising cooperation.
- The press reported that ZIM LINE is uniting in an alliance with MAERSK and MSC. Does this mean that the vessels of the Israel line, which has been cooperating with Odessa port since 1994, will go to competitors?
- Definitely not. Although I admit, our competitors attempted to redirect ZIM vessels to another port. However, taking into account the highest level and reliability of CTO service, we managed to extend the contract with this line, as, by the way, with all other customers of the terminal. Although, some changes in container services will still happen this year. If earlier ZIM sent a direct service to us, this year, in order to optimize supply chains, the company plans to replace the direct service with a large feeder service in the spring, which will still go to our terminal. It should be noted that many container lines tend to operate on the Black Sea using feeder services. Therefore, it is not surprising that ZIM has also taken such a decision. At the same time, we do not expect any significant change in the volume of containers that are delivered by ZIM vessels to Odessa port.
- I cannot avoid asking the question, which has already become a tradition, about the breakwater. Are the reconstruction works underway or not?
- Indeed, the breakwater has become what is called talk of the town. Unfortunately, the rate of the breakwater recovery, which is performed by a state contractor, leaves much to be desired. The works were conducted in the spring and summer, but in the autumn everything stopped. We hope that with the coming spring the works will be restored. It is encouraging that the Prime Minister of Ukraine ordered the relevant ministries to speed up the construction of the breakwater. From its side, German government is ready to provide Ukraine with targeted loan funds to complete the breakwater construction in the event of funds’ shortage. Although in a slow pace, the construction of the breakwater is progressing. However, I would like our partners and the contractor to speed up the construction of this object. It is important for us, because in the long term we plan to handle even larger vessels at the new berths. Moreover, the process of enlarging the fleet all over the world is becoming more and more relevant every year.
- I would like to know if you have any view on the volumes of containers you intend to handle this year?
- We do make forecasts and consult with experts. The market forecast and our calculations give reason to plan a small increase in comparison with 2018. However, at the same time, it is very difficult to make any predictions because of the risks that exist in Ukraine. I mean the upcoming presidential and parliamentary elections. If these events will affect the recent status of the stable exchange rate of the national currency and have a negative impact on the economy, then, naturally, this will ricochet on the volumes. Precisely because the container business will depend not only on market processes, but unfortunately, on the political situation, no expert can really predict what the container turnover of Ukraine will be in 2019. However, speaking generally of the container business in Ukraine, there is a clear trend of moderate growth. Let's hope for an optimistic scenario.
The company "Container Terminal Odessa" is a subsidiary of HHLA International GmbH and a group member of one of the leading logistics holdings in Europe - German company HHLA AG (Hamburg).