Prospects of the container market of Ukraine: what was discussed at the Expert Talks forum by EBA and GOL

USM publishes insights from the discussion “Expert Talks: Results, pitfalls and new horizons of container traffic”, organized by the EBA Transport Working Group and Global Ocean Link.

Since the beginning of the full-scale invasion, the container shipping market has suffered catastrophic losses, and is now experiencing a period of gradual recovery.

Experts gathered to discuss global challenges affecting the Ukrainian market and to find out what current trends in the direction of container logistics can be traced in the 2024/25 season. We tell you what exactly was discussed during Expert on August 29 in Odesa.

Peculiarities of transshipment of containers during the war

“It is quite difficult to estimate the container market for 2022-2023. Yes, it was very difficult to identify the cargo that was transshipped in the ports of Rotterdam, Istanbul, and Hamburg. The fact that the cargo was once transported in containers could only be assumed,” GOL commercial director Volodymyr Guz began the discussion.

As a result of the full-scale invasion, the volume of container transportation in Ukraine fell by two thirds. At the beginning of the great war, the industry suffered huge losses due to infrastructural and logistical problems.

The situation more or less stabilized only in 2023. This was facilitated by the resumption of railway transportation by direct service lines of such operators as N’Unit, ZKT, Imtrex. Then the containers mostly went to the Baltic ports of Gdansk and Gdynia.

Also, from October 2023, regular sea container transportation resumed, in particular, through Constanta, which relieved the load on the logistics routes on the western borders.

Volodymyr Guz also commented on the prospects of the container market for 2024. The expert noted that due to the aggravation of the situation in the Red Sea, when the Yemeni Houthis began shelling civilian ships, container logistics became “sophisticated”. That is, if it is necessary to deliver a cargo from China to Kharkiv, now it is necessary to calculate at least nine route options in order to take into account all the risks.

On the positive side, this is the restoration of container traffic from the ports of Greater Odessa. Since the beginning of the year, Ukraine has unloaded 300,000 containers on all available routes. In the future, the forecast remains the same: one-third of container cargo is transshipped in Ukraine, two-thirds — in the ports of partner countries.

“Based on the previous speaker, I want to add that since February 2022, the situation on the container market has been in a terrible state. The majority of exporters began to look for new routes — mostly the ports of Poland and Romania. After the initial panic passed, the situation began to change. Rail container transportation has become more active, which saved the Ukrainian economy at the time,” commented Vadym Burlachenko, a representative of the branch of the Turkish container line Akkon Lines in Ukraine.

According to Burlachenko, in 2023, thanks to the Defense Forces, the security situation in Odesa improved significantly. In turn, investors and insurance companies began to believe in Ukrainian business again.

“In the current season, we already have a preliminary expected indicator of containers going to Romania and Poland – it is about 9 thousand containers, compared to 6 thousand that are transshipped in Ukrainian ports. Thus, since the beginning of summer, Ukraine has been able to return about 40% of the volume of container cargo transportation,” said the representative of Akkon Lines.

According to the expert, if we talk about prospects, now the business has frozen in anticipation of the grain season.

“Exporters increasingly trust the ports of Great Odesa. However, none of the market participants is ready to bring a container ship with a capacity of 20-30 thousand TEU to Ukrainian ports. At the same time, the “swarm strategy”, when many small vessels are involved in the transportation of containers, significantly increases safety and reduces cargo transshipment time,” added the speaker.

What influenced the decrease in transshipment of containers in Ukraine

“Despite all the difficulties and problems, our logistics industry coped with the challenges of war. First, in 2022, we dealt with the inertia of delivering cargo that was already on the water. In 2023, we “stood on our feet” and were able to develop a network of intermodal cargo,” Yuriy Krasovskyi, director of business development of the railway operator N’Unit, began his report.

During these two years of the war, the market of Ukraine was very compressed. First of all, because a third of the population went abroad. As a result, consumption decreased, the circulation of money decreased, so it is quite natural that cargo containers also became much smaller, noted Krasovsky.

Until the end of last year, besides the Danube and the borders, there were no options for transporting goods, which gave a great impetus to the development of intermodal transportation. If before the full-scale war in Ukraine there were 6-7 private intermodal terminals, now there are more than ten of them.

However, since the end of last year, the most important export cargo of Ukraine — agricultural products — began to actively enter the ports of Greater Odessa. As a result, cargo at intermodal terminals has decreased. Currently, farmers are in no hurry to sell their crops, waiting for favorable prices to export them in bulk.

So, the speaker concluded, now the market is returning to the transportation of goods through the ports of Great Odesa. However, business representatives have alternative routes, in particular, to the Polish ports of Gdansk and Gdynia.

It is worth noting that the Chornomorsk “Rybport” was the first to start processing containers in deep-sea ports since the beginning of the full-scale invasion.

“Iteris forwarding company was the first to launch a container service on deep water.” In particular, we cooperate with partners Maersk, CMA CGM, MSC. The latter was the first to put up its own vessel — and this is also a big step, in my opinion,” said the representative of the port Serhii Kurushyn.

According to him, it is expected that other companies will also join container transportation to Ukraine. This, in turn, will affect the improvement of cargo flows.

“Probably terminals are in second place in this logistics chain. To date, we have done approximately 35,000 TEUs since April, and we all understand that these numbers are not at all the figures that could be done without stress in 2021. But the numbers are there, the numbers are growing, and we will hope that they will continue to grow,” the speaker emphasized.

You can read more about the work of the Black Sea Ribport from speaker Serhiy Kurushyn at the link.

What is the situation with container transportation in the world now?

Leonid Zaborskyi, a representative of the French shipping company CMA CGM, spoke about the state of the global container market.

This year, the growth of the container fleet is estimated at 9%, ahead of the growth of demand for liner transportation by 4%. Only in the first four months of 2024, more than 1 million containers arrived at buyers. It is predicted that the number of cargo shipments in container ships will reach 2.7 million TEU, which is an absolute record. Another 2 million TEUs are scheduled for delivery in 2025-2026.

However, if the Red Sea crisis is over by 2025, next year will be difficult for the container market. In this case, the global container fleet is expected to grow by more than 5%, while demand growth is forecast at only 3%.

As for Ukraine, thanks to the opening of the sea corridor supported by the Ukrainian Navy, from September 2023 to August 2024, more than 64 million tons of cargo were exported from the ports of Greater Odessa.

The speaker recalled that in April 2023, CMA CGM opened a barge service between the ports of Izmail and Constanta. In July, this service was transferred to Reni as part of the Group’s feeder services. Already in July 2024, the same service operator 3PF launched a new weekly feeder service connecting the ports of the carrier’s hub with the port of Chornomorsk.

How the Ukrainian container transport market is adapting to the war

“At the beginning of the full-scale war, a large number of containers with export cargo remained at the blocked seaports of Ukraine, which did not have time to load onto ships. Then the motor vehicle came to the rescue, which was able to take out a larger share of containers from the ports. Heavier containers were redirected to the railway to the western borders and to Romania,” said the head of GOL’s railway department Yurii Brzhezytskyi.

Due to a sharp increase in the volume of transshipment of containers and other cargoes, the year 2022 has become a period for exporters to actively search for crossing points through which their cargo can be transported.

“Finally, thanks to cooperation with all market participants, we managed to “jump” over the first hurdle, and the cargo left. At first it was difficult, but later more and more terminals began to appear on the border, which provided cargo transshipment services. Thanks to this, we survived the years 2022-23 with dignity, and we continue on,” Brzezytskyi summed up.

“Undoubtedly, today it is more profitable to work over long distances,” added Oleksandr Shambalov, a representative of the shipping concern BLASCO.

At the same time, the speaker believes that the independent development of motor vehicles is currently impossible in Ukraine. Compared to rail, road transport is much more expensive, and the customs authorities of different countries may demand a bribe for crossing the border.

Commenting on the prospects of the agricultural market in the current season, Agroprosperis logistician Ivan Kozakevych said that the “game changer” in this marketing year was the launch of sea transportation. According to the speaker, this should lead to an increase in throughput.

However, due to the fact that Agroprosperis is one of the largest companies on the Ukrainian grain market, the company almost never exports grain in containers. This is due to the fact that the company is forced to maintain an intensive pace of grain shipment in order to export cargo on time. Accordingly, Agroprosperis bets specifically on bulk carriers. Despite this, the company plans to start the process of “containerization” of its products this year. As Kozakevych emphasized, the launch of “feeders” from Great Odesa significantly improves the logistics complex.

In general, this year is expected to reduce the cost of logistics and increase the capacity of Ukrainian deep-sea ports. Also, the beginning of the next season is likely to be stretched in time – due to the lull in the market from traders who are waiting for better offers.

In particular, this will be reflected in the processing. Accordingly, the processing of oil crops this season will be more evenly distributed over the season. If we compare with the previous season, then before 70-80% of products were tried to be recycled before the new year, and in the rest of the season companies sent much less for recycling.

“This season, I think, everything will be more even. There will be no peaks or troughs,” said the Agroprosperis representative.

The third trend worth paying attention to, according to the speaker, is to ensure the processing of sunflower oil in such a way as to prevent the accumulation of agro-raw materials in large quantities at one point. This is due to the need to diversify risks from Russian missile attacks, which already destroyed significant volumes of oil last season.

Read also. Global Container Market to 2024: How Leading Companies Are Overcoming the Challenges