Monday, September 19, 2011

Container Freight Feeder Services Can Flourish - But Not Everywhere

New Port Provides Opportunity for Expansion
Shipping News Feature

RUSSIA – EUROPE - US – Whilst the freight container feeder options available in the US remain in the doldrums due to the trade restrictions imposed by the Jones Act, services across Europe continue to expand. Unifeeder, a Danish based group which has been shunting boxes around the Continent since 1977, has announced the imminent commencement of shipments via the new, multipurpose Ust-Luga deep-water port situated in the Gulf of Finland and close to the Russian border with the EU.

The seventeen metre deep water area of the port, together with the 3.7 kilometre short ship channel, makes Ust-Luga port the only Russian port on the Baltic Sea capable of admitting dry cargo vessels with deadweights up to 75,000 tonnes. As such this is a natural place for feeder services to tranship cargoes now that the new container handling terminal is due to commence operations in November.

The terminal itself offers all-year round operation with a shorter ice channelling period (around forty days per annum) than in St. Petersburg. The necessary infrastructure to handle major volume has already been set in place with the direct involvement of the Ministry of Transport of the Russian Federation. The container terminal with 440 metres of quay is fully equipped with railway tracks, shunting yards and wide internal roads.

Motorways and railway tracks connect the port with the major traffic arteries, enabling swift removal of containers and reducing risk of congestion. While the multipurpose port is still under construction, it currently holds an annual throughput capacity of 440,000 TEU and by 2019 it is expected to handle more than 2,800,000 TEU annually. Overall the capacity at Ust-Luga when completed is intended to be up to 180 million tonnes of wet and dry cargo a year.

Unifeeder says it will provide the widest terminal network coverage in the St Petersburg area when it becomes the first feeder company to use the facilities and company CEO Jesper Kristensen clearly relishes the opportunity saying:

“The new Ust-Luga terminal offers a sound alternative to the strained and at times congested St. Petersburg terminals. It is strategically located to reduce the impact of the harsh winter on operation and it is able to easily accommodate cargo going to the St. Petersburg, Moscow and Kaluga areas through an already well established infrastructure. It is the new gateway into Russia and at Unifeeder we are proud to add it as a fixed part of our already extensive terminal network in the area.”

Unifeeder will offer fixed weekly services for both feeder and short sea clients and has demonstrated its commitment by opening its own office at the terminal. Compare this with the US model which has once again come under criticism today in the Financial Times following our own piece last month. The Jones Act effectively outlaws marine cabotage unless carried out by US companies utilising American manufactured vessels crewed by US citizens, and this in a country which complains about any form of restrictive trade practices overseas.

The Jones Act (actually the Merchant Marine Act of 1920) is a classic case of legislation brought in to protect seamen and preserve native employment actually killing the industry it was meant to conserve. Many parties believe that unless there is reform in this area costs to US consumers will remain artificially high as truck and rail remain the only economically viable forms of carrying freight around the country despite the best efforts of companies like American Feeder Lines who are handcuffed by the excessive costs which non competitive legislation has brought to an industry which is thriving elsewhere.

Others, with longer memories, comment that the Act, and its subsequent amendments, were put in place to ensure the US would always have a self sufficient national fleet able to be mobilised in time of war or disaster. What is certain is that container feeder services are liable to grow throughout Europe whilst remaining comparatively static across the Atlantic.

Photo: Unifeeder’s feeder vessel Ida Rambow under way.