Ports of Ukraine: Competition obstacles in stevedoring: reforms de-jure and de-facto
1. Ports of Ukraine: Competition obstacles in stevedoring: reforms de-jure and de-facto By Andrii Kuzmenko, for Practice of Marine Business: Cargo Odessa, 2011 Ukraine
2. Private terminals and state ports Private stevedores handle 45% of all cargoes of the Ukrainian sea and river traffic Amazingly, ministry and government still prefer not to see and hear presence of the private terminals operators. They are outright ignored. Hereinafter statistics courtesy of National Maritime Rating. Private stevedores include those working in state ports on different terms.
3. Top 11 private terminals, 2010 (‘000 mts) Data for 2010 Private terminals – 69,3 mio tons State ports – 84,7 mio tons
4. Top 12 ports and terminals, 2010 (‘000 mts) De-facto almost each port is already controlled by private business.
5. Emerged port models in Ukraine However ministry and government still sees no difference and tries to run all ports in same outdated and inefficient way while demanding development and modernization. No surprise that attempts are doomed.
9. Panacea of privatization? Privatization is transfer of the existing state assets to the private owner. Is it really needed? It is important only for powers who want to take over existing state ports and protect their future possible investments. Another and bigger problem lays with obstacles on development and operation of the new berths, which are threatened to be taken under state ports control under cover of pseudo-national-interests rhetoric.
10. Presidential reforms stalled? Administrative reform of President Yanukovich required separation of regulatory and commercial functions between Ministry and appropriate Service. Recently approved Charter of The Ministry of Infrastructure keeps all regulatory powers within Ministry, same time holding it responsible for commercial profitability of the state enterprises which it governs. It clearly creates an internal contradiction and root for the future problems.
11. What is really needed Separate regulatory and commercial functions at all levels Immediately clear the way for private investments into rail infrastructure by approving the standard compensation agreement (fixed share of the railfreight amount) Immediately clear the way for private investments into dredging of the harbors by approving the standard compensation agreement (fixed share of the respective port dues) Remove obstacle on land and bottom use for port development Cancel fixed tariff system, implement soft tariffs Create Councils on Hubs development at each large port including port authorities, MOT, regional administrations, local municipality and private operators for planning and control purposes.
12. Andrii Kuzmenko Executive Director, TIS Container Terminal Graduated Odessa Institute of Marine Engineers in 1994. 1995-1999- managed representative office of "Sea-Land Service" in Ukraine. 1999-2003 – managed branch office of "Maersk Sealand" in Odesa. 2004-2005 – General Manager of Illlichivsk container terminal. 2005-2007 – Deputy Director (Commerce) of “Ukrtranscontainer” (subsidiary of “NCC”, Russia). Developed “4M Program” and directly contributed to realization of the 1st phase of Illichivsk container terminal expansion to capacity of 850 000 TEUs (investments in excess of USD 51 mio). 2007-2008 – managed brownfield container projects of “Odessilmash PLC” (ICTP) and Illichivsk Fishing Port. TIS - largest private stevedoring company in Ukraine. 1stphase of TIS Container Terminal project is completed in 2010 with capacity of 400 000 TEUs and prospects of 2 000 000 TEUs. Project includes Ro-Ro yard, grain export capability, state-of-the-art IT system and extensive logistics facilities.