Ambitious plan to boost IIIichivsk volumes could alter cargo flows in the Black Sea by decade-end

Illichivsk hopes to become Ukraine’s leading port by 2007-2008.

In 2004, the Ukrainian port of Illichivsk inaugurated its 4M project aimed at boosting container handling capacity up to 4 million teu within the next 10 years. This is despite the fact that, in 2001, the combined throughput of Ukraine’s two leading seaports of Illichivsk and Odessa amounted to just 154,000 teu. However, since then, years of double digit growth saw this figure reach 580,000 teu last year, of which Illichivsk contributed 291,127 teu. In the year to date, the port has reported growth of 28%.

As Ukraine sources an ever greater number of imports from the Far East, throughput in the coming years is expected to really take off. Therefore, to equip Illichivsk with the infrastructure it needs to handle this additional traffic, an estimated $495 million (e385 million) will have to be spent on upgrades. This proved beyond the means of the port authority, which therefore sought external funding. Early interest in investing in the terminal business was originally shown by APM Terminals and CMA CGM, as well as by Turkey’s Arkas.

However, in 2005, a 30-year contract was signed with PE Ukrtranscontainer, in which Russia’s leading stevedoring group, National Container Company (NCC), has a stake. This assumed control of Illichivsk container terminal on the understanding that it would jointly implement the so-called 4M plan. The agreement, which involved bringing NCC management know-how to the Ukraine, has so far withstood three legal challenges and is now generally accepted to be legal and valid. Despite initial reluctance by some to accept the new management team, there were almost immediate benefits. During its first month in charge, Ukrtanscontainer posted a throughput of 34,599 teu, which was a new monthly record. For 2005 as a whole, resurgent box traffic allowed Illichivsk to overtake Odessa to re-establish itself as Ukraine’s leading container seaport.

Explaining how this had been achieved, Ukrtranscontainer’s senior management team of director Anastas Kokkin and deputy director of commerce Andrii Kuzmenko point to the introduction of new IT systems, the optimising of technological and management systems, the simplification of terminal procedures and better staff organisation and motivation.

Total investment has so far exceeded $22 million (e17.12 million). One of the terminal’s three 30-yearold quayside gantry cranes has been modernised; the other two will undergo similar treatment by 2008. Also upgraded is the entire fleet of nine straddle carriers. Modernisation work has also been carried out on the gantry crane in the rail terminal, which has itself been completely revamped. In addition, orders have been placed for two Noell post-panamax gantry cranes, six Konecranes RTGs and 16 Terberg terminal tractors. All are due for delivery in 2007. The overall capacity expansion plan involves $50 million (e38.92 million) being invested in the first two years to create a facility capable of handling 750,000 teu. This contrasts with Odessa container terminal, where Hamburg Port Consulting is committed to spending $9.63 million (e7.5 million) on upgrades by 2008.

In 2008, berths 1 and 2 will also be transferred to Ukrtranscontainer as part of the second phase development; berth 2 currently handles coal. The following year, capacity at Illichivsk is expected to reach two million teu following additional investment of $60m (e46.71 million), rising to 3.5 million teu the year after. Phase three of 4M, which commences in 2013, will also involve significant land reclamation.

Asked whether he thought Illichivsk could attract back any of the Russian box traffic that was formerly routed through the Ukrainian port, Mr Kuzmenko points out that Russia is nowadays interested in protecting its own ports. “However, we are confident that, within a few years, the basic laws of economics will see some Russian traffic return here. In addition, we have high hopes for the handling of transhipment cargo.”

He adds that Ukrtranscontainer’s goal is for Illichivsk to become Ukraine’s leading port by 2007-2008, while by 2008 it also aims to get back Ukrainian box traffic currently feedered out of Constantza. From 2009 onwards, Mr Kuzmenko will be seriously targeting Russia’s South East Asian imports, which he believes can be sent to destinations in the neighbouring country either by rail or river.

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