Belarus' mulling of redirecting its shipments via Russian ports rather than the Baltic-state ports will be a major blow for ports in Lithuania and Latvia, specifically the ports of Klaipeda and Riga. If Belarus moves forward with this plan it will place downward pressure on our forecasts for Baltic-state ports, as although the positive domestic outlook of these states has been a major driver of growth the facilities have been positioning themselves as gateways for trade in and out of the high-growth regions of the Commonwealth of Independent States (CIS). A redirection of freight via Russian ports would benefit the ports of Kaliningrad, St Petersburg and Ust-Luga in particular and highlights a trend we have noted in the freight transport sector of Belarus and Russia moving closer together.
During a meeting with Leningrad Region Governor Alexander Drozdenko Belarus' President Alexander Lukashenko stated that he and Russia's President Vladimir Putin have 'agreed in principle to relocate large volumes of cargo shipments, including potash fertilizers from Baltic-state ports to those in Russia's Leningrad region''.
No time frame has been outlined as to when this relocation of freight shipments could take place, but if or when it does, it will be a major blow for Baltic-state ports, which have positioned themselves as gateways for goods in and out of the CIS.
At the port of Klaipeda, Lithuania's largest port, the transit of goods to and from Belarus accounted for 31.4% of the total cargo volumes handled at the facility in 2011. The loss of its second largest client (Lithuanian cargoes accounted for 55.7%) would have a negative impact on the port's throughput and comes at a time when the facility is suffering cargo throughput losses as Russia diverts its oil exports away from Baltic-state ports and through its domestic facilities. This has led to a decline in total tonnage throughput at the port of 4% y-o-y in January-October 2012.
|Set To Lose A Major Client|
|Port Of Klaipeda Transit Cargo Breakdown By Country (%)|
We project a throughput decline of 4.8% for the whole of 2012, but currently forecast an uptick of 1.7% in 2013. If Belarus moves forward with its planned relocation then this forecast will be revised down.
|Further Risk To The Downside|
|LHC: Port of Klaipeda Total Tonnage Throughput, January- October ('000 Tonnes & % Change y-o-y). RHC: Port of Klaipeda Throughput, 2007-2017 ('000 tonnes & % Change y-o-y)|
BMI notes that Belarus has been moving closer to Russia in the freight transport sector over the last year. The two states, along with Kazakhstan, are planning to establish a logistics joint venture between their national freight operators, the United Transport and Logistics Company (ULTC), which will operate in the three countries.
While relations between Belarus and Russia in the freight transport sector appear to be strong, we highlight that this has not always been the case and relations could disintegrate once more. For example, in 2010 Belarus was utilising Baltic-state ports for the import of oil from Venezuela, as the country tried to decrease its reliance on imports of the commodity from its neighbour and the countries have had previous disagreements in the gas transit sector leading Russia's gas supplier, Gazprom to shut down gas exports to Belarus.