The logistics of the Black Sea region were severely affected after the beginning of the Russo-Ukrainian war and the subsequent blockade of the Ukrainian seaports, thus, Bulgaria will help Ukraine to move cargo in the Black Sea.
Shortly after Russian naval forces blockaded Ukrainian seaports, a significant portion of container traffic en route to Ukraine headed to the neighboring Black Sea port of Constanta, Romania. The port of Constanta [150 km north of Varna, Bulgaria] was overloaded after a rapid increase in Ukrainian import containers. As a result, part of the cargo began to move towards the port of Varna, Bulgaria, whose terminals are not congested.
Some transport stakeholders shared the view with Informall BG that the port of Varna is currently a more reasonable option for Ukrainian exporters shipping their cargoes in sea containers. Given the current congestion in Constanta, some Ukrainian carriers prefer to deliver cargo to/from Varna, where the container terminal operates under standard conditions.
Daniil Melnychenko, Data Analyst at Informall BG: “Varna is an attractive option for shippers who want to move cargo seamlessly, while the additional cost of traveling to Varna is offset by cheaper cargo handling charges and stevedoring services. affordable”.
Also, like Romania, the government of Bulgaria joined the initiative that simplifies cross-border rules for trucks carrying Ukrainian import and export cargo. The initiative made it possible to speed up the transshipment of Ukrainian containers with essential products and humanitarian aid arriving at the port of Varna.
With trusted and friendly partners in Bulgaria, Informall BG asked Kostadin Dimitrov, manager of Varna West Terminal, for some comments to learn more about the container terminal’s operations in the midst of the Russo-Ukrainian war:
“The results of the first quarter of 2022 did not demonstrate any significant increase in the volume of Ukrainian containers moving in transit. However, as the Constanta terminal became overloaded, we started receiving requests from Ukrainian freight forwarders interested in moving cargo through the Varna terminal more frequently,” shares Mr. Dimitrov.
Kostadin suggests that shipping line restrictions on container equipment entering Ukraine is the main bottleneck for import container traffic moving from Varna (and Constanta) to Ukraine. While non-Ukrainian containerized cargo continues to move to the POD [place of delivery] in a container, Ukrainian cargo must be refilled onto a depot truck for onward delivery to Ukraine. This additional cargo handling operation is a time-consuming process that slows overall container turnover and increases transportation costs.
Mr. Dimitrov confirms that the Varna container terminal has enough capacity to handle some of the Ukrainian traffic, however storage space may become an issue if shipping lines maintain current restrictions.
If restrictions are removed, Ukrainian container traffic transiting through Bulgaria will move significantly faster than today and at a more reasonable cost. Currently, only a few liner operators are willing to take risks and allow Ukrainian importers to deliver their containerized cargo directly to Ukraine. Mr. Dimitrov continues: “We regularly receive requests [from Ukraine] for bonded warehousing services in Varna, but as of today, such port warehouses are fully utilized and storage capacity is limited. Once shipping lines allow containers to be delivered directly to Ukraine, warehouse space should no longer be an issue. We, as the operator of Terminal West in
Varna is continuing our discussions with shipping line representatives and promoting the idea of direct container shipping to Ukraine, however, it is up to them [shipping lines] to decide.”
Vassiliy Vesselovsky, CEO of Informall BG, says: “As regional shipping stakeholders recover from the aftershock effect of the war, we expect companies providing liner services to the Black Sea to review and ease their restrictions on Ukrainian import containers in the nearest future. Such a move will benefit all parties involved in the movement of containerized cargo to/from Ukraine.”
Bulgaria container movement review:
Note: Informal rating is based on total employee turnover data. [without transshipment] for the container terminals of Varna and Burgas.
According to the results of the Informall rating for the first quarter of 2022, the total turnover of Bulgarian containers decreased by (-) 6.99% compared to the first quarter of 2021. The shipping lines present in the Bulgarian container market demonstrated no significant change which can be seen in the rating table below.
Despite the decline in domestic loaded container turnover in the first quarter of 2022 versus the first quarter of 2021, Informall forecasts that Bulgaria will increase its transshipment volume in the second quarter period as the Russo-Ukrainian war unfolds .
The top 3 liner operators [MSC, MAERSK, HAPAG LLOYD] secured their positions from the previous year and further increased the total volume of containers shipped through Bulgarian terminals.
Collectively, the TOP-3 carriers transported almost 69% of Bulgaria’s total container turnover.
2M Alliance owns most of the container volume in Varna and Burgas with a total of 55% market share. The shipping company MAERSK showed the highest volume growth of (+) 2.08 p.p. in the first quarter of 2022 compared to the period of the first quarter of 2021.
At the same time, trader YANG MING showed considerable growth (+) 1.95 p.p. doubling its share in the first quarter of 2022 compared to the same period in the first quarter of 2021 and resulting in 3.86% of the total market share in Bulgaria.
In contrast, the EVERGREEN line transported twice as much cargo in 1Q 2022 compared to the same period in 1Q 2021, reducing its market share to 3.76%.
While Ukrainian containerized cargoes arrived at the port of Varna [mainly by trucks], Ukrainian bulk cargo exporters are still struggling. The complexity of the route connecting Ukraine and Bulgaria, as well as cost factors, do not allow effective transportation of Ukrainian grains [wheat, corn, sunflower seeds, etc.] to terminals in Bulgaria. However, Ukrainian and Bulgarian officials are mutually seeking ways to improve logistics on the bulk cargo route in particular.
“Bulgaria will be happy to provide the port of Varna as a logistics center for transshipping flour and sunflower seeds and distributing grains that Ukraine could not distribute through its ports,” Bulgarian Prime Minister K. Petkov said after the meeting with V. Zelenskyy, President of Ukraine. However, the Prime Minister did not give a timetable or provide details of the volumes of grain to be shipped through Varna on the Black Sea.
On the contrary, Informall BG would argue the potential of the Ukraine-Bulgaria grain export corridor. While the port of Constanta has access to the waters of the Danube River, the port of Varna is only accessible by land roads and this is a major problem for shippers of grain. The combined use of freight trains and large-capacity river barges [on the Danube River] makes it possible to handle considerable volumes of grain through Constanta at reasonable cost. In addition, the proximity of the Constanta grain terminals to the Ukrainian borders is a factor that allows trucks to be used efficiently on the route.
Despite the congestion at Ukraine’s [Danube] river ports, Constanta has shipped more than 100,000 tons of Ukrainian grain between mid-March and May 2022. Constanta continues to receive barges and trucks with Ukrainian corn and wheat that transfer the grain to ships through one of the fastest loading grain terminals in Romania, reports Informall BG.
At the same time, if the Varna grain terminal were to try to handle similar volumes of Ukrainian grain, it would need to receive more than 4,400 truckloads or at least 1,660 rail cars in the same time period. Despite Varna’s proximity to Ukraine, the land corridor connecting the two countries is underdeveloped, creating serious logistical challenges for exporters who want to move a significant volume of grain through the port.
Informall BG continues: “considering the currently rising bunker [and gas] prices, the significantly increased insurance premiums for vessels entering Black Sea waters, and the overall complexity of the Ukraine-Bulgaria land corridor, it is The cost of transshipment of Ukrainian grain through Varna terminals is likely to make logistics on the route excessively costly for exporters.”
Alexander Khromov, project manager at Informall BG, notes: “While Ukraine’s seaports are blocked, Polish and Lithuanian ports on the Baltic Sea remain the main gateways for Ukrainian agricultural products to international markets. Countries are further developing the transit corridor from Ukraine bypassing Belarus to transport grain under minimal controls and expedited customs procedures, minimizing existing infrastructure and bureaucratic hurdles.”
Informall BG continues: “A significant part of Ukrainian grain is expected to continue to flow to the Polish and Lithuanian Baltic Sea ports, as well as to the Romanian Black Sea port, however, its terminal capacity is also limited. , especially during harvest. seasons. Bulgarian ports should still be considered as a potential gateway for Ukrainian agro-exporters in case existing export routes are overloaded and/or heavily congested.”
Source: Informall Business Group
