DELO Invests to Boost Shipping Business

Posted By Gabby DelGatto
Monday, June 30, 2014
A recent arrival at Novorossiysk. Part of the China Shipping Line new deep-sea service from the Far East to Russia (Credit GCS)

Over the past three years, DELO Group, a Russian private transport company, has implemented an investment program, including rail and other adjacent port infrastructure, construction of stevedoring and inland storage terminals for oil products, construction of the KSK grain terminal, acquisition of 50% of the NUTEP container terminal from its JV partner and an expansion program turning the terminal into a chief container terminal throughout Russian coasts.

“We are planning to double capacity at NUTEP from 350,000 to 600 - 700,000 TEU,” said Andrei Bubnov, CFO of DELO Group. “This is a breakthrough project for us. It will allow us to handle mother ocean container vessels, which could reshape the entire Black Sea market by allowing direct calls to Novorossiysk bypassing the traditional transshipment hubs.”

One of the advantages for ships calling at Novorossiysk is the low bunker prices–currently almost $200 per metric ton cheaper than at nearby Istanbul.

“We also expect more consolidation in the market and DELO will continue to invest in strategic assets and launch more innovative services to support continued growth,” Bubnov said.

Speaking about the impact of the recently denounced P3 alliance or the outlook for any prospective alliance, its proposal alone has already changed the liner shipping market—in Russia at least, according to Bubnov.

“It prompted the smaller shipping lines serving Russia to consider new niche strategies in order to compete,” he told TOC Conference delegates. The P3 Network shipping alliance would have positioned the three partners (Maersk, MSC and CMA-CGM) to control as much as 50% of all Russia-bound container traffic. 

A new strategy that has already lead to opportunities for DELO Group, is the expansion of carriers into in-land operations. Thiese additions add value services along the logistics chain.

“Through our intermodal logistics operator, Global Container Services (GCS), we have an extensive network of road, rail, customs, logistics and warehousing facilities and services, so the carriers are happy to work together with diversified service providers such as GCS,” said Bubnov. “Having a strong local partner continues to be a competitive advantage for international players.”

The carriers aim to increase the number of vessels and the range of alternative port calls that they can offer to customers, so facilities are being upgraded and extended in many areas of Russia.

Bubnov emphasized that changing conditions in Russia requires companies to be flexible in order to meet customer needs and take advantage of business opportunities.
 

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