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Containers were selected for the fertilizers
Russian chemical companies often prefer container shipping. Thus, the share of fertilizer exports has increased to 11%, and the cost of delivery on some routes has approached traditional prices for transportation using hoppers when transshipping dry cargo. Experts expect this trend to continue until the imbalance of container imports and exports is eliminated.
The imbalance in the Russian container market has led to a decrease in the cost of transporting fertilizers in containers on some routes and in hoppers with transshipment to dry cargo ships using the traditional scheme, according to calculations by the Center for Economic Forecasts (CEF). Gazprom Bank. As analysts recall, over the past 20 months, 650 thousand TEU more were imported to the Russian Federation than exported. Against this background, the cost of container transportation of fertilizers from the Perm Territory to China is $134 per ton, which is only $7 per ton more than with the traditional method. However, in other regions, the price convergence is not so strong. Container delivery to Brazil costs $144 per ton, which is 64% more expensive than traditional delivery. In Western India, it is 50% more expensive - $191 per ton.
Alexander Kotov, head of the consulting department at NEFT Research, explains that differences in import and export container shipping mean that container operators are willing to agree to significant discounts when shipping to countries in the Asia-Pacific region. Because otherwise the container will be empty and will have to be shipped. Pay customs duties for rail transport.
As noted by the Center for Economic Excellence, over the past few years, the share of fertilizers transported for export in containers has increased from 2% to 11%. According to Russian Railways, container transportation of fertilizers, taking into account exports, increased by 1.9 times in January-September 2024, to 375.1 thousand tons. This is the largest dynamics among all cargoes transported in containers.
The Russian Association of Fertilizer Producers (RAPU) also notes that the share of container shipping has been growing over the past two years. First of all, this concerns the transportation of potash fertilizers to the ports of China and the Baltics via containers for mineral fertilizers. As RAPU explains, this technology allows for the rapid placement of warehouses in one place for storing virtually any type of cargo, without the risk of chaos, while the capacity is limited only by the number of containers.
If necessary, containers can be sent by train or sea, unloaded onto ships in bulk or loaded directly from the port in the same way, RAPU continues. In practice, the association stated that terminals for handling mineral fertilizers can be located in any container terminal or port equipped with a container platform and minimal equipment for container operations. The largest chemical companies do not comment on this trend.
The majority of fertilizers (about 70 percent of fertilizers) are still transported by hoppers, including grain trucks, the Center for Electrical Operations notes.
Analysts added that fertilizers are the only bulk railway cargo that will maintain positive transportation dynamics in 2024, since chemical companies do not compete for scarce capacity in the eastern region. Instead, fertilizers are exported through the least congested Baltic ports, the Electric Power Management Center explains. According to Russian Railways, fertilizer loadings from January to September increased by 6.8% year-on-year to 50.3 million tons. RAPU confirms that most mineral fertilizers for export are transported through the Baltic ports and that this direction is less congested than the eastern polygonal direction. But at other times of the year, competition between carriers of mineral fertilizers, coal and oil products is felt in the northwest, the association notes.
According to Aleksandr Kotov, further development of the situation will largely depend on the success of the project to transport containers with gondola cars and other types of rail transport on traditionally empty routes. Until the imbalance is overcome, the cost of container transportation to the Far East will remain low, which will have a positive effect on the economy of exporters, including chemical companies, he said.