Significantly altered trade flows as a result of investments into Russian port infrastructure and logistics has elevated the level of storage competition in the Baltics region.
In recent years, liquid cargo flows in the Eastern Baltic region have undergone significant change. These investments into Russia's infrastructure have increased the ability of Russian Baltic ports to attract and handle more Russian origin cargo.
As a result, large cargo flows historically transhipped with the ports of the Baltic states are instead being diverted to these Russian ports and putting a strain on the Baltics' logistics sector.
In an interview with Tank Storage Magazine, Lars Pantzlaff, general manager at Ventspils Nafta Terminals, says that the political tensions between Russia and the rest of the western wold following the annexation of Crimea have further compounded the issue.
'With Russian cargo flows, which historically represent the major share for the terminals in the Baltics states, significantly declining, competition for cargo flows is building with increasingly available tank capacity,' he explains.
However, there is still opportunity for the storage sector to thrive, predominantly due to petrol and petrol products demand.
'While gasoil flows are under severe pressure with a potential to decline further, the emphasis is on petrol and petrol components that can see preferential handling in terminals in the Baltic states.
'With Russia falling short as being the major source for future cargo flows, the two refineries and their output in Belarus has become a major focal point,' he says.
'Additionally, trading companies operation in the entire Baltic region consider hubs to consolidate their trade flows, even if loading ports are different.'
The largest storage players in the region are Ventspils Nafta Terminals, part of VTTI, the private Ventbunkers, state-owned Klaipedas Nafta, Krovinių Terminalas, part of Achema group, Vopak and Alexela terminals. These operators handle middle distillates, petrol and its components and fuel oil. These operators are facing growing competition from storage operators in the Russian ports of Ust-Luga, Primorsk and St Petersburg, which have increased their capacities in recent years.
The focus is now on terminals in the Baltic region being as flexible and diverse as possible to provide added value to customers, according to Pantzlaff.
'While the pressure on cost for tank storage will be mounting in the current trading environment, the flexibility and diversity of terminal services is becoming ever more critical to provide distinction and value to customers,' he adds.
'The internal efficiency of terminal operations relating to its infrastructure, its availability, processes, organisation and having the right people to master change is going to be crucial.'
Pantzlaff will be providing a comprehensive overview of the storage market in the Baltics on the first morning of the Tank Storage Germany conference on November 29 at the Hamburg Messa. For more information visit www.tankstoragegermany.com.
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