UKRAINE: Hostility with Russia, a second consecutive year of recession and a poor grain harvest are all risks to the downside that will make a difficult year for Ukraine’s shipping sector. BMI is predicting declines in throughput at Ukraine’s main ports of Odessa and Illichivsk.
From a total tonnage standpoint, the projected decline in grain production will be a major driver in the throughput declines at both ports, with the two facilities both participating in the country’s grain export supply chain.
The ports will also witness a declining role in the coal export supply chain. Ukraine’s coal supply chains and to some extent mining activities, which mostly take place in the east of the country have been negatively impacted by the fighting between Ukrainian forces and separatist groups supported by Russia.
Such is the decline in coal deliveries, a key fuel source for Ukraine’s power sector that the country is now having to import from South Africa. The first delivery of imported coal into Ukraine happened in Q4 2014 and the port of Odessa is projected to play a greater role in this supply chain.
Container throughput in 2015 will be negatively impacted by a projected second year of recession in Ukraine, with BMI forecasting a contraction of 5.2% on top of the estimated 5.3% decline in 2014.
This is specifically bad news for the container terminal operator HPC Ukraina at the port of Odessa, which has just finished an expansion plan at the port to attract greater volumes of traffic. This increase in traffic is unlikely to materialise in at least the medium-term, with BMI forecasting Ukraine’s economy to grow by just 0.2% between 2015-2019.
