A mild recovery in the Russian new car market has led to more vehicle volume at several ports in the Baltic, with carmakers such as Toyota, Hyundai and Kia using additional ports in the Baltic, notably Ust Luga.
The Commercial Sea Port of Ust Luga, a long term Russian infrastructure project in the Gulf of Finland, has seen increased volumes of finished vehicles this summer to its Yug-2 multipurpose terminal from short-sea operators K Line European Sea Highway Services (KESS) and United European Car Carriers (UECC). While the services are not yet fixed for either shipping line, both have been sailing once a week recently to Ust Luga. It is good news for the terminal, which is due to complete expansion work for two berths and a ro-ro ramp this year.
Toyota is currently using the port as a second entry point for Russia in the Baltic besides Hanko in Finland, according to Cyran Vanderhaeghen, general manager of the vehicle logistics group for Toyota Motor Europe. Hyundai and Kia, meanwhile, have been moving on UECC vessels to Ust Luga from their hub in Walhamn, near Gothenburg, Sweden around once a week, also as an additional option for UECC’s regular service to the port of Kotka, Finland, according to Bjorn Svenningsen, head of car sales for UECC.
Since it opened, Ust Luga has seen spot deliveries of Toyota and Hyundai vehicles, but such volume, while still inconsistent and dependent on fluctuating demand, appears to have become more regular at the moment. “For the last month or so the sailings [for UECC to Ust Luga] have been every week, which is what I would like to see as a regular service,” Svenningsen told Automotive Logistics News. “We have rate agreements with some of the Russian importers of Hyundai and Kia, but a regular service would be based on their demand from us.”
Hyundai-Kia vessels arrive from South Korea aboard Eukor vessels to Walhamn, from which they move to the Baltic, sometimes by vessels that make multiple stops at Kotka, St Petersburg and Ust Luga, but other times moving direct to the ports, depending on demand. Svenningsen said UECC has also seen increased movements of Mitsubishi vehicles to Kotka and onward to the PLP terminal in St Petersburg.
According to Alexander Goloviznin, deputy general director for the Ust Luga Company, Ust Luga is also seeing calls around once a week from KESS with the Toyota imports. Keiji Tamori, marketing and business development manager at KESS, confirmed that the shipping line is running a service mainly between the Swedish port of Malmö and Ust Luga, although she would not specify customer details. Like UECC the service levels are not fixed, but she told Automotive Logistics News that current sailings were around once a week, and sometimes more. “We are very flexible to offer our services to Ust Luga in future as well depending on customer requirements,” Tamori said.
Toyota’s Vanderhaeghen confirmed that vehicles arrive by deep sea to Malmö, from which they move to Hanko–Toyota’s traditional entry point for Russia, where it also holds buffer stock–and Ust Luga. According to Vanderhaeghen, about 18,000 units have thus far been shipped to Ust Luga this year. The frequency of ships depends on deep sea arrivals in Malmö, but at current volumes Vanderhaeghen said that Toyota has seen a minimum of four calls per month at Ust Luga.
Although not a fixed service, Vanderhaeghen said that the Ust Luga terminal could be considered a structural element of Toyota’s network setup in 2010, however that does not exclude the possibility of using alternative as well as additional ports in future. He would not offer any prediction on anticipated volumes in Ust Luga for the rest of the year. Svenningsen also noted that the rest of the year would be hard to predict. “The Russian market is bit funny in that it goes up and down and is not as easy to plan as other markets,” he said.
Ust Luga builds for Russian recovery
According to the Association of European Businesses (AEB), Toyota’s sales in Russia during the first half of 2010 were around 35,000 units, a drop of 15% from 2009. Sales in June, however, were 7,800 units, more than 30% higher than last year. In June, Kia sales in Russia jumped 91% to more than 10,000, while Hyundai rose 47% to 7,300 units. Russia’s domestically-produced cars currently benefit from a scrapping incentive, but Svenningsen suggested that this was also helping to increase import sales. 
“The Baltic is definitely an area where we have seen the market pick up a little bit, and we are doing some vessel changes to get some more capacity there,” he added.
Ust Luga has been developed under special investment from the Russian federal government since the late 1990s, and had long been touted as a solution to the limited container and ro-ro capacity of Russian ports in the Baltic, which historically has led many importers to use Finnish ports such as Hanko and Kotka and then trucking cargo across the border. The car terminal saw numerous delays in its opening, finally becoming operational last year after the Russian import market saw a heavy crash. At one point, Ust Luga predicted that it would handle more than 350,000 units per year by 2013, but such a prediction no longer seems certain.

Nonetheless, the terminal continues to expand. According to Goloviznin, in July the terminal signed a contract for the construction of another 27 hectares between the existing terminal and nearby Rosmorport. It is projected to be finished by the end of year, along with two more berths as well as a new 30 metre ramp for ro-ro cargo.