Port operator Gulftainer has signed an agreement to become a shareholder in the Russian port of Ust-Luga near St Petersburg.
Gulftainer, which is the largest privately owned port operator and based in the United Arab Emirates, is expected to invest more than $275m into terminal development at the port which will provide alternative to the congested port of St. Petersburg.
The agreement is believed to be the largest UAE private company investment in Russia to date.
“[Gulftainer is] bringing international know-how and additional financial input to our terminal,” said Alexander Goloviznin, deputy general director – Port Business at Ust-Luga Company. “In their strategy it is clearly stated that they will continue developing automotive activities on Yug02 terminal but with stronger emphasis on additional services. Their goal is to build vehicle processing centre with PDI/PPO and other services,” he told Automotive Logistics.
As well as facilitating the growth in vehicle imports to Russia, which increased to around 532,000 between January and July this year according to the Federal Customs Service, the proposed development at Ust-Luga will also benefit carmakers with facilities in the region, a number of which are boosting production to meet renewed demand, including General Motors, Renault and Volkswagen. Honda is also now planning to set up its first assembly plant in Russia to produce 30,000 to 50,000 cars annually using components imported from its global facilities.
The increase in production is being met with lower import tariffs for parts.
As GM Russia’s head of purchasing and supply chain told delegates at Automotive Logistics Russia in June this year, the carmaker is doubling capacity at its St Petersburg plant to meet annual production of 230,000 vehicles as it strives to meet a target of 350,000 vehicles produced in the country. The company is also expanding production at its GM-Avtovaz joint-venture plant in Togliatti to 120,000 units.
Meanwhile, VW is closing on full capacity of 160,000 vehicles per year at its Kaluga plant south of Moscow. It has also signed a contract to with Russian carmaker Gaz to build 100,000 vehicles a year at the joint venture facility in Nizhny Novgorod.
The Renault Nissan Alliance is also planning to increase production to 350,000 units and beyond in the next two years at facilities in St Petersburg, Moscow, and Nizhny Novgorod.
The Gulftainer investment could help put the port back on track to reach its goal of handling annual volumes of 350,000 vehicles by 2013, a prediction that had become uncertain over the last couple of years.
Ust Luga has been developed since the late 1990s with special investment from the Russian federal government, and has long been touted as a solution to the limited container and ro-ro capacity of Russian ports in the Baltic. The car terminal saw numerous delays in its opening, finally becoming operational in 2009 after the Russian import market saw a heavy crash.