Agrovista holding is well known in the industry for its “river records” – the largest river terminal on the Dnieper, the most powerful tugboats and the largest barge. Ports of Ukraine talked with the co-owner of the holding, Yuriy Skichko, about how the situation on the river transport market is changing and what prospects they see in the holding.
– Yuri, you are the founder of the Hermes-Trading company, which is part of the Agrovista holding . It is one of the largest players in the grain market and one of the most successful companies operating in the river logistics market. Happy with the way your business is developing?
– Indeed, the holding develops systematically, implements various projects and is one of the leaders in the grain market. This is a vertically integrated business: we grow agricultural products, reload them at our own facilities and deliver them for subsequent export shipment by our own transport. The land bank of the agricultural holding is 82 thousand hectares, and the total capacity of one-time storage of grain at our elevators is almost 360 thousand tons. We provide jobs for three thousand people.
I am personally especially pleased that our projects bring river infrastructure to a new level. In 2013, we built the largest terminal on the Dnieper River – the Svetlovodsk River Terminal. Then 12 containers were erected with a one-time storage capacity of 94 thousand tons of grain and an annual turnover of about 250 thousand tons. Last year, we built another warehouse for floor storage with a capacity of 6 thousand tons, so that the total capacity reached 100 thousand tons. At the same time, the length of our berth, which is unique for the river terminals of the Dnieper, – 240 meters – allows us to handle two vessels at the same time and save time when loading.
In 2018, we became shipowners. And in 2020, they built the largest barge in Ukraine with a capacity of 6 thousand tons. Thanks to her, the capacity of Agrovista’s own fleet has almost doubled – up to 14 thousand tons of tonnage. By the way, we also have the most powerful tugs on the Dnieper with a capacity of 2800 liters. With.
– What is the total investment volume of Agrovist s?
– We have been working on the market for more than twenty years and during this time have already invested more than $ 250 million in the development of the agricultural industry.For example, in 2012-2013, investments in the Svetlovodsk river terminal alone amounted to about $ 32 million. They invested $ 25 million in the Sharovsky elevator. The dairy complex – about $ 30 million.
And we also have “Royal HPP”, “Ukragrokom”, HPP “Dobronadievskoe”. Last year, in particular, we invested in the construction of a feed mill on the site of the Ukragrokom elevator in the Kirovograd region – we reconstructed the main building by installing a processing line for the production of feed. During 2018-2020, they invested about $ 8 million in the fleet.
– Probably, many in the industry associate Agrovista with the development of river transportation. But due to changes in legislation and dumping of road carriers and owners of grain wagons, river transportation was in a worse position. Will you continue to invest in river infrastructure and fleet?
– I am sure that river transportation of grain will be in demand in the future. After all, the ships will need to be loaded on the roadstead. And sooner or later, taking into account the transition of the railway to market conditions of management, investment in the maintenance and development of infrastructure, it will be necessary to revise the cost of railway transportation services, an alternative to which will be delivery by river.
The river fleet is simply indispensable. We deliver grain to Trutaev’s bank, roadstead of the Odessa and Black Sea ports, this summer we started working with the terminals of the Pivdenny port.
Recently, Ukrvodshlyakh, as an experiment, allowed to lock barge trains with two barges, and not, as before, only a tug and a barge. This opens up more opportunities for carriers – reduced fuel consumption, reduced lock-in time, and hence the flight time, etc. We have already taken part in such sluicing – Agrovista led two barge crews of two tugs and four barges.
I can note that the competition in the river transport market has intensified, and over the past few years the number of the fleet, which specializes in the transportation of grain and meal, has grown. The seaports offer a package rate – you can load a vessel at the sea terminal and carry out additional loading at the roadstead.
But this is all in the current conditions, when grain, let’s say, is not enough for everyone who wants to carry it. In the future, the harvests in Ukraine will grow, as well as exports. In 2019, our production of grains and oilseeds amounted to 98 million tons, and by 2025, 115 million tons are expected. So there will be enough work for the river fleet, and river logistics will develop.
As for our plans, today our fleet consists of two pusher tugs, four non-self-propelled hold barges with a total capacity of about 8 thousand tons and one barge for 6 thousand tons. When we laid the barge at Dunaisudoservice in Izmail, we were already planning to build another one of the same. Another thing is that the first barge of the project was built last autumn, and in December the Law “On Inland Water Transport” was adopted. This law, which provides for the admission of a foreign flag to cabotage, paused not only our investment program, but also the investment programs of other river players. The market wants clarity, wants to understand how to work in new conditions. But I can say that we will continue to build the fleet – it’s only a matter of time.
I will add that we set our record for river cargo transportation in 2019, when we loaded 245 thousand tons on water transport in Svetlovodsk. In 2020, the market situation did not allow achieving the same result, but in the future we will be able to do this. Our barge allows you to immediately transport a large consignment – with an incomplete draft of 2.8 meters, 4 thousand tons to the city of Dnipro, and then load it up with a total draft of 3.8 meters by 6 thousand tons and deliver it to the roadstead.
– One gets the impression that the future of river transportation of grain belongs to the larger river fleet.
“At Agrovist, we believe that our powerful tugs and barges also raise the requirements for river infrastructure to a new level. This is an impetus for the construction of modern terminals, for lengthening berths, upgrading existing storage facilities, and accelerating the productivity of grain shipment. Also, more tonnage trains on the river require improved navigation on rivers – dredging, expansion of some sections, and hence an increase in the throughput of river transport logistics.
– “Agrovista” is included in the pool of those companies that spoke out against the admission of a foreign fleet to cabotage. But the law has been passed, the foreign fleet is allowed on the rivers and its working conditions are better than those of the national carrier. What other opportunities are there for the playing field to be level?
– We continue to work in this direction. We convey our position to the authorities at different levels. We take an active part in the meetings of the transport committee of the Verkhovna Rada, conferences, etc. Now an important point for us is the cancellation or compensation of the excise tax on fuel for river carriers. This practice is fully consistent with the practice of the European Union.
This is important not only because the excise tax occupies a significant part in the cost of transportation, and the foreign fleet will not pay it, carrying out bunkering in neutral waters. This is important because we must interest the state in the development of river transport, and above all in the domestic fleet. The authorities understand that this is an opportunity to preserve the roads – it is necessary to reorient cargo flows from highways and railways to the river, to develop intermodal transportation.
And today, river transportation in Ukraine is not cheaper than transportation by road or rail on most of the river. It is more profitable for the shipper to transport by road or rail. So it’s not only about making the conditions of competition between the national and foreign flags on the Dnieper fair, but also about creating conditions for attracting cargo to the river. In the meantime, about 70% of agricultural products are transported by rail, another 20% – by road. Up to 10% of agricultural products are transported by river transport.
– In addition to reducing the excise tax on fuel for river transport, what else needs to be done at the state level in order for the river to work more efficiently?
– It is definitely necessary to increase railway tariffs. Today they do not allow to fully cover the needs of Ukrzaliznytsia. Meanwhile, this is also a matter of transportation safety – the infrastructure and wagons are worn out. Funds are needed to create new infrastructure, electrify sites, increase wages and retain specialists at Ukrzaliznytsia, etc.
At the same time, the market is overflowing with grain carriers – supply exceeds demand, there is not enough traction power, electrified sections, access roads in the port and port areas. Today there are about 28 thousand grain carriages. Of these, Ukrzaliznytsia (TsTL) owns about 8 thousand cars. At the same time, there are many old cars, unsuitable for operation, but “extended” in terms of time.
In order for the river to be attractive for shippers, it is very important to combat overloads on the roads.
We welcome any steps that are being taken in this direction by the government, legislators, and businesses. One of them is the automatic recording of violations of size and weight norms, which reduces corruption risks and works around the clock. Earlier (in the conditions of impunity for transshipment of road carriers), operators of grain carriages and river carriers had to dump. We hope that with each subsequent year more market conditions for the operation of all types of transport (rail, road and river) will be formed, that freight flows will be redistributed in a different way and the share of river workers will increase. This is how it should be – in the end, we follow the best European experience, and there river transport is actively used.
The issue of providing locomotives remains relevant – there are not enough of them, and there is still no full-fledged private market for private traction. We are waiting for progress in this direction.
– To what extent is Agrovista dependent on third-party carriers – do you not only send cargo by river transport for further export?
– We have 55 own grain wagons, which were built for us in 2018. We ordered them for the transportation of primarily our own and purchased goods on our railway elevators, as well as for the transportation of goods purchased on other railway elevators – we are talking about shipments from linear elevators. The number of wagons allows us to form block trains.
We can send block trains from the Svetlovodsk river terminal, but it is still a river terminal, unless the clients decide to send the accumulated grain from it by rail. We also deliver grain to Svetlovodsk by our wagons from the north of Ukraine.
We have our own vehicles, and this year we have expanded our fleet. Almost all of its cargoes “Agrovista” can transport by its own transport.
– The 2020-2021 marketing year became difficult for many farmers – the harvest was less than a year earlier, there was not enough rainfall, and the southern regions and distant regions of the Dnieper suffered, and this is just a “river” cargo base. Do you have a need to develop an irrigation system?
“We have already completely renewed the irrigation system, having installed circular sprinklers on the fields, which rationally consume water and allow, simultaneously with irrigation, to apply liquid and soluble mineral fertilizers. At the same time, we are increasing the irrigated areas at a good pace – this significantly increases the yield. The equipment is made in Ukraine. And I would like to note that Agrovista places a lot of orders with Ukrainian enterprises. We ordered the cars at the Kremenchug Carriage Works. Barge D-6000 – at the factories “Dunaisudoservice” and “Dunaisudoremont”. We try to support Ukrainian producers.
Of course, there is no harvest year by year. And in 2020, with a low spring harvest, there was a noticeable lack of cargo for everyone on the river, and on the railroad and motor transport. On average, every year the harvest and the volume of cargo in Ukraine will grow – respectively, exports and imports too. In 2019, our production of grains and oilseeds amounted to 98 million tons, and by 2025, 115 million tons are expected. So we expect that the work for the river fleet will increase, and river logistics will develop.
– Will Agrovista make any new capital investments?
“We are determined to continue investing in the agricultural sector, river infrastructure and the Ukrainian economy. But new investments depend primarily on the success in agricultural production and the work of previously invested projects. And also on what conditions the state creates for work. We hope that in the future we will have more understanding with lawmakers and officials of relevant departments.
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