Hamburg is emerging as the biggest European beneficiary of Russia’s entry into the World Trade Organization, which is spurring feeder services from Germany’s largest port and cementing its status as a container transfer hub between Asia and the Baltic Sea.
Hapag-Lloyd AG, Cosco Container Lines and Unifeeder AS are among shipping lines that have increased feeder services from Hamburg since the start of the year. That contributed to an 8 percent rise in the movement of standard 20-foot containers, or TEUs, between the German port and Russia in the first six months, according to Port of Hamburg Marketing.
As WTO membership drives down import tariffs and expands port capacities in and around St. Petersburg, Russia is widening its lead over Singapore as Hamburg’s second-biggest partner after China. Just as looser trade barriers helped China’s container trade with Hamburg quadruple after its entry to the WTO in 2001, so too will the flow of goods between the German port and Russia increase, said Gabriele Koetschau, who heads the St. Petersburg office of the Hamburg Chamber of Commerce.
“I don’t expect the same growth in trade for Russia, but a 50 percent increase by 2020 is possible,” said Koetschau.
Russia became the 156th country to join the WTO on Aug. 22 last year, after 18 years of negotiations delayed by such obstacles as obtaining approval from WTO member Georgia. That former Soviet republic fought a brief war with Russia in 2008 and has contested customs procedures in disputed territories that Russia recognized as independent states.
Membership means the world’s biggest country by area must cut import tariffs to an average 6 percent from 9.5 percent today by 2015, according to the Hamburg Business Development Corporation.
St. Petersburg, Russia’s biggest sea port, and Hamburg have been partner cities since 1957, bolstering ties even after the onset of the Cold War. About 20 percent of Russia’s seaward trade is dispatched from there, according to the Russian ministry of transport.
Trade between Hamburg and Russia can be traced back to the 13th century, when beer was the biggest export along the first trade route from the Hanseatic port to Novgorod across the Baltic Sea. In 1719, the first Russian diplomatic mission opened in Hamburg.
At about the same time, Hamburg sugar producers settled in Archangelsk, a port about 1,120 kilometers (696 miles) northeast of St. Petersburg on the White Sea that is closed by ice for part of the year. From there, they supplied sugar to the whole of North Russia and all the way to Moscow.
Today, goods exported to Russia from Hamburg are mainly meat, cars, canned food, milk products and metals, according to the Hamburg Chamber of Commerce. Goods imported from Russia include hard coal, crude oil, paper, copper and chemical products.
Vessels moved 343,000 standard 20-foot containers, or TEUs, between Hamburg and Russia in the first six months of 2013, 8 percent more than in the same period last year, according to data provided by Port of Hamburg Marketing.
“The region of St. Petersburg is increasingly becoming a gateway for goods from all over the world for the big Russian market,” said Fritz Horst Melsheimer, president of Hamburg’s Chamber of Commerce. “We are definitely expecting the momentum in trade between Hamburg and Russia to continue.”
Northern European container trade with Russia is mostly transshipment -- the transfer of containers from deep-sea container ships from Asia to smaller feeder ships destined for Russia’s Baltic Sea ports. Intra-European traffic accounts only for about 15 percent of the total, according to the Institute of Shipping Economics and Logistics in Bremen, Germany.
More than 150 feeder ships leave Hamburg every week to sail down the River Elbe before moving northwards through the Kiel Canal to the Baltic Sea.
“The most important driver of growth in trade is the quality of the feeder services between Hamburg and St. Petersburg in particular,” said Axel Mattern, a board member at Port of Hamburg Marketing, an association representing about 270 companies active in the port.
In the first half of 2013, seven new feeder services to Baltic Sea harbors were started, according to the port.
That includes the FIX service to St. Petersburg started by Hamburg-based Hapag-Lloyd in April, which also calls in Finland and Sweden and complements the existing Russia Express, or Rex, of Europe’s fourth largest container-shipping line.
The Hapag-Lloyd vessels transport containers with car parts from Volkswagen AG, manufactured in Mexico, to the fast-growing Russian port of Ust-Luga, said Christoph Adomat, a spokesman at the German carmaker, which is based in Wolfsburg. About 100 containers a week then make the journey by train from Ust-Luga to an assembly plant of VW partner GAZ Group, a unit of Russian billionaire Oleg Deripaska’s Basic Element, in Nizhny Novgorod.
“Russia’s entry to the WTO will lead to a further opening up of that market, while competition will intensify,” Adomat said in an e-mail. “Since agreeing on our cooperation with GAZ in June 2011, we have been producing various models at the site, step-by-step, which will inevitably lead to growing volumes.”
Container volumes throughput at Ust-Luga, which is about 150 kilometers west of St Petersburg and started operations three years ago, grew to 21,835 TEU in the first half, nearly ten times as much as the 2,342 TEU in the same period 2012, according to data from the St. Petersburg Port Administration.
Still, the share of Ust-Luga and other Russian Baltic Sea ports such as Kaliningrad is small compared to that of St. Petersburg, which handles 92 percent of container traffic from Hamburg, according to Port of Hamburg Marketing.
National Container Co., which operates the biggest terminal in St. Petersburg with 1.35 million TEU of annual capacity, saw a 27 percent increase in container trade with Hamburg in the first half compared to the same period in 2012. Turnover totaled 163,680 containers, the company said in an e-mail.
“Volumes in Hamburg look relatively good compared to other ports in North Europe and Russia plays an important part in that development,” said Burkhard Lemper, director at the Institute of Shipping Economics and Logistics.
Total container throughput in Hamburg rose 2 percent in the first half, while it fell 9 percent in Bremerhaven, Germany’s second biggest port, according to Port of Hamburg Marketing. Antwerp in Belgium, Europe’s third biggest container port, lost nearly 2 percent, while Rotterdam, Europe’s top port, had less than 1 percent growth.
Hamburg’s Business Development Corporation meanwhile said it helped an above-average number of Russian companies to open branches in Hamburg since Russia joined the WTO.
About 25 companies, including commodity traders and technology startups, have settled in Germany’s second biggest city since August 2012, increasing the total number of Russian companies to 150, according to the body.
“The Russian companies often have their base in Hamburg for the whole German market. For them Hamburg is the gateway to the market with the most purchasing power in European Union,” said Melsheimer.