Russian coal shipments to Taman port's OTECO terminal experienced an 80% fall in Q1 compared to the same period last year, as suppliers suspended rail shipments from end-January due to exorbitant transshipment rates that render coal exports financially unviable.

The suspension has led to only 1.4 million tonnes reaching the terminal in Q1 2024. Compounding the issue, stringent transportation planning regulations prevent the redirection of these loss-making volumes to alternative export destinations.

Notably, the decline in rail shipments to OTECO has also impacted other ports, with the port of Ust-Luga experiencing a decrease of 18.9% year on year in coal shipments during the same period.

The challenges faced by Russian coal producers persist into 2024, such as falling global prices, escalating railway tariffs, high transshipment rates at ports, and exacerbating logistical hurdles. Furthermore, limited transport capacity of Russian Railways network and the longer transportation distance to supply coal to the Asia Pacific region via European terminals contribute to the unfavorable conditions.

The strict handling rates policy implemented by Taman has compelled many large producers to curtail production. Even if the port were to reduce tariffs, the swift restoration of volumes remains unfeasible, requiring months and substantial funding.

In 2023, OTECO, under the ownership of Michel Litvak, saw a 15% decrease in total transshipment volume, amounting to 25.1 million tonnes.

(Writing by Alex Guo  Editing by Harry Huo)
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