January 19 2022
APM Terminals Poti explores plans for regional transport hub
Interview with Iain Rawlinson, Chief Commercial Officer at APM Terminals Poti.
Originally published in Forbes Infrastructure in Georgian language.
The pandemic has had a similar impact across the world and in all sectors of business, with the exception of the transportation industry. There are countries and routes where vessels are queueing for months to ship products and at the same time there are countries where freight has dropped significantly.
The reason is purely pragmatic - exporters prioritise products for countries where the economy has recovered faster and consumption is higher. Georgia's largest logistics center, Poti Port, did not returned to pre-pandemic rates in 2021, and expectations for 2022 are similar. However, the unequal redistribution created today offers new opportunities for the company's management and offers the motivation to carry out their ambitious plan - to make Poti a hub for freight across the Caucasus and Central Asia.
"Up to 2021, our efforts were focused on serving the domestic markets of the Caucasus and Central Asia. These countries do not have access to the high seas and therefore face logistical challenges in terms of efficient transportation of goods both in the region and abroad,” said IaIn Rawlinson, Commercial Director at APM Terminals Poti. "We see a unique opportunity to make Poti a hub for smooth and efficient transportation of both container and non-container cargo to the region".
Poti Port is the largest logistics center in Georgia and accounts for a significant part of the country's export / import and international transit. The port is operated by APM Terminals, a member of the Danish company Maersk Group, headquartered in The Hague, the Netherlands.
In 2020, the company's total revenue fell by 13% to $ 194.5 million as a result of economic challenges and shipments. However, despite the decrease in revenue, the APM Terminals Poti’s new profit increased by 4.5 million GEL compared to 2019, reaching 121 million.
Poti Seaport has a total of 15 berths, of which 8 berths have been transferred to other companies on long-term leases.
How did the pandemic affect APM Terminals Poti?
The pandemic had a different impact on our industry in different parts of the world. As global cargo volumes recovered through the course of 2020, a split market started to emerge, with markets like North America starting to increase their consumer spending above pre-pandemic levels, whereas other parts of the world did not. As a result, the focus of the container shipping industry moved towards supporting these booming markets, resulting in a lack of capacity to serve the Georgina market and our hinterland markets of the Caucasus and Central Asia. As a result, container volumes in 2020 and 2021 have been significantly below pre-pandemic levels, with businesses having to seek alternative ways of bringing goods to market.
Throughout 2021, the situation with regard to container traffic has remained similarly disrupted by the pandemic, which has meant that volumes of container shipments and vessel calls have remained below pre-pandemic levels.
What are your expectations for 2022?
While believe that the specific situation for the regional container shipping industry will eventually settle into a new normality, the pandemic continues to disrupt global supply chains, resulting in ongoing challenges with container and vessel availability into smaller markets. As a result, the forecast is that the world will continue to experience a similar two-tier market for containers through much of 2022.
To address this, over the course of 2021, we have been developing our capabilities to serve the hinterland markets of the Caucasus and Central Asia. These countries are land-locked, and therefore face interesting logistical challenges to the efficient transport of goods in and out of the region. We see a unique opportunity to make Poti a hub for the smooth and efficient transport of both containerized cargo, as well as conventional bulk cargo, for the region. This ties in with our expansion of APM Terminals Poti, through which we are developing a new deep-water facility at the port, which will give Georgia its first true deepwater port, and therefore improve the efficiency of Poti as a regional hub. Once the expansion is operational, we will be able to handle the largest vessels entering the Black Sea.
How can Georgia's potential as a logistics hub be fully exploited and what role can APM Terminals Poti play in this?
As I said, we are investing in Poti to develop deep water capabilities at the port. With the first phase, due for completion in early 2024, APM Terminals Poti will be have the ability to handle vessels as deep as 14.5 metres draft, which enables us to handle any vessel which can enter the Black Sea. This will enable business to bring direct services using larger vessels to Poti, which will reduce shipping costs, and therefore further improve Georgia’s competitiveness as a hub for cargo for the whole of the Caucasus and Central Asia. Ultimately, with our deep water development, Poti has the potential to become the primary gateway for the entire region.
What has led to the colossal increase in worldwide freight rates?
Global business operates on the principle of supply and demand. For many years, shipping suffered from a huge oversupply, and as a result the industry struggled to make profits, and we saw the failure of a large number of shipping lines which had been in business for many years. As the global situation has changed, changes to the supply/demand balance has resulted in some realignment within the industry. But naturally, as the balance shifts, so too will companies’ fortunes.
It has just been announced that APM Terminals will pay $ 1,000 to all its employees worldwide. In general, what are the corporate social responsibility activities of the company both internally and externally?
This is the second year APM Terminals will reward its employees with a $1,000 bonus. This initiative is in recognition of the disruptions and uncertainties employees have resolved, their resilience, and the relentless team effort to go above and beyond to solve our customers’ challenges, while continuing to lead with care.
As a large organization Poti Sea Port has historically been actively involved in supporting the local community’s short and long-term needs. In recent years, the company has established a more structured and organized strategy, tailoring it to the United Nations’ Sustainable Development Goals (SDGs). APM Terminals Poti’s CSR policy ensures the company remains a trusted, relevant and responsible partner for the local community and stakeholders. Based on the SDGs we have identified the priority areas to be Zero Hunger, Quality Education, Gender Equality and Climate Action. We are not limiting ourselves to this, but continue other initiatives which are relevant to the local community:
We run a company-funded project, APMTerminals4Poti, for supporting Small Business Entrepreneurship in Poti. Within the project about 80 entrepreneurs receive direct skill-set development and co-funding to support the start-up or improvements to their businesses in Poti.
Since 2017, we have run a Talent Acquisition & Development Program, known as InPort. The programme entails up to 10 young people annually undertaking a four-month theoretical and practical course covering activities within the port. At the end of the programme, selected candidates may be offered permanent positions in our company.
We are cooperating with Poti Maritime Training Center and have purchased a Crane Simulator LAB that includes Crane and Lifting Equipment which simulates the operation of 6 types of port and construction equipment to support classroom-based training.
We have invested in revolving spreaders, which are state-of-the-art operational technology for handling bulk cargo and which result in a significant improvement in the environmental impact of operations, in addition to increasing efficiency and decreasing the risk to human health and safety.
Finally, we are proud to have been recognized three times in the past four years for our CSR activities.
I would also like to highlight that in addition to our external CSR programme, our corporate responsibility starts with our approach towards our employees: we have equal employment opportunities free of discrimination, we ensure that our benefits & rewards principles are competitive within the market, and applicable to all staff, with equal treatment regardless of gender, and we are committed to ensuring all our staff are given appropriate personal and professional development opportunities.
Being a responsible corporate citizen is a big responsibility which each of us takes as soon as we join APM Terminals. At APM Terminals Poti, we are well aware that we should create an environment which benefits both the company and the community. This win-win approach is the key to success when it comes to responsible business conduct.