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General Director of P&O Maritime Ukraine speaks about changes on the tug services market

Mykhailo Sokolov, General Director of P&O Maritime Ukraine
18 June 2019

General Director of P&O Maritime Ukraine Myklailo Sokolov speaks about changes on the market of tug services of Ukraine and future prospects

“Up until the recent past those were exclusively state companies operating on the market of tug services. However, the market wasn’t “closed” for the private operators: they could provide tug services, while the national legislation envisaged such a possibility even before the Law of Ukraine “On Sea Ports” came into force in 2013.

Also, in the water area of the Odesa port in 2016 tug services were provided only by the state port fleet owned by the SE “Odesa Sea Port”. But two years later, private legal entities, even those having in possession no own fleet, received 70% of applications for tug services in ports, and following the results of five months of the current year – up to 90%.

A similar situation can be observed in the “Chornomorsk” sea port, where yet in 2015 the share of the state-owned port fleet constituted 90%, while in 2018 private companies gained up to 70% of the market.

Quite remarkable is also the fact that the number of vessels available with the state operators remains the same, as it was 5-7 years ago, but they provide a way lower scope of services. One of the reasons is that they can’t stand competition with the private fleet.

Therefore, the situation on the market of tug services is similar to the situation on the market of stevedoring services. As it is known, more than 75% of cargo in the Ukrainian ports are processed exactly by the private stevedores. The share of private sector in transloading activities is increasing from year to year, while the share of state stevedores within the management structure of the Ministry of Infrastructure is gradually decreasing. And the reason is obvious. Private operators actively invest in construction and growth of port capacity, modern port infrastructure and service, while state-owned companies badly lack motivation and means for technological re-equipping and modernization of dilapidated port infrastructure, the level of tear and wear thereof reaches the catastrophic 80%.

However, the market of tug services in Ukraine is at the moment rather heterogeneous and is at the stage of formation. On the one hand, we observe a rapid growth of a share of private operators and entry to the Ukrainian market of a world leader for tug services P&O Maritime. This, without any doubt, has a positive impact on development of competition and increase of the services quality.  It is this very P&O Maritime who brought powerful tugs into Ukraine which are capable of working with the biggest large-tonnage vessel, and it strictly monitors both technical condition of ships, as well as keeping the standards of service  and quality of the mother company.

On the other hand, the market is full of suspicious private companies possessing no own fleet operating tugs based on suspicious schemes. Those can hardly be called full-fledged tug operators. And this is a way too early to speak about formation of a civilized market of tug services in Ukraine.

However, in the course of time the sphere of tug services will overcome its growth “illnesses” which are inevitable for all developing markets.

Future belongs to those tug services operators having impeccable reputation providing world standard services.

Of course, it is much easier for the private operators to cope with this challenge, but this mission is quite possible for the state ones, too, in the event that in the nearest future a number of decisions on the level of the industry-related ministry, related to the state-owned fleet, are passed. Each year the state-owned fleet gets older, there is a catastrophic lack of funds to maintain a due technical condition of the fleet. And in the crews work high-class specialists who under no condition should remain without a job.

So what can the state do? It is necessary yet today to analyse in detail the condition of the state-owned port fleet. I think that a decision on sale of state-owned tugs or a long-term bareboat should have been made a long time ago, necessarily providing in contracts for the guaranteed preservation of jobs for crews. 

But, I am afraid, that the moment is already lost: the market is oversaturated with tugs , the crews lose jobs. And all that is happening due to the lack of will of the state-owned companies’ managers holding an inventory of the tugs, and of the respective ministry, to make the market more transparent. They have decided that schemes are a way more profitable. Exactly, they are for them, but not for the industry, common employees of port fleets and their families”. 

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