We hereby inform you that the actions of officials of the Phytosanitary Service of Ukraine in the Odessa region paralyze the transshipment of grain cargo (90% of the transshipped cargo) in the port of Reni, reports Brave.
The port of Reni's main clients are Moldovan agricultural traders. The lion's share of grain cargo is transshipped directly from railcar to ship, while the remainder is transshipped from railcar to warehouse to ship.
The transshipment process until August 28, 2014, was as follows: Railcars were delivered to the unloading front at the Reni port checkpoint (this procedure took up to 1-2 hours). Customs cleared the arrival of the railcars ("de-credited the railcars"), conducted a preliminary documentary inspection (PDI), and placed the cargo under customs control (this procedure took up to 6 hours).
– The declarant completed a customs declaration for the arrived cargo based on documents that had passed the PDK (this procedure took 2-4 hours).
The freight forwarder, using customs declarations, issued orders to load cargo from railcars onto the vessel (this procedure took 2-3 hours). The maximum delay in unloading railcars from the moment they were presented for unloading was 15 hours. The regulated unloading time for a grain railcar is 60 minutes. The fine for using one railcar beyond the standard was 107,63 Swiss francs or 1600 hryvnias. The capacity of one grain railcar is 65 tons (if the cargo is wheat). Due to the existing bureaucratic machinery, the cost of handling one ton of wheat increased by 24 hryvnias. This resulted in direct financial losses for the port's clients. The Head of the Regional Phytosanitary Service of Ukraine in the Odessa region proposed the following scheme for the transshipment of grain cargo at the port of Reni starting August 28, 2014: - Railcars are delivered to the unloading front at the Reni port checkpoint (this procedure takes up to 1-2 hours). - Customs formalizes the arrival of the railcars ("de-credits the railcars"), BUT DOES NOT CONDUCT preliminary documentary control and places the cargo under customs control. Without marks on the completion of the PDC, the declarant cannot file a customs declaration for TRANSIT cargo (this procedure takes up to 6 hours). - The Phytosanitary Service requires the forwarder to submit an application for phytosanitary control of the cargo FOR EACH RAILROAD SEPARATELY (this requirement is not regulated by current Ukrainian legislation) (this procedure takes up to 2 hours). - Upon receipt of the application, the phytosanitary inspector organizes sampling of the cargo from the railcars. Then it issues invoices to the Applicant-Forwarder.
Since the wagons arrive in the evening, the forwarder can only pay these invoices the following day. After the invoices are paid, the phytosanitary inspector will arrange for the samples to be delivered to a laboratory located 60 (sixty) km from the port of Reni in Izmail. The laboratory is open from 09:00 AM to 17:00 PM. On weekends, the forwarder must arrange a laboratory technician's visit in advance with Mr. V.V. Degulyar, head of the Odessa Regional Phytosanitary Laboratory. The approximate time to receive sample results is 24 (twenty-four) hours. The approximate time to place the cargo under phytosanitary control is an additional 2 hours, which is necessary to stamp the shipping documents with the "Import Permitted" stamp. – The declarant has the right to submit a declaration for transit cargo after receiving the cargo documents from the phytosanitary inspector with the stamp “Import permitted” (this procedure takes 2-4 hours).
– Based on customs declarations, the freight forwarder issues orders for loading cargo from rail cars onto a vessel (this procedure takes 2-3 hours). The maximum delay in unloading rail cars from the moment they are presented for unloading is 43 hours. The regulated unloading time for a grain car is 60 minutes. The fine for using one car beyond the standard is 301,35 Swiss francs or 4481 UAH. The capacity of one grain car is 65 tons (if the cargo is wheat). The cost of this phytosanitary service innovation is: 0,85 UAH per ton of cargo accepted for transshipment. 90 UAH is the cost of laboratory analysis of one sample of cargo per car, or 1,38 UAH per ton of accepted cargo. Thanks to the new "bureaucratic machine," the cost of transshipping one ton of wheat increased from 24 UAH to 71 UAH. This means that direct financial losses for port clients have increased by almost 300% (three hundred). Transit cargo processing time has increased from 15 hours to 42 hours. Furthermore, the above-mentioned losses are calculated based on only one freight rate of 15 freight cars. A full ship load requires 60-90 freight cars, which translates to 3-6 freight rates. This translates to 5,25 to 10,5 days. The average demurrage time for a 5000 DWT vessel is USD 3500 per day. Demurrage costs will range from $18,375 to $36,750. Reni port clients have already stated that they are unwilling to accept these additional costs. The aforementioned sabotage by the phytosanitary and customs services could lead to a complete halt in grain transshipment at the port of Reni, and the diversion of transit cargo from Moldovan grain traders to the neighboring port of Galati, Romania. We would like to note that 95% of the revenue of the port of Reni and the businesses operating within its territory comes from Moldovan grain traders or their counterparties. A reduction in foreign exchange earnings will lead to further financial losses and bankruptcy for all businesses.
The bankruptcy of the Reni port and its enterprises will lead to increased social tension in the region, which could lead to uncontrolled public protests and lynchings in an already depressed region.
P.S. While our country is on the brink of default, we are under threat of invasion by once-friendly Russia, and the country's budget is catastrophically short of funds for the army, internal enemies—"hydras" in the form of unprincipled officials, the remnants of the "Yanukovych family"—continue to invent bureaucratic red tape.
The purpose of these actions is clear: to get the entrepreneur to come and pay a BRIBE to expedite the cargo clearance process. We ask all relevant authorities: the Ministry of Justice, the Prosecutor's Office, the Security Service of Ukraine, the Organized Crime Control Department, and the Ministry of Internal Affairs to investigate the legality of the actions of the Phytosanitary Service of Ukraine in the Odesa Region and the Customs Service of Ukraine. Article 2: The "Evening Odesa" recently reported in its March 1st issue, in an article titled "A Fictitious Strike," about the difficult life of a once-thriving maritime enterprise, which, while a major contributor to the budget of ancient Ackerman, is now barely making ends meet. As a reminder, the publication was prompted by an information attack on the port. Some media outlets presented the enterprise's return to full-time operations on March 1st as a "victory" for the workforce, which allegedly threatened the administration with a strike. To understand that this was not the case, it's enough to cite one fact. Belgorod-Dnestrovsk port workers learned of their intention to strike from... the internet. Information immediately surfaced explaining which influential figures in the region would benefit from the unstable situation at the plant.
In particular, the all-Ukrainian internet portal "Bagnet" named among them the head of the Belgorod-Dnistrovskyi branch of the State Enterprise "Administration of Sea Ports of Ukraine" and Party of Regions member Oleksiy Khaimenov, and Igor Usov, leader of the city branch of the All-Ukrainian Union "Svoboda," who allegedly oversees the veterinary and quarantine service and fumigation. They claim that the aforementioned "comrades" need to rock the boat in order to establish full-scale economic control over the enterprise. The newspaper attempted to understand the situation. It turned out that the main problem of the Belgorod-Dnistrovskyi Sea Trade Port is pest control. Both literally and figuratively. First, the former. For fifteen years now, the port's main cargo has been timber. Belgorod-Dnistrovskyi is the gateway for timber exports to Turkey. Timber cargo accounts for up to 90 percent of its total cargo turnover. The port, of course, would be happy to handle grain, bulk, and general cargo. But, alas, the depths don't allow it. And timber is a delicate cargo; all sorts of bugs and pests can infest it. Therefore, phytosanitary control must be strict.
To the credit of the Belgorod-Dnestrovsky port, it should be noted that in all the time it has been working with timber exports, there has never been a single case where an importing country has returned a cargo because it was allegedly damaged. Nevertheless, there were those who wanted to “improve” the phytosanitary control procedure. In April 2011, the State Phytosanitary Inspectorate in the Odessa region informed the port that a new “technological scheme for phytosanitary control of timber cargo” was being introduced. The innovation, which fundamentally contradicted the order of the Ministry of Agrarian Policy of Ukraine dated August 23, 2005, No. 414, consisted in the fact that if previously a quarantine inspection of timber with the collection of samples for phytosanitary examination was carried out before loading the timber on board and subsequent customs clearance, now all of the above procedures had to be carried out directly on the vessel. After loading is complete, the plant quarantine inspector collects samples and transports them to the appropriate laboratory in Odessa, where they are analyzed within 72 hours. The then head of the Belgorod-Dnestrovsky sea trade port, O., repeatedly reported in his letters what this “innovation” led to. Manitenko. In particular, in one of them he noted that the technological scheme imposed on the enterprise “…leads to significant downtime of vehicles awaiting phytosanitary inspection, unproductive downtime of teams of dockers and handling equipment, and to the destabilization of the port’s operations, which is a serious threat to the loss of the main export cargo flow.” Port specialists calculated the losses from the innovation. Thus, if previously 40-50 vessels with timber cargo were serviced at the berths during the month, with an average loading time of up to two days, now, with the introduction of a new technological scheme for phytosanitary control, no more than 25 vessels are served. The port's revenue from handling one ship averages $40. Thus, the port’s losses reach up to 1 million dollars monthly! Budgets at all levels are losing tax revenues, port workers' salaries are falling, and the enterprise is idle. There are other losses too. For example, one day of non-productive downtime of a vessel costs the cargo owner approximately 2,5 thousand dollars. One hour of unproductive "rest" for a team of port workers and handling equipment costs the port 1111 hryvnia. In addition, vessels cannot remain at the working berth after their loading is completed. However, we need to wait for the results of the laboratory analysis. Therefore, ships have to be re-moored. This “pleasure” is not cheap, from one and a half to two and a half thousand dollars. If, however, the phytosanitary inspection reveals that the cargo on board, including any already loaded cargo, requires fumigation, then it will have to be unloaded onto a barge—disinfection is not permitted on board—where all pests will be destroyed, and then reloaded. Everyone will suffer from such unproductive “balancing act”: the port, the ship owner and the cargo owner. It is difficult to calculate what unexpected expenses they will have. The question arises: why was it necessary to “improve” the phytosanitary control procedure if it only causes problems and financial losses? Given that the old mechanism never failed? The Chairman of the State Enterprise “Administration of Sea Ports of Ukraine” Yuriy Vaskov tried to ask these questions to the Chairman of the State Veterinary and Phytosanitary Service of Ukraine V. Gorzheev and the head of the State Phytosanitary Inspection in the Odessa region D. Kuzishen in one of his letters. It notes that “non-productive downtime of vessels, labor, and technical resources negatively impacts the port’s business reputation and worsens the financial and economic performance of state-owned enterprises operating in the Belgorod-Dnestrovsky Commercial Sea Port.” However, the opinion of the Chairman of the State Enterprise “Administration of Sea Ports of Ukraine” was not heard. So what happens? The new phytosanitary control procedure, despite derogatory criticism, has been in effect for three years. Если в Николаевском или Херсонском портах данное нововведение не оказало существенного воздействия на их хозяйственную деятельность, так как лесом они практически не занимаются, то для Белгород-Днестровского оно стало просто убийственным.
However, it is not cancelled. As they say, if the stars are lit, it means someone needs it? It remains to be seen who exactly? Who is interested in the existence of an order that, on the one hand, creates ideal conditions for corruption, and on the other, is an excellent tool for putting pressure on ship and cargo owners? Indeed, try to express dissatisfaction with any procedures at the port, and immediately the receipt of test results will be delayed for up to three days, and pests will be “found” even in uninfected forest. As a result, the Belgorod-Dnestrovsky seaport has reached a point where it must choose: live or die? Since 2011, when new phytosanitary control regulations came into force, cargo turnover has been rapidly declining. In the past, compared to 2012, it was 28 percent. Compared to 2010 – by 36 percent. Transshipment at the Bugaz port facility has decreased by 57 percent. One can, of course, talk about a general trend of declining cargo turnover in Ukrainian sea trade ports, in particular in Belgorod-Dnistrovsky. However, if these objective negative circumstances are further assisted by ineffective management decisions regarding the organization of phytosanitary control, which give rise to open talk of corruption, then is it any wonder that a once successful state-owned enterprise has reached, as they say, its limits? Well, no work means no salary. From September last year to March this year, port workers worked part-time due to a lack of funds for wages, and even those were paid late. After all, the port is a city-forming enterprise, and a large part of the city’s population depends on its successful economic activity. According to people with inside knowledge of the enterprise's situation (materials on this topic were published by the aforementioned internet resource "Bagnet", as well as the websites "Dumskaya.net", "Inforechye", "Alfa News"), the port's problems began after the appointment of Alexey Khaimenov as head of the Belgorod-Dnistrovsky branch of the State Enterprise "Administration of Sea Ports of Ukraine". Before this position, he had never had anything to do with the maritime industry. It is clear that he does not have the appropriate specialized education either. Apparently, his appointment, like all personnel decisions made by the previous government, was dictated by the need to appoint a reliable person to the position who would “look after” the enterprise. Unexpectedly quickly, the head of the branch of the State Enterprise "AMPU", despite his affiliation with an antagonist political force, found common ground with Svoboda member Igor Usov, who is popularly credited with overseeing the work of the veterinary quarantine service. Instead of addressing the port's real problems, such as organizing dredging operations (a direct responsibility of the branch of the Ukrainian Sea Ports Authority), Mr. Khaimenov, together with his business partner, began to squeeze cargo owners. In particular, onerous contracts for fictitious services were invented. Exorbitant fees have led to an increase in the complex rate for cargo handling. As a result, cargo owners began looking for a replacement for the Belgorod-Dnestrovsky port. The tandem of the Party of Regions representative and the Svoboda association continued its activities during the Maidan, even during the most dramatic moments of the civil confrontation. This is truly nothing personal, just business. According to dockworkers who agreed to be interviewed on condition of anonymity, Usov incited them to extremist actions against the port's management. He called for disobedience and threatened physical violence. The main goal is to plunge the enterprise into a state of instability, so that it would be easier to manage later. In short, as employees of the Belgorod-Dnestrovsky Commercial Seaport say, unless drastic measures are taken now—replacing the unprofessional management of the enterprise and clearing the territory of the "privileged" firms that dictate their terms to everyone—there will be no further progress. Ackerman will be left without a sea gate. А о славном прошлом Белгород-Днестровского морского торгового порта будем только вспоминать…
Oleg Suslov
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