An integrated business conception of St. Petersburg River Port
«In April 2003 river ports Leningrad and St. Petersburg were bought by the Group LSR – the biggest construction holding of the North East region of the Russian Federation, which specializes in production of building materials and construction. While Leningrad River Port activities include sea sand recovery, which completely corresponds to the main trend of the Group business, St. Petersburg river port does the transshipment of the import – export cargo. Thus St. Petersburg river port is not a profile business for the Group – comments Vladimir Ladigin, director general of the JSC St. Petersburg River Port, – nevertheless I managed to prove to the owners that the port is a complicated, but interesting and attractive business, and above all – profitable! And it is not reasonable to give it away.»
Business built on the sands
«The aim of the purchase of the river ports is simple: to provide a control on recovery and refining of the sea sands, – proceeds Ladigin. – Recovery of the sea sands is a business of the Leningrad river port, since it possesses the necessary capacities, resources and facilities. At the same time St. Petersburg River port owns the biggest warehouse of the sea sands on the scale of the city. Nevertheless, the purchase was made in respect to have a complete business – including all counterparts, and we have to treat it as a complete port business development case.» LSR Group follows a concept of a direct specialization: the Group does not imply non-profile business, meanwhile the board decided not to cut off all, at a first sight, untied units of the Group. During first steps there were various ideas and possibilities. Undoubtedly, a new approach demanded new potentials. Vladimir Ladigin perceived himself a pioneer: he had to reorganize the managing team, since part of the employees did not keep up with the new system and demands.
Four steps towards new thinking
After the team was changed the company could proceed with development of the new business strategy. The development plan was split into four stages: – techical provisions — staff training – changing of the technological plans and cargo handling techniques – changingof the sales system. Each stage required certain preparation works resulted in optimization of the accounting system implementing a completely computerized accounting system 1C. The system implies management account and amendment of the distribution of assets in the port activities. The system was worked out according based on the LSR Group policy, though it is unique in a sense that all nuances connected to the port activities are taken into consideration. While other companies managed to introduce this kind of system in about half a year, it took almost a year for St.Petersburg River Port. It will be completely operating by the beginning of the navigation season in 2004.
Port starts with the equipment
Fulfillment of the first stage – technical provision – began right after the arrival of the present director. This stage was the most time- and effort-demanding one since the earlier steps taken in this respect were rather chaotic. Reinvesting into the port's equipment comprised about 10–12 million rubles and insured the profit of the port. As a result last year, despite the standstill in the port for four months due to the weather conditions, the income grew by 36%. At the same time changes in contractual liabilities and flexible client-oriented services insured fast reduction of the debit duties.
Work: a moral and a material factor
«We optimized activities of the port, – says the managing director, – and this alone led to increase of the port turnover by 12%. Plans for the year 2004 are even more ambitious, and to realize them we have to find more of internal reserves and build up a highly professional team. What we have to do is to change the system.» Thus, main task of the stage two was the introduction of tutorship – experienced dockers are to train the newcomers who find their way in the port business to acquire a profession and earn good money. Work in the port became also more attractive due to rise of the wages and implementation of a beneficial social policy for the dockers.
Professionalism determines level of technology
The third stage was started in February this year – which is the technological changes. The succession of the port development stages was not accidental. «First of all, the port facilities had to become operational, – says Ladigin. – Consequently, the operational equipment brought in the training priorities: we saw clearly what had to be taught and in what way. Moreover, in the course of training one can outline top priorities within technologies and innovations.»
Sales: major and concluding process
«As soon as the situation with the facilities, personnel and technologies was clear, we found a possibility to change the sales system. It must be the topical stage, – according to Ladigin, – if we cannot sell, we cannot earn money.» Operations optimization led to reducing the cargo handling times in the port. A flexible tariff policy is a factor that made the port attractive for cargo owners and freight forwarders – now the port provides for opportunity to save money. Moreover, all the above mentioned factors provided for a stable work and income for the port. The port handles all types of cargo and now it has plans to attract cargoes, which are either delivered in small amounts or are not delivered at all. Today the port has an opportunity to have an individual approach to any cargo or contract. «We have regular customers by now, such as the container sevice operating between St. Petersburg and Rotterdam, but they all once were new clients, – says Vladimir Ladigin. – We do hope that the range of service provides by the port could be of a considerable interest for the companies to develop a good cooperatation with us in the futute.»
The Leningrad port brought up this problem in mass media, during the meeting of all the parties interested in the development of the ice- breaking navigation including the CEO's of the Port Marine Administration (MAP) and the city authorities. MAP once issued very severe restrictions regarding the ice-breaking navigation, however after the brought up discussion it came up with a more flexible approach, meeting interests of the entrepreneurs, including those in the St. Petersburg River Port. «Ever since we did not encount a single case of impossibility of being provided by an ice-breaker or prohibition to lead a vessel into the port – shares Ladigin. – More so, MAP ordered additional ice-breakers from Murmansk. We have nothing to complain about here. What support can be more important than one in deeds, not in promises? And thanks to this support we earn more money and pay more in taxes. It is a win-win situation to all: ourselves, our employees and the city.»
Customs: a cooperation partner
JSC St. Petersburg River Port has established a close and stable cooperation with the Baltic customs – it lasts for years by now, and the company assumes it to be its know-how. The port welcomes the innovations and changes taking place in the Baltic customs, like the introduction of an overall control at the borders in order to reduce smuggling. Within the Baltic customs structure an analytical center was introduced allowing to track containers in the on-line regime. It helps the customs to handle cargo faster and control it at a time. A port company, like nobody else, is interested in reduction of the illegal operations like smuggling. Besides, the JSC St. Petersburg River Port was one of the first to install the video recording cameras on its territory. «It was a rather complicated and expensive investment, however justified, – says the port director. – The next step will be to connect them to the network providing communications between the cargo areas of the company.»
Port – it is cheap, easy and profitable
Why are marine transport and port servise thereof more advantageous than the road haulage? First of all, it is cheaper, secondly – one do not have to queue on the borders, since vessels cross the border on the Vasiljeotrovsk cargo area, which is owned by the JSC St. Petersburg River Port. This is much faster than passing the customs control area in Torfjanovka or Brusnichniy. It took the port nearly half a year to create an efficient system providing for a fast and quality processing of documentation. In view of constantly changing and demanding customs regulations, it will be day clear that a cooperation with us is cheaper and easier.
Cargo areas for the port
Currently JSC St. Petersburg River Port owns three cargo areas: Vasiljeostrovskoy – the strategic one, Nevsky (Oktjabrskaya quay in St. Petersburg) and Ust-Lugy. There are two big projects of the LSR Group being currently carried on in the Nevsky cargo area. The plans for the development of Ust-Luga cargo area imply investments into berth wall construction and purchase of a new portal crane. It will ensure a high productivity of the port, even more because the depth of the Ust-Luga berth can accomodate sea-going vessels. Vasiljevskiy and Nevsky cargo areas complement each other, since Nevsky cargo area has a railway connection, which will be developed to increase the handling capacity. The port has investment plans and granted loans which means it is ready to start with the construction works – the first construction stage is planned to be finished by the mid-April 2004, and the second stage is due by June 2004. Vasiljevsk island does not have railway connection, but it does not seem to be a problem, since containers and other types of cargo are delivered to the port by its trucks. «Today more than before we hear about plans to terminate the heavy road traffic on the Vasiljevskiy island, – concludes Vladimir Ladigin, – We however have a word of the city administration confirming that the restrictions will affect neither the activities of the port, nor its cargo flows. Restrictions will be mostly applied to the road hauliers, entering the Vasiljevsk island in order to process documents at the St. Petersburg customs. We want to assure our cargo owners and consignees that there will be no problem with entering our cargo area in the future.»