NIBULON is a vertically integrated Ukrainian company and a leader in the domestic agrarian market. It is one of the largest agricultural commodity producers, investors, and exporters. On December 5, 2021, the company will celebrate its 30th anniversary.Established in 1991, when Ukraine declared independence, NIBULON, together with the country, continues to improve and to become stronger.As a result of NIBULON’s activities and its unique logistics infrastructure (which it built itself), combining river, railway and road transport, our country is renowned as a supplier of high-quality grain and an example of how to successfully develop the most modern inland logistics. We are talking with Serhiy Kalkutin, NIBULON’s Deputy General Director of Logistics, about the operation of the company’s unique logistics chain. – Mr Kalkutin, how do you determine the logistics efficiency and cost, in particular grain logistics? Describe road, railway and river transport logistics both worldwide and in Ukraine? – The operational efficiency of any transport company is determined by the number of ton-kilometers made within a certain period of time as well as by their cost. Historically, grain crops are transported mostly by road and railway. Since NIBULON commenced to implement its large-scale investment program to revive waterways, the company has become a pioneer in Ukraine’s modern history and has started to transport agricultural commodities by rivers efficiently. Concerning the sustainable price formation dictated by Europe, water transport is the cheapest and the most prospective considering its cost-effectiveness, minimal negative impact on the environment and people, low load on the country’s infrastructure, and multiplication impact on the development of other economic sectors. Please note that water transport is cheaper by about 25% than railway transport in Europe and by several times than road transport. The situation is different in Ukraine. Distance is an important factor influencing the price comparability. River transportation is cheaper by about 30% than road one at a haul distance within 200-300 km from the center and the right bank of the river. Railway transportation is now the most economically profitable in comparison with water transportation by about 20%. Comparing the haul length of up to 200 km, road transport will be more competitive against railway. Thus, various types of transport will demonstrate various figures, depending on a haul distance. The geographic location also plays an important role. It is economically reasonable to deliver products from the western part of Ukraine to Odesa ports by railway, products from the right bank of the river – by river and from the central part of country – by road and railway transport. At present the railway transportation costs USD 8-12, and river one costs USD 10-14 from 300 to 500 km. Concerning road transportation, it is about UAH 2 per t/km at a short distance; the bigger the haul distance the lower prices are. While repairing roads, carriers reduce prices for a distance from 400 to 500 km, which represents the same haul distance from which transportation were made by railway.- How does the domestic grain logistics meet the market conditions?- We have been observing a real elevator boom over the past 10 years. The country has now more than 1,300 linear elevators with the total capacity of 55-56 million tons to store grain simultaneously and can make at least 2 grain turnovers at these facilities. The country has considerably increased not only volumes, but also the production effectiveness in the grain storage and transshipment sector. At the same time the logistics infrastructure has been developed chaotically and inconsistently during these years. Railway was the main logistics driver, and at a certain period of time it could not handle the transportation volumes offered by the agricultural sector. Therefore, the volumes of road transportation were increased, thereby causing traffic load on highways and road damage. It did not solve the logistics problem. In fact, nobody realized it in 2010; the agrarians fulfilled their contracts and did not care that it would be a problem to deliver their commodities in time to the port in 5-10 years.- Building a logistics chain is an expensive and slow process which requires time, infrastructure development, specialists, etc. In the global economy conditions, it is probably not just about the development, but also about the improvement of logistics costs, isn’t it?- Since the domestic agro-industrial sector entered the global market, NIBULON’s management has noted the future logistics problems inside the country caused by an increase in grain and oilseeds yields, called on the state bodies and business to prevent an inevitable transport collapse, and to search for an alternative to railway and highways. NIBULON’s founder and General Director, Oleksiy Vadaturskyy, considered the redirection of cargo transportation from road to river as the way out. Therefore, NIBULON started to implement its global strategy to navigate rivers by using safely and environmentally friendly methods. The logistics goals were determined for the global strategic plans in order to perform tasks set. The logistics aims at transporting 75-80% of grain by rivers by using calculated and optimized combinations of three transport modes – road, railway, and river. The company persistently develops in this direction. To achieve tasks set, the company’s own fleet comprises 85 vessels built by Ukrainians from Ukrainian metal – for Ukrainians and the entire world. All the company’s vessels meet the requirements of the international and national standards, conventions, and codes. The company operates 100 modern trucks. It uses Ukrzaliznytsia JSC services to transport cargoes by railway, and NIBULON has its own 108 hopper cars to diversify risks to ensure railcars. The company’s railway fleet also includes a TGM locomotive serving mostly the company’s transshipment terminal in Mykolaiv. Our task is to maximally efficiently combine the capabilities of every transportation mode, to optimize the logistics process, and to reduce the prime cost for transportation as well as loading and unloading operations. – What are the river logistics capacity and efficiency in NIBULON’s structure?- I would like to emphasize that NIBULON’s goal is to increase river transportation. Thus, the company has created a well-developed elevator network consisting of 27 modern high-tech facilities, 13 of them are river transshipment terminals – 10 branches are located along the Dnipro, 2 branches – along the Southern Buh, and also the company's transshipment terminal in Mykolaiv. The grain storage capacity at the river facilities comprises 1.13 million tons. The grain logistics is maximally redirected to water transport, while linear elevators for shipment on railway transport perform an important function during the internavigation period. The company transported 4.14 million tons by river last calendar year. The fleet’s share is more than 80% in the structure of vessels shipped for export. Concerning water transportation, the company operates by three directions, such as transportation by the Dnipro and the Southern Buh, as well as transportation by river from Mykolaiv port to the outer roads. The cargo transportation along the Dnipro has both advantages and restrictions. The logistics price to transport by water from the center of Ukraine is lower; however; the water delivery time exceeds the railway delivery by 3-4 times. It takes 1.5-2 days to deliver by railway, and a round trip of a tug and tow train takes about 8 days. Please note that we are also dependent on lock operation, which condition, to put it mildly, leaves much to be desired. Operation during the navigation period which, for example, was reduced to 5-6 months, is a considerable restriction. Bridge raising is also an obstacle on the Dnipro. The company has already solved this problem by designing tugs with a movable wheelhouse to low and raise it when passing the bridges. The company also conducts pilotage. The vessels’ ice class enables them to operate on the Southern Buh during the entire year, and the cleaning and dredging works from Voznesensk town to the estuary enable NIBULON to transport 800 thousand tons per year. Analyzing the structure of grain delivery to the transshipment terminal in Mykolaiv, more than 3.5 million tons of cargoes (85%) were delivered by trucks till 2009, thereby causing a considerable load on both the road infrastructure and environment. Due to the construction of the company’s river terminals in Kherson and Mykolaiv regions, this figure does not exceed 27% at present. The operation of two terminals along the Southern Buh (Voznesensk and Nova Odesa towns) enables the company to remove the equivalent of 800 thousand tons of cargoes from highways every year. – Let’s discuss road transport which starts a logistics chain. What are its quantity and functions? Why do more agricultural producers prefer your company when it concerns logistics issues?Concerning NIBULON’s truck fleet, it now comprises 100 modern as well as the most efficient and environmentally friendly trucks produced by the world’s leading manufacturers, such as MAN, Mercedes, DAF, Scania, and Volvo. All the trucks meet the EURO-5 standards and are equipped with a GPS control system enabling the company to monitor a delivery route, stops, as well as cargo transportation terms. The company’s specialists always assist a customer to choose optimal routes, delivery location and terms, taking into account individual desires of every customer. NIBULON’s truck tasks are to ensure the harvesting campaign at all 20 production branches on a total area of more than 80 thousand ha in 8 regions across Ukraine, i.e. the transportation of about 300-370 thousand tons of grain grown by NIBULON annually. The company also provides services to its partners ensuring that the grain is delivered from a field to a vessel. The share of truck transportation in the company’s total logistics structure is insignificant, and all the transport operations are conducted within 80-100 km. By working with NIBULON, a customer receives a number of advantages, such as efficiency, profitability, and safety guaranteed. Grain is delivered by trucks from a field to NIBULON’s nearest linear or river elevator; the grain is then delivered by railway or river to the transshipment terminal or by barge and tug convoys to the outer roads. This multimodal transportation – truck-river, enables the company to significantly improve logistics, to reduce costs and save time, as well as to take care about the environment. The company has increased services provided to partners twice over the last few years, and the transportation volumes comprise more than 800 thousand tons per year. – The grain from a field is usually delivered to an elevator. How is it possible to make its operation rhythmical and at the same time regular, so that the elevator is not overloaded with grain during harvesting and does not stop operating because of grain absence later? An elevator is not a warehouse; it must earn money during transshipment.- At present the domestic market of elevator services is very competitive. Many modern elevator facilities have been built over the recent years, and a farmer has an opportunity to choose. Proximity to a field is an elevator’s absolute competitive advantage. When building an elevator network, the company brought its facilities closer to agricultural producers so that a farmer may save time, money and efforts to deliver grain to the elevator. It is important especially during harvesting, when a yield must be harvested quickly and stored appropriately. Thus, the elevator must provide services efficiently and be maximally open and transparent when working with a client. Concerning the well-coordinated work, the logistics department has an online plan to place grain at every transshipment terminal or elevator complex, as well as harvesting volumes in every region. We efficiently work with the branches’ management to analyze the potential grain volumes to be received by a facility within a month, decade in order to ensure rhythmical constant operation. This allows our elevators to ensure 3-4-5 time turnover of cargo flows (from the volumes of simultaneous storage). – Why does the company need its own grain hopper cars and how do they match up to the tasks set?- Since Ukraine has started to increase grain exports, railway transported the lion’s share of cargoes to ports. Since 2012-2013 it has become a bottleneck of the grain logistics, and since 2015, when the production in Ukraine had exceeded 77 million tons of grain and oilseeds, Ukrzaliznytsia could not handle such volumes. Today its transport capacity varies within 35-40 million tons, and it is almost limit. In 2019, it set a record in transporting 39 million tons, which is only about 60% of the total export volumes. The rest of transportation is conducted by road and river transport. The Ukrzaliznytsia transportation price was increased almost twice from 2015 to 2019.During the hopper car shortage, the company’s elevators had to forcedly stand idle during the peak period, because Ukrzaliznytsia did not give hopper cars. Consequently, during 2018-2019 the company made a decision to buy 108 new hopper cars to monthly transport 30-35,000 tons of grain from its linear elevators. We have realized that due to NIBULON’s modern elevators and the transshipment terminal in Mykolaiv ensuring the entire chain of loading-unloading, the company can operate its hopper cars efficiently. This optimization has also reduced our expenses by 30-40% in comparison with hopper cars rented from Ukrzaliznytsia. The hopper cars make 5-6 cargo turnovers from the central Ukraine to Mykolaiv every month.We also provide transportation services to our clients so that they can execute their contracts, as our hopper cars are high-capacity, new, and technological. It is not necessary to transport from our elevators. If an agricultural producer keeps grain at other elevator, we can help him to transport grain to an unloading point, usually to a port. – Vessel loading for export can be considered as an end of a logistics chain. When do you receive information that a certain quality batch must be formed and loaded on a vessel? What are you based on choosing the loading points? – We form our logistics within a month depending on sales volumes. Every contract has its quality requirements; thus, the logistics department, together with quality department, determines facilities, from which we can deliver grain in time. The timeliness of delivery is the main indicator for logistics experts; the cost within certain price formations comes next, and third important component is the necessity to weight grain from a certain facility (to make space for the next procurement so that the elevator can continue to operate). Therefore, the specialists who are responsible for road, railway and river transportation start to form batches– how much, when and where the required grain will be delivered according to the tasks set. During the meeting, the specialists finalize all the data; the contract execution process is started. During the peak period, the company can load 3-4 vessels simultaneously. I want to emphasize that during many years NIBULON has been a constant leader in grain transshipment by a “ship-to-ship” method. These are mostly Panamax vessels with a carrying capacity of 50-75 thousand tons. It became possible due to the well-coordinated operation of the St. Mykolai and the NIBULON MAX 140-m long floating vessels in the outer roads, transshipping grain from NIBULON’s non-self-propelled vessels on a cargo vessel. The daily loading volumes comprise 20-25 thousand tons. Unfortunately, Ukrainian ports are one of the world’s most expensive for a vessel call. This influences negatively on freight cost. Consequently, a ship owner has to pay a large amount of money to call a vessel. Mykolaiv port is the most expensive because a vessel has to pass the Buh-Dnipro-Lyman Canal. Thus, the loading in the outer roads is economically feasible for customers. So, we take this component into account and increase the loading volumes in the outer roads, at the same time having considerable grain volumes at the terminals located along the Dnipro. The company loads 500-650 thousand tons in the outer roads during the peak months and about 150 thousand tons at NIBULON’s transshipment terminal in Mykolaiv (from the railway and non-self-propelled vessels from the Southern Buh). The company establishes the load capacity figures as well as the timetable to call NIBULON’s fleet and cargo vessels, constantly analyzes terms to load vessels, as well as possible risks of demurrage. NIBULON imitates situations so that all vessels can be loaded in time, and the word “demurrage” is unacceptable for us. The uniqueness of NIBULON’s logistics is the possibility to ensure the required amount of cargotoday for tomorrow, because the company has all the required capabilities, namely its own high-capacity river, railway and road transport, a well-developed network of modern elevators and laboratories, the transshipment terminal in Mykolaiv, as well as the operation of the floating vessels in the outer roads. Perfection is in details:the company's unique logistics is a result of the well-coordinated work of all services where the highly qualified specialists work.http://www.agroprofi.com.ua/statti/1953-serhiy-kalkutin-doskonalist-u-detalyakh-unikalna-lohistyka-nibulona-rezultat-zlahodzhenoyi-roboty-vsikh-sluzhb?fbclid=IwAR1NIHpDfRIOy6yNpFSU8MgWz05OeHZsHIp9RPgNzKDHAU5Q3E0fCw7xAoY