provided for most of the social needs of their em-
The Department of Maritime Transport has re-
ployees and families, such as operating schools
cently established three categories of national sea-
and hospitals, providing housing, and managing
ports. The ten largest and most diversified ports,
farms and factories that produced goods totally
handling significant international trade, comprise
unrelated to water transport. In some cases, these
Category I and are considered to be of the highest
support services consumed a large percentage of
national importance. Forced privatization, or the
the port's operating income. A European Bank re-
turnover of port assets and operations to current
port estimated that social benefits add approxi-
port personnel, is being considered only for Cat-
mately 40% to basic port labor costs; 35 to 40% of
egory I ports. Nine of these ten ports are most
port operating costs went directly toward wages,
likely those presented in a table of principal ports
and another 15% was consumed by social benefits
by Peters (1993), a portion of which is reproduced
(EBRD 1993). For example, only 15% of Ark-
as Table 11. Category II is composed of 21 ports
hangel'sk's 1992 net profit of 160 million rubles
that are considered to be of regional importance,
remained for maintenance and investments after
and their management will be transferred to re-
social expenditures had been deducted (Peters
gional jurisdiction. Most of these are located in the
1993).
Pacific Rim region. Category III is composed of
ten smaller ports that are considered to be of lim-
ited, local importance. Their organization and man-
Recent administrative changes
In January of 1991, Russia's ports were delinked
agement will be placed in local hands. Most of
from the cargo carriers in the advancement of de-
these are found in the White, Azov, and Caspian
centralization and privatization. The new Depart-
Seas. We can only assume that the Arctic ports
ment of Maritime Transport under the Ministry of
(with the exceptions of Murmansk and Arkhan-
Transport retained only a few of the port adminis-
gel'sk) fall mainly into Category III due to their
tration duties previously held by the government.
relatively low cargo turnover.
The overriding assignment of each port's specialty
During the Soviet period, ports and transporta-
role, the control of broad investment decisions to-
tion companies were supposed to cover operating
ward that end, and the establishment of service
costs out of revenues, and government subsidies
charges officially continue to be controlled by the
were to be allocated to fund capital improvements
department. In actual practice, these reduced man-
and investment. Even this arrangement was unre-
dates are probably not being strictly adhered to
alistic, for additional subsidies were required ev-
since the department's manpower and funding
ery year to fund basic operations. This was espe-
shortages make enforcement relatively impossible.
cially true in the Soviet Arctic where transportation
Port managers are frustrated that the fees for ser-
is much more equipment- and labor-intensive.
vice established by the department are not keep-
Now, not only have these subsidies been reduced
ing up with the rapid rise in the actual cost for
and in some cases discontinued, but the govern-
delivering that service. It is more likely that more
ment has also levied new taxes on port operators
lucrative, albeit unofficial, business arrangements
that are creating very difficult business conditions.
are being sought in the effort to generate desper-
None of the ports has sufficient reserves to main-
ately needed working capital.
tain its current infrastructure, let alone invest in
Table 11. Cargo turnover, in millions of tons, and vessel traffic in Russia's largest
ports for 1990 (from Peters 1993).
Total
Liquid
Dry
Bulk
Container
Number of
Port
cargo
cargo
cargo
cargo
cargo
vessel calls
Novorossiysk
43.6
34.5
9.1
6.9
--
1,176
Tuapse
14.6
12.0
2.6
2.2
--
851
Nakhodka
12.0
4.5
7.5
3.6
--
1,901
Vostochny
11.6
--
11.6
8.8
2.0
1,218
St. Petersburg
10.9
--
10.9
7.1
0.9
1,776
Murmansk
7.9
--
7.9
6.9
0.3
578
Kholmsk
6.7
--
6.7
0.6
--
42
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