Tuesday, March 29, 2022

It May be Time to Feel Sorry for the Professional Freight Associations

Ukraine Situation Will Pose Some Unique Questions
Shipping News Feature

UKRAINE – The realities of war in the country has ensured ripples of confusion and delay along the supply chain and provides a perfect illustration of how the flow of goods across the world actually works, and how to disturb that rhythm.

Whilst the vast majority of container shipping lines immediately suspended services to and from Russia once it was understood there was an armed invasion going on, the conflict caused confusion in such as the OCEAN Alliance, the route sharing agreement between CMA CGM/APL, Evergreen Marine and COSCO Shipping. While the French and Taiwanese partners immediately withdrew services, Chinese state controlled COSCO have seemingly maintained them.

Conversely the Ocean Network Express (ONE) Alliance immediately cancelled services as COSCO seemingly even continued the carriage of fuel using its fleet of ocean tankers despite the embargo on the Russian product. Other carriers are actively viewing the sale of their assets in Russia, Maersk touting its 30%+ stake in Russian port operator Global Ports for example.

All the other major carriers, MSC, CMA CGM, Hapag Lloyd, Maersk etc. stopped provision of transport, despite having their own Russian offices, but of course these moves whilst proudly announced, never tell the full story. Other short sea Baltic specialists, such as Mann Lines, are still maintaining normal services for ports such as Kaliningrad for unsanctioned goods. When something as fast and dramatic as this conflict arises however, there are still goods on the water, the rail tracks and the roads.

Multimodal services, taking one example such as the rail/sea option from OOCL via the Russian transhipment port of Kaliningrad , this needed to be rerouted via Poland in double quick time, and such cases are as nothing to the confusion of box traffic, en route to Russia from across Asia, which suddenly had nowhere to go. This has meant Russian bound cargo washing up at a plethora of ports, particularly Hamburg, Antwerp and of course Rotterdam which can do no more than sit on the goods.

Then of course there is the potential nightmare of non-payment, with the rouble, which a month or more ago would see a thousand buy ten pounds or so fall to almost half that (although it has risen a little lately) many shippers may simply walk away from their goods rather than pay the doubtless mounting level of charges for shipments discharged in the wrong port, incurring storage charges and with the spectre of further on carriage to some unknown geographical point at the relevant time in the future.

Add to this that, even if these goods have found a home and are to be passed on, the level of customs inspection has been ramped up dramatically, raising questions about the status of cargo and slowing the whole process, and all this exacerbated by the well discussed driver shortage, itself made considerably worse in the region as Ukrainian drivers opt to return home in defence of family and country.

In addition to goods which were actually moving there are of course thousands of shipments, originally due for despatch to or indeed from Russia, now tied down by sanctions or simply because services are at a standstill, sitting therefore at shippers or consignees premises with no guarantees of how and when they will be allowed to move, if ever.

At times like these one pities the associations which represent such as freight forwarders, one can only imagine the diverse level of questions they will need to answer from their members as this situation persists, and indeed changes producing new and unique problems unknown to this generation as the picture matures.

Photo: Traffic in Kaliningrad is somewhat down as sanctions bite. Image courtesy of Mann Lines.