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Shippers warned to be wary of sanctions

Container trade with Russia has become much more complicated since the start of the Ukraine crisis

Many carriers are no longer taking bookings for Russia. But shippers using the ones that remain must take precautions

SHIPPERS seeking to move cargoes to and from Russia on the carriers that are still calling there must be extremely cautious to avoid any sanctions imposed over the conflict in Ukraine.

“Following what is happening on the ground in Ukraine right now is a moving target,” said Xeneta chief analyst Peter Sand. “But there are risks shippers need to be aware off. Firstly, steer clear of sanctions. Secondly, if you are in doubt, get in touch with your insurer, agent, freight forwarder or carrier.

“For the time being the main thing to be aware of is that if you are in doubt, do not try your luck. You do not want to be caught in breach of sanctions as that could be ruinous for your business.”

Communications with carriers were critical, as it was possible that a cargo booked in an alliance could end up with a carrier that was no longer taking cargoes to Russia.

“If you go with a carrier such as HMM or Cosco you can still call at Russian ports but be aware there are elevated risks, and there are elevated prices,” he said. “To call at Russian Black Sea ports may involve going through high-risk areas as set by the Joint War Committee, which means much higher costs of shipping.”

To a certain extent, shippers would be able to go on with business as usual, unless they are shippers with cargo that was en route for either Novorossiysk or heading toward St. Petersburg.

“Those main ports of entry into Russia are definitely seeing huge impacts from the sanctions that are biting the industry,” said Mr Sand.

But while the impact on container shipping was unlikely to be severe, it was an unwelcome addition to other challenges faced by the sector.

“Global logistics just got a little bit more difficult to handle than the critical situation already suggests. After battling the pandemic, Ever Given and the equipment shortage, it has now got harder.”

In terms of logistics, avoiding and omitting port calls would disrupt some of the schedules.

“Ships will need to find other ports to discharge the boxes that were supposed to end up in the Black Sea,” he said. “In the Baltic these are likely to end up in Hamburg, making it more difficult to the port to handle the flow of containers. Hamburg has already been struggling with congestion.”

Spot rates to the Black Sea fell in February as shippers grew wary of developments in Ukraine but have shot up since as the capacity of shipping entering the region collapsed.

“We see a much tighter market for ships that are calling at Novorossiysk. But the interest in signing long-term contracts for this region has evaporated since the new year.”

In the Baltic, feeder services had witnessed a huge drop in spot freight rates because of demand for goods on the trade collapsing.

“Russian containerised volumes amount to only around 2.5% of global business so this is not the world falling apart from a global shipping perspective,” Mr Sand said “But it will impact Russian consumers and industries.”

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