Logistics, Chains and Shackles!

Logistics, Chains and Shackles! What a ride logistics and transport take for the moment. Did it look that the pandemic was at it’s return and light at the tunnel, a war was initiated by Russia against neighboring democratic country, Ukraine. This has driven at first the prices of fuel and oil which are at high levels we havenot seen for a long time.

Logistically, at present, it means that no cargo can reach Ukraine by sea, Russian Black Sea ports are no go areas for most of the ships operated and due to the sanctions, any cargo to or from Russia is a possible issue with the authorities in western countries. The chain of logistics or perhaps better, commodities, is under severe pressure since every shackle is presently under pressure. Fuel prices are volatile, Ukraine & Russia, both exporters of various foodstuff commodities, are hardly exporting which will give upward pressure in demand towards the other producing countries. This will create new logistic challenges, pressure on vessels and ports etc. Few will realize that for instance Romania has export which has to pass the Danube running through Ukraine which is now war risk area. Stock of products from e.g. steelfactories in Ukraine, before they were blown to pieces, is placed in Ukrainian ports. These plants, if still working, need raw materials, like ore and coal to function. The export cargoes now will be moved to Romanian ports. Railway is not an easy option since the different gauges in Ukraine and Romania, so extra handling thus costs. The solution would be to use barges via Izmail and Reni ports which still are functioning. However ports are getting congested with containers which are inbound to Ukraine and now stocked in Romanian ports also. So the disruption in the logistical chain is caused by the individual shackles.

These individual shackles, the production, the export logistics, port logistics will all be hampered by the war, non production, imports which are piling up and leading to cost increase. With the latest sanctions including the ban on Russian flagged ships the pressure on vessels, shortsea traffic, will also increase. Although perhaps export from the Black Sea will decrease, other areas will see an increase. For instance if substitute cargos in bulk are coming in and have to be transhipped from large importing vessels into smaller coastal vessels. In other words, each player in the logistic chain as well as the producers/shippers and receivers have to take some time to look at the situation with a helicopter view and to appreciate the situation and developments. This is perhaps something you will have little time for since everybody is busy. For that, we at SeaWorks offer solutions. We can assist you as consultants and see where parties can gain, issue a SWOT analyses so you will be able to consider your logistics and the consequences.

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