European queue

European queue

Dmitry Ermakov, Mikhail Katkov, Alena Kazakova

The largest European transport companies refuse to send cars to Russia. Goods are loaded onto trains, but the capacity of the railway is low. And the planes will not take anything large. It takes months to set up new logistics. Whether consumers will be left without imports was analyzed by RIA Novosti.
European queue
The cost of transporting goods by sea, land and air is increasing every day. Due to the conflict in Ukraine, oil quotes rose to $130 per barrel, which affected the tariffs of all types of transportation, except for rail.
But this is not the main difficulty. Containers destined for Russia accumulate in EU docks. There are at least hundreds of them in the port of Rotterdam, Europe’s largest, shippers say. Goods undergo a lengthy customs check: they should not have “sanctions” – for example, semiconductors or spare parts for aircraft.
Some port operators from the EU refuse to accept ships with any cargo for Russia. Among them are MSC, Maersk, CMA CGM and Hapag-Lloyd, whose combined market share is over 50 percent.
In the Black Sea, about a hundred ships got stuck in Ukrainian ports. Shipowners have to pay an additional premium to insurers – up to five percent of the cost of the ship. In the high-risk zone are the coastal waters of Romania and Georgia. At the same time, the port of Novorossiysk, which fell under EU sanctions, declares that it fulfills all obligations. However, there is mainly grain export, there are few containers.
Auto parts, food and chemical industry products, household appliances, pet food, sporting goods enter Russia in containers. Retailers and caterers are seeing supply disruptions and rising purchase prices.
Consumer goods will be less affected by the maritime crisis as they are transported primarily by land and air. Before the sanctions, online commerce grew rapidly. Every fifth purchase is made on foreign marketplaces. Now large sites like Amazon are closed for Russia. But there are other online stores as well.
So, in 2021, the turnover of the joint venture with the Chinese “Aliexpress Russia” increased by 46 percent and reached 306 billion rubles. Moreover, not all deliveries are from China: the share of local manufacturers has increased to a third. And you can still pay for AliExpress online orders with Visa and Mastercard.
Vladivostok-2022
Meanwhile, not all Asian transport companies are ready to work with Russia under sanctions. Shipments were stopped by Singaporean ONE, Taiwanese Yang Ming. The Indian port of Chennai no longer accepts goods for shipment to Vladivostok. We have to use the North-South corridor through Iran and the Caspian Sea, partly by sea, partly by land. However, there is not enough infrastructure there.
The departure of major market players will inevitably lead to a shortage of not only goods, but also the containers themselves. There are only two container carriers in Russia – Fesco and TransContainer.
According to industry experts, the volume of container traffic from Western Europe and the Atlantic countries to the port of St. Petersburg has decreased by 70 percent. “This is a huge drop. The port of Vladivostok will be able to take on the strength of one-fifth of the reduced cargo traffic. Therefore, most logistics operators will reorient themselves to the railway,” Georgy Vlastopulo, general director of Optimal Logistics, told RIA Novosti.
Nevertheless, several small Chinese companies began to cooperate with the port of Vladivostok. Specialists hope that carriers from China or South Korea will start accepting cargo for Russia in European ports as well.
“Not even hundreds, but tens of thousands of containers really accumulate there. But if in the first half of March we heard uncontested rhetoric, now it has softened,” Vlastopulo points out. (small container ships. — Approx. ed.). And this is understandable: otherwise Europe is threatened with a transport collapse.”
Less air
Air transport, as you know, is expensive. What can be delivered by sea for $195 will cost $1,000 by air. In addition, the carrying capacity is incomparable.
Airplanes usually transport pharmaceutical and medical products, perishable products, flowers, equipment, parts, spare parts, including those from aircraft and ships, jewelry, works of art, weapons, and just private parcels.
The sanctions hit the industry hard. The largest cargo air group, Volga-Dnepr, which includes the charter carrier of the same name, as well as Atran and AirBridgeCargo, has sto-pped flights. The German CargoLogic Germany and the British CargoLogicAir, whose beneficiary is the founder of Volga-Dnepr Alexei Isaikin, are also on the ground.
Volga-Dnepr accounted for 49 percent of air cargo in Russia. The company has five Il-76 and 12 An-124 “Ruslan” at its disposal. Atran has nine Boeing 737s, AirBridgeCargo has 17 Boeing 747s and one Boeing 777. One of the Ruslans is stuck in Canada, and most of the Boeings are leased, that is, they cannot fly abroad: they will confiscate.
Passenger airlines are also engaged in cargo transportation. Over the past year, Aeroflot delivered 187,000 tons of goods in luggage compartments, while Sibir delivered 77.2 tons.
Another problem: more than 70 percent of Russian air cargo is far abroad. The domestic market simply does not need so much. And now there is nothing to occupy the planes.
Route with transfers
Foreign companies continue to fly to Russia. In particular, Turkish Airlines, Emirates and Etihad from the UAE. Nothing prevents them from delivering goods that are not under sanctions.
As for the “sanction”, it can be brought on the messenger, through transshipment points. For example, products from the USA and Great Britain go to Moscow through the Baltic States and Poland, from Australia and Singapore through Dubai.
Vladislav Bekoev, managing director of the forwarding company Netvor Logistic, notes that now only a few foreign companies provide transport services to Russia.
“We are talking about carriers from the UAE, Qatar, Turkey, China. Of course, this is not enough. Everyone is still waiting, they are thinking what to sell and at what rate. On the other hand, the Chinese promise to double the supply of cars and spare parts for them. Perishable products still reach the Far East by air,” the expert says.
By the way, even before the Ukrainian events, analysts predicted a reduction in air cargo turnover due to a decrease in effective demand and a slowdown in world trade amid the pandemic.
In this situation, again, the PRC can earn. Since many airlines are banned from flying over Russia, European carriers are forced to lengthen routes to East Asia. This puts them at a disadvantage compared to Chinese competitors, for whom Russian airspace is open.
Earth instead of water
Overland transportation is also difficult. The line of one and a half thousand trucks on the border of Poland with Belarus stretched for 36 kilometers. Customs clearance is expected for three days. Drivers are depressed, many have run out of water and food.
“There are big problems on the border of Belarus with the Baltic countries. Inspection of goods coming from Europe has been increased. It is much easier in the opposite direction. The throughput from Lithuania is about 57 percent of the norm, Latvia – 58, Poland – 44. This is not even because sanctions, such a picture has been observed for a long time, and there is no clear explanation for this,” Alexander Zhikin, an expert in communications at the transport and logistics company TELS, told RIA Novosti.
So far, cargoes are still coming from the EAEU countries and the CIS as a whole. But European freight forwarders are boycotting shipments through Russia and Belarus. This reduced the number of trains on the Shanghai Express railway from China to Germany by 40 percent.
The sanctions have limited the possibility of using the Russian transport infrastructure (in particular, Russian Railways) for Western companies that produce, say, components in China.
And Chinese logistics operators, on the contrary, stimulate transportation by Russian railways. They even lower rates. Freight traffic from Shanghai to Russia increased by 20 percent.
But the capacity of the railways is limited. Without serious restructuring and additional government funding, the “bottleneck” effect cannot be avoided.
Of the large transport companies, only Maersk has so far announced a complete withdrawal from Russia. The rest just stopped working. This means that the world market hopes for at least some normalization.

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