Noose tightens on Russian economy as import options dwindle

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There is no global trade embargo on Russia. No penalties prohibiting shipments of most consumer goods or manufacturing components. But you don’t need to target the cargo itself to throw a wrench into a supply chain.

Russia’s import options are shrinking as it becomes more difficult for ships, trucks, planes and railroads to transport Russian goods – and shippers and carriers ‘self-sanctioning’ “although they are legally able to serve Russia.

Most Russian-flagged cargo ships were banned from calling at EU ports from last Saturday. Russian and Belarusian trucks were banned from driving on EU roads from Sunday.

New restrictions on ships and trucks follow earlier bans on Russian planes in EU and US airspace, and US and European sanctions against Russian railways, whose network connects China to the EU.

All in all, it is still far from a complete blockade from Russia. But it’s enough to cause serious problems for Russian logistics.

Russian Central Bank President Elvira Nabiullina admitted on Monday that the sanctions had “mainly affected the financial market, but now they will begin to affect real sectors of the economy more and more. The main issue will be… import restrictions, foreign trade logistics and, in the future, possible export restrictions.

“This problem is not yet so strongly felt because there are still reserves in the economy, but we see that the sanctions are getting tougher almost every day. We see restrictions on the transport of Russian goods and the work of Russian transporters The period when the economy can live on the reserves is over.

Shipping data confirms a significant decline in container services to Russia. It also reveals how well certain services are continuing, including ongoing port calls by the world’s two main container lines, MSC and Maersk.

Port calls to western Russia halved

Russia’s main container ports are Saint Petersburg and Kaliningrad on the Baltic Sea, Novorossiysk on the Black Sea, and Vladivostok on the Pacific side.

According to data from VesselsValue, there were an average of 22.5 container calls per week to western Russian ports in the six weeks following the invasion, a drop of 53% from an average of 48. per week during the six weeks preceding the invasion. The fall in the average number of calls in Russia from the Pacific was only 11%, to 26.8 per week compared to 30.2 over the same periods.

Chart by US shipper based on data from VesselsValue

Peter Williams, trade flow analyst at VesselsValue, told American Shipper: “There has been a decline in the number of ships visiting Russian Black Sea and Baltic ports since the invasion of Ukraine, while the number in the Russian Pacific remains fairly constant.

Windward’s data shows the same trend: a drop in container ship calls after the invasion to Russia, but not a complete halt. Windward posted an average of 11.4 calls per day in January compared to 7.9 in March, a drop of 31%. “It’s clear from the data that the number of stopovers has decreased since the invasion, but hasn’t completely stopped,” Windward said.

FreightWaves’ SONAR platform presents a proprietary index of bookings measured by day of departure and indexed to January 2019. Russia-bound freight bookings (in this particular dataset) are down 80% from a peaked from 220 index points on February 28 after the invasion to just 45 points on Tuesday, and from 91% to just 19 points for bookings departing the following Tuesday.

Russian reservations
Index: 100 = January 2019. Chart: FreightWaves SONAR (To learn more about FreightWaves SONAR, click here.)

MSC and Maersk continue their calls

American Shipper used MarineTraffic ship tracking data to see which vessels are still calling at Russian Black Sea and Baltic ports.

Of the container ships that have recently left a port in western Russia or will arrive there on their next port of call, about half were MSC and Maersk vessels. The rest were operated by smaller regional players, not major global carriers, and had far smaller per-vessel capacities than the MSC and Maersk ships still serving St. Petersburg and Novorossiysk.

The ship’s positioning date showed calls from 10 MSC ships: the 2,604 foot twenty foot equivalent unit MSC Lara; 1,733 TEU MSC Lea; 2,680 TEU MSC Americas; 2,604 TEU MSC Eleonora; 4,112 TEU MSC Anisha R.; 2,668 TEU MSC Jordan; 1,678 TEU MSC Vanquish II; 2,169 TEU MSC Masha 3; 2,250 TEU MSC Andriana III; and 2,024 TEU MSC Rhiannon.

The data showed five Maersk ships still calling in western Russia, half as many as MSC: the 3,596 TEU Vuoksi Maersk; 3,600 TEU Vilnia Maersk; Safmarine Nuba of 2,478 TEUs; 3,600 TEU Venta Maersk; and 3,600 TEU Vistula Maersk.

Maps: Maritime traffic. Positions as of Tuesday of MSC and Maersk container ships calling at Russian ports.

Reservation suspensions still in place

MSC suspended all bookings to and from Russia on March 1, except for food, medicine, medical equipment and humanitarian aid.

Asked about MSC’s continued stopovers by so many ships seven weeks later, MSC spokesman Giles Broom told American Shipper that the suspension of bookings remains in place, but “we also continue to monitor and clean up a small pipeline of freight shipments that were arranged before our March 1 policy takes effect.

He stressed that “MSC condemns the ongoing violence in Ukraine” and supports Ukrainian refugees as well as Ukrainian office staff and sailors, as well as Russian sailors.

Asked about Maersk’s ongoing calls in Russia, a company spokesperson referred American Shipper to comments by Maersk CEO Soren Skou at the March 15 annual general meeting.

Skou said Maersk stopped all new bookings to and from Russia except for food and medicine on Feb. 28. It even halted food and medicine reservations in St. Petersburg and Kaliningrad on March 3. It announced that it would sell all of its Russian assets, including its terminal business on March 11.

“In practice, however, it is not so easy to stop doing business in a country like Russia. We have around 50,000 of our containers in Russia today,” Skou said in mid-March. “A lot of them are empty. They are our property. We need them and we wouldn’t be happy to leave them in Russia. Therefore, we still have ships going to Russian ports.

“Before the war broke out, we had over 50,000 import reservations in our network en route to Russia. We have tried to deliver these containers as quickly as possible. The cargo in the containers does not belong to us, but to our customers. Many of these customers are not Russian. Many containers contained perishable goods. There were also practical problems in storing containers in the continent’s already crowded ports. So we anticipate that it will take us until the end of April to remove all containers from the system one way or another.

In other words, Maersk’s layovers are only part of a slowdown. Soon there will be no more. And Russia will have even fewer import options.

Click for more articles by Greg Miller

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