News / Sanctions start to wreak havoc on rates, dwell times and fuel prices

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In further evidence of the Russian-Ukraine war’s massive disruption to trade, data from FourKites shows transhipment dwell times have increased 43% across Europe since 17 February.

Disruption has been mounting since troops began to mass on the Ukranian border last month, with export dwell times up by 25% in European ports, and 43% for transhipment cargo specifically.

Delays were particularly pronounced in consumer packaged goods and food & beverages, where dwell times for FourKites customers in Europe increased by 55%.

In the same timeframe, box shipments into Russia have fallen by 17% and it is likely more precipitous decreases are to come as the effect of widespread sanctions and commercial decisions by carriers take hold.

In addition, “…many shippers have pulled out after facing dangerous conditions at ports, including incidences of friendly fire,” Fourkites said.

“At this stage it is not possible to separate the effect of the war itself from the effect of sanctions,” a FourKites spokesperson told The Loadstar. “Historically, sanctions have taken time to bite, so we wouldn’t necessarily expect them to show up clearly in our data yet.

“However, this time we have not only official sanctions but also public sentiment to take into account. The depth of feeling of people all around the world is likely to have as big an impact on the supply chain as sanctions. Dockers in the UK and Canada, for example, were refusing to handle Russian ships for several days before their governments put official bans in place.”

CMA CGM, MSC and Maersk have all opted, or been compelled, to halt all activity with Russia and, according to data from Windward, these companies make up 28% of container vessel operations there. Of the 403 container vessels that operated in Russia over the past year, 149 have been owned by these three giants, Windward’s data says, and responsible for 1,244 Russian port calls. Windward estimates that they would have been responsible for delivering 101,000 containers this month.

 By far the most pronounced effect on freight rates will likely be in air cargo, but an anticipated rise in ocean freight rates is also taking on insane proportions, with FourKites predicting between a 20- and 40- fold increase in some cases.

“Where ocean shipments from Shanghai to Rotterdam were less than $2,000 two years ago, some freight forwarders showed rates at $54,000 for a single container immediately after the invasion,” FourKites said.

 Bunker prices, meanwhile, have also gone haywire. According to data from Ship&Bunker, between 17 February and yesterday, the global average price of VLSFO has gone from an already-elevated $769.50 per tonne to $885.50. (The cost was $525.50 this time last year.)

 “We note… that the EU, UK and US are focusing on targeted financial sanctions,” said the FourKites spokesperson. “These elements are likely to have little effect on global supply chains. There are significant trade sanctions but, long-term, we expect these to have less impact on supply than many are predicting.

“In the short term, Russian companies and consumers are rushing to get a hold of goods affected by sanctions, which there will be serious shortages.  After about three weeks, we expect an impact on supply chains from the number of companies withdrawing from Russia.

“However, in the long term, they will add to capacity on other routes, mitigating the effect of container and driver shortages.”