Russian Food Import Ban: Trucks Lose, Shipping Wins

Posted by Michelle Howard
Tuesday, August 19, 2014
Photo: Hapag-Lloyd

Team Niinivirta, a Finnish family-run transportation firm, turned 60 this year, but its third-generation managers now don't know if the business will see Christmas, because of Russia's new ban on European food imports.


The firm based in Kotka, on the Gulf of Finland opposite Saint Petersburg, was using its 12 refrigerated trucks to ship 80 loads a month of Finnish milk products to Russia.

But the ban on imports of dairy products, fruit, vegetables, meat, and fish from Europe has brought work for Niinivirta and similar specialist local truckers to a near standstill.

Meanwhile bigger more diverse logistics companies are expected to be able to adapt as substitute imports start to come from further afield, from countries unaffected by the ban.

"When I now look out the window, (eight of) the trucks stand idle in the parking lot," said Veikko Niinivirta, whose grandparents got their first truck in 1954 to transport timber. "I've been calling around, trying to find other uses for them.

"If I don't find anything we'll go bankrupt," he said. "Biting nails, we could survive two to three months."

For the European transport and logistics sector, which generates 900 billion euros ($1,200 billion) in annual revenue and employs over 7 million people, according to the Alliance for European Logistics, the food import ban hits the business of those companies already grappling with tight margins and overcapacity due to volatile freight costs and ailing European economies.

However, at the same time shipping companies like A.P. Moller-Maersk stand to benefit as Russia looks further afield to places like Brazil to help restock its larder.

EU farm exports to Russia are worth about 11 billion euros a year, roughly 10 percent of all EU agricultural sales.

"We have a big shipping route from Latin America directly into Saint Petersburg in Russia. There will be an upswing in (volumes on) long haul routes," Maersk's chief executive Nils Andersen said on Tuesday.

"When there is less trade between Europe and Russia, more traffic turns up on the Asian side (of Russia), where we also have port activities at Vostochny."

Other companies that operate "reefers" - specialised refrigerated cargo ships that carry perishable goods - include Switzerland's Kuehne & Nagel, Germany's Hapag-Lloyd and Singapore's Neptune Orient Lines.

"That is a specialised market, and the demand/supply balance is probably more tight than in other shipping areas," said Lars Heindorff, an analyst with ABG Sundal Collier, noting that the refrigerated containers are more costly because the long distances and refrigeration require more energy.


Mixed Bag

Unlike local specialists like Team Niinivirta, many other companies in the sector, including Deutsche Post's DHL and France's Norbert Dentressangle, operate a range of businesses from trucking to freight forwarding to logistics, so may be able to make up for any lost trucking business with a boost to shipping or logistics.

"If new logistics solutions need to be found ... the logistics firms will benefit because it is their business to organise that," said Vontobel analyst Michael Foeth.

DHL and Kuehne & Nagel said they were monitoring the situation closely. Norbert Dentressangle and Britain's Stobart Group did not respond to requests for comment.

While Danish freight forwarding company DSV said it does not foresee a direct impact from the Russian ban on its business, it said the transport sector was seeing changes.

"There's a lot of transport equipment which is usually occupied transporting to and from Russia which is currently coming back to the European market," Director of DSV Investor Relations Flemming Ole Nielsen told Reuters.

"We can see an impact in overcapacity or at least more capacity being available," he said.

The manager of another Finnish trucking firm said idle trucks have already pushed down prices.

"Some offers seem very low, so low that I cannot fathom how they could be profitable," the manager said, declining to be identified by name.

The impact of the import ban is also being felt by non-food hauliers travelling to Russia as drivers already nervous about driving there are now expecting more stringent customs checks including roadside stoppages, according to one UK-based transportation company.

"Some drivers are preferring not to work in Russia," said Luke Devlin, director of PDQ Specialist Couriers, which transports urgent goods. Managers are meeting this week, he said, to discuss options such as sending drivers in pairs.

(1 US dollar = 0.7493 euros)

(By Martinne Geller, Sakari Suoninen and Sabina Zawadzki, Additional reporting by Silke Koltrowitz in Zurich, Ole Mikkelsen in Copenhagen, Victoria Bryan in Berlin, Andrew Callus in Paris and Neil Maidment and Tom Bergin in London; Editing by Greg Mahlich)

Maritime Reporter September 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Ports

Partnerships Key to Caribbean Maritime Security

Planning and execution of port and maritime safety and security in Caribbean region is all about partnerships Maritime security and safety experts are meeting in Nassau,

Braemar Hosts Insurance Experts

Braemar (incorporating The Salvage Association) welcomed an invited group of marine insurance professionals onto its specialist port and shipyard familiarization

St. Lawrence Seaway Receives Strike Notice

The St. Lawrence Seaway Management Corporation (SLSMC) was served a 72-hour notice to strike by UNIFOR, a group representing the Seaway’s 460 unionized employees.

News

Two Great Lakes Toxic Hotspots Restored

EPA announces removal of two toxic hotspots on Lake Superior and Lake Michigan from binational list The U.S. Environmental Protection Agency today announced that two U.

Statoil Invests $1.5b in US Offshore Project

Statoil together with co-owners in the Stampede development in the Gulf of Mexicohas sanctioned the Stampede project in the U.S. Gulf of Mexico. Statoil said it will invest $1.

CMA CGM to Retrofit 10 More Bulbous Bows

The CMA CGM Group said it will retrofit 10 of its vessels’ bulbous bows to achieve improved energy efficiency for slow steaming. The modifications are in addition

Vessels

CMA CGM to Retrofit 10 More Bulbous Bows

The CMA CGM Group said it will retrofit 10 of its vessels’ bulbous bows to achieve improved energy efficiency for slow steaming. The modifications are in addition

Maersk Interceptor Named in Norway

  In a ceremony held at GMC Marine Partners yard in Mekjarvik in Norway, Mrs. Anita Utseth, Senior Vice President in Det norske oljeselskab ASA (Det norske)

Eurodam Tops in USPH Inspections

Holland America Line’s ms Eurodam achieved a perfect score of 100 on a recent routine United States Public Health (USPH) inspection conducted by the U.S. Centers for Disease Control and Prevention.

Government Update

Two Great Lakes Toxic Hotspots Restored

EPA announces removal of two toxic hotspots on Lake Superior and Lake Michigan from binational list The U.S. Environmental Protection Agency today announced that two U.

First Libra Offshore Oil Well Confirms Discovery

Libra consortium reports that drilling the first well in the area extension of Libra, the 3-BRSA-1255-RJS (3-RJS-731), confirmed the discovery of good quality

Monitoring U.S. Troops Returning from Ebola Mission

Secretary Hagel has signed an order that validated a recommendation from the Joint Chiefs of Staff to place all U.S. military service members returning from

Intermodal

EU to Invest in Port of Dublin Development

The EU's TEN-T Program  will co-fund with almost €2.5 million studies on the capacity development in the Port of Dublin to improve the freight traffic connection

Kalmar Bags 9 RTGs Order from Piraeus Container Terminal

Kalmar, part of Cargotec, has signed a repeat order for nine all-electric rubber-tyred gantry cranes (RTGs) with Piraeus Container Terminal (PCT) S.A. in Greece,

Terex Bags Hans Lehmann Order

Terex Port Solutions (TPS) has received an order from Hans Lehmann KG (Lehmann) for a second diesel-electric G HMK 5506 variant of the Terex® Gottwald Model 5 mobile harbour crane.

Logistics

Kirby Corp. Announces Record 3Q Results

Record 2014 third quarter earnings per share of $1.34 compared with $1.21 in the 2013 third quarter, which included a $0.08 benefit due to the reduction of the United earnout liability.

Vale Financials Disappoint; Iron Ore Prices, Currency Cited

Brazil's Vale posted a surprise loss of $1.44 billion on Thursday, hurt by a fall in the price of iron ore, higher production costs and a weakening Brazilian currency.

US Natgas Exports Would Raise Energy Prices but Boost Economy

Expanded U.S. liquefied natural gas exports would mean a modest price increase for domestic consumers, but the higher costs would be offset by a boost to the economy, the U.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Navigation Pipelines Ship Electronics Ship Repair Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.4059 sec (2 req/sec)