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

Bulk Carrier Trends

COSCO Delivers Bulker

The Board of Directors of COSCO Corporation (Singapore) Limited announced that COSCO (Dalian) Shipyard Co., Ltd a subsidiary of the Company's 51% owned COSCO Shipyard Group Co.

NewLead Fixes Newcomer, "Newlead Castellano"

NewLead Holdings Ltd. announced today that it has entered into a time charter contract for the recently delivered Handysize vessel, the "Newlead Castellano".

Great Lakes Coal up More Than 12% in September

Lake Carriers’ Association reported that coal shipments on the Great Lakes totaled 3 million tons in September, an increase of more than 12 percent compared to a year ago.

Container Ships

Decade Old India Shipping Summit Makes History

In ten years, India Shipping Summit held consistently in Mumbai, has sailed on a robust growth course despite the worldwide witnessing recessionary waves buffeting any endeavors to grow and gain.

Liebherr to Deliver RTGs to Mayotte and Manila

Liebherr confirms orders for variable speed RTGs and electric RTGs. DPWorld Asian Terminals Inc. has placed an order with Liebherr Container Cranes for a further 5 RTGs at its Manila facility.

UASC Targets Expansion to Beat Container Market Blues

UASC expects to reach volume of 2.35 mln TEU in 2014 Global carriers still struggling with weak conditions United Arab Shipping Company (UASC) is on a major expansion drive,

News

Decade Old India Shipping Summit Makes History

In ten years, India Shipping Summit held consistently in Mumbai, has sailed on a robust growth course despite the worldwide witnessing recessionary waves buffeting any endeavors to grow and gain.

USCG to Ensure Safety During World Series

The Coast Guard and local agencies are working to ensure the safety of boaters and baseball fans during World Series games at AT&T Park this weekend. The

Areva-Siemens Raises Claim Over Finnish Reactor Delays

The French-German consortium Areva-Siemens , the supplier of Finland's much-delayed Olkiluoto-3 nuclear reactor, has increased its claim against Finnish utility Teollisuuden Voima (TVO),

Vessels

COSCO Delivers Bulker

The Board of Directors of COSCO Corporation (Singapore) Limited announced that COSCO (Dalian) Shipyard Co., Ltd a subsidiary of the Company's 51% owned COSCO Shipyard Group Co.

Navy to Commission Submarine North Dakota

The Navy will commission its newest attack submarine North Dakota, during a ceremony Saturday, Oct. 25, 2014, at Submarine Base New London in Groton, Connecticut.

WFW Advises ING Bank on $340m Loan Facility for Euronav

Watson, Farley & Williams (WFW) has advised ING Bank N.V. (ING) as sole bookrunner and facility agent for a syndicate of banks on a $340 million loan facility made available to Euronav NV.

Government Update

Navy to Commission Submarine North Dakota

The Navy will commission its newest attack submarine North Dakota, during a ceremony Saturday, Oct. 25, 2014, at Submarine Base New London in Groton, Connecticut.

MARAD Seeks Comments on Proposed Policy for Deepwater Export Applications

The Maritime Administration (MARAD) is seeking comments on the agency’s proposed policy to accept, evaluate and process license applications for the construction

Oil Drillers Group to Fight U.S. Export Ban

More than a dozen U.S. oil producers have joined to lobby the federal government to reverse the 40-year-old ban on U.S. crude exports, a move that supporters hope

Logistics

UN: Ship Inspections near Somalia for Arms, Charcoal

The United Nations Security Council authorized the inspection of boats suspected of carrying illegal shipments of charcoal or weapons to and from Somalia on Friday,

Singapore Bunker Meter Mandate Targets 'Frothy Fuel'

Singapore, the world's biggest bunkering port, plans to end the so-called "cappucino effect" in ship fuelling through new meters designed to stop suppliers from short-changing customers,

Antwerp Port Achieves Highest Throughput

The port of Antwerp handled a freight volume of 148,344,168 tonnes during the first nine months of this year. That’s 3.7% more than the same period last year. Both

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Navigation Pipelines Pod Propulsion Port Authority Ship Electronics Ship Repair Sonar
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: 0.1926 sec (5 req/sec)