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House Passes Bill Barring Russian Oil Imports, Coca-Cola Suspends Operations in Russia, Air Freight Rates and Fuel Surcharges Rise

By March 10, 2022 No Comments

Ocean  

Zim introduces first-ever SE Asia-USEC express service. Zim Integrated Shipping is establishing the world’s first accelerated maritime service between Southeast Asia and the U.S. East Coast, with Baltimore serving as the initial U.S. call amid congestion at other key domestic ports. The new Zim Ecommerce Baltimore Express (ZXB), which will include a full port rotation of Yantian, Cai Mep, Baltimore, New York–New Jersey, Boston, and back to Yantian, will begin later this month. ZXB is a trans-Atlantic flight that will pass through the Suez Canal. The ZXB will be the sole direct flight from Vietnam to Baltimore. As part of its slot exchange arrangement with the 2M Alliance, Zim operates additional service from China, although Baltimore is the second port of call after New York.

Hapag-Lloyd introduces premium two-port China-Hamburg service. Next month, Hapag-Lloyd will launch the first ocean express service on the Asia-Europe trade, a weekly fast-boat loop connecting Dachan Bay in Shenzhen and Hamburg in Germany. The CGX service is intended to reduce the carrier’s reliance on congested North European hubs. From early April, Hapag-Lloyd will provide a 27-day transit that it believes will be viable with eight ships of 5,000 TEU and priority access to the two ports.

Customs

House passes bill barring Russian oil imports by overwhelming margin, moving legislation to Senate. The House overwhelmingly approved legislation Wednesday night to prohibit Russian oil imports into the U.S., putting into law the restrictions imposed by President Joe Biden in response to the worsening conflict in Ukraine. Going beyond President Biden’s import ban on Russian oil, the bill currently moving through Congress would also encourage a review of Russia’s standing in the World Trade Organization and signal U.S. support for sanctions against Russian officials for human rights violations, as the U.S. works to economically isolate the government. 

Ports

Baltimore’s port announces expansion. The Port of Baltimore announced on March 7 that the Israeli-based ZIM Shipping Line would begin calling at its Seagirt Marine Terminal this summer, growing container business at the site. The call will start with biweekly visits and then progress to weekly stops later in the year.

Air

Surcharges rise in response to ongoing war in Ukraine. Surcharges are being increased as the supply chain disruption caused by the crisis in Ukraine continues. FedEx Express will raise peak surcharges on FedEx Express parcel and freight shipments and TNT shipments between Asia Pacific (APAC) and countries in APAC, Europe, Latin America and the Caribbean (LAC), the Middle East, the Indian subcontinent, and Africa (MEISA) beginning Mar. 7. The increases apply to some shipments traveling between Europe and countries in all regions, as well as some shipments traveling between India and countries in APAC, Europe, and MEISA. On Feb. 1, UPS raised the peak/demand fees applicable to shipments from key Asia Pacific origins (excluding China, Hong Kong SAR, or Macau SAR) to 19 European nations. Scan Global Logistics (SGL), which has recently suspended reservations to/from Russia and Belarus Mar. 4-18, also stated in a release that “Cargolux has introduced a war fee of USD 0.20/kg from cargo to and from Asia.” Additionally, As oil prices climb, “fuel surcharge increases are beginning to be announced by various airlines,” according to SGL.

Nippon Cargo Airlines maintains suspension of European flights. Nippon Cargo Airlines (NCA) has extended the suspension of its Asia-Europe flights for a few more days while it searches for alternative routes that do not pass through Russian airspace. As a result of “the current situation in Russia and Ukraine,” the Narita-based cargo operator stated its European flights will be suspended until Mar. 13. The initial flight suspension at NCA began on March 4 and lasted until March 9. Flights between Narita and Milan MXP and Schiphol are affected by the extended suspension.

Rail

CP-KCS operate first cooperative Mexico-Chicago train. Canadian Pacific Railway has completed its first intermodal rail service from Mexico’s Pacific Coast port of Lázaro Cárdenas to Chicago, showcasing what it hopes will become a regular single-line service and an alternative to congested Southern California.

Trucking

Diesel soars to an all-time high of 74.5¢ in one week, biggest increase in history. President Joe Biden declared on March 8 that the U.S. will prohibit the purchase of Russian oil in retaliation to Russian President Vladimir Putin’s decision to invade neighboring Ukraine, resulting in substantial civilian fatalities. According to the Energy Information Administration (EIA), the price of diesel, trucking’s main fuel, jumped an astounding 74.5 cents last week to a record $4.849 per gallon. The previous high for diesel was $4.764 a gallon in July 2008.

Other

Supply chain bottlenecks disrupting seasonal shipping norms. It’s almost spring, but many stores are still waiting for delivery of shorts, sandals, and other warm-weather apparel, indicating that the supply-chain issues that have plagued the industry for the previous two years haven’t been resolved.

Congress finally passes Bill to shore up postal service. On March 8, Congress passed legislation to strengthen the U.S. Postal Service (USPS) and assure six-day-a-week mail service, forwarding the bill to President Joe Biden to sign into law. The long-awaited postal reform has been years in the works, and it comes amid widespread complaints about mail delivery delays. During the COVID-19 crisis, many Americans became reliant on USPS, but authorities have consistently warned that without congressional action, it will run out of funds by 2024.

Surge in Covid impacting Shanghai. Because of the spread of individual Covid-19 infections in Shanghai, the megacity launched a widespread Covid-fighting effort on Tuesday. Large-scale screening, residential block lockdowns, school lockdowns, and quarantine measures are being carried out as reported by Navegate’s Managing Director, Asia Pacific, Yujie Jay Tang. Click here to view some images of the large campaign fighting Covid infection in Shanghai.

Recent developments amid Russia-Ukraine crisis:

Amazon suspended retail product shipments and access to Prime Video in Russia. Amazon.com Inc. has suspended shipments of retail goods and access to Prime Video to customers in Russia, as part of a larger drive by the business and other digital heavyweights to cut ties with the nation. Customers in Russia will no longer be able to order products or access Amazon’s Prime Video streaming services as a result of Amazon’s move.

Drivers joining in the fight for Ukraine exacerbate Europe’s trucker shortage. Ukrainian truck drivers working in Western Europe are quitting their jobs to return home and fight the Russian army, exacerbating a labor shortage that will make ground shipping more challenging. At the same time, truck drivers from other countries are still stranded in Ukraine following failed attempts to cross the border. There is anecdotal evidence that some drivers are returning to Ukraine to join the resistance movement, but actual numbers are difficult to quantify because the situation is so fluid.

Airfreight rates rise as capacity is constrained by airspace restrictions. According to the first data since Russia’s invasion of Ukraine and the resulting restrictions on Russian and foreign carriers, air freight capacity has clearly fallen. Capacity between North-East Asia and Europe has fallen by up to 22% in the recent week compared to the previous week. According to Clive Data Services, load factors have climbed 1.5% to 84%, while rates have risen as predicted. Rates to Europe from Japan, where carriers are removing capacity from Europe, have climbed almost 15% to $9.40, while rates ex-Korea have risen 13% to $8.60. Even Europe-Asia Pacific, the unfilled backhaul, has witnessed a 5% increase in prices, with rates from Europe to Japan increasing by 11% and rates from Europe to east China increasing by 6%.

Coca-Cola suspends operations in Russia, McDonald’s closes locations, Pepsico halts sales. On Tuesday, Coca-Cola Co. said that it would cease operations in Russia, while McDonald’s Corp. announced that it would temporarily close its locations. PepsiCo Inc., too, said that it would suspend sales of its major soda brands, including Pepsi-Cola and 7UP, but would continue to sell potato chips and basic necessities such as milk, cheese, and infant formula.

U.S. Forecasters lowered predictions for global grain exports in light of the Russia-Ukraine crisis. Because of the war in Ukraine, the U.S. Department of Agriculture (USDA) has reduced its projections for global grain imports as well as exports from the Black Sea area. According to the USDA’s most recent monthly world supply and demand report, world wheat exports are predicted to fall 3.6 million metric tons from last month’s projection of 206.7 million tons in 2022, due to a disruption in vessel transit out of Black Sea ports. Imports from major buyers such as Egypt and Turkey are expected to fall for both corn and wheat globally, according to the USDA, owing largely to disruptions in Russian and Ukrainian supply.

Shell issues apology declares it won’t buy Russian Oil. Shell said on March 8 that it will no longer purchase Russian oil after Ukrainian politicians slammed the energy company for purchasing a supply of crude from Moscow and asked that other multinational businesses cut links with Russia due to war. The action came just hours before the U.S. and British governments banned Russian oil imports. The European Union has been hesitant because of its reliance on Russian oil and natural gas, as well as concerns about the impact on the global energy supply. The upheaval has shaken global markets, bringing oil prices to a 14-year high of $139 a barrel overnight.

Nickel prices nearly doubled to record highs. Nickel prices virtually doubled to record highs on Tuesday, as the war in Ukraine increased fears of supply interruptions for the metal, which is a vital component of electric-vehicle batteries. Following the extraordinary price action in which three-month LME nickel contracts temporarily surpassed $100,000 per ton for the first time during Asian trading hours, the London Metal Exchange (LME) suspended nickel trading.

Unilever, world’s largest consumer goods company, suspended all imports and exports into and out of Russia. Unilever PLC has announced that it will suspend all advertising and media spending in Russia, as well as all product imports and exports into and out of the country. Unilever has an ice cream plant in Omsk, Russia, as well as offices in four additional locations. Unilever has stated that it will continue to deliver essential food and hygiene goods that it manufactures in Russia. Separately, Kraft Heinz Co. imposed a suspension on all new investments in Russia, as well as all exports and imports of Kraft Heinz goods into and out of the country.