Logistics in the wake of changes: The impact of a military strike on the transportation market
August 8, 2023
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Taking place at night, the military strike of the Russian Federation on the port infrastructure of the Danube, in particular the port of Izmail, which took place on August 2, caused a resonance in the logistics world. This unexpected and destabilizing incident led to serious consequences for which many ship owners and logistics companies were forced to respond immediately. After such an important event on sea routes, the freight market for the transportation of agricultural products is undergoing rapid changes. Existing agreements become controversial, and future agreements become the object of inflated expectations. As of August 3, freight rates for the transportation of 6,000 tons of corn and wheat by coasters from the ports of Reni and Ismail have increased sharply, creating a test for the logistics industry. Thus, destinations in the eastern Mediterranean reached 50-52 USD/t, on the eastern coast of Greece – 46-47 USD/t, Crete – 49-51 USD/t, Israel – 55-57 USD/t. Freight to the east coast of Italy increased by USD 3/t to USD 53-55/t, while freight to Spain increased by USD 2/t to USD 58-60/t. This difficult period also affected the market for the transportation of rapeseed and barley by barge to the ports of Amsterdam, Rotterdam, Antwerp and Gentaviris. The cost of freight to these destinations increased by 3-5 USD/t, reaching 85-88 USD/t. Significant growth has also affected freight rates for sunflower meal by barge and granular product, creating new challenges for logistics solutions. Next to the economic aspects, after the Russian strike it became known that some ship owners refused to enter the Danube ports due to threats and uncertainty. This shows the need for all logistics market players to be very careful and flexible, ready for changes and solving various difficulties.