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Freight turnover. Logistics in the era of energy reforms
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The global economic crisis that emerged as a consequence of leading powers' geopolitical response to the hostilities in Ukraine, has become a critical turning point in many of the most important processes in world economy. Destabilization affected almost all sectors of the global industry, including countries indirectly involved in the current events.
The current review will show what the freight market response was, and who hit the jackpot in the present-day emergency situation.
The current review will show what the freight market response was, and who hit the jackpot in the present-day emergency situation.
Gas pipe situation and all it implies.
The blue fuel supplied to Europe by Gazprom used to account for about 28-32% of the total natural gas market capacity and was estimated at 400 billion cubic meters per day. According to the latest data from news sources, the volume supplied via Nord Stream 1 shrank from 109 million to 43 million cub.m. per day. After several temporary shutdowns and reductions of pumped gas volume, Gazprom announced the complete pipeline shutdown due to the lack of maintenance of its equipment by Siemens.
Fertilizers.
The rising cost of gas and logistics, as well as several consumption constraints have led to a decline in European industries' nitrogen fertilizer capacity. In a short period of time, major producers in Germany, Norway, Britain, Lithuania, Poland and Hungary have announced the suspension of their operations and reduction of output.
The rising cost of gas and logistics, as well as several consumption constraints have led to a decline in European industries' nitrogen fertilizer capacity. In a short period of time, major producers in Germany, Norway, Britain, Lithuania, Poland and Hungary have announced the suspension of their operations and reduction of output.
AG CARGOBROKER experts say that the demand for urea, ammonium nitrate, ammonium sulphate and multi-component mineral fertilizers (NPK) transportation by sea has increased.
Who will take over?
Russia has always been one of the leading suppliers of agricultural fertilizers to the global markets. Even now, in the current world crisis, the US and EU do not dare to impose restrictions on this segment of Russian exports. Russian suppliers keep exporting fertilizers to European and American markets due to low production costs.
Russia has always been one of the leading suppliers of agricultural fertilizers to the global markets. Even now, in the current world crisis, the US and EU do not dare to impose restrictions on this segment of Russian exports. Russian suppliers keep exporting fertilizers to European and American markets due to low production costs.
Fuel.
Rising gas prices affected most European residents: many households prefer to shift to wood and coal as fuel alternative.
Pellets and other types of fuel wood are particularly liked by residents of the European Union for their environmental friendliness. However, this type of biofuel also fell under import embargo. Russian exporters used to send about 90% of all their produce to the European market.
Economic priorities to reduce the use of natural gas led to the relaunch of coal-fired power plants shut down before. Due to the introduction of another round of sanctions against Russia, the main flow of coal to European countries nowadays comes from South Africa, Australia and Colombia. Under the pretext of fuel and energy crisis, the price of Australian power plant coal has also increased and exceeds $400 a ton now.
Russian producers are trading coal twice as cheap: Handy and Supramax type vessels are now heading for Turkey, India and China. Exports are on the rise: loading capacity no longer matches the increased solid fuel tonnage.
Steel.
Steel industry is also an energy-intensive one. Unaffordable prices and cuts in Russian gas supplies hit the European metals market like a boomerang: it turned out to be economically inefficient for European countries to produce steel and nonferrous metals, with many companies becoming unprofitable.
Rising gas prices affected most European residents: many households prefer to shift to wood and coal as fuel alternative.
Pellets and other types of fuel wood are particularly liked by residents of the European Union for their environmental friendliness. However, this type of biofuel also fell under import embargo. Russian exporters used to send about 90% of all their produce to the European market.
Economic priorities to reduce the use of natural gas led to the relaunch of coal-fired power plants shut down before. Due to the introduction of another round of sanctions against Russia, the main flow of coal to European countries nowadays comes from South Africa, Australia and Colombia. Under the pretext of fuel and energy crisis, the price of Australian power plant coal has also increased and exceeds $400 a ton now.
Russian producers are trading coal twice as cheap: Handy and Supramax type vessels are now heading for Turkey, India and China. Exports are on the rise: loading capacity no longer matches the increased solid fuel tonnage.
Steel.
Steel industry is also an energy-intensive one. Unaffordable prices and cuts in Russian gas supplies hit the European metals market like a boomerang: it turned out to be economically inefficient for European countries to produce steel and nonferrous metals, with many companies becoming unprofitable.
Will the European Union start looking for an alternative to the heavy reliance on the Russian gas?
Norway is the second largest supplier of the blue fuel to Europe and intends to take the leading positions in this sector. To implement such ambitious plans, the country intends to increase natural gas production and expand its extraction infrastructure. However, the Norwegian government indicates that the high costs of such an extensive industrial development will mean that the current market price of natural gas will hold, and there will be no talk of discounts.
Will the market submit to sanctions?
The list of sanctions against Russian producers and politicians becomes longer with each new round. But no matter what alternative ways the European Union invents to replace the resulting deficit, - the cost of goods imported from elsewhere hits the customers' pockets harder and harder.
The list of sanctions against Russian producers and politicians becomes longer with each new round. But no matter what alternative ways the European Union invents to replace the resulting deficit, - the cost of goods imported from elsewhere hits the customers' pockets harder and harder.
AG CARGOBROKER managers also note an increase in requests for transportation of steel products from Azov-Black Sea ports.
A window to Europe.
The Republic of Moldova has not joined the anti-Russian sanctions and was given the status of a "friendly country" by the Russian Federation. Russian-Moldovan relations are those of business partners, seeing each other as the primary beneficiaries.
The freight market sees mass shipments of Russian coal to the port of Giurgiulesti.
Moldovan authorities decided to make the most of the current economic situation: a special government decree issued in these emergency conditions says that priority port services shall be provided to coal carrying vessels bound for Moldova.
In order to prepare for the heating season in this challenging energy market situation, a permit for the import of wood waste and solid biofuel has been announced for the duration of the state of emergency.
The Republic of Moldova has not joined the anti-Russian sanctions and was given the status of a "friendly country" by the Russian Federation. Russian-Moldovan relations are those of business partners, seeing each other as the primary beneficiaries.
The freight market sees mass shipments of Russian coal to the port of Giurgiulesti.
Moldovan authorities decided to make the most of the current economic situation: a special government decree issued in these emergency conditions says that priority port services shall be provided to coal carrying vessels bound for Moldova.
In order to prepare for the heating season in this challenging energy market situation, a permit for the import of wood waste and solid biofuel has been announced for the duration of the state of emergency.
Summarize.
The imposed sanctions have directly and indirectly affected the export of products from Russia.
In addition to difficulties in finding new logistical solutions, exporters face freight settlements problems: major Russian banks fell under the embargo.
The use of dollar and euro as a payment currency often results in payments being withheld by banking systems without any explanations. All participants in the logistics chain, including transport and cargo, are subject to counterparty checks based on sanctions lists.
We also note that marine insurance companies located in EU countries refuse to insure Russian cargoes and vessels bound to ports outside Russia.
The imposed sanctions have directly and indirectly affected the export of products from Russia.
In addition to difficulties in finding new logistical solutions, exporters face freight settlements problems: major Russian banks fell under the embargo.
The use of dollar and euro as a payment currency often results in payments being withheld by banking systems without any explanations. All participants in the logistics chain, including transport and cargo, are subject to counterparty checks based on sanctions lists.
We also note that marine insurance companies located in EU countries refuse to insure Russian cargoes and vessels bound to ports outside Russia.
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