[090414.EN.SEA] Brace For Big Shipping, Logistics Upheaval With Crimea Crisis: Ti

THE shipping world should brace itself for big changes if relations between Russia return to something akin to a Cold War state, says the UK's Transport Intelligence.

Many of the developments in logistics will come unstuck in the wake of the Russian annexation of the Crimea, says Ti, adding that the changes will have a profound effect on the economies Central and Eastern Europe.

First, the Black Sea and Baltic trades will be hit badly. "The consumer boom that Russia has experienced has overstretched its ports, resulting in the growth of transshipment ports in Turkey and Romania," said Ti.

The Baltic short-sea trade has grown in recent years. Not just ports in northern Germany, Poland and the Baltic States but carriers like DFDS, Unifeeder and Grimaldi do big business in Russia.

Even before the Crimea crisis, truckers have been feeling Russian heat with a series of conflicts with Russian Customs over cargo insurance and TIR papers, which appears to fly in the face of international accords.

A likely target for western sanctions is GEFCO, 70 per cent owned by the Russian State Railway company (RZD), whose head is Vladimir Yakunin is a close associate of Vladimir Putin. 

Mr Yakunin has already been named as a target for sanctions by a number of western governments including France.

Given that GEFCO wants western European freight on Russian rails, the viability of this enterprise is now in doubt. Similarly, Germany's DB Schenker, with it rail service across Russia to China, is also troubled.

Useful Russian overflights may end, too. "For example, [Russia] used the threat to withdraw overfly rights from Lufthansa to get the German airline to use a Siberian airport as a cargo hub. The possibility that it will use this tool in its conflict with western states must be high." said Ti.

"Yet a more profound trend will be the re-orientation of trade from Western and Central Europe away from Russia. Not just in the energy sector but many businesses such as the automotive sector, chemicals and luxury goods will experience a considerable change of direction as a market of not inconsiderable size is effectively shut down," said Ti.

Source : HKSG.