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War in Ukraine and lockdowns in China deepen logistical chaos in Europe

Embargoes imposed by the European Union have affected ports in the economic bloc; Terminals are being closed in China due to the coronavirus

In Europe, the logistics chain has faced serious difficulties with restrictions in Chinese ports, caused by the coronavirus pandemic, as the country goes through new lockdowns. In addition, the terminals in the region are directly impacted by the war in Ukraine and the sanctions imposed on Russia.

Now, cargo transported by containers concentrate the greatest effects, but the situation could worsen after the European Union’s decision to extend the embargo on Russian oil.

Under current rules, various cargoes such as food and pharmaceuticals are still allowed, but most shipping companies have cut lines with the country, which drastically reduced volumes in containers. Currently, the economic bloc is discussing the sixth package of sanctions against Russia, which provides for the end of imports of oil and derivatives, gradually, by the end of the year. Some companies have already restricted purchases and are looking for other sources of input, but the strong dependence of some countries makes the task difficult.

“To be realistic, the conflict with Russia is not going to be resolved anytime soon. Perhaps this situation will last longer than the Covid-19 pandemic. Because even if Putin withdraws his troops from Ukraine today, the sanctions will not be lifted immediately. Trust has been broken and it will take a great deal of effort to rebuild it,” says Wim Dillen, International Development Manager at the Port of Autwerp-Bruges, Belgium.

The country is relevant to most European ports. An example is the Port of Rotterdam in the Netherlands, which has Russian oil as 30% of all imported crude oil, in addition to 25% of natural gas and 20% of oil and coal derivatives.

While the first quarter results do not yet fully reflect the situation, the impact is expected to show up in the next result, according to North Sea Port commercial manager Sandra De Mey.

On the other hand, trade with Ukraine also has a relevant, albeit smaller, impact. “We are supplied with cereals by Ukraine for the production of biodiesel, but today the ports are closed. We hear that producers are starting to plant, but they don’t know if they will be able to export, because the ports are destroyed. So, we have to look for other countries, like France, Canada, Australia. Of course, if the raw material comes from further away, there are more costs”, says De Mey.

In the case of products from Russia, this substitution is more complex. “It is a difficult and costly process, but it is possible to find other sources to supply our petrochemical complex. The flow of cargo will not disappear, but it will have to move to other regions of the world”, says Dillen.

In the first two months of the war (from February 24 to April 24), Russian oil imports into the European Union have already fallen by 20% and coal imports by 40%. Natural gas purchases rose 20% in the period, according to a report by the Centre for Research on Energy and Clean Air (Crea).

Source
Valor Econômico
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