- Allen Czermak
The Human Side of The Shipping Container Crisis
Prices Are Going Up
If it’s not yet in your neighborhood, it’s coming very soon. No, we are not talking about the latest iPhone or newest Amazon fulfillment center. Nor are we discussing a new virus strain G-d forbid. It’s the latest consequence of the war between Russia and the Ukraine, the price of your next loaf of bread and fill up at the pump.
For those few of us who are not on diets, one of the most delicious morning delights is fresh rye bread. If you are an early riser and can get out before breakfast, or maybe you're a jogger or biker, then you are one of those lucky ones to have a chance to buy fresh bread in the morning. This staple will be one of the items that will increase in price because of the current war between Russia and Ukraine.
The world has been in isolation for two years with some countries such as China still suffering from the pandemic. Here in the Northeast United States, we have started to come out of our shells. Although, there were definitely struggles with empty shelves in certain parts of America, where I live, we are very lucky that we can get the food we need and like, fairly easily.
What About Staples Such as Bread and Oil?
Those of us who are not the jogging or biking kind must pay more at the gas pump to get into our cars to go grocery shopping. Will more Americans get out of their cars and find other means of non-fuel transportation? It’s not a very practical solution for most of us since you can only carry so much cargo with a bike and if you are a senior citizen, it just won’t work for most of us. So far, the lines at the pumps are quite long so it does not seem that any time soon our pampered population will be parking our cars in our garages indefinitely. However, one of our main sources of fuel is Russia and if we want to do our part to jeopardize the Russian economy, we will have to look for gas in other pastures. Meanwhile, I paid $3.95 at the pump last Friday for regular gas and that was considered by my friends as a steal.
Issues With Shipping Transport of Goods
Russia is one of the main importers of wheat and oil to the United States and the prices are going up. Russia produces almost 80 million metric tons of wheat a year and from that amount exports over 20 million tons. While harvest time is months away, both the Ukraine and Russia are major producers of wheat particularly to the Middle East. It’s not only the issue of world economics that we should stop accepting the wheat from Russia, but the logistics problem that we are currently experiencing, the empty supply containers sitting in Russian ports. So, although many countries want to boycott Russia in theory, they must somehow retrieve their empty shipping containers from Russian seaports.
For example, shipping giant Venta Maersk of Denmark, has about 50,000 containers, most of them empty sitting on Russian waters. “Because of this”, said Chief Executive, Soren Skou, “We still have some port calls in Russia.” Another situation is that Russian ships cannot get into ports in the EU, UK, and Canada and more than 100 ships are marooned at the closed Ukrainian ports. Other shipping giants are following Maersk including France’s CMA CGM and Switzerland’s MSC. With Moscow shunned and the Ukraine closed, container ships are traveling all over the world with cargo and crew aboard not knowing where to disembark. There are reports that some crews have deserted their ships in Ukraine due to worries about security.
Russian naval forces have recently stopped up to 300 shipping vessels from leaving the Black Sea blocking the world’s most vital trade routes. Three ships of Panama have been fired upon by the Russians since the war began. Although there were no injuries, one ship sank and two were damaged. Russia gave its reason for this strategy by stating that they were afraid of mines which were laid in that region by the Ukrainian Navy. In previous eras, this criminal activity would be akin to Russia declaring war on the countries whose ships were attacked.
Since Russia controls so much of the world’s economy, we are slaves to these people and cannot bite the hand that feeds us. The United Nations Maritime Organization (IMO) has authorized that the “blue corridors” ( these are supposed to be safe ship passageways) to let the foreign ships leave the Black Sea without the risk of hitting a mine or being otherwise militarily attacked. The IMO approved the policy to permit the safe evacuation of sailors and ships from the high-risk areas in the Black Sea and the Sea of Azov. (Russia took over the Black Sea at the beginning of the war.)
Shipping counts for ninety percent of commerce all over the world. Just when we started to see the light at the end of the tunnel in terms of the easing of shipping container traffic, another huge obstacle has invaded the system even with COVID-19 on the wane. It is no coincidence that Putin decided to wage war on Ukraine just when the world was recovering both physically and financially from the COVID-19 pandemic.
The time it takes to secure the ship, unload, and load it is called, “ocean dwell time”. These parameters have increased by over 35% over the last few weeks. Just as during the pandemic there was a shortage of workers now sailors are hesitant to embark on a dangerous shipping mission.
What About Air Carriers?
There are some larger consumer companies that can afford to use air transportation but even with their ability to pay higher prices for air transport there is a big issue with the routes that international carriers can take. Carriers such as UPS and KLM not only are now paying more for fuel but have to take longer circuitous routes to avoid invading Russian airspace. The price of jet fuel has ballooned more than 35% this month alone adding to the already increase of 75% this past year.
Drayage Improvements Due to Fuel Increases
A company in Montclair, New Jersey called Staxxon, has plans for an ingenious shipping container that's "designed to fold in an accordion-style fashion, and shrink to 1/5 the size of a regular container." With the increasing costs of fuel especially diesel caused by the war between Ukraine and Russia these containers will ensure a huge savings in fuel for truckers if they must leave ports with empty containers.
Since most standard shipping containers return home empty, these containers will be of huge benefit to cargo ships as well. They can fit more containers on a ship for the return journey home by collapsing them, which will help immensely in the supply chain crisis.
Who is Going Hungry?
The upper-class and middle-class populations are somehow still managing to buy their sourdough, artisan bread and their cinnamon Danishes. Like every other economic crisis, it’s the poor who suffer. It’s not only the American poverty-stricken population but areas such as the Middle East and other third world countries that are tormented by this conflict. Ukraine, together with Russia is considered the breadbasket of the world with over 30% of the wheat coming from there. But the Ukrainian economy is shut down. Nothing is being produced and as the harvest season approaches, who is going to pick the wheat, and will the fields still be there and not destroyed by the war? Humanitarian efforts, deliveries and distribution of foodstuff are taking place right now. So even though Ukraine has such an abundance of wheat the people are going hungry with the war raging.
In contrast to the shipping container crisis during the pandemic, today’s turmoil has a different enemy, one that is tearing the world apart where the pandemic urged us to unite as a planet. With the addition of a foreign army controlling economically strategic waterways, there is real danger to ships who could sail and pick up oil, wheat, and other necessities. Whereas the workers during the pandemic were getting paid whether they worked or not, in this threat their lives are at risk not from a virus.
Russia and Ukraine are noted to be the breadbasket of the world and they are now at risk for a deadlock. Russia can export but either their customers are boycotting them, or the Russians are endangering the lives of the shipping container vessel crews causing such a complicated dilemma. Empty containers are waiting in Russia to be picked up while politically it would be incorrect to fill them even if Russia allowed them to be loaded. Meanwhile, hopefully as American citizens we will still be able to put bread on the table and gas in our cars, unlike the citizens of Ukraine who are relying on humanitarian efforts of foreign countries to bring them food.
We must pray that there will be an end to this conflict very soon. As terrible as the economic hardships are, worse are the human casualties of the war both economically and physically. Hopefully, just as the pandemic has waned and we are getting our freedom back so the winds of war should dissipate, and we should have a peaceful and healthful spring and summer worldwide.