Author: Piskun Yuliia

International Agro&Food Security Forum 2024: New Horizons in Logistics Solutions

December 2024 was marked by a significant event in the world of agricultural logistics – the prestigious Agro&Food Security Forum held in Warsaw. Our team not only attended this large-scale event but also gained unique insights into the industry’s future.

In the heart of Poland, over 300 leading experts from 25 countries gathered together. The forum served as a platform for exchanging experience and seeking innovative solutions in agricultural logistics. Of particular value was the practical experience – visiting the CLIP Group intermodal terminal in Swarzędz.

The forum presented several defining directions for industry development that will shape the future of logistics. The first key trend was the digitalization of logistics processes through the implementation of artificial intelligence and blockchain technologies for supply optimization. The second important direction was environmental responsibility, which involves transitioning to sustainable solutions in transportation. Special attention was paid to the development of multimodal transportation, which ensures the integration of different transport modes to achieve maximum efficiency.

Our participation in the forum proved to be extremely productive. We were able to establish strategic partnerships with leading European logistics hubs and thoroughly study advanced supply chain management technologies. Thanks to the experience gained, our team developed new optimized routes for clients, which will increase transportation efficiency. The visit to the CLIP Group terminal made an unforgettable impression on forum participants. During the tour, we had the opportunity to see state-of-the-art automated cargo handling systems and intelligent warehousing solutions in action. Particularly impressive were the innovative environmentally friendly transportation technologies already actively used at the terminal.

This year’s Black Friday and Cyber Monday not only brought record sales but also demonstrated the rapid transformation of the logistics industry as it adapts to new challenges and opportunities in the digital age.

New Records – New Challenges

Black Friday 2024 set impressive records in e-commerce history, with online sales reaching $10.8 billion according to Adobe Analytics, a 10.2% increase from last year, while Cyber Monday added another $13.8 billion to the holiday season’s total sales volume.

Key period indicators show significant growth:

• Total online sales reached a record $74.4 billion

• Peak hours recorded up to 4.2 million transactions per minute

• Mobile orders increased to 57.6% of total volume

Mobile Revolution in Action

The rapid growth in mobile orders creates new demands for logistics companies, which now must ensure faster order processing, more accurate cargo tracking, and improved customer communication through mobile platforms.

Omnichannel as the New Standard

Modern consumers increasingly choose a hybrid approach to shopping, combining online and offline channels, as confirmed by Block data: online sales grew by 16%, offline purchases increased by 31%, with online order average checks being 4 times larger than offline purchases.

Warehouse Logistics: New Approaches

Logistics companies are actively adapting to new market realities through the implementation of automated warehouse management systems, increasing staff by 30-40% during peak periods, and using artificial intelligence to optimize warehouse processes.

Innovations in Action

Technological solutions are becoming a determining factor for success in the logistics industry, including the use of artificial intelligence for delivery route optimization, implementation of predictive analytics for demand forecasting, and development of automated warehouse systems.

Financial Trends

New payment solutions significantly impact logistics processes: BNPL (Buy Now Pay Later) service popularity increased by 8.8%, instant payment implementation accelerates order processing, and digital wallet usage significantly simplifies financial operations.

Looking to the Future

2025 will bring new challenges for the logistics industry, including further digitalization of processes, development of flexible delivery models, increasing role of automation, and greater attention to business environmental responsibility.

Our expertise in organizing international transportation allows clients to confidently overcome holiday season challenges and maintain high efficiency of logistics operations throughout the year.

Preparing for future challenges, Global Ocean Link continues to invest in technological infrastructure development and staff training to ensure the highest level of service for our clients. We understand that success in logistics is based on the ability to anticipate and quickly respond to market changes, so we constantly expand our service range and improve existing solutions.

In conditions of rapid e-commerce development and growing delivery speed requirements, partnership with a reliable logistics operator becomes a key success factor for business. Global Ocean Link is ready to become your reliable partner in solving any logistics tasks, providing individual approach and high-quality service.

Contact us:

+38 (048) 797-20-48

[email protected]

The new law on mobilization has significantly shaken the field of road transport because the latter must look for a new risk management strategy. The lack of drivers, trucks left abroad in the middle of flights, the impossibility of predicting the actions of border guards when checking documents – everything that the field of road transport is already facing. However, the law came into force only a few weeks ago. As a result of all the listed challenges, the conditions of road transport have changed significantly. The blockade of the borders by Polish carriers, who renewed their resistance a few days ago, is being signaled. “Dark times” impose their limitations, and this forces transport and logistics companies to look for more flexible and efficient solutions.

Global Ocean Link General Director Pavlo Linnyk told Mind what factors influence the transformation of road transport in Ukraine and what immediate solutions are needed by road transporters.

 

FOPs also require reservations

Every day, many drivers working for Ukrainian logistics companies cross the state border. At the same time, there is no clear system for booking international drivers. This was stated by the vice-president of the Association of International Motor Carriers of Ukraine, Volodymyr Balyn. According to him, the current reservation system does not consider the specifics of the industry. For example, Government Resolution No. 76 does not regulate the issue of armor for FOP. Instead, a significant part of carriers work precisely as individual entrepreneurs.

Representatives of the industry rightly believe that it should be considered as critically important for the economy: like the agricultural sector, IT, and other important areas. So it is not surprising that drivers are already protesting against ill-conceived changes.

Drivers are being replaced by women and men 60+, but the industry needs systemic solutions

The described problem needs to be solved urgently because the business cannot adequately conduct its activities in connection with the introduced restrictions. First, those who created the issue should deal with the solution. Both at the level of regulatory and legal acts and at the level of their implementation, there should be no artificially created complications that paralyze the work of entire industries.

There are fewer and fewer drivers. And if nothing is done in the direction of constructive changes, then point X will come when it will be necessary to completely switch to rail transportation due to the impossibility of finding a car for the route. And here it will not even be about the price.

We work in our industry legally and have the status of critical importance for the economy of the enterprise, so we solve the issue by booking our driver employees. But even this does not become a “panacea” because there have already been cases of removing the driver from the flight for re-checking: even when he is booked. This, at a minimum, leads to a loss of time when the delivery of the cargo is delayed for 1–2 days. This adds to many misunderstandings with customers.

If we analyze this situation in the context of “what happened and what happened”, then the strengthening of checks at the border created a certain pressure on the industry. So, previously it was enough for drivers to show invoices and registration in the Shlyah system. Now border guards must ask for military registration documents. The protest held by the drivers clearly testifies to their attitude towards this.

If the problem is not solved at the legal and organizational levels. In the near future, we may face the fact that it will become extremely difficult to hire a car for transportation because drivers will be afraid to get behind the wheel. In particular, this may cause logistics disruptions in the eastern regions. In the west of Ukraine, for example, Polish carriers may come to replace Ukrainian carriers. However, they are reluctant to go to the eastern regions. The consequences will be felt by everyone: both exporters and importers. The issue will not escape those market players who carry out internal road transport. One of the options for transport and forwarding companies can be the involvement of women who are not subject to mobilization, and men of unappealing age, in particular, 60+. This is one of the solutions currently used by market participants.

However, such solutions have drawbacks, in particular, when it comes to training drivers who have not had long-term experience in working with trucks. Driving a car is much easier than, for example, understanding what happened if the car broke down on the road. For this, you need to have the appropriate skills and sufficient practice. Therefore, it is time to wait for a quick adaptation of female drivers to the new conditions.

However, it is impossible to completely solve the problem in this way. Currently, an active dialogue between the state and private business is needed. Only this allows us to discuss a two-sided vision of the problem and ways to solve it.

Drivers of draft age refuse to return to Ukraine

Cases of cars left abroad by hired carriers have become more frequent. Everything is solved by the quick dispatch of replacement drivers, but the trend itself is alarming and shows that the legislation on booking drivers is not well-thought-out. There are rare cases of drivers being removed from flights right on the way under customs.

Lawyers have to intervene in the situation. As a result, there is a slight panic in the road transportation market. And although the prices have not gone up yet, it is increasingly difficult to find the optimal car. So, according to the statistics of the GOL company, 22 drivers who were not in the state, but hired for transportation, ran away only in the week of May 13-17.

During May 20-24, another 15 drivers escaped. Of course, the problem was completely solved by the company itself. Therefore, the client’s business has not suffered from this yet. Of course, all cargo that can be loaded into a container can be alternatively transported by our team by both rail and road transport.

But here everything depends wholly on desire and undefined readiness of the client to reformat. However, the trend itself, how the implementation of the mobilization legislation affects the transport and forwarding industry, is worrying.

Potential consequences are an increase in price and time for logistics

It is also worth considering what the consequences may be if the concern is not solved. This is an increase in the cost of goods as a result of an increase in the cost of transportation. And if the final cost of some goods reaches a critical limit, it will be unprofitable to import them.

In addition, it is worth remembering basic behavioral economics, when in the case of difficulty in making one choice, consumers make another. More customers will switch to rail transportation. And this is logical because the train will not be stopped on the way by removing the driver.

The next inevitable consequence in the long-term context will be a slump in the markets for cheap products. This will happen because the cost of logistics will increase. It will be impossible to transfer this factor to the final consumer. The part of the market related to the ports of Reni and Ismail and transportation through the Romanian port of Constanta will also decline. As practice shows, many drivers no longer want to go in this direction because it is here that driver checks have become more frequent.

Some believe that for the white market undefined carriers, the situation will be better than for the so-called gray segment, but it is difficult to predict. It is also possible to find an alternative and replace motor vehicles with railways where there is such an opportunity. For example, in cooperation with the ports of Poland, such a format has been established. Despite all the mentioned alternatives, it is worth understanding that they will not solve the problem systematically.

The ratio of the volume of cargo transported by road in our company is 2 to 1 (that is, 66% is by car, and 33% is transported by rail). We are a multi-directional company. Among the cargoes are household chemicals, minerals, steel, polymers, fertilizers, household appliances. All these market segments require uninterrupted transportation for the industry to function effectively.

Carriers must unite their efforts

The conclusion the industry can draw from this issue is that proactive participation from market players and dialogue with legislative initiators are essential. On their part, it is crucial to refrain from making rash decisions that could severely impact the entire supply chain, leading to shortages and even problems with delivering humanitarian aid. These mistakes have already been made today. Whether they will be corrected in time will be revealed in the near future.

Ukrainian logistics is undergoing dynamic changes influenced by factors such as war, political and legal decisions, and a whole range of other circumstances. However, the key aspect is that its representatives constantly keep their finger on the pulse of the news and seek ways to effectively respond to new challenges.

 

 

 

 

Global Ocean Link is a player in the logistics and container shipping market. The company has been operating in this field for over 10 years and has a team of more than 150 specialists. Understanding market trends and the demand for innovative solutions, Global Ocean Link facilitates interaction between Ukrainian and European businesses.

Among the company’s previous projects is the launch of intermodal trailer transportation within the EU. During the period of complete border closures with Poland, this became almost the only solution that significantly reduced delivery times. However, this is just one of the company’s current solutions, as it relentlessly continues to move forward. What achievements has Global Ocean Link made, and in what direction is it building its future? Find out in this article.

 

Achievements without fanfare

The full-scale Russian invasion has had a significant impact on Global Ocean Link’s operations, as it has on any company operating in the freight forwarding industry. When the potential and resources are large, it is much more difficult to preserve them in the conditions of military aggression, the forced restructuring of logistics chains and the permanent need for a competent response to challenges.

One of the examples of such a successful response to challenges is the launch of the direction of contra-rail transportation to the EU in response to the blocking of the Polish-Ukrainian borders by Polish protesters. Trailer transportation is one of the progressive logistics technologies: when loaded trucks or semi-trailers are transported to them on special platforms.

This experience shows that Global Ocean Link can develop creative and powerful logistics solutions when adapting to adverse conditions.

Relocation of employees, rebranding and moving forward

When the full-scale Russian invasion was just beginning, GOL carried out a partial relocation of the team within Ukrainian and international branches. This helped not only to retain key specialists, but also to transform the service line, which was enriched with new logistical solutions dictated by wartime circumstances. For example, this applies to the transportation of general and bulk cargoes by river and sea vessels.

The company’s general director Pavlo Lynnyk and commercial director Volodymyr Guz are convinced that difficult times are a reason to study the trends of your industry even more carefully and adapt them in your work. Even better, to stay ahead of the curve by offering innovative solutions to the market.

Pavlo Lynnyk and Volodymyr Guz, Global Ocean Link 

Both the management and the Global Ocean Link team are convinced that it is important to work not only on updating the service line, but also on the image of the company. Therefore, rebranding was carried out in 2023. This year, work continues on a new site that will meet all the requests of the industry and facilitate interaction between the company and customers. This is how the client’s electronic account will be implemented, which will help to obtain all cooperation documentation in an automated mode.

A powerful background as a basis for transformation

Of course, the company’s ability to confidently survive difficult times does not come from nowhere. This is preceded by a successful previous experience. Let’s remember the year 2021. It was then that the Global Ocean Link company became one of the first to use the “Mostysk” border crossing for handling containers. At that time, this work took place in test mode and took a lot of effort. However, the result was worth it. Even before the start of the full-scale invasion, the first rolling stock with containers was shipped to the Mostyska-2 station in the Lviv region. In the future, this logistics project will develop even more actively.

To realize this idea and transform it from an idea into a practical plane, complex work was carried out in several directions at once:

• Global Ocean Link team shared with local customs officials how to work efficiently with platforms and containers;
• conducted the Internet, so that in the context of organizational aspects, nothing would slow down;
• well-known rail operator PCC Intermodal SA, which specializes in working with shipping lines, was brought in after the start of the full-scale invasion.

This algorithm of actions helped to ensure high-quality and uninterrupted delivery of goods to the Polish ports of Gdynia and Gdańsk. If we draw a parallel between this project and the subsequent adaptability of the company already after the invasion, it becomes clear that timely and constructive responses to new challenges are based precisely on strong previous experience. The ability to see new opportunities and sufficient competence of the team to implement innovations.

By the way, later in the Lviv region, where the mentioned project was implemented, “Mostyska Dry Port” was opened. But GOL was the first of those who mastered work in this area, paving the way for all others.

Global Ocean Link team

Case in cooperation with UZ

The development of the GOL company is very rapid. Among the recent cases that testify to this are intermodal container trains with the participation of the railway – UZ Poland. As part of this project, 30 container trains have already been dispatched. Its implementation began in October 2023. Previously, no one worked like this, although the service was open. Thus, the GOL team was the first to test sending empty containers from Gdańsk to Odesa and Dnipro.

Risk management as a guarantee of responsibility

Last December, the company had an exemplary case that demonstrates how to respond to changing circumstances in business interactions. Therefore, the company submitted two container trains for the shipment of oil cargoes. However, the connection with the client disappeared. He was unable to pick up the cargo due to instability in the Red Sea due to Houthi attacks on ships. In order not to have large losses, the GOL team began to look for creative ways to solve problems.

At that moment, the client contacted and confirmed that it was not possible to pick up the cargo. So he clarified whether it was possible to find someone who would repurchase the cargo. The fact that the team includes numerous managers who know how to work with clients in a high-quality manner helped here. They communicated with those customers who might be interested in such a large oil cargo. And the client was found! Thereafter, the warehouses were turned towards him.

Subsequently, GOL was approached by the first client with whom cooperation took place and offered compensation. However, there was no need for it, given that proper communication and finding solutions helped avoid losses.

What does this case show? Firstly, it indicates such principles in the company’s work as:

• attention to proper professional training and professional development of personnel, thanks to which employees have sufficient competence to solve complex, unexpected and urgent tasks;
• in-depth understanding of the customer base and knowledge of the needs of various customers (this was the guarantee that a customer for a large volume of oil cargo was found);
• the ability to act not confused, but as coordinated and result-oriented as possible, regardless of the circumstances. Such principles can be traced not only in this, but also in other cases that were mentioned above. They are a guarantee that the GOL team is not afraid to take responsibility and take the initiative where the situation requires it.

The GOL team is not afraid to take responsibility and show initiative where the situation demands it

Innovation as a strategy, the company is actively engaged in the implementation of an electronic tracking system and robotics in document management. And the robotization of many processes in the accounting and legal departments is still ahead. This is not at all about the pursuit of innovation for the sake of a trend. The GOL team is strategically aimed at freeing qualified specialists as much as possible from routine tasks that can be handled by artificial intelligence. Giving them the opportunity to direct their forces and talents to important and creative directions where they cannot be replaced by a machine.”

Taking care of the most effective use of human labor is the priority set by the management of Global Ocean Link. It is not for nothing that brainstorming takes place within the team every week. Specialists consolidate efforts to find the most effective ways to achieve specific goals in the context of the company’s logistics activities.

From minus to plus

It will be quite logical to analyze what are the financial indicators of the company Global Ocean Link. The company ended the first year of the full-scale war with massive losses. They are measured in the sum of $300,000. One could stop here with thoughts about unfavorable times and numerous difficulties, but such a position is not about the Global Ocean Link company.

The management and the team considered how to reformat the use of available resources so that it would be more efficient. And everything succeeded. Last year, only about $150,000 in income taxes were paid. The company is proud of the fact that it works completely transparently, pays taxes conscientiously, and can present all the necessary documentation for each shipment.

Introduction of new training and effective search for specialists

Educational and educational work in its field is also one of the priorities of GOL. Thus, the company initiated and launched a free course for students called “Logistics: the path of professionals” with teaching from the most experienced specialists of the team. The course is permanent, and successful students are provided the opportunity of internship and employment in the company. Indeed, it is at training, where there is an opportunity for the closest possible professional interaction with testing and knowledge assessment, that you can see the level of specialists and replenish your team with professionals. So GOL does just that.

Therefore, it was not for nothing that Global Ocean Link was able to reach indicators that are so strikingly different from 2022 in the second year of a full-scale war. Such success has a concrete explanation and consists of a massive complex of factors. Including:

• the courage to anticipate industry trends and introduce innovations;
• the ability to learn from the experience gained in difficult times;
• an extensive structure of managers who keep close contact with customers and know their needs;
• ability to manage risks;
• full tax transparency and a responsible approach to legal issues;
• the ability to competently use available resources, multiplying them.

Today, Global Ocean Link already has offices not only in Ukraine, but also in Lithuania and Poland. The company is building a large container terminal in Odesa region. So further – only new horizons and achievements.

Initially, it was expected that the protests would last until March 10, but now it is predicted to extend until the end of April. “MinFin” investigated why the Polish border was halted and when it might reopen.

“It seems the situation is only getting worse. Currently, all border crossings are blocked, with over 2,500 trucks in queues. Negotiations with the Poles are not succeeding,” says Pavlo Koval, head of the Ukrainian Agrarian Confederation.

In his address to the protesters, Ukraine’s Ambassador to Poland, Vasyl Zvarych, estimated that Ukraine has already lost approximately 2 billion zlotys due to the border blockade. “If we consider the losses over the entire period of the blockades (which began last year), the losses will be much greater — we are talking about billions of dollars. The losses affect not only Ukrainian exporters but also the budget, which is missing out on taxes, as well as Polish importing companies,” added Denys Marchuk, deputy head of the All-Ukrainian Agrarian Council. Things could get even worse, as the Polish side is now even discussing a complete closure of the border. Formally, the reason is the supposedly “aggressive” export of Ukrainian agricultural products to Poland, which is “driving local farmers into losses.” However, as Pavlo Koval noted, the situation is much more complicated.

 

What Polish farmers really want

The blockade of the Ukrainian-Polish border began last fall. Initially, Polish carriers organized the protests. They were dissatisfied with long queues at the border, what they saw as inadequate organization of the “e-Queue” system, and, most importantly, the excessive activity of Ukrainian transporters. Since the start of the war, Ukrainian companies were given simplified access to the European transport market, and the Poles believed that they were “undermining” the market with their low tariffs.

Through bilateral negotiations, the conflict was resolved, particularly by organizing the movement of empty trucks through a separate checkpoint outside the general queue. However, the peace at the border did not last long. Along with the carriers, occasional farmers also joined the protests last year. In February this year, they organized the border blockade independently. The alleged reason was the dominance of Ukrainian exports. Interestingly, the grain issue, which Polish farmers were unhappy about due to its mass sale in Poland, was resolved back in 2023. In fact, the sale of Ukrainian grain in Poland was completely banned, allowing only transit. This ban is still in effect. But Polish farmers now have complaints about other Ukrainian products, such as sugar, poultry, and eggs. Since the start of the war, restrictions on Ukrainian agro-exports to the EU, such as quotas and duties, were lifted. Consequently, Ukrainian food started flowing massively into Europe, including Poland.

According to the Ukrainian Agrarian Export Club (UAC), the supply of Ukrainian agricultural products to Poland significantly exceeds similar Polish imports to Ukraine. For example, in January this year, Polish importers brought $20.6 million worth of products to Ukraine (mostly poultry, coffee, canned vegetables, chocolate, spirits, cheese, etc.). During the same period, Ukraine shipped $136.3 million worth of food to Poland (with the top 10 including soybean and rapeseed oil, sugar, juices, nuts, etc.).

A similar situation occurred in the second half of last year, when the grain export ban was already in place. “We sold agricultural products worth over $800 million to Poland, while the Poles sold us goods worth $138.6 million,” noted the UAC. However, considering the overall balance of Ukrainian-Polish trade, Poland still has the advantage. Last year, Ukrainian exporters delivered goods worth $4.75 billion to the neighboring country (mostly metallurgical products), while Polish exports to Ukraine amounted to over $6 billion (mainly petroleum products, fertilizers, household chemicals, although cheese and chocolate are also in the top 10). As we can see, the share of agricultural products in Ukraine’s total exports to Poland is quite insignificant. But it is our food that has caused sharp dissatisfaction — to the extent that Polish consumers are even being urged not to buy Ukrainian products.

Polish farmers demand the return of pre-war conditions for Ukrainian agro-exports, i.e., quotas. The preferential period for our goods ends on June 5. Initially, the European Commission proposed extending it, but considered the complaints of the farmers (in addition to Polish farmers, Ukrainian products are also unsatisfactory to farmers in other European countries, such as France, Germany, Hungary, etc.).

The European Commission recommends that Ukrainian sugar, poultry, and eggs be allowed under a separate list — tracking export volumes, and if they exceed the figures for 2022-2023, restrictions will be introduced. This proposal still needs to be voted on by the European Parliament, but many farmers’ associations are dissatisfied with it. Some recommend adding honey to this list, while others want the export volumes to be measured against 2021–2022 figures (which are smaller because quotas were in effect until February 2022). But the “Ukrainian question” is only part of the Polish farmers’ demands. Others pertain purely to Polish realities. For example, farmers want a postponement of the “green transition” (because it increases agricultural technology requirements and requires investment) and an increase in government subsidies.

On February 14, the Polish union NSZZ RI “Solidarność,” as part of a 30-day general farmers’ strike, announced that all border crossings between Poland and Ukraine would be blocked. As of the morning of February 29, around 2,200 trucks were in queue at the “Krakivets,” “Yahodyn,” and “Rava-Ruska” checkpoints. The situation remains unchanged.

Global Ocean Link’s CEO Pavlo Lynnyk and Commercial Director Volodymyr Huz comment on how their company will respond to these new challenges. They discuss the company’s preparations for the new challenges related to the blockade and the alternative routes they are considering.

 

Volodymyr Guz: “We started preparing for the blockade in advance. Currently, it is difficult to predict how long it will last. So, we are considering various scenarios. One thing is certain: everyone is now seeing and preparing for the blockade not to end quickly. The Polish government is not intervening as it should. Therefore, we see that in the absence of necessary regulation, this will systematically repeat. The Poles have this opportunity, so they are using it. All messages that we will block in response are not very relevant. The reason is simple: as our dispatchers have stated, the ratio of our vehicles to theirs, even in imports, is about 1 to 20. So we need to comprehensively search for alternatives.

Currently, the supply of goods through Slovakia and Hungary is becoming more relevant. Furthermore, the already established rail routes will gain momentum in demand. They have been functioning uninterruptedly before, and given the current situation, they will be used even more frequently. We are talking about direct trains to the ports of Gdansk and Gdynia from cargo consolidation points in Ukraine.”

Regarding alternative routes, Romania, Slovakia, and Hungary are interesting for carriers in this context. Pavlo Lynnyk considers: “Due to the blockade on the border with Poland, our company is actively analyzing alternative logistics routes and supply chain strategies. We are considering the use of different modes of transport – maritime and alternative land routes. This could be relevant to ensure the continuity of our operations.”

 

Volodymyr Guz also notes: “There is already a growing queue at the border crossing to Romania. The same situation happened to us in October-November 2023. Instead of 3–4 days of waiting at the border, we now have an approximate figure of 7–8 days. According to carriers, the queue continues to grow. Today, we are entering the off-season for grain. Everyone is waiting for China to ‘wake up’ and determine the main directions for shipping the remnants of the last season. Regarding the near-term dynamics of queues at the border with Romania, it will largely depend on the situation in Poland, as these phenomena are interconnected.”

“Among the considered alternative routes, we are exploring the possibility of using southern corridors through Slovakia or Hungary. We are also considering maritime routes that may involve delivering goods through the Black Sea to other European ports. The choice of each route depends on many factors, including cost, transit time, and the current geopolitical situation. We are conducting a thorough analysis to determine the most effective alternatives. We lack existing logistical solutions to meet market needs. A systematic approach is needed to improve rail container transportation,” adds Pavlo Lynnyk.

Equally important is the issue of estimated losses for the company and the market in general. “The blockade can seriously impact both our company and the market as a whole. We expect increased transportation expenses and longer transit times, which may affect our service level and customer satisfaction. The market may experience a temporary shortage of goods and rising prices. Quantitative assessment of these losses is difficult, but we are preparing financial models to assess the impact in various scenarios. We are also closely working with industry associations and exploring the broader impact on the market,” says Pavlo Lynnyk.

 

Volodymyr Guz adds on the issue of estimated losses: “These losses are approximately $1,500-2,000 per container. If converted to a ton, it is about 60–80 euros per ton, which the final sender and/or recipient bears, depending on the contract terms. Clearly, this will worsen the current competitiveness of our exporters. On the other hand, we, as direct consumers, will overpay this amount when buying imported goods, as it will be directly passed on to us.” Thus, the current situation at the borders creates a whole range of different consequences. Expert assessment from the leadership of Global Ocean Link, a leader in Ukraine’s transport and logistics industry, only confirms this conclusion.

Regular attacks on ships by the Houthis have raised serious concerns within the global community, as this issue pertains not only to international security but also poses challenges to the transportation and logistics industry. Additionally, the crisis has impacted agricultural exports from Ukraine.

The leadership of Global Ocean Link, CEO Pavlo Lynnyk and Commercial Director Volodymyr Huz, shared their views on this problem and the prospects for the development of the situation with Ukrainian Shipping Magazine.

 

Key Points

The Yemeni Houthis have been attacking commercial vessels in the Red Sea since October 2023. Since then, they have conducted over 27 attacks on civilian ships using combat drones and ballistic missiles.

In November, the Houthis seized the cargo ship Galaxy Leader and took hostages, including Ukrainian sailors. Following this, they also attempted to capture the tanker Central Park in the Gulf of Aden, which was rescued by the US destroyer USS Mason. In December, the United States and nine other countries announced the launch of Operation Prosperity Guardian. The aim of the operation is to address security issues in the southern Red Sea and Gulf of Aden to ensure freedom of navigation for all nations. Currently, the coalition includes over 20 participants, including the United Kingdom, Norway, France, the Netherlands, Italy, Denmark, India, Bahrain, and the Seychelles.

On January 12, the United States and the United Kingdom, with support from Australia, Bahrain, Canada, and the Netherlands, began a series of air and missile strikes against the Houthis in Yemen. This was in response to their attacks on ships in the Red Sea. During this first wave of strikes, over 100 missiles were launched at more than 60 targets in 16 separate locations. Additionally, at the end of January, it was reported that the Houthis had launched a missile strike on a US naval ship in the Gulf of Aden off the coast of Yemen. The target was an auxiliary cargo ship, the expeditionary sea base USS Lewis B. Puller.

Political Escalation and Suspension of Transportation Moratorium

GOL CEO Pavlo Lynnyk notes that the attacks carried out by groups supported by Iran have led to the temporary suspension of maritime transportation and increased the risk of political escalation in the region. “Countries located along the Red Sea face threats to maritime security and trade. These threats can negatively impact not only the local economy but also global trade, especially in the energy supply sector,” says Pavlo Lynnyk.

For example, Qatar is the largest supplier of LNG to Europe after the US. It redirected at least six cargoes around the Cape of Good Hope in Southern Africa instead of the shorter route through the Red Sea and the Suez Canal from January. 15.

In turn, GOL Commercial Director Volodymyr Huz adds that there has been a significant decline in competitiveness as logistics in these regions have become 3-4 times pricier. The cost of shipping a standard 40-foot container from Asia to Northern Europe has risen from less than $1,500 in mid-December to almost $5,500. According to the cargo booking platform Freightos, shipping Asian cargo to the Mediterranean costs even more: nearly $6,800 compared to $2,400 in mid-December.

Therefore, the issue is undoubtedly not of a local nature but poses a challenge to the global security architecture and causes a range of associated economic consequences. It is worth noting that 15% of the world’s maritime trade, including 8% of grain, 12% of oil, and 8% of liquefied natural gas (LNG) shipments, passes along the western coast of Yemen, controlled by Iranian-backed militants. This trade route is crucial as the Suez Canal connects the Red and Mediterranean Seas.

As a result of the crisis in the Red Sea, the world’s four largest shipping companies – MSC, CMA CGM, Maersk, and Hapag-Lloyd – have suspended the passage of ships through this route. According to the IMO, this already involves 20 shipping companies. Meanwhile, the alternative route, which runs between Europe and Asia around Africa via the Cape of Good Hope, adds 14 days to the journey.

Consequences for Ukraine

Experts emphasize that the effects of the crisis in the Red Sea will not spare Ukraine. This assertion is supported by the fact that in January 2024, Ukrainian agro-industrial exports decreased by 20%. The Minister of Agrarian Policy, Mykola Solskyi, stated during a television marathon that the reasons include not only the New Year holidays but also the crisis in the Red Sea. He explained that a portion of Ukrainian agro-exports passed through the Red Sea en route to Asia, China, other countries, and East Africa. Against this backdrop, six business associations in Ukraine have appealed to President Volodymyr Zelenskyy, requesting the National Security and Defense Council (NSDC) to address the difficulties faced by Ukrainian companies in transporting goods through the Suez Canal.

Additionally, there are other factors that, according to the management of GOL, could impact the Ukrainian economy. “Instability in the Red Sea could lead to rising oil prices and increased transportation expenses. This will affect Ukrainian businesses engaged in international trade,” says Pavlo Lynnyk.

Volodymyr Huz also noted that a significant impact on Ukrainian exporters, especially container exporters, is already visible. “The imposed surcharges do not correlate with the global price of agricultural products. Due to this factor, many have halted their activities or minimized them. Importers face the traditional price increase ahead of the Chinese New Year. The escalation of the conflict brings us closer to the unstable year of 2020, during the COVID-19 pandemic, in the context of shipping lines’ pricing policies,” adds Volodymyr.

Currently, over 500 containers have had to change their route. Insurance premiums are skyrocketing, and sailors demand double pay for their work. “In summary, it is worth noting that the situation in the Red Sea has indeed significantly impacted shipping and the global economy. Ukraine has also been affected. As analytical data and trends indicate, despite the armed response to the Houthis from the Western coalition, resolving this issue will not be immediate,” concluded Global Ocean Link.

 

Recently, maritime container transportation has faced significant challenges for all participants in the supply chain. This issue is not limited to the war in Ukraine and our logistics industry; it can be said that the entire global container transportation industry has been experiencing turbulence. Starting with the suspension of port operations in China due to the “zero-COVID” policy, followed by the “roller coaster” of container shipping rates, the blockage of the Suez Canal by the Ever Given container ship, and other events.

 

What’s happening in the world

When we look at Ukraine’s transport and logistics industry, it is essential to consider it within the context of global trends. In April this year, according to Sea-Intelligence, punctuality in the container shipping sector increased by 26% compared to the previous year.

According to the management of Global Ocean Link, last year the industry “hit rock bottom” in terms of service, with only one in three ships arriving on schedule. However, by February 2023, global schedule reliability had increased by 7.7%, reaching 60.2%, the highest level in many years.

But just as we began to enjoy the improved service from container lines, the situation in the Middle East worsened. The trade route from China to Europe via the Suez Canal is used for transporting approximately one-third of the world’s containerized cargo. Using alternative routes through the Red Sea increases costs and transit times — the route around the Cape of Good Hope requires additional fuel expenses, increases delivery times by 35–40 days, and can cause a shortage of space on ships due to empty containers stuck in transit, which are needed for Chinese exports. Notably, container lines are already reducing the number of port calls. All of this combined will lead to higher costs.

Container transportation in Ukraine

Due to the armed aggression of the Russian Federation, maritime container transportation has been completely blocked from the beginning of the war until now. It has likely suffered the most losses since the sea transport of other goods was resumed literally a few months later thanks to the Danube ports, followed by the operation of the so-called “grain corridor.” Now the humanitarian corridor is gaining momentum. However, container shipments from the Big Water ports are still in question, although there is some light at the end of the tunnel.

The ports of Ismail and Reni took on a heavy load at the beginning of the full-scale war, when the ports of Greater Odesa were blocked. By the fall of 2022, container barge services from the Danube ports were already launched. Despite the relatively stable functioning of the Danube ports for almost a year and a half, the enemy began regular drone attacks starting in the fall of 2023, trying to destroy the port infrastructure. This led to the suspension of the Orlivka – Isaccea ferry crossing several times. Therefore, strengthening air defense has become relevant in this direction as well.

Industry in numbers and trends

According to Global Ocean Link, the following important trends and indicators in the industry should be noted:

• After the grain corridor ceased operations, there was an increased demand for transporting grain crops in containers.
• There is also a growing share of small-scale production exports, highlighting the effectiveness of government export support programs.
• In September-October this year, the schedules for maritime container transportation were stabilized. There was a sharp increase in demand for grain shipments from Ukraine, as prices favored this. This specifically pertains to container exports. This is significantly influenced by Ukraine’s impact on global prices for sunflower oil, sunflower seeds, rapeseed oil, rapeseed, rapeseed meal, wheat, and peas.
• Freight rates from Europe to the USA have sometimes fallen as trade needs to be closed. This has influenced financial trends in this market segment.

Ukrainian logistics have significantly felt the impact of port blockades and attacks, compounded by the blockade of truck borders by neighboring countries. In this context, rail transport has proven to be a much more stable mode of transport, with better planning capabilities. The example of the contrailer train from “Ukrzaliznytsia,” which transported Ukrainian trucks to Poland, is very telling. Therefore, reliance on rail transport will remain strong, especially for container shipments.

When discussing the structure of cargo, the key items are grain and oilseed crops and other products exported by Ukrainian agriculture. There is also significant demand for the transportation of fertilizers, for which containers are widely used. Metal products, ores, and foodstuffs are also among the popular export goods. Of course, this list is not exhaustive.

The blockade of the border in Poland, as previously mentioned, has affected infrastructural processes in Ukraine. A large portion of imported containers has been blocked. The problem of empty container imbalance in Ukraine has become more acute since exports could not be transported out. One solution was organizing direct container trains from Poland, which brought in loaded containers and took empty ones back. Additionally, it’s important to mention the delivery of cargo with transshipment, which involves changing wheelsets. This refers to the well-known narrow-gauge railway systems of EU countries. Ukrainian carriers are well adapted to this, as they regularly operate in this format, and the processes are well established.

To transition from these examples to the general trend, it is indispensable to analyze Ukraine’s interaction with other countries in this sector and consider the numerous indicators of import and export shares.

For imports, the shares are as follows:

• 60% Poland
• 20% Romanian ports
• 20% Reni (Danube region)

For exports, the shares are as follows:

• 45% Romania
• 45% Poland
• 10% Reni (Danube region)

Thus, from all the above, it can be concluded that the demand for container transportation by rail will remain. Therefore, Ukrainian transport and forwarding companies and other market players must not only continuously adapt their operations to the changing conditions of wartime but also keep their finger on the pulse of global trends.

Logistics. Today offers commentary from Global Ocean Link CEO Pavlo Lynnyk and Commercial Director Volodymyr Guz on the situation regarding the blockade of the border by Polish carriers. Industry representatives discussed the challenges faced by the company and the measures being taken to restore international transportation logistics.

 

– Pavlo, what logistical solutions has your company implemented to address this problem?

“The situation with the blockade of the Polish borders was predictable but uncontrollable since it was impossible to quickly redirect the main cargo flows through Poland, regardless of the mode of transport. Therefore, we decided to shift part of the cargo flows to rail.”

– How did this happen technically?

“In cooperation with our Polish colleagues, we started using direct intermodal trains, which significantly reduced our export traffic by road and increased shipment volumes. We are also actively using import rail services, which, in turn, has also reduced the load on the road transport market.”

– Are there any complications in implementing this solution?

“Yes, unfortunately, there is always a ‘but.’ Due to the active import of goods through Polish ports, there are congestion issues inside the ports. This leads to containers staying in the port for 7 to 20 days before being loaded onto a train, which is roughly the same as a truck waiting at the border. However, despite this, rail transport is successfully competing with road transport as it is a more cost-effective option.”

– What other transportation directions is GOL currently working on?

“We are actively developing rail routes with the ports of Koper/Rijeka for imports and are now actively working on launching this direction for exports. In short, our team’s focus is on the fastest possible delivery of goods for our clients and minimizing additional costs associated with demurrage/detention.”

– Volodymyr, how do you view the problem of the Polish border blockade?

“Firstly, the strike by Polish carriers and their union was announced on November 3. Their main message was to reinstate the permit system. Additionally, there were about a dozen other demands. The strike began on November 6, stopping three border crossings. To be precise, it meant allowing only one truck per hour, which is equivalent to a stoppage. By November 8, there was already a 32-kilometer queue at Shehyni, and by November 9, it was 60 kilometers long.”

– How will this phenomenon affect the financial aspect of transportation?

“The idle time will be paid by the customer, meaning the client. This means that the cost of transportation will be affected.”

– Are there any alternative solutions?

“I see a solution in shifting the focus to the Uzhhorod and Chop crossings to neighboring countries such as Slovakia and Hungary. However, as of Friday, there was already a queue of about 500 trucks at each crossing. As my colleague Pavlo correctly noted, we need to search for alternatives and diversify the use of different types of transport, such as more actively using railways. Direct trains to Gdańsk, Hamburg, Koper, Rijeka could be relevant alternatives to move away from container ports.”

– Do you have any current projects related to cooperation with Ukrzaliznytsia?

“Yes, we have launched contrailer transportation. The first trial trucks have already been delivered via the Kaunas-Kyiv route, with unloading in Obukhiv. This transportation involves securing truck trailers on railway platforms. Next week, we plan to launch a regular service with 36 trucks on the Gdansk-Kyiv and Kaunas-Kyiv routes. So, despite the challenging dynamics of the transport and logistics industry and the constant challenges it faces, our plans are ambitious and extensive.”