Category: Blog

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]

Security has always been paramount in shipping. The industry continuously seeks new ways to improve cargo transportation, from protecting goods against theft and damage to combating piracy and ensuring safe conditions for the crew.

In the modern era of digitalization, cybersecurity has become a crucial aspect of shipping. Specifically, the industry is actively discussing the transition to electronic documentation. The implementation of digital versions of transport documents (electronic bills of lading, or eBL) can significantly reduce costs and make the cargo transportation process much more transparent and secure.

What is an electronic bill of lading, and why is it necessary?

A bill of lading is one of the most important documents in maritime shipping, essentially serving as a transport waybill for sea cargo. It confirms that the cargo is indeed on board and is being transported to the destination.

Additionally, the bill of lading is a legal contract between the shipper and the shipping company. It specifies the terms of the shipment, such as the route, delivery times, and the cost of services. This document regulates the relationship between the parties and ensures that obligations are fulfilled on both sides.

Moreover, the bill of lading functions as a document that certifies ownership of the cargo. In other words, whoever possesses the bill of lading is entitled to claim the goods at the destination. This is a crucial aspect because it allows the cargo owner to maintain control over the goods during transportation.

An electronic bill of lading (eBL) is the modern version of the traditional paper document. One of the key advantages of an eBL is that its digital format simplifies the contract process and reduces the risk of the document being lost or damaged. Furthermore, creating such documents takes up to five minutes, compared to the longer time required for traditional paper documents.

Electronic bills of lading in global practice

The implementation of electronic documentation in shipping is being driven by the Digital Container Shipping Association (DCSA). Founded in 2019, DCSA is a non-profit organization dedicated to promoting the digitalization and standardization of the global container shipping industry. It comprises over 100 members, including shipping companies, ports, terminals, freight forwarders, cargo owners, and technology providers.

According to Serhii Osypov, a representative of the Ukrainian logistics company Abordage Logistics, the practice promoted by DCSA has already been observed in the industry for some time. In the liner container shipping sector, 95% of transport documents exist in electronic form. Currently, customs authorities in Ukraine and EU countries do not require “hard” copies of documents. However, there is always the option to issue a paper version if required by contract conditions.

Moreover, the digital bill of lading is highly cybersecure, as it is built on a public blockchain network. Information about the eBL owner is stored on millions of devices, making it nearly impossible to hack the document. Each such bill of lading is unique, partly due to the use of NFTs (non-fungible tokens) by some companies.

The only potential cyberattack on secure eBLs is the so-called 51% attack, where attackers gain control of the majority of the network’s computing power, allowing them to manipulate transactions. However, such an attack is extremely costly and complex to execute.

Obstacles to implementation

Despite global digitalization, the shipping industry is currently not ready for a complete transition to paperless documentation. Market players face several challenges. From a technical perspective, obstacles include incompatibility between different systems and the lack of unified standards for electronic documents. This complicates the exchange of documents among various market participants.

Regulatory obstacles are also evident, involving diverse national laws and international norms that do not always accommodate electronic documents or require their legal recognition. However, the example set by Ukraine’s Ministry of Digital Transformation shows that a swift electronic transition is possible with the right motivation. Therefore, the fate of electronic bills of lading largely depends on state interest.

A few years ago, DCSA announced plans to transition 50% of industry documentation to electronic forms by 2025, with full adaptation by 2030. However, as of 2023, market adaptation was only at 3-4%, and it has since increased to 4-5%. The transition is happening, but not as quickly as anticipated, said Mykhailo Lepekha, a representative of eTEU, a company implementing electronic documentation in shipping.

Global forwarders primarily need eBLs as they spend significant amounts on courier services like DHL or FedEx. In Europe, courier services cost around $60, while eBL prices start at $10. Despite forwarders’ interest, negotiations with shipping lines often take a long time and are complex.

Challenges include distrust of new technologies among some market participants, the absence of necessary regulatory frameworks, and the complexity of technical implementation. This includes the use of bank letters of credit and documentary collections, which typically require the original bill of lading. Some agreements still mandate an original paper bill of lading between the seller and buyer, creating barriers to the full adaptation of eBLs since having an electronic bill of lading does not eliminate the need for the “usual format” of the document.

Paper versions are most typically required for order bills of lading and bearer bills of lading. These types of documents stipulate that the ship’s cargo must be delivered to the person who presents the bill of lading. Any person holding it can deliver the cargo to the buyer. The difference between these documents is that, unlike an order bill of lading, a bearer bill of lading does not specify the recipient’s name. These documents are more commonly used for delivering goods whose prices depend on exchanges (grain, oil, metals) or when cargo is sold from one company to another during transit. Order bills of lading and bearer bills of lading are also used when parties want to maintain anonymity. Here, eBLs ensure transparency and reduce the risks of “gray” exports. In this context, paper documentation becomes a matter of habit. For example, with documentation like bank letters of credit, banks are generally not very flexible in these matters. Therefore, electronic bills of lading are unlikely to be adopted soon in such scenarios, suggests Dmytro Kazanin, director and owner of TEUS.

Prospects for eBL development in Ukraine

The aforementioned company developing software for digitizing documentation in shipping, eTEU, showcased a significant reduction in document processing time during the launch of a pilot project in Ukraine. While processing a paper bill of lading takes eight days, the electronic platform reduces this to just one minute.

There are other examples of attempts to transition to eBL in Ukraine. Some large port operators and shipping companies (e.g., in Odesa and Chornomorsk) have conducted pilot projects with electronic bills of lading in collaboration with international partners. One such company, WaveBL, organized a presentation of eBL for Ukrainian clients a few years ago in partnership with the shipping company ZIM.

However, the issue of fully transitioning to eBL in Ukraine persists. The question remains whether Ukrainian shipping companies face additional challenges or advantages regarding electronic documentation compared to international companies. For international container companies, launching electronic documentation is likely not a problem due to their capabilities and market adaptation speed. The key factor is having a demand from the market and its participants. Interestingly, compared to many other European countries, Ukraine is advancing more rapidly in terms of electronic documentation.

The transition to electronic bills of lading in shipping is inevitable, albeit a slow process. Factors aiding the electronic transition in Ukraine include improvements in digital infrastructure, support from government bodies, and the desire to reduce paper bureaucracy and avoid the loss or damage to documentation. However, Ukrainian shipping companies may also face additional challenges such as insufficient digitalization of national infrastructure, lack of unified standards, and the need to comply with international requirements. At the same time, the advantages include reduced costs of paper documentation, faster and more efficient document processing, and the ability to integrate with international supply chains.

Pavlo Lynnyk, CEO of the logistics company GOL, states that the forecasts for full digitalization of documentation in shipping in the next 5–10 years are positive. It is expected that most Ukrainian shipping companies will transition to electronic documents thanks to the development of blockchain technology and enhanced cybersecurity.

Moreover, international organizations like the International Maritime Organization (IMO) are actively working on creating unified standards and recommendations to facilitate a faster transition to eBL. However, the key condition for this remains active support from the government and industry associations.

The logistics industry’s potential

In 2023, 68 countries increased their investments in infrastructure development. According to a World Bank study, private capital investment in infrastructure (PCI) amounted to $86 billion in 2023, which is $0.5 billion more than the average annual volume over the previous five years. The number of infrastructure projects in the world is growing dynamically. While in 2022 investors financed 260 projects, in 2023 it was already 322. In Europe and Central Asia, the infrastructure portfolio more than doubled over the year to 35 projects. Despite the predominance of investments in the renewable energy segment in global PPI, spending on port infrastructure development also doubled in 2023.

Nevertheless, representatives of the Ukrainian transport and logistics sector are optimistic despite the war. According to the results of the Infrastructure Index 2023 industry survey conducted by the European Business Association in cooperation with Arzinger and Sayenko Kharenko, 84% of companies are ready to resume shipping after the de-blockade of Ukrainian ports. Most of the surveyed companies intend to do so as soon as possible. At the same time, 66% of industry representatives consider the development of highways connecting Ukraine with the European Union to be the most relevant area for investment in logistics. In addition, 70% of transport and logistics companies are convinced of the need to develop a network of strategic transport hubs in the western regions of Ukraine. It is worth noting that 85% of the industry’s companies in Ukraine have either not stopped operating at all or have fully resumed operations.

Ukrainian logistics has generally adapted to the new realities and is successfully operating under martial law. The industry is recovering and integrating into the European and global transport and logistics network. Domestic agro-industrial holdings, trading and manufacturing companies, and developers are making a significant contribution to the development of Ukrainian logistics. Despite the difficult circumstances, new transshipment complexes are being built in Ukraine, and warehouse hubs and vehicle fleets are being modernized. Moreover, some companies are creating their own flotillas, investing billions of hryvnias in development, and, therefore, need to establish effective public-private partnerships and expect further European integration reforms. This can create the conditions for the Ukrainian logistics industry to attract foreign investment and reach a new level of development.

Logistics industry in Ukraine. Perspectives of development.

During communication with specialists of domestic logistics companies and local structures of international companies in Ukraine, one gets the feeling that the industry is optimistic about the prospects for development in the medium term. It is unlikely that this impression was formed due to the deliberate silence of companies on the negative aspects of their activities. Nor can it be spoiled by the change in the position of several international players in the Ukrainian market to a less public one. Of course, sometimes you hear comments like: “As long as there is something to carry for at least the current year, and then, perhaps, the fog will somehow clear.” However, there are very few such assessments, and more optimistic statements prevail. The most interesting thing is that the optimism of commentators is confirmed when analyzing the official statistical information available in the context of war.

Logisticians’ allies also add to the confidence in the industry’s positive prospects. Let us mention just a few recent examples. The agro-industrial holding PJSC Myronivsky Hliboproduct is buying a well-known logistics company. Another agricultural holding, Kernel, is creating its own flotilla to transport goods by water. The Novus chain of stores opened a powerful logistics center to further develop its retail business. And this is not a complete list. The achievements of transport and logistics companies and their encouraging assessments of the development of key segments of Ukrainian logistics are presented in our review.

The first part of the study is devoted to a general analysis of the state of affairs in the logistics market. The experts’ assessments are complemented by an analysis of industry statistics, which leads to the conclusion that the industry is resilient in the face of war. We also identified the trends currently prevailing in the transport and logistics sector of Ukraine.

The second part shows the dynamics of market processes and presents the results of the analysis of five key trends in logistics. Special attention is paid to the prospects for container transportation in Ukraine. After all, the level of containerization in the world is ten times higher than in Ukraine, and the country has a lot to strive for. For example, according to the World Bank, suppliers transport 35% of cargo in containers by volume and 60% by commercial value. This is a good benchmark for national carriers.

The third part of the report briefly describes the new challenges that logistics market participants will have to overcome in 2024. Almost two-thirds of business representatives have already publicly recognized the negative impact on the industry of the critical labor shortage and large-scale power outages. Preparing for an even worse situation, companies are investigating how to solve problems.

The situation in Ukrainian logistics: the overall view

Ukrainian logistics companies are recovering from the sharp drop in transportation volumes in the first months of the full-scale invasion. This is evidenced, among other things, by the positive dynamics of freight volumes over the past two years. According to the State Statistics Service, in March-December 2023, 282.4 million tons of cargo were transported by all modes of transport, while in the same period in 2022, only 231.1 million tons were transported. So we have a 22% overall growth. Monthly growth ranged from 17% to 30%. Of course, the volume of transportation remained significantly lower than the pre-war level, but the positive dynamics of indicators remained.

In 2024, the positive “cargo” trend continued. This is clearly demonstrated by the performance of the main segment of freight transportation: the railways, which traditionally accounts for about half of the total volume of freight transportation in Ukraine. According to JSC Ukrzaliznytsia, in the first five months of this year, rail freight traffic increased by 30% compared to the previous year. This significant growth is primarily driven by servicing the needs of exporters. The growth here is up to 57%. In January-May 2024, 75.4 million tons of cargo were transported by rail, of which 38 million tons were destined for export. The railroad is already transporting two-thirds of the pre-war level of cargo.

At the same time, experts emphasize the growing importance of land transportation. Logistics companies attach a special role to road transportation, and some even call it the key in the transport complex. Experts also note the high dynamics of road transportation in Ukraine. “Road transport is currently developing the fastest,” says Mykhailo Lymar, CEO of Meest China. Transporters also draw attention to the high ability of road transportation to adapt to circumstances. For example, in response to the blockade of the Polish borders, carriers sent trucks with goods across the borders of other countries or switched to using smaller trucks that were allowed to pass through during the border blockade*.

Despite the prospects of the “big water”, the Danube route plays an important role. It was in particular demand from early 2022 to mid-autumn 2023. According to the CTS estimates, in 2023, operators transshipped almost 52% of all sea cargo through the Danube ports. Then the demand for transportation capacity on this route slightly decreased due to the resumption of transportation through the Ukrainian Black Sea corridor. “However, we are currently maintaining a stable demand for a total flow of 250-300 thousand tons per month using all local capacities of the ports of Reni, Ismail and Orlivka,” GOL, an Odesa-based company, said.

By the way, the commodity structure of cargo transportation is also stabilizing. The share of commercial cargo is growing in the structure of transportation, gradually replacing humanitarian aid. The volume of grain cargo transportation by sea is increasing. Agricultural and metallurgical products traditionally occupy key positions in exports, while fuels and lubricants and engineering products are the main imports. Food cargo is mainly represented by grains and oil seeds, vegetable oil, sugar, etc. There is also a stable demand for logistics companies’ services in the FMCG segment, with only a declining share of expensive goods in the overall turnover structure. Demand for military cargo transportation is also growing.

Among the key industry trends, experts highlight:

• the restoration of the country’s transport and logistics infrastructure;
• active development of logistics transshipment complexes;
• increased demand for consolidated cargo delivery and handling services;
• growth in fulfillment volumes;
• high demand for warehouse logistics;
• the restoration of container shipping;
• further automation and digitization of the industry.

Logistics companies also strive to integrate various logistics services – warehousing, transportation, and customs – into a single platform, enabling operators to manage supply chains more efficiently. There is a growing trend towards creating strategic partnerships and alliances between logistics providers, manufacturers, and retailers. According to DB Schenker, such partnerships optimize costs and improve service quality by pooling the resources and expertise of participants.

Industry representatives are developing solutions to address issues caused by labor shortages and the worsening energy situation. Some companies have already started actively involving women in transportation roles, and measures to improve logistics energy efficiency are being implemented.

New challenges in Ukrainian logistics

The year 2024 has brought an increase in workforce shortages and a lack of energy resources for domestic logistics. Due to the mobilization of Ukrainians, there is a growing labor shortage in the industry. “The situation with personnel is getting more complicated, their cost is rising, and finding a specialist is becoming increasingly difficult,” notes Meest China CEO Mykhailo Lymar.

Today, the issue of staffing is extremely pressing. According to representatives of GOL, in just one week – from May 13 to 17 – 22 drivers hired by the company for transportation fled (yes, fled) from their jobs. The following week – from May 20 to 24 – another 15 drivers did the same. The reason is clear: drivers are afraid to go on routes because they are detained, checked, and often mobilized directly during their trips. Industry participants believe this trend is very alarming as the number of drivers continues to dwindle. GOL CEO Pavlo Lynnyk and the company’s Commercial Director Volodymyr Guz call for urgent action to address this issue.

“Booking drivers hasn’t been a ‘cure-all.’ There have already been cases where even booked drivers were taken off their routes for re-checking. This, at the very least, leads to lost time in cargo delivery. So, there are many misunderstandings in this matter, and the reasons for them need to be eliminated,” say GOL executives.

The expected resumption of regular container traffic to the ports of Greater Odesa has encountered difficulties that went beyond the maritime industry last month. First, the first call of the Turkish container carrier Akkon was disrupted, then the postponement of a voyage of the global leader in container transportation, the Swiss MSC Mediterranean Shipping Co, became scandalous, and the partners of the feeder service of the Ukrainian company Iteris also had problems.

The reason for this was the joint measures taken by a number of government agencies to conduct additional inspections of export agricultural cargo in containers, which significantly slowed down customs clearance and the transportation process itself. The problem demonstrates the lack of full coordination between the government and business, which is often lacking in our realities. Therefore, the most urgent task is to find opportunities to combine the interests of economic protection of the state during the war and to ensure proper conditions that will facilitate the return of international container lines to the ports of Greater Odesa. The elite of the global container business is currently testing this capability of our country. The conclusions, as we can see, are partly disappointing.

How did the mass media response illuminate the problem?

A few weeks before the launch of the MSC service, the Ukrainian industry community was already actively discussing the difficulties encountered in clearing export containers at the ports of Greater Odesa. Businesses were surprised by additional cargo inspections that effectively blocked the transportation process. It was not clear how long these procedures would take. The accumulation of containers at the terminals grew along with the indignation of market participants.

At the same time, entrepreneurs noted that containers with similar export cargo passed through other border crossing points according to the standard procedure – additional checks were carried out only in the ports of Greater Odesa.

According to Global Ocean Link (GOL), a logistics company, only a fifth of the approximately 700 export containers were cleared through customs during the preparation of the first MSC call. It became clear that the ship was simply not getting enough cargo, so the first voyage was canceled.

In the end, the Association of International Freight Forwarders of Ukraine (AMFU), which unites more than 150 leading freight forwarding companies, spoke up. “The reason was unreasonable cargo inspections and delayed customs clearance of export containers with agricultural products for an indefinite period, which blocked the cargo for an indefinite period and made it more expensive due to additional storage and demurrage costs (compensation for losses for vessel demurrage – Mind), which can reach $2000-3000,” AMEU said last week.

The association called on the authorities “to help solve this problem and prevent negative consequences for Ukrainian logistics and the economy.” This release made quite a splash in the national media. The very next day, industry leaders, including representatives of container lines, met with the head of Odesa Customs, Yuriy Cherdintsev.

After the meeting, the head of the customs office publicly assured that he would help solve the problem within the customs authority. And the head office of the State Customs Service tried to explain the reasons for additional inspections of export containers: “The concern of business representatives, and therefore the delay in submitting containers for customs clearance, is caused mainly by the fact that regulatory and law enforcement agencies are working on the facts of illegal export of agricultural products and cases of arrest of containers with such products.”

How will additional control measures affect container shipping?

In fact, the problem became the subject of public statements by some government agencies only when it rose above the “media waterline.” And when the focus of attention became the global business giant MSC, headquartered in Geneva.

Unfortunately, the first serious failure occurred a little earlier. In early June, the Turkish container line Akkon took the risk of bringing the container ship Elbe to the Black Sea seaport as part of the resumption of its service to Ukraine’s deepwater ports. Due to additional cargo checks and delays in procedures, the call was disrupted and the ship left the port empty. However, this scandal did not receive any media coverage at the time. Nor were there any public explanations from the relevant government agencies.

Similar problems were also reported by shippers in the Black Sea fishing port, which receives the Iteris Feeders service (Chornomorsk – Constanta), whose key partner is another container giant, the Danish Maersk. As a result of these complications, the service’s vessels were underloaded.

Why are additional checks of export containers made?

“The reasons declared by the state authorities for strengthening export cargo inspections are to ensure financial discipline, accounting and reporting, fulfillment of obligations to the budget by foreign economic entities, economic security, overcoming shadow mechanisms, de-shadowing and de-offshoring of the economy,” Konstantin Moryakov, attorney at law at ANK Law Firm, explains to Mind.

The relevant list was published by the Odesa Military Administration (OMA) and the State Tax Service of Ukraine in August 2023. The list is part of the development of the procedure for cooperation between Odesa Customs, the Main Department of the State Tax Service in Odesa region, and the Territorial Department of the BES in Odesa region. In matters of compliance with financial discipline by business entities in the field of foreign economic activity under martial law. In addition, an open memorandum of cooperation was announced between the Odesa Regional Office, state authorities, local governments and business entities, which is open to all interested parties.

“The said procedure, developed based on the joint order of the DIA and the military command dated 18.08.2023 No. 19, launched joint measures by the said state bodies regarding risky export operations of products from Ukraine, in particular agricultural products, verification of the legality of their origin, as well as imposing additional responsibilities on freight forwarders, port operators and other business entities involved in this process to submit documents, information, etc.”, explains Moryakov.

“It is interesting that the said procedure of interaction also involves the Main Department of the State Tax Service in Odesa region, which, among other things, now appears to be engaged in analyzing and verifying the source of origin of agricultural products, providing so-called analytical certificates with its conclusions, which generally falls within the competence of the customs, according to the Customs Code of Ukraine,” the lawyer adds.

How is the additional regulation realized in reality?

“We often hear from our clients that, under the guise of the above reasons, all export containers are subject to a continuous inspection, customs declarations are not issued (even after the inspection), cargo loading orders are not approved, cargo is seized, searches and seizures are carried out, etc.,” says Moryakov.

Thus, on the one hand, the state encourages foreign business to work in Ukraine, assuring it of favorable conditions. On the other hand, the state complicates the conditions by creating additional regulation, using exclusive powers during martial law, increasing the number of state bodies involved in inspections, etc.

“Foreign shipowners are also becoming hostages of the situation, as they make a difficult decision to resume ship calls to Ukrainian ports and are faced with the fact that due to lengthy inspections of export containers and, often, seizures of the cargo contained in them, they are forced to leave the port underloaded or even empty, as a result of which they suffer losses and reconsider their decisions to operate in Ukrainian waters,” the lawyer notes. “Frankly speaking, we hear from our clients about pressure on them, which in some cases is accompanied by signs of corruption, forcing them to take measures to protect their rights and interests,” emphasizes Moryakov.

What can solve the problem?

According to the lawyer, despite the “traditional” delayed reaction of government agencies, the meeting between industry representatives and the management of the Odesa Customs proved that a dialogue between the state and business is possible, and even more so, necessary.

“Perhaps, if such a meeting or a meeting, for example, at the Odesa Customs, between business and government representatives had taken place before or after the agreement on the procedure for interaction and new requirements based on a frank dialogue and the search for the optimal format of cooperation, this scandal could have been avoided,” the lawyer said.

“I believe that it is necessary to draw conclusions from the current situation and move forward by implementing modern practices of high-quality dialogue between the state and business to prevent negative consequences for the state in the future, to maintain a balance of interests for the sake of the common goal – the growth of the Ukrainian economy,” Moryakov summarized.

How did MSC react to the Ukrainian problems?

These complications forced the world’s largest container carrier to respond appropriately to changing circumstances. After the first voyage was canceled, the company has postponed the date several times. At the time of publication, the first call was scheduled for July 7.

During the period of uncertainty, the carrier even changed the vessel to operate the service twice. However, the latest update of the schedule again features MSC Levante F.

Obviously, the final decision on the main parameters of the service will be made by MSC only after the situation in Odesa has actually improved. Therefore, the updated call date has effectively become a new deadline for testing our country’s capacity to operate. The preparations for the rescheduled voyage are finally going well: the second call of the Turkish Akkon container ship Elbe to the Black Sea port took place last week, with the vessel delivering containers to Constanta.

How does the rescheduling of the MSC impact the market?

“The biggest problem is the reputational risk, which can greatly affect the market,” GOL Commercial Director Volodymyr Guz told Mind. ”The first direct call of the largest global container line to the ports of Greater Odesa was supposed to take place – it was a landmark event. Unfortunately, our state authorities did not take this fact into account – due to bureaucratic procedures, Ukraine does not look good abroad.”

At the same time, Guz is convinced that MSC will resume ship calls to Odesa. “There will definitely be a second call, but if this happens again, we will face serious issues with the possibility of resuming container shipping to the ports of Greater Odesa. This story has a negative impact on the plans of other container lines to return to Ukraine,” adds GOL’s commercial director.

In addition, the detention of containers did cause material losses to shippers. Additional costs may force market participants to refrain from using Ukrainian deepwater ports for now. “Why work directly through the difficult situation in the ports of Greater Odesa when there are alternatives, such as Constanta and Gdansk? These destinations are now equivalent or even better in economic terms than Greater Odesa. So why bear the additional risks of calling at Odesa, considering delivery times and other factors, and not receive any financial benefit? These are the questions that service users may ask themselves,” Guz reflects. “Yes, the resumption of ship calls to Greater Odesa is good news, but if the economy is not considered, no one will use the services regularly,” he added.

“ Thus, it is difficult to overestimate the resumption of regular container traffic to the ports of Greater Odesa by global players. In addition to a direct increase in exports and the gradual stabilization of our maritime container market. The return of ship calls will give confidence to the maritime and port industries, allow us to keep logistics and infrastructure costs within the country, etc.

Peak Season Surcharges: Analytics in Figures

Pre-war Indicators: Real Prospects or Unjustified Expectations

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.