Shipping containers linked to Russia pile up in Rotterdam

By Cagan Koc (Bloomberg) —

In normal times, the Dutch port of Rotterdam is like a machine: hundreds of ships come and go every day, and tens of thousands of crates are loaded and unloaded from these ships, all to keep the European economy running.

Right now, however, sanctions against Russia are rumbling thousands of steel shipping containers, the port boss said in an interview that gave unique insight into how the beating heart of Europe’s real economy is disturbed by the measures against Moscow.

According to Port of Rotterdam general manager Allard Castelein, the boxes, usually 20 or 40 feet long and destined for the country hit by the sanctions, must all be carefully inspected to ensure their movement will not breach the penalties.

Several agencies are also paying close attention to vessels arriving from Russia, and a slew of container terminals and shipping lines have also indicated that they will no longer handle goods bound for the sanctions-hit country after its invasion of Russia. ‘Ukraine.

“You can just imagine the nightmare emerging,” Castelein, 63, said in the interview at his office in the World Port Center, overlooking the Rotterdam skyline.

Even before the invasion, global supply chains in general – and in the container shipping industry in particular – had barely overcome the chaos caused by Covid-19, with ships pulled from their places and demand for booming merchandise when the pandemic made many services unavailable.

Of the thousands of packages with each ship arriving “several tens or hundreds may be destined for Russia”, he said. “You have to isolate them, separate them, and then do physical inspections of the containers before they can be released.”

“This exercise puts constraints on the value chain in terms of physical space, manpower and time,” he said, adding that the port currently has 4,500 containers that have been reserved for inspection, an extraordinary situation. “We try to keep this number as low as possible because the yard itself is limited.”

Castelein said the port is ready to create spare capacity by establishing a so-called rest area if the number of containers linked to Russia leads to a complete blockage of the terminals. “The Euromax terminal has an expansion capacity, and we could finally use it.”

Russian business represents a significant portion of the port’s operations, as of the approximately 470 million tonnes transshipped through the facility each year, around 13% is Russian-oriented.

Of all the containers passing through, 10% are linked in some way to the country, which also exports raw materials like steel, copper, aluminum and nickel through the Dutch hub. But a significant part of the port’s total volume is related to energy.

Currently, around 30% of Russian crude oil, 25% of liquefied natural gas and 20% of petroleum products and coal are imported via Rotterdam, according to the port website.

There is no outright ban on buying Russian energy products, but European governments and companies are starting to wean themselves off supplies and “it comes at a cost”, according to Castelein.

“A lot of the refineries in this region have been adjusted to Russian crude oil,” meaning that while supplies could be replaced, efficiency and fuel yields might not be the same, he said. declared.

The Dutch government is taking steps to increase the capacity to import liquefied gas into the Netherlands in the short term. Capacity at the port’s LNG terminal, which is operated by Nederlandse Gasunie and Koninklijke Vopak NV, is expected to increase by 30-40% before the end of the year, Castelein said.

But the energy woes will be far from over even then.

If European countries refuse to comply with Russian demands to pay in rubles for its gas exports – most of which go directly to the continent – and the Kremlin then halts energy exports, “we could be in dire straits. at midnight, very easily”. he said. “The gas storages are not filled, so we are not out of troubled waters.”

–With help from Jody Megson.

© 2022 Bloomberg L.P.

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