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REPUBLICA PRESS
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Freight (Cargo)

Ukraine Grain Ship Passes Russia’s Black Sea Blockade

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MYKOLAIV, Ukraine — A ship loaded with corn on Monday became the first cargo vessel to sail from Ukraine in more than five months of war, passing through Russia’s naval blockade of Ukraine’s Black Sea ports and raising hopes that desperately needed food will soon reach nations afflicted by shortages and soaring prices.

The ship’s journey was the culmination of months of negotiations and an international campaign to get grain out of Ukraine, one of the world’s breadbaskets before the war. Russia’s invasion and blockade, along with Western sanctions impeding Russian exports and factors like drought and climate change, have sharply cut global grain supplies, threatening to bring famine to tens of millions of people, particularly in the Middle East and Africa.

Mediators from the United Nations and Turkey, which shares the Black Sea coast with Russia and Ukraine, oversaw months of talks in Istanbul. Though discussions seemed hopelessly mired for weeks, in late July the parties struck a deal to free more than 20 million tons of grain.

the causes of a looming global hunger crisis.

“Ensuring that grain, fertilizers, and other food-related items are available at reasonable prices to developing countries is a humanitarian imperative,” António Guterres, the U.N. secretary general, said Monday. “People on the verge of famine need these agreements to work, in order to survive.”

major supplier of fertilizer, and with Ukraine it supplies more than a quarter of the world’s wheat.

But as the Razoni’s Black Sea crossing raised hopes for some degree of cooperation between the combatants, the fighting intensified on multiple fronts in Ukraine.

a counteroffensive in the southern Kherson region, Ukraine has used long-range precision weapons, recently supplied by the West, to disrupt Russian supply lines and logistics. Ukrainian forces have attacked Russian command and control centers, hit supply routes, tried to isolate Russian forces into pockets and enlisted Ukrainian saboteurs behind enemy lines.

adept at attacking Russian command and control hubs and destroying large amounts of Russian equipment. On Monday, the Biden administration announced another round of support for Ukraine: $550 million in military aid, including more ammunition for 155-millimeter howitzer artillery pieces and High Mobility Artillery Rocket Systems, or HIMARS, that the United States has already provided.

But for all its sluggish or faltering progress in the war, Russia retains vast advantages in the size of its arsenal, and its military has shown a willingness and ability to strike all over the country, even as it focuses on gaining ground in eastern Ukraine. There, Russia has blanketed town after town with overwhelming artillery fire as it tries to reposition ground forces to press forward.

The strategy slowly gave Russia control of the eastern Luhansk Province, leaving many cities and villages in ruins. Russian forces have since moved to reinforce the south and to push into another eastern province, Donetsk.

“Their tactic remains much the same as it was during the hostilities in Luhansk region,” Serhiy Haidai, head of Ukraine’s Luhansk regional government, said on Monday.

He said the Russians were making daily attempts to mount an offensive on the city of Bakhmut, in Donetsk, but so far had failed to break through the main Ukrainian defensive lines.

Russian forces have also continued to shell residential and military areas in and around the city of Kharkiv in the northeast, putting pressure on Ukraine not to shift too many of its defenses from there.

In Chuhuiv, in the Kharkiv region and just 10 miles from Russian lines, residents were still recovering on Monday from missile strikes last week on the House of Culture, a building used since Soviet times for cultural events. In wartime, the building’s kitchens were used to prepare food for the needy, but members of the city government had also used it as a temporary office, possibly a reason for the attack.

The missiles killed three people sheltering in the basement and wounded several more, according to Oleh Synyehubov, the Kharkiv regional administrator. A volunteer cook was among the dead, residents said. His brother and several other people survived.

Two women were also killed, one of whom had been helping the cook, said a resident who gave only his first name, Maksim, wary of possible retribution. They were making an Uzbek rice dish, plov, for people in the neighborhood.

“She was just cleaning vegetables,” Maksim said.

Chuhuiv has come under increasing bombardment in recent days, as have the city of Kharkiv and other villages and towns in the province. Soldiers guarding the approaches to the city on Sunday said that artillery strikes had been steady much of the day, hitting an industrial area around the train station.

The Russians “are hitting lots of places like this, all the schools as well,” said Maksim. “They are doing it to make the people leave.”

People were getting the message, and the town was largely empty, he said. He was preparing to leave too, he said. He and his family had plans to emigrate to Canada.

“There is nothing left here,” he said.

Michael Schwirtz reported from Mykolaiv, Ukraine, Matina Stevis-Gridneff from Brussels and Matthew Mpoke Bigg from London. Reporting was contributed by Carlotta Gall and Kamila Hrabchuk from Chuhuiv, Ukraine, Marc Santora from London and Alan Yuhas from New York.

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New Supply Chain Risk: 22,000 Dockworkers Who May Soon Strike

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In a world contending with no end of economic troubles, a fresh source of concern now looms: the prospect of a confrontation between union dockworkers and their employers at some of the most critical ports on earth.

The potential conflict centers on negotiations over a new contract for more than 22,000 union workers employed at 29 ports along the West Coast of the United States. Nearly three-fourths work at the twin ports of Long Beach and Los Angeles, the primary gateway for goods shipped to the United States from Asia, and a locus of problems afflicting the global supply chain.

The contract for the International Longshore and Warehouse Union expires at the end of June. For those whose livelihoods are tied to ports — truckers, logistics companies, retailers — July 1 marks the beginning of a period of grave uncertainty.

A labor impasse could worsen the floating traffic jams that have kept dozens of ships waiting in the Pacific before they can pull up to the docks. That could aggravate shortages and send already high prices for consumer goods soaring.

impacts of Russia’s invasion of Ukraine and as China imposes new Covid restrictions on industry.

The dockworkers have moved unprecedented volumes of cargo during the pandemic, even as at least two dozen succumbed to Covid-19, according to the union. They are aware that many of the shipping terminals in Southern California are controlled by global carriers that have been racking up record profits while sharply increasing cargo rates — a fact cited by President Biden in his recent State of the Union address as he promised a “crackdown” to alleviate inflation.

With ports now capturing attention in Washington, some within the shipping industry express confidence that negotiations will yield a deal absent a disruptive slowdown or strike.

“There’s too much at stake for both sides,” Mario Cordero, executive director of the Port of Long Beach, said during a recent interview in his office overlooking towering cranes and stacks of containers. “There’s an incentive because the nation is watching.”

Savannah, Ga.

“If they don’t come to a compromise, then freight will get permanently diverted to the East Coast,” Mr. Matinifar said.

Animating contract talks is the popular notion that the longshoremen are a privileged class within the supply chain, using the union to protect their ranks — a source of resentment among other workers.

“They treat us like we’re nobodies,” said Mr. Chilton, the truck driver. “The way they talk to us, they’re very rude.”

traced to the outbreak of Covid-19, which triggered an economic slowdown, mass layoffs and a halt to production. Here’s what happened next:

Union officials declined to discuss their objectives for a new contract.

Mr. McKenna, the maritime association chief executive, said the union had yet to outline demands while declining to engage in discussions before May.

He expected that the union would resist efforts to expand automation at the ports, a traditional point of contention. He said greater automation — such as adding self-driving vehicles and robotics to move cargo — was unavoidable in ports in dense urban places like Los Angeles. There, land is tight, so growth must come from increasing efficiency, rather than physically expanding.

The last time the I.L.W.U. contract expired, West Coast ports suffered months of debilitating disruptions — the source of enduring recriminations.

Terminal operators accused dockworkers of slowing operations to generate pressure for a deal. The union countered that employers were the ones creating problems.

Some dockworkers question whether terminal owners are sincerely seeking to speed up cargo handling, given that shipping rates have soared amid chaos at the ports.

Jaime Hipsher, 45, drives a so-called utility tractor rig — equipment used to move containers — at a pair of Southern California shipping terminals. One is operated by A.P. Moller-Maersk, a Danish conglomerate whose profits nearly tripled last year, reaching $24 billion.

She said maintenance of equipment was spotty, producing frequent breakdowns, while the terminals were often understaffed — two problems that could be fixed with more spending.

A Maersk spokesman, Tom Boyd, rejected that characterization.

“Freight rates have been impacted by the global Covid-19 recovery and the demand outpacing supply,” he said in an emailed statement. “Ships at anchor are not productive, nor are they earning revenue against a backdrop of large fixed costs.”

That Ms. Hipsher spends her nights on the docks represents an unexpected turn in her life.

Her father was a longshoreman. He urged her to attend college and do something that involved wearing business attire, in contrast to how he spent his working hours — climbing a skinny ladder to the top of ships and loading coal onto vessels.

“He would come home after work and he would have coal dust coming out of his ears, out of his nose,” Ms. Hipsher recalled. “His hands would just be completely black.”

But in 2004, when she was working as a hairstylist, her brother — also a longshoreman — suggested that she enter a lottery for the right to become a casual dockworker.

The ports had changed, her brother said. Growing numbers of women were employed.

Eighteen years later, Ms. Hipsher has gained the security of seniority, health benefits and a pension.

As contract talks approach, she pushes back against the notion that the union poses a threat to the global economy.

“You’re complaining about my wages, thinking that my wages are the source of inflation, and we don’t deserve it,” she said. “Well, look at the billions that the owners are making.”

Emily Steel contributed reporting.

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Ukrainian Invasion Adds to Chaos for Global Supply Chains

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And if the conflict is prolonged, it could threaten the summer wheat harvest, which flows into bread, pasta and packaged food for vast numbers of people, especially in Europe, North Africa and the Middle East. Food prices have already skyrocketed because of disruptions in the global supply chain, increasing the risk of social unrest in poorer countries.

On Tuesday, the global shipping giant Maersk announced that it would temporarily suspend all shipments to and from Russia by ocean, air and rail, with the exception of food and medicine. Ocean Network Express, Hapag-Lloyd and MSC, the world’s other major ocean carriers, have announced similar suspensions.

“The war just makes the worldwide situation for commodities more dire,” said Christopher F. Graham, a partner at White and Williams.

Jennifer McKeown, the head of global economics service at Capital Economics, said the global economy appeared relatively insulated from the conflict. But she said shortages of materials like palladium and xenon, used in semiconductor and auto production, could add to current difficulties for those industries. Semiconductor shortages have halted production at car plants and other facilities, fueling price increases and weighing on sales.

“That could add to the shortages that we’re already seeing, exacerbate those shortages, and end up causing further damage to global growth,” she said.

International companies are also trying to comply with sweeping financial sanctions and export controls imposed by Europe, the United States and a number of other countries that have clamped down on flows of goods and money in and out of Russia.

In just a few days, Western governments moved to exclude certain Russian banks from using the SWIFT messaging system, limit the Russian central bank’s ability to prop up the ruble, cut off shipments of high-tech goods and freeze the global assets of Russian oligarchs.

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What America’s Port Crisis Looks Like Up Close

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SAVANNAH, Ga. — Like toy blocks hurled from the heavens, nearly 80,000 shipping containers are stacked in various configurations at the Port of Savannah — 50 percent more than usual.

The steel boxes are waiting for ships to carry them to their final destination, or for trucks to haul them to warehouses that are themselves stuffed to the rafters. Some 700 containers have been left at the port, on the banks of the Savannah River, by their owners for a month or more.

“They’re not coming to get their freight,” complained Griff Lynch, the executive director of the Georgia Ports Authority. “We’ve never had the yard as full as this.”

As he speaks, another vessel glides silently toward an open berth — the 1,207-foot-long Yang Ming Witness, its decks jammed with containers full of clothing, shoes, electronics and other stuff made in factories in Asia. Towering cranes soon pluck the thousands of boxes off the ship — more cargo that must be stashed somewhere.

turmoil in the shipping industry and the broader crisis in supply chains is showing no signs of relenting. It stands as a gnawing source of worry throughout the global economy, challenging once-hopeful assumptions of a vigorous return to growth as vaccines limit the spread of the pandemic.

Germany’s industrial fortunes are sagging, why inflation has become a cause for concern among central bankers, and why American manufacturers are now waiting a record 92 days on average to assemble the parts and raw materials they need to make their goods, according to the Institute of Supply Management.

On the surface, the upheaval appears to be a series of intertwined product shortages. Because shipping containers are in short supply in China, factories that depend on Chinese-made parts and chemicals in the rest of the world have had to limit production.

But the situation at the port of Savannah attests to a more complicated and insidious series of overlapping problems. It is not merely that goods are scarce. It is that products are stuck in the wrong places, and separated from where they are supposed to be by stubborn and constantly shifting barriers.

The shortage of finished goods at retailers represents the flip side of the containers stacked on ships marooned at sea and massed on the riverbanks. The pileup in warehouses is itself a reflection of shortages of truck drivers needed to carry goods to their next destinations.

Vietnam, a hub for the apparel industry, was locked down for several months in the face of a harrowing outbreak of Covid. Diminished cargo leaving Asia should provide respite to clogged ports in the United States, but Mr. Lynch dismisses that line.

“Six or seven weeks later, the ships come in all at once,” Mr. Lynch said. “That doesn’t help.”

Early this year, as shipping prices spiked and containers became scarce, the trouble was widely viewed as the momentary result of pandemic lockdowns. With schools and offices shut, Americans were stocking up on home office gear and equipment for basement gyms, drawing heavily on factories in Asia. Once life reopened, global shipping was supposed to return to normal.

But half a year later, the congestion is worse, with nearly 13 percent of the world’s cargo shipping capacity tied up by delays, according to data compiled by Sea-Intelligence, an industry research firm in Denmark.

Many businesses now assume that the pandemic has fundamentally altered commercial life in permanent ways. Those who might never have shopped for groceries or clothing online — especially older people — have gotten a taste of the convenience, forced to adjust to a lethal virus. Many are likely to retain the habit, maintaining pressure on the supply chain.

“Before the pandemic, could we have imagined mom and dad pointing and clicking to buy a piece of furniture?” said Ruel Joyner, owner of 24E Design Co., a boutique furniture outlet that occupies a brick storefront in Savannah’s graceful historic district. His online sales have tripled over the past year.

On top of those changes in behavior, the supply chain disruption has imposed new frictions.

Mr. Joyner, 46, designs his furniture in Savannah while relying on factories from China and India to manufacture many of his wares. The upheaval on the seas has slowed deliveries, limiting his sales.

He pointed to a brown leather recliner made for him in Dallas. The factory is struggling to secure the reclining mechanism from its supplier in China.

“Where we were getting stuff in 30 days, they are now telling us six months,” Mr. Joyner said. Customers are calling to complain.

His experience also underscores how the shortages and delays have become a source of concern about fair competition. Giant retailers like Target and Home Depot have responded by stockpiling goods in warehouses and, in some cases, chartering their own ships. These options are not available to the average small business.

Bottlenecks have a way of causing more bottlenecks. As many companies have ordered extra and earlier, especially as they prepare for the all-consuming holiday season, warehouses have become jammed. So containers have piled up at the Port of Savannah.

Mr. Lynch’s team — normally focused on its own facilities — has devoted time to scouring unused warehouse spaces inland, seeking to provide customers with alternative channels for their cargo.

Recently, a major retailer completely filled its 3 million square feet of local warehouse space. With its containers piling up in the yard, port staff worked to ship the cargo by rail to Charlotte, N.C., where the retailer had more space.

Such creativity may provide a modicum of relief, but the demands on the port are only intensifying.

On a muggy afternoon in late September, Christmas suddenly felt close at hand. The containers stacked on the riverbanks were surely full of holiday decorations, baking sheets, gifts and other material for the greatest wave of consumption on earth.

Will they get to stores in time?

“That’s the question everyone is asking,” Mr. Lynch said. “I think that’s a very tough question.”

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E-Commerce Mega-Warehouses, a Smog Source, Face New Pollution Rule

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And the industry is surging. Last year, Inland Empire, a region close to the Los-Angeles-Long Beach port where retailers and manufactures offload billions of dollars in goods, added 23 million square feet of new warehouse construction, an area the equivalent of nearly 500 football fields.

“Where we live, these warehouses are popping up like Starbucks,” said Ivette Torres of the People’s Collective for Environmental Justice, a local nonprofit organization that has campaigned for warehouses to address their role in air pollution.

Operators of warehouses larger than 100,000 square feet (roughly two football fields) are required to earn points to make up for emissions from the trucks that come and go from the warehouses. Operators can earn these points by acquiring or using zero-emissions trucks or yard vehicles, or investing in other methods for reducing greenhouse gas emissions, for example, installing solar panels at the warehouses or having air filters installed in local homes, schools and hospitals. Or they could choose to pay a fee if not in compliance.

Many warehouses are far larger. One planned site involves 40 million square feet of industrial buildings, an area about the size of Central Park in New York.

Known as an “indirect source rule,” the effort is unusual because it largely targets emissions from the trucks that service warehouses, rather than the warehouses themselves. In the past, similar approaches have been made to address the heavy traffic drawn by sports stadiums or shopping malls.

According to estimates by the regulator, its plan will reduce nitrogen oxide emissions by up to 15 percent and result in up to 300 fewer deaths, up to 5,800 fewer asthma attacks, and up to 20,000 fewer work loss days between 2022 and 2031. The district estimated that public health benefits from its plan could be as much as $2.7 billion, about three times the projected costs.

The region, which includes portions of Los Angeles, Riverside and San Bernardino Counties and all of Orange County, has a population of 18 million people — more than most states.

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Clearing the Suez Canal Took Days. Figuring Out the Costs May Take Years.

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TOKYO — It took six days to prise free a giant container ship that ran aground and clogged the Suez Canal, one of the world’s most crucial shipping arteries. It could take years to sort out who will pay for the mess.

Cargo companies, insurers, government authorities and a phalanx of lawyers, all with different agendas and potential assessments, will not only need to determine the total damage, but also what went wrong. When they eventually finish digging through the morass, the insurers of the ship’s Japanese owner are likely to bear the brunt of the financial pain.

The costs could add up quickly.

There are the repairs for any physical damage to the Ever Given, the quarter-mile-long ship that got stuck in the Suez. There is the bill for the tugboats and front-end loaders that dug the beached vessel out from the mud. The authority that operates the Suez Canal has already said the crisis has cost the Egyptian government up to $90 million in lost toll revenue as hundreds of ships waited to pass through the blocked waterway or took other routes.

And the stalled ship held up as much as $10 billion of cargo a day from moving through the canal, including cars, oil, livestock, laptops, sneakers, electronics and toilet paper. Companies delivering goods may have to pay customers for missed deadlines. If any agricultural goods went bad, producers may look to recoup lost revenue.

Richard Oloruntoba, an associate professor of supply chain management at the Curtin Business School in Perth, Australia.

Jeff N.K. Lee, a lawyer in Taipei who specializes in commercial and transportation law.

“While the ship is just parked there, the cargo isn’t actually being damaged,” Mr. Lee said. “The only damage is that it’s delayed.”

“Say I have a batch of cloth, and on top of the time it took to come to Taiwan, it got stuck for six or seven days,” he said. “It just sat there. Will it go bad? It won’t.”

There is a caveat. The ship’s owner could have to pay for cargo delays, if its crew is found to be at fault for the accident.

Some so-called third-party claims related to delayed cargo may be covered by yet another insurer for the ship, the UK P&I Club. The same goes for any claims by the Suez Canal Authority, which operates the waterway and might file over any loss of revenue.

Nick Shaw, chief executive of the International Group of Protection and Indemnity Clubs, the umbrella group that includes the UK P&I Club, said the insurer would “make decisions together with the shipowner as to which ones had validity and which ones are illegitimate.”

Adding to the complexity of the Suez accident are the layers upon layers of insurance. Reinsurers, companies that covers the risk of other insurance companies, come into play for claims above $100 million. Between insurance and reinsurance, the ship’s owner has coverage for those third-party claims up to $3.1 billion, although few experts believe the damages will run that high.

The sheer size of the Ever Given makes the situation all the more labyrinthine. Aside from time of war, the Suez Canal has never been blocked quite so spectacularly or for as long a time as it was with the Ever Given, and this is the biggest ship to run aground.

The ship is as long the Empire State Building is tall, with the capacity to carry 20,000 containers stacked 12 to 14 high. The Ever Given is one of a fleet of 13 in a series designed by Imabari, part of a push to lower the costs per container and make the ships more competitive in an increasingly fierce market dominated by Chinese and South Korean shipbuilders.

“The bigger the ships get, the risk is whenever you have an incident like this is that you are putting more of your eggs into one basket,” said Simon Heaney, senior manager of container research at Drewry UK, a shipping consultancy. “So the claims will magnify.”

Raymond Zhong and Amy Chang Chien contributed reporting from Taipei, Taiwan. Vivian Yee contributed from Cairo and Makiko Inoue, Hisako Ueno, Hikari Hida from Tokyo.

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‘I’ve Never Seen Anything Like This’: Chaos Strikes Global Shipping

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Off the coast of Los Angeles, more than two dozen container ships filled with exercise bikes, electronics and other highly sought imports have been idling for as long as two weeks.

In Kansas City, farmers are struggling to ship soybeans to buyers in Asia. In China, furniture destined for North America piles up on factory floors.

Around the planet, the pandemic has disrupted trade to an extraordinary degree, driving up the cost of shipping goods and adding a fresh challenge to the global economic recovery. The virus has thrown off the choreography of moving cargo from one continent to another.

At the center of the storm is the shipping container, the workhorse of globalization.

Americans stuck in their homes have set off a surge of orders from factories in China, much of it carried across the Pacific in containers — the metal boxes that move goods in towering stacks atop enormous vessels. As households in the United States have filled bedrooms with office furniture and basements with treadmills, the demand for shipping has outstripped the availability of containers in Asia, yielding shortages there just as the boxes pile up at American ports.

record-high freight prices in reporting more than $2.7 billion in pretax earnings in the last three months of 2020.

No one knows how long the upheaval will last, though some experts assume containers will remain scarce through the end of the year, as the factories that make them — nearly all of them in China — scramble to catch up with demand.

Since they were first deployed in 1956, containers have revolutionized trade by allowing goods to be packed into standard size receptacles and hoisted by cranes onto rail cars and trucks — effectively shrinking the globe.

Containers are how flat panel displays made in South Korea are moved to plants in China that assemble smartphones and laptops, and how those finished devices are shipped across the Pacific to the United States.

Any hitch means delay and extra cost for someone. The pandemic has disrupted every part of the journey.

Peloton outlined plans to invest $100 million in air shipping and expedited ocean freight.

But even in normal times, airfreight is roughly eight times the cost of sea shipment. Most airfreight is carried in the cargo holds of passenger jets. With air travel severely constrained, so are available cargo slots.

Some shippers have rearranged their schedules, stopping off in Oakland, Calif., 400 miles to the north, before continuing to Los Angeles. But containers are stacked on ships in configurations set by their destinations. A sudden change in plans means moving the stacks around like a Jenga game.

And the port in Oakland is dealing with its own pandemic problems. Dockworkers are home tending to children who are not in school, said Bryan Brandes, the port’s maritime director.

“In normal times, vessels come directly into Oakland,” Mr. Brandes said. “Right now, we’re ranging anywhere from seven to 11 vessels at anchorage.”

The dysfunction on the American West Coast has caused problems thousands of miles away.

Scoular, one of the largest agricultural exporters in the United States, loads grain and soybeans into containers at terminals like Chicago and Kansas City, and then sends them by rail to Pacific ports en route to Asia.

Given the prices fetched by containers in Asia, shipping carriers are increasingly unloading in California and then immediately putting empty boxes back on ships for the return leg to Asia, without waiting to load grain or other American exports. That has left companies like Scoular scrambling to secure passage.

Delays at the ports frequently bump Scoular’s containers to different vessels, forcing the company to redo its customs paperwork — another delay.

“It’s the schedule reliability that is a problem,” said Sean Healy, Scoular’s carrier relations manager. “It’s a global issue.”

In recent weeks, shipping carriers have aggressively moved empty containers to Asia, increasing availability there, according to data from Container xChange, a consultant in Hamburg, Germany.

Some experts assume that as vaccinations increase and life returns to normal, Americans will again shift their spending — from goods back to experiences — reducing the need for containers.

But even as that happens, retailers will begin building up inventories for the holiday shopping binge.

The stimulus spending plan moving through Congress may generate hiring that could prompt another wave of buying, as previously jobless people replace aging appliances and add to their wardrobes.

“There could be a whole other subset of consumers out there that haven’t been able to consume,” said Michael Brown, a container analyst at KBW in New York. “You are potentially looking at some shortages for quite some time.”

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