Shipping world stands with Ukraine

Welcome to the WHAT THE TRUCK?!? newsletter. In this issue, companies clap back against Russia, will trucker convoys really disrupt SOTU, Suez Canal raises tolls again and more.

In like a lion

Out like a lamb? — Last I checked that idiom was for March, but it was very much the case for truckload rates in February. We’re entering the month with national dry van rates inclusive of fuel down 21 cents since their February peak. Carriers can’t cry pauper yet though as $3.57/mi is still a highly elevated rate and was only topped twice in SONAR in 2021. Close your umbrella, more headwinds are coming.

Oil prices have been erratic prior to the invasion but this will only make things worse. Fuel prices currently account for roughly 15%-20% of the current cost of spot truckload shipments and the sharp increase over the past few weeks will keep rates elevated even if the market eases. — FreightWaves’ Zach Strickland

FSC could “skyrocket” — Just as we’re working to get past COVID and a global supply crisis that’s hammered shippers and society for two years, we’ve now got a war to contend with. Diesel prices were already ramping up prior to the invasion of Ukraine and now they’re at the highest level since 2014. Meanwhile, UPS’ ground delivery surcharge will climb to 13% should diesel prices hit $4.10 a gallon or higher on Monday, according to FreightWaves. Mike Erickson, president of AFMS LCC, a parcel consultancy, warns that surcharges could “skyrocket” on Monday once the impacts of the war are reflected in the price of fuel.

Shipping and business clap back at Russia

The world is watching — The conflict in Ukraine may be the first time war has gone viral. Social media has brought the public up close and personal with these atrocities in a way that cable news cameras showing bombs drop from a distance never have before. The emotional response to this has been palpable. As Ukrainians battle for their freedom, businesses across the globe have taken action to … well, cancel Russia.

Shipping: MSC, Hapag-Lloyd, ONE, Maersk, UPS, FedEx, SEKO Logistics and a growing number of other carriers, forwarders and brokers have suspended service and/or deliveries to some or all of Russia. Meanwhile, Mark Solomon reports, “Landstar System Inc.’s truckload business could face a $100 million hit during March should the two independent agencies that serve Ukraine on its behalf completely shut down operations there, the company said Monday.” DHL, which has about 40% of the Russian parcel market, has “canceled all current DHL road transport agreements between Denmark and Russia,” according to The Hill.
Banks: Some Russian banks have been cut off from SWIFT, causing the ruble to hit record lows and citizens to storm ATMs.
Sports: The IOC, FIFA, NHL, F1 and many others have either pulled events or severed ties with Russia. Putin even had his black belt stripped by World Taekwondo.
Entertainment: Disney, Warner Bros. and Sony Pictures Entertainment have paused all theatrical releases in Russia.
Tech: One of the most amazing aspects about the response to this war has been how social media has connected leaders. Mykhailo Fedorov, Ukraine’s vice prime minister and minister of digital transformation, tweeted Elon Musk on Saturday asking for Starlink satellite internet terminals. By Monday, they’d arrived. Speaking of communication, Google, Facebook and Twitter have been working to remove Russian bots, disinfo campaigns and Russian state-sponsored ads.
Energy: Shell and BP have both exited Russia. Shell Chief Executive Officer Ben van Beurden called the invasion a “senseless act of military aggression.” What about sanctions from other countries? FreightWaves’ John Kingston tweeted, “There are no sanctions against buying Russian oil from any country. They are having a tough time selling their oil because companies want to avoid doing business with them.”

I don’t know how to greet anyone. Because I can’t say, “Good morning,” or “Good afternoon,” or “Good evening.” I can’t, and this is absolutely true because every day, that day is definitely not good for some, that evening is the last one for some, every day. — President Volodymyr Zelensky of Ukraine in his address to the European Parliament.

The unknown — Even as I type this, Ukraine is still under a full-scale assault with a 40-mile-long convoy set to besiege Kyiv. While these impacts will be difficult on the shipping community, all of that pales in comparison to the tragedy that is unfolding overseas. FreightWaves’ Zach Strickland may have said it best: “War is a terrible thing and there are many consequences much worse than continued supply chain disruptions and inflation. Here’s to hoping for a swift resolution and a positive outcome for the individuals whose lives are in danger through no fault of their own.”

To put things in perspective on the “new normal” for Ukrainians, here’s a beautiful rendition of their national anthem performed from a subway bomb shelter: Listen.

State of the Union: Shipping and convoys?

White House sets sights on shipping — I never thought I’d see the day when global shipping took center stage during a presidential State of the Union, but here we are. On Monday, the White House released its fact sheet on lowering the playing field in ocean shipping. Everything from exorbitant freight rates, poor communication with the dray community to carrier consolidation and collusion is called out in the report.

Under the new initiative, DOJ will provide the FMC with the support of attorneys and economists from the Antitrust Division for enforcement of violations of the Shipping Act and related laws. — White House Fact Sheet

The other convoy — While the world is focused on a 40-mile-long military convoy entering Kyiv, Washington is keeping its eye on a domestic convoy headed toward D.C. The convoys initially marketed themselves as being organized by truckers with a simple message to end mandates. Since then they’ve splintered off into multiple different groups, which has changed the scope of their messaging and called their intent into question.

Bad timing — Unlike the Freedom Convoy, this slow roll to D.C. has received much less attention as the American public is far more concerned with the specter of nuclear war than fading mandates. Shippers and shipping companies are trying to figure out how the knock-on effects from the war will pose an immediate business risk. Additionally, many in trucking question why this convoy isn’t running on a platform that addresses domestic trucking issues like parking, detention, ELDs and regulations.

Will they disrupt the SOTU? — A lot of noise has been made about truckers rolling into D.C. in time for the State of the Union, however the largest of the convoys is still in Indiana and has no plans to arrive in Washington until Saturday. A smaller “Stage of Freedom” is going on in the area right now but attendance is very low.

Suez raises tolls

I’m comin’ outta the booth — While the world is distracted, the Suez Canal slipped another toll hike past the goalie Monday. FreightWaves’ Lori Ann LaRocco reports that vessels will see increases ranging between 5-10%. On top of that, the Suez Canal Authority already raised tolls by 6% at the beginning of February.

Memetermission

WTT this week

Wednesday — The latest supply chain impacts from the Ukrainian conflict; what war means for CHB; can autonomous fleets run 20 hours a day; Uber Freight’s unique take on driver shortages; and trucking companies partner on driver health.

With special guests Bill Driegert, head of operations and co-founder at Uber Freight; Tom Kroswek, vice president of strategy and business development at Locomation; Dr. Mark Manera, founder of The Trucking Fitness Co.; and Matt Haffner, vice president of customs brokerage at OEC Group.

Friday — How one logistics company is using the DOD SkillBridge program to hire veterans; the logistics behind a veteran-themed coffee experience; and a print design shop for freight companies.

With special guests Michael Klemmer, CEO of Aerial Resupply Coffee; Matt Perkins, co-owner of Business to Business Logistics; and Eric Cerda, marketing manager at Liberty Custom Printing.

Catch new shows live at noon ET Mondays, Wednesdays and Fridays on FreightWavesTV, FreightWaves LinkedIn and Facebook or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player.

Now on demand

Russian invasion of Ukraine hits global supply chains