In response to Russia’s invasion of Ukraine, Canada and the U.S. have imposed new sanctions. The new sanctions include restrictions on individuals who are key members of President Putin’s inner circle, close contacts and family members of some individuals already sanctioned by Canada and the U.S., and key financial institutions.
In addition to other financial sanctions, Canada and the U.S. have revoked “Most-Favoured Nation status” for Russia and Belarus as trading partners, meaning imports will be subject to higher tariffs.
On February 24, 2022, Canada announced restrictions on exports to Russia. Canada stopped the issuance of new export permit applications and cancelled valid existing export permits for controlled goods and technology to Russia.
On March 8, 2022, the U.S. prohibited imports of Russian oil, liquefied natural gas, coal, and related products into the United States as well as prohibiting US persons from engaging in any new investment in the energy sector of the Russian Federation. These restrictions specifically target Russian-origin products, and do not affect those simply passing through the Russian Federation.
Earlier this month Canada banned Russian owned ocean vessels from docking at Canadian ports, the U.S. followed with their own ban to not allow docking for Russian-flagged vessels.
For the most current sanctions, refer to the following links:
For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.
Russia’s invasion of Ukraine affecting global supply chain
For global supply chains, Russia’s invasion of Ukraine could generate a wide range of challenges. The risks extend beyond higher energy costs, including compromised ocean cargo movement, disrupted airspace and implications for cargo insurance.
In terms of ocean cargo, severe disruptions are expected as carriers have decided to cease moving cargo to and from Russia, which will impact trading routes in the area. The region is primarily controlled by three shipping alliances:
2M – comprised of MSC and Maersk
The Alliance – comprised of Hapag-Lloyd, ONE, HMM and Yang Ming
The Ocean Alliance – comprised of Cosco, CMA CGM, Evergreen and OOCL
These alliances account for 80% of the world shipping market and include all of the top ten container lines. Shipping giants Maersk, MSC, Hapag-Lloyd and ONE Line have temporarily halted all container shipping to and from Russia, while other carriers have not declared their intentions at this point.
As a result of the conflict, many vessels have had to reroute, exacerbating congestion at other ports in Europe. The world’s oceans are now filled with ships whose onward journeys have been thrown into turmoil. Because they are no longer allowed to call on certain ports, they cannot deliver the cargo they have on board and cannot collect the cargo other customers expect.
Airspace restrictions from the economic war between the West and Russia over the invasion of Ukraine is adding logistical complexity and cost for the air cargo sector and passenger airlines still coping with COVID-related ups and downs in business activity. The conflict is also driving up the price of fuel, which represents a quarter or more of an airline’s cost base.
Air shippers have already been weathering higher rates as the COVID-19 pandemic sparked a drop in air cargo capacity. The month of February was a step in the right direction, as volumes and capacity both stabilized close to pre-pandemic levels and rates trended downward, however, the invasion of Ukraine presents a new layer of uncertainty.
Additionally, airlines are bracing for lengthy blockages of east-west flight corridors after the European
Union and Moscow issued airspace bans, which are estimated to affect 20 per cent of the world’s air cargo. Transport between Europe and north Asian destinations such as Japan, South Korea and China is on the front line of disruption after reciprocal bans barred European carriers from flying over Siberia and prevented Russian airlines from flying to Europe.
At the same time, Canada and the U.S. have barred all Russian-owned, registered and controlled aircraft from overflights of their territories. Russia has responded, banning three dozen airlines from its airspace.
Finally, most cargo insurance providers are now refusing to offer cargo insurance for any cargo transiting these impacted areas, which include Russia, Ukraine and shipping via the Black Sea. Initially, insurance providers responded by increasing premiums for cargo insurance coverage, however, given the extreme risk at the present time many are now refusing to offer any coverage.
For more information, contact David Lychek, Director – Ocean & Air Services.
Fuel Surcharge increases adding to trucking costs
Following Russia’s invasion of Ukraine, fuel costs have spiked at an unprecedented pace, posing further challenges to an already struggling trucking industry. The rapid rise in diesel fuel prices this past month alone has resulted in setting record high averages of over USD$5.00 per gallon in the U.S. and over CAD$2.00 per litre in Canada. The increased price at the pump is adding hundreds of dollars a week to the costs of operating each truck, forcing carriers to add to the already record shattering freight rates via fuel surcharges.
Trucking companies use fuel surcharges to cover swings in diesel prices, and those surcharges have risen on average to 43 cents a mile from 19 cents at the start of the year, according to Truckstop.com.
The ongoing geopolitical crisis and the volatility within the oil markets are expected to maintain the high costs of fuel for the foreseeable future. Potentially worsening the situation is the recent announcement by European nations of cutting or eliminating the purchase of Russian oil altogether, an action already implemented by the Canadian and US governments, which will then increase the fuel supply shortage, further hiking rates.
As we work to manage this continuous situation, some within the trucking industry are asking for both federal and provincial governments to suspend or permanently eliminate some of the taxes levied on gasoline and diesel purchases such as the federal excise tax, federal carbon tax, provincial tax and GST/HST to lower the elevated cost.
Historically, retail fuel prices tend to gradually rise in the spring and peak in late summer when demand is at its highest. This year is no exception as the multitude of factors will continue to drive rising diesel prices while maintaining trucking rates and the accompanying fuel surcharges at record numbers.
For more information about shipping freight to or from this city, contact Debbie McGuire, Director – Freight Solutions.
Country of Origin may not be
the Country of Export
Did you know that Country of Origin and Country of Export are not the same thing? Country of Origin indicates where your product is made. Country of Export indicates where your product is shipped from. Failing to make this distinction could result in an AMPS penalty for incorrect tariff treatment.
Sumin Oh, Freight Solutions
At Your Service: Sumin Oh, Freight Solutions
Sumin Oh joined our Head Office Freight Solutions team in May 2021. Like many Universal employees, Sumin brings a strong educational foundation to her work. She graduated with Honours from Seneca College (2020 – International Transportation and Customs), and is also working towards completion of her CIFFA Certificate.
Sumin’s positive attitude and attention to detail are extremely valuable when coordinating shipments for our clients.
Sumin can be reached by phone (905) 882-4880, ext. 1211 or by email.
Route is produced by Universal Logistics. Editor: Bettina Scharnberg. Email: email@example.com While every effort has been made to ensure the accuracy of information contained herein, Universal Logistics accepts no responsibility or liability for errors or omissions. Written correspondence should be forwarded to:
Universal Logistics Inc.
125 Commerce Valley Drive West
Suite 750, Thornhill, Ontario L3T 7W4
Tel: 905-882-4880 Fax: 905-882-2250
Attention: Bettina Scharnberg
News and Views for the
clients of Universal Logistics