Transcript
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The host introduces the episode, reflects on the invasion of Ukraine, and explains the strategic importance of the Black Sea. He then walks through live vessel traffic patterns and how normal shipping activity has been disrupted.
Speaker A
On this episode of what's Going On With Shipping, Russia invades Ukraine and the War on the Black Sea.
I'm your host, Samir Kagliano.Welcome to this episode of what's Going on with Shipping.So it is day two of Russia's invasion of Ukraine.And I gotta say, the images and videos and pictures coming out of this is just absolutely disheartening.Among everything really lost for words at times to describe what's being seen.
And I'm a historian.I teach history now for over 20 years, was a former merchant mariner.So this story has really resonated with me for obvious reasons.Right now I'm teaching a course on world history, and we're teaching talking about World War I.And the parallels between the outbreak of World War I and what we're seeing today is just eerie.
Sometimes I forget if I'm in 2022 or in 1914.So let's go ahead and jump in and get an update on what's happening on the Black Sea and with naval and maritime movements.
So this is the latest from our friends at Marine Traffic showing us the Black Sea.Now, normally, what we would see going on here is a couple of things.Number one, up here in the Azov Sea, or Sea of Azov, you would see lines of vessels heading out of the Kerch Strait here up to Mariupol, up to Rostov on Don.Rostov's in Russian territory.Mariupol is the northern port there for the Ukraine.But as you see, no traffic moving in the area.And when you zoom in here to the Kerch Strait, what you see is vessels just piled up at the southern end of the strait, not so many on the north end.They're releasing vessels to head in.Vessels that are held up here on the North Strait are probably waiting for clearance to get through or waiting for things to subside down.The other area you see here, where a lot of ships going in here is over in Novorossk.
This is a major Russian port for tankers.There's a pipeline runs across into the Caspian Sea, down into the Baku fields.You see this red line of tankers coming here.Those are tankers getting oil out of the region across the Black Sea.The other area where you see a concentration is up here at the port of Odessa.
This is the major port here.Normally, what you would see here is, and you saw it a few days ago, was an anchorage full of vessels waiting to get into Odessa.And instead, what you see here is an empty anchorage.The Joseph Schultz, which is this large Costco freighter It says msc, but the ship's leased over to Costco now, is still sitting there.She has not sortied, probably not wanting to take the risk of coming out or she's unable to leave because the port is closed at this time.
And so she is still there.Meanwhile, other vessels are sailing out.You can see a large concentration here off the Romanian coast seeking protection from NATO, or at least from the Romanians, off of Bulgaria and off Turkey.And then this large gathering right here coming in out of the Bosphorus of vessels just holding and waiting to get through the Bosphorus into the Sea of Marmara and then out of the Dardanelles into the Aegean Sea.And I'll zoom out here a bit so you can see what I'm talking about.
So the Black Sea is a big basin.It's just a big pool.All this water dumps in from rivers and areas.And again, you would normally see this area teeming with vessels moving around.But right now, because of a series of events, we'll talk about, it's not happening.
This section covers key naval developments, including Russian amphibious operations, the buildup of Russian warships, and the role of NATO monitoring. It closes with the story of Snake Island and the Ukrainian defenders who refused to surrender.
Speaker A
So let's jump into some key stories here.First place I'm going to take you over to is U.S. naval Institute News.U.S. naval Institute is a great source for all things naval.Three stories here.I want to talk about Heather Mungalio, I think that's her name.She's new.Over at USNI News.Russian Navy launches amphibious assault on Ukraine.We knew that this had the potential to happen.The Russians move a fleet of amphibious vessels from the Baltic down into the Mediterranean and then through the Dardanelles and Bosphorus into the Black Sea.
And what we're seeing now is amphibious operations underway into Ukraine through the Straits of Sea of Azov, coming into west of Mariupol, senior defense officials say.So west of Mariupol here is Mariupol right here.This would be west.Somewhere in this region over here, we're seeing an amphibious assault take place on Ukraine.The amphibious assault is underway.We talked about this.Until now, the Russian navy largely played a supporting role in the Ukrainian invasion, which Russia began early Thursday morning.USNI News previously reported the amphibious assault comes From 1 of 2Amphibious Task Force is Moscow assembled for its attack on the neighboring country.Another task force is in Crimea and could land troops in Odessa.And again, Odessa, that is that major port over here that we're seeing potential for move.
Odessa is deep.It's up here against the Moldavia border right here.Ukraine has a little bit of a peninsula right here, a little area that juts off in here but it's not too far overland from Crimea.Grabbing Odessa would cut Ukraine completely off from the sea and that would be catastrophic for the Ukrainian economy as it exports 10% of the world's grain.We're seeing amphibious movements now underway at this time.
Second story Russian Navy masses 16 warships near Syria 2 Russian guided missile cruisers from the Russian Northern Pacific Fleet met off the coast of Syria as part of a 16 ship Russian Navy formation.According to satellite photos taken on Tuesday.Slava class cruisers, the Marshal Ustinov and the Varyag were part of a 16 ship formation in Syrian territorial waters near Russia's sole foreign naval base in Taurus, as captured by European Space Agency satellite.There's a concentration of essentially the entire Russian Navy in the Mediterranean in one place.This was put out here by Naval News.
Get my mug off here.You can see the satellite image of the base showing the entire fleet there.Two Slava class cruisers, the third Slavic class cruisers in the Black Sea, two Kilo class submarines.This is a massive concentration of naval forces.Had an interesting discussion on Twitter.I had very many interesting conversations on Twitter recently talking about this subject.And one of the things that we talked about was that one of the things that NATO and the US Navy doing is right now is keeping these forces monitored.And somebody used the phrase tied up.If they're tying up American and NATO naval forces, it's because they want to tie up American and NATO forces so that they can operate in the Black Sea and execute their amphibious assaults.Third story here.
Russian Navy has limited role in initial invasion.Again, this is the initial story here, talking about how initially the Russian Navy was not playing a significant role at all.But again, we've seen that change.We've seen the Russian Navy accelerate its roles.These stories from USNI News are really interesting, but I want to add one more story here which I found absolutely captivating and I'm sure most people have heard it already.
So this story came out and again it demonstrates the valor of the Ukrainians, I think in this, this is a BBC story.Snake Island, Ukraine says soldiers killed after refusing to surrender.Ukraine has honored 13 soldiers who were killed defending a tiny island after reportedly swearing at a Russian ship that ordered them to surrender.In unverified audio clips, the border guards defending Zamini island in the Black Sea, Snake island to lay down your weapons or be bombed.Russian warship Go to hell.They responded.Now I will tell you that that's not what is being reported in other sources.This is from the Guardian and this is supposedly the audio from the event.I'LL go ahead and let it.
Not exactly what was reported by the BBC, but I don't mean to laugh.That's the voice of people who've died defending themselves.But it shows you the heroism and the absolute tenacity of the Ukrainians involved in this.So that covers kind of the naval portion.
The discussion shifts to maritime reporting and the question of whether NATO could have deterred Russia with a stronger Black Sea presence. The host argues through the political and military implications of forward deployment and responds to criticism around the topic.
Speaker A
Let me jump over to the maritime side here, the commercial side.
So a couple of stories here on G Captain and a few other sources.These stories will be coming from G Captain, Freight Waves and Splash 24 7.Those are probably the three best I've seen so far in covering this in what's going on.So this first story is a Reuters story.NATO cannot stop Russian warships from entering the Black Sea.There was a request by Ukraine and Romania to prevent the Russians from sending more ships in through the Blacks, through the Darnells and the Bosporus in and and as the story goes here, Turkey, a NATO member, cannot stop Russian warships assessing the Black Sea via the straits, as Ukraine has requested due to a clause in an international pact, as at the Montreux Convention of 1936 that allows vessels to return to the home base.The Turkish foreign minister said on Friday.Ukraine appealed this.
They wanted to stop the more reinforcements coming through, but that's not going to work.Next story.
This is a story that created a lot of controversy.I'm not going to lie on my Twitter account.I retweeted out this story yesterday and it's a Reuters story.It's not my story.It's Reuters story that tweeted Reuters wrote this U.S. navy left the Black Sea unprotected, allowing Russia to invade Ukraine.The subtext here is did the failure of US Navy and NATO to protect Russia's backdoor give Putin the confidence to invade Ukraine?If you saw my video yesterday with John Conrad from gcap, we talked about this very topic.Would a NATO US Naval presence on the Black Sea have been a deterrent to prevent this?The US Navy had been up on the Black Sea back in December.The French navy was up there in January.
But since January, no NATO vessels have been up there.Now I don't think it's up to the navy to do this.It's not the navy's call at all.This is a political call.This is a President Biden Secretary of Defense Austin NATO decision whether or not to put vessels up onto the Black Sea.However, based on what I'm going to report on here in a second, the number of vessels that have been hit, I think having NATO warships up on the Black Sea beyond Bulgaria, Romania and Turkey.I had somebody tell me today that Bulgaria and Romania have very nice navies.They're great.They're fantastic.The frigates the Bulgarians have were given to them by Belgium in 19, from the 1970s.
And the two frigates the Romanians have were given to them by the British, dated of the 1980s.So, yeah, they're fine, but they're dated.They don't have modern fire control air defense systems where they can light up planes and be able to identify them.And so I'm of the opinion that, I really think it is an interesting question why wasn't there a more substantial NATO presence on the Black Sea?I also think there's a question here about why we didn't provide more support for the Ukrainians particularly.What I think would have been very interesting were US Flagged vessels coming into Odessa offloading tons of military equipment to support the Ukrainians during the Vietnam War.The United States purposely did not bomb the port and harbor of Haiphong in northern Vietnam because China and, and Soviet vessels were docked there.I'm not sure the Ukrainians would.
I'm not sure the Russians would be so quick to attack and bomb Odessa or Ukrainian ports if there were American vessels or NATO vessels in there.Right now there's a Cosco vessel, a Chinese vessel in there.
But again, I raised this question.I didn't write this story.This is a Reuters story.I'm happy to talk about this.I don't understand when people get very nasty in their tweets and use names that are uncalled for.Because I'm not going to do that.I'm not going to do it and I'm not going to, you know, I can take it.I'm a big boy.I can take it.If you want to criticize me, that's fine.
But I'm here to have a discussion.I'm here to talk about this.And I'm telling you this, to me was a moment where if we had forces up on the Black Sea, we could have been demonstrating the utility of having a navy forward deployed, in my opinion.And again, doesn't have to be the U.S. navy.And I wouldn't talk about one ship being up there.
But again, you know, you're out there.The police don't sit in the police station, you know, waiting for crime to happen to go out.They're not the fire department.They're, you know, they're out there patrolling, you know, and when it happens, they don't say hunkered down.So I think there's A bit of an argument here about what's the nature going forward.It was an interesting piece.I don't agree with everything in the piece.I don't agree with everything in almost anything I post.Tell you the truth, there's always something I'm going to find difference with.But the reason to retweet something unless it's grossly wrong is to facilitate discussion.And this is a discussion piece.We're going to have discussions about why didn't we deter Putin from going into Ukraine.And again, it's political, it's military.There's a lot of issues here.
The focus moves to attacks on commercial vessels near Ukraine, including the Yasa Jupiter, Millennial Spirit, and Nomura Queen. The host explains the ships' ownership, locations, and the growing danger to civilian shipping.
Speaker A
Next story here goes back to the attacks taking place on commercial vessels.
Navy vessels can defend themselves, commercial vessels cannot.And this story was actually talked about yesterday.Turkish owned ship hit by bomb off the Ukrainian port.This vessel is one of a series of vessels that we see here.That's this vessel right here, the Yasa Jupiter.
Yasa Jupiter is sitting right now inside of Istanbul.It's just inside the straits.Actually it's on the Asia side of the straits right here.You'll see it right here.She's inside the straits right here.
She was bombed, hit by aerial bomb or a rocket on the forward hold.She did not report distress.She was able to sail on and continue her voyage.And so the first vessel, this Turkish owned Marshall island flag, now Marshall island flag is really interesting because the United States has an agreement to defend Marshall island vessels.So the Marshall Islands is a protectorate of the United States.
Also the cargo on this Vessel was a U.S. company.Cargill was the one that chartered this.So again, it's Turkish owned Marshall island flagged under an American charter.But then we see this, more vessels being attacked.What we're seeing here is the expansion of these vessels.
This vessel right here is the motor tanker Millennial Spirit.This is a Moldavian chemical tanker that got hit again.One of the things we're starting to see is this is spreading out.Now, Moldavia is not part of NATO, it's not part of of the alliance system here.But what we are doing is seeing the spread of this.
We also know there was an attack on a ship called the Nomura Queen.Nomura Queen also got hit here.And I have both these vessels.I'll show you right here.Let's go ahead and get these here for you.
So Nomura Queen, a bulk carrier, she's out, she's Panamanian flagged.And again, if we look into vessel information right here, she is owned by Japan.A Japanese company is the company that owns her.So again so this is Japanese ownership, Panamanian registry.She's sitting right now.Pull her up on the map right here.She's sitting right here off the coast of Odessa and a substantial sized vessel.The other vessel at play here we talked about is the Millennial Spirit.This is that Moldavian chemical tanker.
Pull her up for you.
She too is also sitting off Odessa right now.Here she is at anchor.That was our position from several hours ago.So she may have gone dark in her broadcasts.Same story here by splash24.7.
Splash24.7.Sam Chambers has got a feature going on now.If you just go to splash247.com Ukraine you can pull up all these stories.And he's talking about the ships being hit here.Again, he's talking about Millennial Spirit being here hit.
And again, just a ton of information coming out right now and the potential for more vessels to get hit.That brings us to the impact on the supply chain.So three vessels hit so far.This story by Mike Shiller Shipping Group warns of more supply chain disruptions if free movement of Ukrainian Russian seafarers is impeded.So the ics, the International Chamber of Shipping, is calling on shipping stakeholders and governments to help prevent Russian and Ukrainian seafarers from becoming collateral damage in the conflict.
According to a 2021 report published by BIMCO and the ICS, there are 1.89 million seafarers operating over 74,000 vessels in the global merchant fleet.The report estimates that 10.5 of the total workforce are Russian and 4% are Ukrainians.That's 14.5 of the total workforce.Seafarers have been at the forefront of the response to the pandemic.ICS is now warning of more supply chain disruptions should the free movement of Ukrainian and Russians be impeded.
What happens if all of a sudden you cannot rotate crews, free crews, bring them back on one eighth of the total ships in the world.This could have the potential to freeze vessels all around the world that have Ukrainian and Russian crews on board.Such sanctions go into place about them.Also, you have to worry about, again, efforts by Russians to maybe work for the Russian government in some cases.How do they respond to sanctions against this?John Conrad, in our talk yesterday, talked about what stops a Russian captain who's working for the Russian government to put his ship sideways in the Suez Canal, for example.I don't know.I don't think there's really anything that stops him from doing it well.But this issue, I think, is more relevant, and that is the safety and the impact.This would have on the global supply chain.
The final section examines wider consequences for seafarers, grain exports, oil and diesel prices, and war risk insurance. The host concludes with concerns about global trade disruption, the human toll of the war, and a closing appeal to viewers.
Speaker A
This same story from Lorianne LaRocco talks about it.She talks about the very similar concept here.The difference she has here in this story is she starts talking about also the impact it has on certain key areas.For example, Ukraine ag exports, how much grain you'll see right here, barley, corn and wheat.And you just look at the amount of tons that coming out here.Again, you're talking about corn just in December of 2021 of almost 5 million tons of corn coming out.This is catastrophic.Should we see a shortage right now in agricultural products coming out of Ukraine?Again, 10% world supply comes out of this.Add to this, by the way, our inability on the west coast of the United States to get our agricultural exports out due to the priority given by the ocean carriers to get empty containers out.Remember, we had that discussion about the World Shipping Council not wanting the US Government to mandate exports out.
This is going to potentially mean agriculture is not coming out of the Ukraine and not coming out of the US in sufficient numbers.Add to this the tanker impact because of fuel coming out of Novorussky, even though that's in Russia, we're seeing a slowdown in the amount of oil coming out.And sanctions could impact not just oil exports from Russia, but their liquefied natural gas exports.You're seeing that manifest itself right here in these charts in how much of these vessels are at risk.
As you see right here, ships with Russian companies as their ownership as a proportion of the world fleet.Open this up.So it's a little bit better right here for you.Here.We're Talking about tankers, LNG carriers, Bulkers.
7.4% of the world's tankers are Russian ownership.3.5% of the Bulkers are Russian ownership.And then percentage of global seaborne trade right here, you start looking at it and you can see it manifest how percentage of seaborne tanker trade from Russia.You'll see it by quarterly quantity in 2021.Nearly 5%.
5.2 of tankers, 6% for LNG.I think the impact of Ukrainians and Russians.They are commonplace on the world's merchant fleet.And the impact this is going to have on crews is not being considered at all.
Again, just a series of stories from a variety of places that talk about this same topic.And I'll have these all in the show.Notes.Global commodity trading partners set for upheaval in wake of Putin's invasion of Ukraine.We're seeing this videos of the attack on the port of Odessa in the Ukraine.
Attacks on Ukrainian naval bases.All this is shutting it down.Ships navigate the fallout from Russia's invasion of Ukraine.Again I thought this one here from Dryad Global which is a maritime security agency was really good.As the situation develops, there remains a high degree of uncertainty regarding the freedom of navigation throughout the wider Black Sea.This is the issue I got back to with NATO and the US Navy being up in the Black Sea.One of the missions of the US Navy is to ensure freedom of the seas.We do freedom of navigation operations but right now this war has the potential to endanger the freedom of the seas, the ability for goods to be moving in this area and attacks not just between Ukraine and Russia, but also Romania, Bulgaria, Turkey, Armenia, Georgia.There's other nations beyond Ukraine and Russia in the Black Sea.
And even though this is a closed sea, these ships outlet into the international trade routes.
I think that's important for us to understand.
What does this mean?Well, story right here, Sam's just being really cheery today.Putin's invasion of Ukraine seen hiking ton mile picture for shipping Things are getting expensive.If crews get short, if commodities get short, if fuel prices increase, that all translates to more cost to move goods around the world which is basically inflation.Market uncertainty caused by macho tyrants is good for shipping.That's an interesting saying there by one Asia based broker told Splash.Yeah it's great for shipping, it's terrible for consumers.What this means is freight rates are going up.They're going to pass all this on to the consumer and what we're going to see here is oil prices increasing, freight rates increasing.It's going to be terrible across the board.There's no doubt about it in my mind.
And you see it at the gas pumps.Ukraine fallout diesel surges more than crude before falling back.Russia's key role is diesel exporter powered market ahead before more normal relationships emerge.But price still up significantly.Russia is a major diesel exporter around the world.I talked the other day about the fact that we see diesel, I mean the crude oil coming from Russia to American ports because we need it in our refinery because we lack the heavy black oil that we can get from Russia.Well right here you see it with diesel prices beginning to go up.They're talking about it right here.Approximately 7:15am Thursday, the price of ultra low sulfur Diesel on the CME Commodity Exchange had risen about 20% across the $3 per gallon level.If it were to settle at that level, it would be the first settlement above $3 a gallon since June 26th, 2014.
Talking about 8 years ago at that point, Brent crude, the world benchmark, was up about 8.3%.But Brent at this hour was up $6.22 per barrel, a gain of 6.42% to $103.06 a barrel.So I mean, war creates instability in the market, particularly with a nation like Russia that's a major gas provider and sanctions being leveled against them.And again, we have that issue here with the ag issue playing out.How does agriculture play out in this scenario right here?
And it's going to create that uncertainty.The last issue I want to mention with you is an important one.War risk ships will not sail into areas.Ships sail around the world all the time and they have insurance.Insurance is usually a fraction of a percent of the total cargo value carried.
But as the danger of a tax increase as we're seeing right now in the Black Sea, tanker rates soar alongside war risk premiums right here.Ship owners are also grappling with higher fuel costs after oil prices soared.Nearly $2 per hour.$2 per barrel on Friday goes on here to talk about the issue of war risk insurance.Tanker rates from the US to Europe jump from 8%.I'm expecting quite a mess at this moment, a Singapore based fuel trader said.But as we start seeing these rates go up, we're going to see the same thing happen here for war risk insurance because as you add on the additional cost for fuel, you're going to be adding additional costs here for war risk insurance.This next story also talks about it.Black Sea insurance rates soar as NATO fails to protect commercial shipping.The fact that we have a war risk area now with ships getting hit, three vessels so far have been hit.
And again, there's no effort here to mitigate this to get these ships out.Now is this the role of the U.S. navy in NATO?No, I don't think so at all.And again, I don't agree with Reuters in all their stories.I think Black Sea insurance rates are soaring, but I think is a world issue.
One of the things that's happening here is as we shifted our ships over to these open registries, Panama, Liberia, the Marshall Islands, the Isle of man, we basically abrogated the idea that navies will come protect them because the way we have operated is the oceans have been open thanks to navies like the US And NATO and Japan and Korea and all the Australia and all these other nations around the world.But now that there's attack, we want the navies to come save them.And there's a major discussion we need to have here.I mean, I think it's a serious one.If you want to operate under an open registry, then you take your risk when war comes flying at you.However, if you're flying the flag of a NATO country and you find yourself under attack, is that not the responsibility of NATO and the alliance to come get you?
I think we have to be clear about that also.And again, I come back to that issue about how things may have been different had there been more of a US NATO presence on the Black Sea to deter Putin from doing something.I don't know.I'm not a mind reader.I have no idea.I don't know if it would or it wouldn't.But again, those questions are going to be raised.And I think in this time when the Navy is advocating forward presence, they're advocating for more ships, for more budget.That's a mission that should be number one on their issues to do.
Obviously, we're going to be monitoring this situation.Three ships hit so far.Fortunately, no crews lost.At this point, that cannot be said.The same for what's going on in Ukraine.
Untold hundreds, if not thousands killed or wounded.Massive exodus of populations heading westward, potentially across the border into Poland, Slovakia, Hungary and Romania, Moldavia.It's a tragedy.It's such a tragedy.I'd hope never to see a major war again in Europe.
I can remember Bosnia and Kosovo and the conflict that was there, but Serbia was not a major combatant country at this time.But Russia is.Russia is.And Russia doesn't have the depth and power it once had as the Soviet Union, but it's still a major power.And to see a major power like Russia wage this war is really disheartening against a country like Ukraine.And I've known Ukrainians and I've known a lot of them, and I just.Heart and prayers go out for the people of Ukraine.So with that, that's our report for today.Hope you enlightened it.I know you didn't.
There's too much not here not to like and everything.And some of you are going to be mad at me for bringing up Navy things again, but okay, so be it.Again, I'm a tenured professor, so I'm good.You can yell at me all you want, that's fine.But if you like the video and if you found it information useful, then please subscribe.Hit the bell.So you'll be alert about new videos when they come out?Leave a comment I have a feeling I'll get comments.Go ahead, give it a thumbs up.Don't give it a thumbs down.But you probably will anyway, Some of you.Because that's the way you roll.That's fine.That's fine.I can take it.A big boy.I can take it.If you can.If you can.If you like this sort of information, you want me to continue and defy the entities out there who want to shut me up, then please contribute to the Patreon page that allows me to go ahead and put these videos together for you.
And again, thoughts and prayers are out there with the citizens and everybody in Ukraine, and even with the Russian soldiers.I'll tell you, because you're being ordered to do something that probably many of them don't agree with or don't fully understand what they're executing.So until our next video.Sal signing off.