September 26, 2014
The recent Russian embargo on certain agricultural imports from the U.S. and other Western countries, will, like all global affairs, have an impact on local logistics and maritime commerce. Implemented as a counter-sanction to retaliate against the West, the ban applies largely to U.S.-grown food products, including meats, vegetables and processed foods—all items heavily trafficked in Georgia’s ports.
Poultry is by far the largest export moving through the Port of Savannah. Representing 46% of all commodities we send abroad, the poultry export industry entails everything from processing the chicken, to cleaning, cooling and packing it into shipping containers. The business of exporting poultry is an essential segment of the supply chain, bolstering our local economy.
In fact, the Georgia Ports Authority recently increased refrigerated cargo capacity by 30% in anticipation of growing demand, and Savannah warehousing company Nordic Cold Storage is already moving 30 million pounds of refrigerated cargo through our ports each week. A good deal of this refrigerated container traffic is poultry, but to what extent will the draconian Russian ban fetter local logistics?
Fortunately for the Coastal South, relatively little of our exported chicken goes to Russia—only about 7% of current U.S. chicken exports are destined for Russian tables. While this is not a negligible share of the market, it also should not signify a crippling loss. Indeed, less than 3% of all exports passing through the Port of Savannah have Russia as their eventual destination. Traffic in the port, as well as related warehousing, trucking and shipping, will likely not be significantly affected by the Russian ban.
Nonetheless, the importance of monitoring global trends and measures—both foreign and domestic—that apply to international trade cannot be overstated. A perfect example is the recent sanctions the U.S. imposed against Iran. Shipowners have been known to run afoul of those sanctions simply by refueling in trading hubs where the origin of the fuel oil may be difficult to determine. The broad scope of the sanctions’ applicability, and the difficulty in interpreting their murky language, often lead to ambiguity regarding the exact implications for shipping services. The best defense for these companies is to ensure due diligence up front, before navigating the troubled waters of international trade.
The local shipping community may have dodged a bullet on the Russian ban of U.S. poultry, but staying informed on developing global trends is essential for the Port of Savannah to remain a strong international player.
Colin McRae is a maritime and business litigation partner at HunterMaclean. He can be reached at 912.236.0261 or cmcrae@HunterMaclean.com. Brad Harmon is a logistics and business litigation partner HunterMaclean. He can be reached at 912.236.0261 or bharmon@HunterMaclean.com.
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