Logistics from the inside. How a logistics company is currently building processes using the example of Marine Service Ukraine

At the backdrop of the suspension of the ports of Great Odesa, the logistics market is undergoing a large-scale restructuring: business is adapting, taking into account risks, looking for new ways of export-import and at the same time trying to keep delivery times and costs acceptable to customers.

USM talks about the current challenges and thoughts of the Ukrainian logistics sector using the example of Marine Service Ukraine, which provides comprehensive customs brokerage and forwarding services. Read below to find out what MSU Executive Director Tetyana Shevchuk said about logistics from the inside in these chaotic times.

“We do not work through force and do not neglect people”: on shelling, schedules, worker mobilization, and agreements with foreign companies

— What factors today have the greatest impact on the work of a logistics company? Are they economic risks, the situation at the borders, war?

Of course, everything at the same time. I will try to sort them out one by one.

No one has canceled military risks, and in recent weeks they have been almost the biggest challenge, especially against the backdrop of the recent attacks on the Black Sea port infrastructure. Fortunately, during this time we have not had any situations when the cargo or the vehicle in which it was moving was physically damaged.

The war, in turn, affects the direction of cargo flows. And not only in these months, all the time – previously, many cargoes went through the Odessa or Black Sea ports, but after the start of a full-scale war, we work much more through European logistics. And this means that we need to comply with the rules of the European Union.

For example, there are strict restrictions on the weight of a container, especially in Poland. And if the client was not consulted at the initial stage, when the cargo leaves China, then he may have problems. This is one of those nuances that appeared precisely because of the reorientation of logistics to European routes.

Another important factor is fuel. Of course, we are very dependent on its cost. Both the cost of freight and the cost of land logistics depend on fuel. Because of this, there are constant price fluctuations in deliveries from European ports, and the market needs to be monitored regularly.

There are also seasonal factors. For example, it was summer now, the heat, and because of this, some of the routes may be closed to truck traffic during the day. There is a drought on the Danube, and cargo transportation along this waterway has stopped altogether in some areas. This can also lead to delays.

There are separate rules regarding the driving and rest regime of drivers. A driver cannot drive continuously, he must rest. In Ukraine, these rules are not always followed so strictly, but in the European Union they take this very seriously. But there are other things that we have encountered. For example, drivers can be mobilized, and this also affects logistics. Many companies are now talking about a shortage of people, in particular drivers.

Sometimes even terminals are left without loaders. If such a situation arises at the terminal, and we need to do the work today, we ourselves look for a person from outside the company. We issue them with access documents to the terminal, and they work with our cargo.

Waiting for the terminal to find a loader on its own is not always advisable. Because it means machine downtime, additional costs for terminal services and a risk to our reputation. If we promised the client to do the work today, we cannot just wait a week.

— In conditions of shelling, terminal shutdowns, and constant changes, what is more important for a logistics company: sticking to the schedule at all costs or quickly adapting when the schedule breaks down?

We are adapting. Here we also need to take into account the human factor: employees take risks due to shelling, do not get enough sleep, everyone has different circumstances. For example, our broker lives in Chornomorsk, and there is a very difficult situation there right now, in the city itself.

Therefore, we are adapting. There are employees who work at night, because they do not have such an opportunity during the day. Our main goal is to achieve a result for the client, but we do not work through force and do not neglect people. Therefore, we need to find a middle ground: so that the client receives high-quality service, and the team can continue to work and provide this service to the next clients. You can’t just “drive the horses”, because it is impossible to work for so long – and we have been on the market for 20 years.

— There are often situations when the cargo has already arrived, but the terminal is idle due to shelling or other circumstances, and it is impossible to remove the container. How is the issue of demurrage resolved in such cases?

It depends on the line that the container is chartered by. Each line has its own free days: for some it is three days, for others it may be two weeks. These conditions are usually fixed and do not change automatically due to force majeure in Ukraine, because the lines operate according to the rules of other jurisdictions.

But in such situations, our logistics department contacts the line, describes the circumstances and explains why the delay occurred, and after that you can ask for either a discount or an extension of the free period. Companies often meet the requirements. Of course, they may not completely exempt from demurrage, but it is possible to get a discount, and this is also part of our work: not just to organize delivery, but also to conduct such negotiations in order to minimize additional costs for the client.

— Have there been any cargoes recently that have been stuck due to shelling? How critical is the situation now?

Now we still recommend chartering to European ports. We mainly work with imports, and the main direction for us is China, although there are other countries. The route itself may depend on the client’s request: most often it is Poland or Romania, but there have been cases when it was more convenient for the client to start the cargo, for example, through Greece.

Next, we organize land logistics. We pick up the container from the European port and either reload the goods through the warehouse into a tarpaulin truck, or transport it by container ship directly in the container.

But given the current realities, it is often better to do the reloading, hand over the container at the port and not be tied to demurrage. Because some lines have the ability to hand over an empty container on the territory of Ukraine, and some require it to be returned to the port where it arrived.

For example, if the container arrived in Gdynia, the line may require it to be returned empty back to Gdynia. And these are additional costs. Before the war, when Odesa and Chornomorsk were the main ports, everything was simpler: you could drop off a container at the same Ukrainian port. Now the situation is different – you drove half through Poland, half through Ukraine, and then you still have to carry the empty container back.

— After the 2023–2024 blockades, is the risk of problems at the Polish border already included in the cost of logistics, or is this still considered force majeure?

This is still considered force majeure. If we now include in the price something that is not happening now and it is unknown whether it will happen, we will simply lose competitiveness in the market. It is impossible to add all potential force majeure to the price in advance.

When we are already transporting cargo by truck or container ship across the border, the agreement with the carrier is concluded for a specific situation. For example, we know that in three days we need to pick up the container from the port, and we agree on the cost: how much it will cost to pick it up, deliver it to the client’s warehouse, and carry out customs clearance at a certain customs office – in Kyiv, in western Ukraine, in Odesa or elsewhere.

After that, we already have a fixed price for the service. And the carrier includes its force majeure and risks in this cost.

— So it is now impossible to build long-term planning the way it worked before?

Yes, now we cannot plan everything in advance in the long term. Decisions have to be made very quickly – in fact, not every day, but sometimes every hour.

Problems are solved as they arise, because it is impossible to predict everything now. When Polish carriers blocked the border and the throughput was very low, customers, of course, waited. But then everyone was hostage to this situation. It could not be solved otherwise than to wait.

In such cases, we can support the client with communication and control. For example, we provide photo or video recording: here is your container or cargo, it is intact, it is standing and waiting. This helps the client understand that everything is fine with the cargo, it just needs time.

Customers also understand everything. They see the world we live in now, and they understand that there are situations that cannot be influenced directly.

“Adapting to the conditions is the most important thing.” What is the greatest resource of a logistics company and how to overcome crises

— Over the past 20 years, the market has experienced many crises: financial shocks, a pandemic, port blockades, border checkpoints, and a full-scale war. What allows logistics companies to not only stay in the market, but also compete?

I would say that one of the main reasons is the team. The core team has been working practically since the company was founded. Key people — the logistician, the forwarder, the accountant — have been together for many years. For example, I have been working in the company for 15 years.

Because of this, there is cohesion and understanding of each other at a glance. When the team is on the same wavelength, decisions are made faster, and in our field this is very important, because situations can change literally every day.

Of course, there have been different periods over the years. We have gone through financial crises, when we were in a bad financial situation for several months or even longer. We survived quarantine and worked from home. Even then, we still tried to support customers and find solutions.

During quarantine, there were situations when cargo could not physically move because the borders were closed. Then we organized a transfer to warehouses to free up containers and not accumulate demurrage. Idle time of a container is very expensive, especially when the free period ends and the paid one begins.

Then there was a short period when it was possible to work more calmly, and then a full-scale war began. At first, ships refused to enter Ukrainian ports at all. Part of the cargo was already on the ships, but the ships urgently left our ports and waters. In such cases, we organized new logistics: containers were redirected to the ports of Poland and Romania, and from there we delivered the cargo by land transport – trucks or container ships.

Now is also a difficult time for everyone. The Polish border may close, there may be delays, there are situations that we cannot influence, but in such cases we always talk honestly and openly with the client. He must understand where his cargo is and what is happening to it.

If necessary, we take photos or videos, show that everything is fine with the cargo and it is only a matter of time. For our part, we do everything we can: we try to save the client’s money, provide quality service and meet the agreed deadlines. But today no one has canceled force majeure.

This applies even to customs clearance, not only to the suspension of port operations. When there is an air alert, customs is not working, the clearance process stops. Now, for example, in the Odesa region, alerts can last a very long time, and this also affects the deadlines.

At the same time, over 20 years of work on the market, we already have a reputation, connections and understanding of processes. Therefore, we try to minimize delays and clear cargo on time where it depends on us.

— If we compare the company at the beginning of its work and today, what services and competencies have emerged during this time?

To put it simply, we started as a brokerage company and mainly provided customs clearance services. Over the years, the company has expanded significantly: chartering, logistics, repackaging, purchase of goods, and processing of permits have appeared, if they are required for a specific cargo.

That is, now a client can contact us even with an idea. For example, he wants to bring a woodworking machine. He can simply give us a request, and we will prepare a commercial offer. If necessary, we can even find where to buy this machine.

In fact, now this is a turnkey service. The most common option is when the client already has a finished product in stock. We pick it up, charter it, organize delivery, do logistics throughout Europe or Ukraine – depending on the request. Then we carry out customs clearance and, with a full package of documents, transfer the cargo to the client.

That is, we maximally relieve the client of unnecessary actions. He does not need to separately look for a carrier, broker, forwarder, or resolve issues with documents; we take care of all this.

— So, the main quality that the company has acquired over the years is adaptability to crises?

Yes, that’s right. Adapting to the situation is probably the most important thing. There is a famous saying that it is not the strongest who survives, but the one who can adapt. For our field, this is a very accurate formulation. You could say that this is even our unspoken slogan in the company.

“Everyone is counting costs very carefully.” On today’s challenges, market reaction, and cargo insurance

— Now it is often said that cargo should be redirected to the western borders or Danube ports. In your opinion, is this enough to cover customer demand?

The Danube ports have a rather limited capacity and cannot handle a large cargo flow. Plus, there is a small draft, so large ships cannot enter so that the ports can fully cover all needs.

Now it works like this: containers arrive in Constanta, there they are reloaded onto ferries or barges, and only then the barges go further. With exports, the story is similar in the opposite direction: the cargo reaches a point on the Danube, is first reloaded onto a barge, and then from the barge to a ship. Each such reloading is additional costs.

Rail delivery is also possible, we work with it at the client’s request. This is a good option, but it all comes down to cost. Usually, rail is two to three times more expensive than sea delivery. At the same time, it is not slower, on the contrary – cargo can arrive faster by rail. It is simply that the service itself is more expensive.

You also need to take into account routes from China, which can pass through the aggressor country. There may be reviews, their own lists of goods that they do not want to miss, or attempts to classify certain goods as dual-use products.

So no matter how the situation changes, the sea still remains one of the most reliable options. The railway can also stop, and there are also risks to the infrastructure throughout Ukraine. In our practice, the best ratio of price, quality and time is currently provided by sea delivery to European ports, and then land logistics to those regions of Ukraine where the cargo needs to be delivered.

— So it is important for the client not just to choose a port, but to correctly assemble the entire route?

Yes. Our main focus is precisely on providing the client with a full package of services. A person or company turns to us and does not need to separately look for who will prepare the permits, who will charter the cargo in China, who will track the container en route, who will organize forwarding in a European port, reloading at the warehouse and further delivery.

The final stage is customs clearance of the cargo. This is also a separate, complex part of the process. But that is why it is more convenient for the client when the entire chain is closed in one place: from freight and route control to documents, reloading, delivery and customs clearance.

— In light of the recent attacks on port infrastructure, has the approach to cargo insurance changed? Have cargo owners become more interested in insurance?

Yes, insurance is difficult now. Many insurance companies may refuse to insure cargo, because military operations are not an insured event for them. This trend is still present. In addition, some expensive cargo may also be refused insurance.

But I can’t say that clients have become more likely to insure cargo in practice. On the contrary, now everyone is counting costs very carefully. If earlier clients might not have paid so much attention to every conditional hundred dollars, now they count everything.

You need to understand that working with an insurance company is a long story. First, you pay for insurance, and then in the event of a problem, you still have to receive payment. And this is not always a quick or simple process, so in our practice there is no such thing that clients have now massively started to insure cargo more often.

We had a case study. We bought perfume from the United Arab Emirates for a client. Due to the political situation, long ground logistics were required, and it was for this section of the route that the client asked to calculate insurance. But after the insurance company announced the price, he changed his mind about insurance.

This is also the reality of the current market. All costs for logistics, customs clearance, insurance are then included in the cost of the goods. If the goods become much more expensive because of this, and someone else brought it cheaper, the client is already losing competitiveness.

— One of your non-standard services as a company is the ability to enter into a deal with your own funds. How does that work?

Yes, this is actually similar to lending at a certain percentage, but we discuss the terms separately with each client. They depend on the category of cargo, its cost and the specific situation.

We can select the goods that interest the client, buy them from the factory on agreed terms, and the client pays us from 30% of the cost at the start. After we deliver the goods to the client’s warehouse, he pays the rest: both the cost of such financing and the “body” of the loan itself.

There is a demand for this service. Many factories do not want to ship the goods until they receive full payment. For the client, this means freezing funds. For example, after payment and shipment of the goods, sea delivery from China can take 60–70 days. All this time, the client’s money is actually frozen.

Therefore, some clients use this format. They are ready to pay a little more, but not withdraw the entire amount from circulation for two to three months.

— You work with different destinations — Odesa, Chornomorsk, Constanta, Gdansk, Gdynia. Does it happen that the client himself offers his own vision of the route?

Clients are usually not tied to a specific checkpoint. Most often, the choice of route depends on the cost of freight, security and the final delivery point.

For example, chartering to Odesa is one price, to Gdansk is another, to Gdynia is a third, to Constanta is another. At the same time, land logistics from Odesa is, of course, cheaper than delivery from Europe, especially if the client needs the cargo in Odesa.

We always give the client several options. We show how much freight will cost from the desired port in China to Odesa, Gdansk, Gdynia, Constanta or another direction. We also give our recommendations taking into account the cost, terms, risks and further land logistics. That is, the client has a choice, and our task is to offer him the optimal route.

— Returning to insurance: have there been cases when the insurer reviewed the terms of cargo coverage after booking?

No, if the documents have already been signed, this does not happen. The insurer does not review the terms of an already executed agreement.

He may change his approach for the next agreement. But, as I said, now clients do not want to insure cargo so often. Therefore, insurance itself has become a rather rare story in our practice, and this is mainly due to the client’s choice and desire to control costs.

— Your website states that you do not work with cargo. Is this due to recent challenges in logistics or is the reason for refusing this type of cargo something else?

Here it is more correct to say not that we fundamentally do not work with cargo, but that we are primarily interested in whole containers. Cargo is a slightly different specifics.

Conventionally, cargo is when many small clients buy small batches: some 20 kg, some 15 kg, some some other quantity. This needs to be consolidated in a warehouse in China, collected into one batch until a full container is filled. Plus, there can be a very different assortment there.

This is a separate area of ​​work. Just as there are companies that specialize in passenger cars, there are also companies that specialize specifically in cargo. They can transport both by containers and by air. This is a different logistics and a different operating model.

Our specifics are larger volumes, from one container. But if a client contacts us and needs cargo, we can still help organize such delivery through partners or recommend a solution. That is, we do not abandon the client with their request, it is simply not our main profile.

— If a new client approaches you today with cargo that needs to be imported or exported, what exactly can you take on within the framework of one project? How realistic is it today to build the entire logistics chain with the help of one company?

This is quite possible. We have partners in China who help with freight and logistics on site. There are partners who can pick up the cargo from the client’s or manufacturer’s warehouse and deliver it to the port.

At the client’s request, we can also check the goods at the factory: does it correspond to what the client expects to receive. That is, we can close the full logistics even in the territory of the manufacturing country, in most cases this is China.

Next comes the stage of sea transportation, when the container is on the ship. Then – forwarding and logistics at the port of destination. These can be Ukrainian ports or European ports.

After processing the container at the port, we look at what is more profitable and expedient in a specific situation: to reload the goods from the container to a truck or to leave it in the container. Then the cargo crosses the border, and we choose a convenient customs clearance point.

For example, if the cargo is to remain in the west of Ukraine, there is no point in taking it to another region for clearance. We select the optimal customs clearance point, carry out customs clearance, and then deliver the cargo to the client’s warehouse.

That is, we can organize a full logistics arm: from the manufacturer or warehouse abroad to the client’s warehouse in Ukraine.

At the same time, we can connect and not from the very beginning. It often happens that the client no longer needs freight, because the container has already been chartered. For example, in India, suppliers often deal with freight themselves. Then the client can contact us already at the stage when the cargo is in the port.

We can work segmentally: pick up the cargo from the port, reload it if necessary, carry out customs clearance and deliver it to the client’s warehouse. That is, it is not necessary to transfer the entire chain to us from the very start – we can get involved at any stage where the client needs help.

To summarize: Ukrainian logistics now operates in conditions where you need to be able to quickly change the route, negotiate with partners and honestly explain to the client what is happening with his cargo. In addition, our experience shows that in such conditions, the main advantage is the ability to assemble the entire chain to meet the needs of the client: from freight and transshipment to customs clearance and final delivery to the warehouse.

Despite all the restrictions, the market continues to work. Companies are restructuring processes, clients are adapting to new realities, and logistics is increasingly relying on flexibility, communication and reputation. It is now impossible to predict everything in advance, so the most important thing remains the ability to react quickly and deliver the cargo to the final destination even when the route has to be changed in the process.

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