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00:00IF I CAN START BY ASKING WHAT KIND OF IMPACT A BLOCK ON RUSSIAN ASSETS BEING SHIPPED IS HAVING ON YOUR BUSINESS. YOU ARE NOT SEEING A BLOCK ON ALL RUSSIAN ASSETS AT THIS POINT, BUT WHAT IMPACT HAVE THE SANCTIONS HAD SO FAR ON YOUR BUSINESS? ALLARD: SO FAR IT HAS BEEN LIMITED. WHAT WE ARE SEEING IS THE VARIOUS PACKAGES OF SANCTIONS. EVERY PACKAGE HAS ITS OWN IMPLICATIONS ON THE LOGISTICS SIDE OF THE SUPPLY CHAIN. WE TRY TO SERVE 350 MILLION EUROPEANS FROM THE PORT OF ROTTERDAM AND YOU CAN IMAGINE THAT THESE SANCTIONS ARE AN ISSUE RELATED TO THE VALUE OF GOODS, ALL OF THESE GOODS NEED TO BE CHECKED AND THE CONTAINERS NEED TO BE CHECKED. YOU RUN A RISK OF HAVING A LOCKDOWN OF YOUR SUPPLY CHAIN, AND IT TAKES A LOT OF EFFORT AND MANPOWER, A LOT OF TIME TO GET EVERYTHING SORTED. THE MORE SANCTIONED THE PACKAGES BECOME, WE HAVE A PACKAGE THAT HAS A 400 BILLION EURO VALUE OF GOODS TO RUSSIA, AND THEN THE CONFUSION WAS IF IT WAS WHOLESALE VALUE OR RETAIL VALUE. WE HAVE THE STORY THROUGH THE VARIOUS IMPLICATIONS, BUT SO FAR WE HAVE SEEN INCREASING IMPACT. CLEARLY IT ONLY STARTED SOMEWHERE THROUGH Q1 AND WE WOULD EXPECT MORE SIGNIFICANT IMPACT FOR THE REST OF THE YEAR. ANNA: HOW COMPLEX IT IS TO STAY ON TOP OF THE FAST-CHANGING SITUATION BECAUSE YOU HAVE TO IMPLEMENT WHAT IS A VERY QUICKLY EVOLVING SITUATION. HOW MUCH TIME AND EFFORT IS IT TAKING TO STAY ON TOP OF THE FAST-CHANGING REGULATIONS? ALLARD: A LOT, TO BE HONEST. WE WERE SLIGHTLY LUCKY. WE DID CREATE WHAT WE CALL A COVID GET TOGETHER, SO A WEEKLY CALL AT THE START OF COVID WHERE WE GOT TOGETHER, THE FULL VALUE CHAIN FROM THE SHIPPERS TO THE CUSTOMS AUTHORITIES TO THE BOATS AND THE LIKE. WE USED THAT SAME CONSULTATION PROCESS TO ENGAGE WITH ALL OF THESE PROPERTIES -- PARTIES TO CREATE EFFICIENCY TO DELIVER TO OUR CUSTOMERS. WE HAVE THE PRESIDENT OF HOW TO ENGAGE -- PRECEDENT OF HOW TO ENGAGE BEYOND THE SUPPLY CHAIN, SO WE CAN DEAL WITH THIS IN A SUFFICIENT MANNER, BUT LET US NOT UNDERESTIMATE THE PACKAGES IF THEY GO TO ENERGY SOURCES. APPROXIMATELY 15% OF THOSE SUPPLIES ARE RUSSIAN RELATED, SO YOU CAN IMAGINE A HUGE IMPACT FOR BUSINESSES IF AN ENERGY BOYCOTT WAS CALLED FOR AS WELL. MARK: YOU TALKED ABOUT 62 BILLION TONS OF INPUT IS TOWARDS RUSSIA. WE FOCUS ON THE ENERGY COMPONENT BECAUSE YOU SEE A LARGE PART OF ENERGY EXPORTS FROM RUSSIA. THAT IS WHERE THE ECONOMIC IMPACT IS FOR THE REST OF THE WORLD IN TERMS OF THE MACRO LEVEL. CAN YOU QUANTIFY THE DECLINES YOU ARE SEEING IN ENERGY SHIPMENTS FROM RUSSIA ALREADY COMPARED TO THREE MONTHS AGO? AND WHAT IS THE OUTLOOK FOR THAT FOR THE YEAR? ALLARD: THERE ARE TWO THINGS TO DISTINGUISH. THE MAJOR USERS OF RUSSIAN OIL IN THE PORT AREA HAS CONFIRMED THAT THEY WILL NOT HAVE ANY RUSSIAN OIL TO BE REFINED IN THE COMPANIES. WE HAVE SEEN A DECLINE IN SUPPLIES FROM RUSSIA WITHDRAWALS OF CRUDE OIL. THERE ARE STILL PROCEEDING AND THERE ARE LEGAL GROUNDS TO PROHIBIT THAT AND BE AGAINST THAT. RUSSIAN OIL STILL ENTERS THE PORT TO BE TRADED. THERE ARE GLOBAL TRADERS THAT WE HAVE A HUGE RELATIONSHIP RELATED TO TERMINALS AND CONNECTIONS, SO THERE ARE TRADERS PROCESSING AND PURCHASING RUSSIAN OIL, STORING IT IN TERMINALS, COMBINING PACKAGES AND SHIPPING TO OTHER COUNTRIES IN THE WORLD. YOU ARE SEEING A DECLINE IN THE PROCESS PART BUT NOT SO MUCH A DECLINE YET IN THE TRADING PART. ANNA: NOT YET A DECLINE IN THE TRADING PART. WE WILL SEE HOW THIS EVOLVES. LET ME ASK YOU ABOUT LNG. YOU PLAY A ROLE IN THE EUROPEAN LNG STORY AND A LOT OF PEOPLE ARE FOCUSED ON THE POTENTIAL ENERGY LEFT TO FILL THE GAP IF RUSSIA HAS GAS SANCTIONS. HOW MUCH MORE CAN YOU DO OR HOW MUCH MORE CAN EUROPE USE LNG? ALLARD: IT WILL BE INEVITABLE IF WE WANT TO WEAN OFF OF RUSSIAN GAS BUT WE HAVE TO RECOGNIZE THAT THE LNG VALUE CHAIN GOES THROUGH DIFFERENT JURISDICTIONS. WE HAVE A LARGE LNG TERMINAL AT THE PORT. WE ARE INCREASING CAPACITY BUT YOU CAN ONLY DO SO MUCH WITHOUT HAVING TO INVEST IT IN A TRADITIONAL PACKAGE OR OTHERWISE. THERE IS A LIMITED SCOPE TO IMPROVE THE INCREASE OF VOLUMES. THERE IS ALSO THE RESTRICTIONS WITH REGARDS TO THE LIQUIDITY OF THE MARKET. WITH THE PRODUCT ITSELF, IT IS THE SHIPS THAT NEED TO SHIP IT AND LET US NOT FORGET THAT EVERY REGION IS SPIKING AS WE SPEAK. WE SHOULD NOT BE TOO TOO SOON. THIS IS GOING TO BE STRENUOUS. GERMANY IS LOOKING AT FLOATING CAPACITY TO BRING INTO THE COUNTRIES. THESE ARE SEVERE ' S CONSTRAINTS. THE OIL AND COAL MARKETS HAVE A FAR GREATER DEGREE OF LIQUIDITY TO MOVE AROUND. IT IS RELATIVELY EASY TO INCUR EXTRA COSTS, IT MIGHT INCUR EXTRA TIME. THE FLEXIBILITY IN COAL AND CRUDE OIL IS SIGNIFICANTLY GREATER THAN THE FLEXIBILITY IN LNG TRADE. MARK: GIVEN YOUR UNIQUE PERSPECTIVE ON EUROPEAN TRADE AND WHAT YOU ARE SEEING FROM HOW BUSINESSES ARE OPERATING AND WHAT YOU ARE SEEING IN SHIPMENTS GOING THROUGH, HOW DO YOU SEE THE STRENGTH OF THE EUROPEAN ECONOMY MOVE FOR THE REST OF THE YEAR? ARE YOU SEEING ANY EARLY INDICATORS OF A RECESSION COMING ON LATER THIS YEAR? ALLARD: I WILL SHARE YOUR CONCERNS. WE DO NOT HAVE A CRYSTAL BALL, AND YOU HAVE EXPERTS ON YOUR PROGRAM, BUT I THINK THE INDICATORS ARE THERE AND THE COST OF ENERGY AND THE AVAILABILITY OF ENERGY, THE INCREASED INEFFICIENCIES IN THE VALUE CHAINS AND LOGISTICS IN THE PROBLEM LOOKS -- PRODUCTS WILL HAVE -- WHICH IS COMPOUNDED BY THE STILL ONGOING EFFECTS OF THE PANDEMIC ON THE SHORTAGES AND SUPPLIES OF RAW MATERIALS. WHETHER IT IS CHIPS OR THE METALS OR FROM A CAR MANUFACTURING PERSPECTIVE, THE WIRING PRODUCED IN UKRAINE. THAT IS A LOT OF STRESS IN THE SYSTEM AS WE SPEAK. ANNA: WE SPEAK OFTEN TO THE CEO OF MAERSK AND EVERY TIME WE SPEAK WE ASK ABOUT WHEN HE EXPECTS TO SEE NORMALIZATION IN THE CONTAINER MARKET AND THAT DATE WAS POST-COVID AND NOW WITH THE WAR RAGING, IF IT GETS PUSHED FURTHER INTO THE FUTURE, DO YOU SEE ANY PROSPECTS FOR NORMALIZATION IN GLOBAL TRADE? ALLARD: I WOULD HOPE THAT NORMALIZATION BEGINS TO MATERIALIZE TOWARDS THE BACK END OF THE YEAR, BUT THAT DOES ASSUME THAT CHINA GETS OUT OF THE PANDEMIC, THAT SHANGHAI DOES OPEN UP, AND THAT SUPPLY CHAINS NORMALIZE. THERE ARE A LOT OF IF ' S AND BUT ' S. THOSE ARE PRETTY IMPORTANT PREREQUISITES IN ORDER FOR IT TO NORMALIZE. THERE WILL BE MORE CAPACITY IN THE MARKETS, SO ALL OF THE LINERS HAVE ALREADY ORDERED NEW VESSELS. THAT WILL BRING TO THE MARKET MORE CAPACITY, AND THAT SHOULD HELP NORMALIZE, BUT IF THERE IS A PARTICULAR CLOSURE OF A REGION OR TERMINALS OR PORTS, THEN THE DESTRUCTION WILL HAVE A FRESH LEVEL THERE.

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Europe's Biggest Port Hit by Russia Sanctions

Allard Castelein, chief executive officer of the Port of Rotterdam Authority, discusses discusses the impact of evolving regulations and the block on the shipment of Russian assets. He says that the port has "seen a significant decline in crude oil from Russia." The CEO also shares his insights into the energy sector and recession risks. He speaks on "Bloomberg Markets: Europe." (Source: Bloomberg)

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