Due to the closure of Black Sea ports in Ukraine, cars from the USA are brought to all surrounding ports.
Since the beginning of the war, the Ukrainian ports of Odesa and Chornomorsk, where cars from the USA and other countries arrived, were blocked. Among them are thousands of cars from the USA and hundreds from Korea.
Due to force majeure, the logistics companies redirected containers with cars, which had Ukrainian addresses as destinations, to other ports. These are Poti (Georgia), Constanta (Romania), Gdynia (Poland), Bremenhafen (Germany), Klaipeda (Lithuania) and others.
This led to a significant increase in the cost of the logistics of these cars.
Today, the excitement has subsided a little, so logistics have become cheaper, although they are still more expensive than pre-war indicators.
Not all cars from the USA, which were bought before February 24, even reached Europe as of now. Therefore, their owners have to wait.
Will Ukrainians get their cars from the USA?
Before the war, Ukrainians bought thousands of used cars for millions of dollars every month in the USA and South Korea. It was profitable, but long. Due to Russia’s blockade of ports, cars bought for Ukraine are stuck abroad. Is there a chance to get them?
“Personally, the delivery was very long for me. The container with the car first got stuck for a month in Belgium, and then for another 1.5 months in a Greek port,” recalls Serhiy from Mariupol, who at the end of 2020 bought a car at an insurance auction in the USA with the help of intermediaries.
Now everything is much more difficult. It was the logistical difficulties caused by the war that prevented many Ukrainians from receiving the cars they bought in the USA and the Republic of Korea at the beginning of this year.
After the suspension of shipping in the Ukrainian segment of the Black Sea, thousands of containers with wheelbarrows never made it to Ukraine.
Dry sea numbers
In 2021, the USA became the No. 1 destination for the import of used cars to Ukraine. About 158,000 cars were imported from there. This is approximately 26.1% of the total volume of imported cars with mileage, according to the Institute of Car Market Research.
The popularity of cars from the USA was explained by the fact that almost all of them are so-called “batteries”. That is, cars that were involved in an accident on the roads of North America and were sold at insurance auctions. Thanks to this, even taking into account logistics and quality repair in Ukraine, their cost was significantly lower than the market prices in our country. But several months passed from the purchase to the opportunity to make the first trip on the restored car.
Based on last year’s statistics, Ukrainians ordered approximately 13-13.5 thousand cars in the USA every month. Transportation from American ports took 1 to 4 months. That is, at the beginning of the Russian invasion, there could be from 15 to 40 thousand cars of Ukrainian owners in the sea.
But there are more optimistic estimates. “Approximately 10,000 cars, which were either on the way or in the USA, were being prepared for shipment,” says Viktor Berestenko, president of the Association of International Freight Forwarders of Ukraine (AMEU).
In any case, we are talking about cargo worth tens, or maybe even hundreds of millions of US dollars.
It is very difficult to make a more accurate assessment. Hundreds of intermediaries worked in this segment, providing services to end buyers of cars and wholesale customers.
“At the beginning of hostilities on February 24, there were about 3,600 cars in the process of delivery. 1,600 of them already have their new owners, 300 are in line for a car transporter, 600 cars are waiting for the container to be opened. Another 1,100 are on the way or in transit warehouses,” they wrote in early July on the Facebook page of the Columb Trade company, which before the war was one of the most famous players in this segment.
This is not the only market participant in whose sphere of responsibility there was such a large amount of cargo. “More than 3,000 cars heading to our country”, – this is how the representative of W8 Shipping answered NV Business.
This is almost the only information with specific numbers that could be found. On the social media pages of many importing companies, you can only find comments from angry buyers who demand the delivery of a car that was paid for at the beginning of the year. But she still hasn’t made it to Ukraine.
“Change” the route
Containers with cars from the USA were usually unloaded at the Ukrainian terminals of KTO, “Brooklyn Kyiv” and “Euroterminal” (all – Odesa), TIS (South) and “Rybny Port” (Chornomorsk). All of them stopped the activity of accepting imported goods with the beginning of the war.
Therefore, the “Americans” went to other countries. “The main ports where containers with cars now arrive are Bremenhafen (Germany) and Klaipėda (Lithuania). But the containers also left in Poti (Georgia), Constanta (Romania),” says Viktor Berestenko, president of AMEU.
At first, containers were redirected and unloaded in various ports, both in transit and final — in Gdynia, Batumi, Poti, Constanta. “The main flow was later taken over by Europe. This is the port of Klaipeda and Gdynia. Some shipping lines took a long time to decide where exactly to redirect containers. There are cases of long downtime of containers in transit ports.
Now we expect a large flow of containers to Gdynia, which have been standing in Turkey for a long time.”
According to the importers, it is the most difficult to deliver to Ukraine the cars that got to the Georgian port of Poti. The route through Hosia is closed, and there are huge bureaucratic restrictions in Turkey. For example, in order to simplify and speed up the procedures, the Lviv company Boss Auto Ukraine had to organize ferry transportation from Georgia to Bulgaria.
The infrastructure of foreign ports and their employees were not ready to handle such a quantity of cargo for Ukraine.
“They were paralyzed and could not process the entire cargo flow quickly, so customers were faced with additional payments. For example, demurrage (additional fee for the use of containers) of containers,” says Berestenko. There were also additional costs for redirecting containers that were already on the way from Ukraine to other European countries.
In order to find the right cargo in the ports of Europe, it was necessary to move a huge number of other containers. This is the so-called shifting service, which is also paid. “This alone could cost from 300 to 2,000 euros,” says our interlocutor.
“The increase in the cost of logistics for one car was from $2,000 to $4,000,” Viktor Berestenko calculated.
One of the importers says that as of today, the excitement has subsided a little, so logistics have become cheaper, although they are more expensive than before the war.
All this coincided with the frantic growth of the import of passenger cars from Europe within the limits of the so-called “zero customs clearance”. Therefore, some other expenses have increased. Vitaliy, who has been providing used car import services in the Kyiv region for several years, says that the cost of car transport services in Europe has almost doubled in the spring. “If earlier it was 500-600 euros for one car, then in April-June the price reached 1,000 euros,” he recalls.
These are only official expenses. Because of the chaos that arose in the ports of Europe, it was even necessary to pay bribes to speed up the procedures. For example, for the container to be processed and opened outside the queue – up to 1,000 euros.
Ukrainian businessmen took such a step in order to have time to cross the border during “zero customs clearance”.
“This helped clients whose logistics became more expensive not to go beyond the expected budgets,” says Viktor Berestenko. But not all car owners had time to take advantage of this opportunity.
And not all cars even reached Europe.
Korean syndrome
According to the Institute of Car Market Research, last year approximately 14,000 cars with mileage were imported from the Republic of Korea to Ukraine. Unlike the “Americans”, they are not transported by containers, but by special ro-ro vessels or roller coasters. In the ports of Ukraine there is only one terminal for unloading cars from such vessels – in the port of Chornomorsk, Odesa region.
On February 7, the CIG Shipping company (Republic of Korea) announced that its vessel Hae Shin will arrive at the port of Chornomorsk on February 27, 2022. But this never happened. Because on February 24, Russia started the war.
Hae Shin entered the Black Sea. Unloaded the cars of Georgian buyers in Poti. And after some time he returned to Korea with the cargo. “In official correspondence, we asked to unload our cars in Georgia, Romania or Greece. But they refused to do it. As if there was no place to store so many cars,” says one of the importers, who had about 10 cars there, on condition of anonymity. In total, there were 792 cars on board the ship. The number of people and companies affected by this situation is approaching two hundred.
The cost of shipping each car from Korea to Ukraine ranges from $1,300 to $1,800, depending on its dimensions. For the return of the cargo to the Korean port, invoices have already been issued at the rate of $1,000 per transport unit. If you want to see the car again in Europe, you need to pay for the delivery again.
Potential additional costs are already several thousand US dollars per machine. They are justified only for very expensive cars. And some Ukrainian importers agreed to these conditions. However, even this cargo will not be able to be re-sent to European ports for two months.
Not everyone was satisfied
There is also a delivery algorithm that requires additional costs for American cars that got into a logistical blockade after the start of the war and the shutdown of Ukrainian ports. But the 800 “Koreans” who returned home need a more complicated procedure. This is the million dollar question. Therefore, Ukrainian importers initiated a dialogue with the Embassy of Ukraine in the Republic of Korea to find a way out of the situation.
Difficulties with delivery are also a challenge for those who have made it their business to import used cars from the US and Korea. The difficult economic situation forces Ukrainians to abandon their pre-war plans. In addition, “zero customs clearance” saturated the market with cheaper cars from Europe. Therefore, the difference of several thousand dollars is becoming an increasingly important factor in the choice.
“People have basically taken a wait-and-see attitude and are trying to predict the best time for themselves to make purchases like a car,” says W8 Shipping.
This has already led to changes in the activity of importers of used equipment, which previously focused on “Americans” or “Koreans”. They are diversifying their business: they more actively transport cars from Europe, specialize in electric cars, offer a selection of auto parts and other services.
