“Embargo” is definitely a buzzword right now, but what does this term mean, and how does it affect the freight industry? Even more importantly, what should you do when a freight embargo is lifted? RPM is here to ease your mind by telling you everything you need to know about freight embargoes.
What Is an Embargo?
An embargo effectively stops the movement of products, services, and even currencies through both imports and exports. While embargoes are typically imposed by governments, they can also be imposed by private businesses.
Embargoes Can Be Restrictions on Products and Services
Most frequently, embargoes take the form of restrictions on products and services from one or more countries. For example, the European Union has maintained an arms embargo on Sudan since 1994. Alternatively, the United Nations has maintained an embargo on supplies for uranium production and ballistic missile development on Iran since 2006.
Embargoes Can Impact the Exchange of Currency
There are more stringent embargoes that take the form of restrictions on the exchange of currency from one or more countries. This is a more aggressive approach that can cause substantial damage to the affected country’s economy, especially when prohibited from exchanging particularly valuable currencies like the U.S. Dollar (USD), the British Pound Sterling (GBP), and the European Euro (EUR).
The Causes of Embargoes
As you can see, embargoes are serious actions that can have far-reaching consequences. So what would cause one country to place an embargo on another country?
How Global Politics Can Cause Embargoes
Global politics can definitely cause embargoes. Take the current situation with Russia and Ukraine, for example. Russia recently invaded Ukraine, a sovereign nation, and is trying to take over the country and overthrow its government. This is a violation of international law and, therefore, will have consequences in the form of embargoes and other economic restrictions.
On March 8, 2022, the United States announced an embargo against oil imports from Russia. The United States can enact such an embargo because it’s not highly dependent upon Russia for oil. Russian oil imports made up about 8% of all U.S. imports last year.
Europe, on the other hand, is much less able and willing to enact such an embargo because they are highly dependent upon Russia for oil. Instead, European countries have enacted arms embargoes on Russia, prohibiting the trade of weapons that could potentially be used in the conflict.
National Security Concerns and Embargoes
National security concerns can also cause embargoes. Iran’s nuclear capability is a good example here. According to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), only five countries are allowed to possess nuclear weapons: the United States, the United Kingdom, France, China, and Russia.
However, other countries, including Iran, have tried to obtain nuclear weapons — and some have succeeded. As a result, countries like Iran that are going against the NPT are subject to embargoes designed to protect the national security of other countries and prevent nuclear proliferation.
For example, the United Nations Security Council imposed an embargo on the import of nuclear weapon delivery system technology to Iran, which includes certain technologies that can be used in conventional military applications. Meanwhile, the United States imposed an embargo on aircraft and repair parts to Iranian aviation companies, along with other sanctions.
Embargoes and the Environment
Environmental concerns may also play a role in embargoes. An embargo of an environmental nature is imposed to express a country’s disagreement with another country’s environmental policies or treatment of animals.
For example, the United States, through the National Oceanic and Atmospheric Administration, placed an embargo on yellowfish tuna imports from the East Tropical Pacific Ocean that used purse-seine fishing methods that tend to kill a high number of dolphins.
This embargo primarily affected Mexican imports of yellowfish tuna and other types of fish that did not meet the United States’ new labeling standards termed “Dolphin Safe Labeling,” designed to protect dolphins from getting killed in fishing nets.
LTL and FTL Embargoes Explained
Let’s dive even deeper into the topic of embargoes by explaining both LTL and FTL embargoes:
What Do FTL and LTL Stand For?
FTL stands for “full truckload,” whereas LTL stands for “less-than truckload.” FTL shipments take up the entirety of the trailer, or at least a vast majority of it. LTL shipments, on the other hand, take up a small percentage of the trailer, which often means that carriers combine multiple shipments into a single trailer to maximize capacity and efficiency.
Carriers Apply Restrictions in Response to Bad Weather
Carriers may apply embargo restrictions in response to bad weather. Winter weather conditions frequently result in embargoes as trucks cannot safely reach their destinations in a timely manner due to poor road conditions.
However, embargoes don’t just occur due to cold weather. In fact, embargoes may also be caused by warm weather storms like hurricanes. Most recently, Hurricane Ida in 2021 affected the shipping industry and resulted in freight embargoes and service interruptions.
Embargoes Are Applied Due to Increased Demand
Carriers may apply embargoes if they are unable to meet increased demand. Freight embargoes most commonly occur during the peak shipping season, which runs from the end of August to the end of October when school starts back up and people are preparing for the holiday season.
Applying an embargo allows carriers to manage current inbound freight without worrying about handling any additional loads. As a result, it’s always recommended that shippers plan ahead, especially during peak shipping season.
Embargoes Can Cause Delays
Whether an embargo is applied due to adverse weather or increased demand, it typically leads to shipping delays. To avoid shipping delays, you should work with a logistics provider like RPM, with an extensive carrier network of over 40,000 vetted carriers. This carrier network has helped RPM avoid embargoes and delays while boasting a 98% on-time delivery rate.
What To Do When a Freight Embargo Gets Lifted
While freight embargoes can be frustrating and inconvenient, they don’t last forever. Here’s what you should do when a freight embargo gets lifted:
Take Advantage of Fewer Shipping Delays
When a freight embargo gets lifted, you can once again take advantage of fewer shipping delays. With the help of an experienced logistics provider, you can get your shipments back on track and meet your customers' needs.
Get Access To In-Demand Products and Services
You can also get access to in-demand products and services when a freight embargo is lifted. For example, if there was an embargo on LTL freight, you can now take advantage of this popular service that’s popular with smaller businesses that tend to have smaller loads.
Conclusion
The best way to avoid dealing with a freight embargo in the first place is to work with a logistics provider like RPM that can meet your shipping needs. RPM has a network of over 40,000 carriers and can handle peak shipping season without the need for freight embargoes. So if you’re looking for efficiency and assurance when it comes to the delivery of your shipments, reach out to RPM today for a quote.
Sources:
Embargo Definition | Investopedia
Russia Oil Ban: White House Announces Plan to Cut Off Energy Imports | The Washington Post
Commentary: 2021 Is the Year of the Freight Service Embargo | FreightWaves
