impact on shipping, ports, air freight
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On February 11, 2022, a patrol boat approached the Ukrainian border port of Mariupol in Black Sea.
Getty Images| AFP | Getty Images
Russia-Ukraine conflict is causing severe disruptions in shipping and air freight. Russian forces are closing shipping routes, logistic firms have suspended services, and air freight rates continue to rise, according to supply chain companies.
Russian naval forces have closed shipping in and out of the Sea of Azov — one of the few access points to ocean trade in Ukraine, said Dylan Alperin, head of professional services at supply chain software platform Keelvar.
This has led to a large number of ships unable to cross the Kerch Strait. He said that 70% of Ukraine’s exports are shipped. “The congestion is getting worse by the hour.” he added to CNBC.
Christian Roeloffs is the CEO of container booking company. Container xChange, said: “Parts of the Black Sea and Sea of Azov are now dangerous or unpassable. Ship arrests, missile strikes on ships and closures of laneways for commercial shipping have occurred.
There is a lot of uncertainty in Ukraine and it’s hard to know if reports are accurate.
According to the International Chamber of Shipping, “Multiple ships were hit with munitions and many seafarers were injured or killed. Many seafarers remain trapped in ships docked at ports.”
CNBC has been told by CNBC that supply chains have reported that cargo movement is at an absolute halt due to the fact that Odessa in Ukraine and Mariupol in Russia are under attack, closed or damaged. Roeloffs stated that container movement has halted and cargo is stuck at ports.
Prices are on the rise
Shippers face double problems due to limited air capacity. Air freight rates have soared due to Russian restrictions on airspace and the closure of Ukraine’s airspace to civil flights.
“The flying ban had a significant impact on international freight routes, cancelling many flights” Alperin stated. With airlines flying 20% of all cargo, carriers will see a dramatic decrease in capacity.
Judah Levine, head of research at freight booking company Freightos Group, said that as airlines avoid Russian airspace, they will take alternate, longer routes — jacking up fuel costs.
According to Alperin, record oil price rises will make it worse for carriers and fuel costs are rising. We’re facing record delays and backlogs, as well as some of the most expensive transportation prices in history.
The oil price has been increasing for several weeks now and is at an all-time high.
Levine reported that Freightos’ China-to Europe Rates rose by more than 80 percent in February to $11.36/kg. However, some airlines have already added war risk surcharges.
Bindiya Vasil, chief executive of Resilinc’s supply chain risk management business, stated that certain insurers have increased premiums for shipping products in the Black Sea.
Numerous logistics firms have suspended delivery to Russia and Ukraine as well, container shipping firms are shunning Russia.
DHL claimed it closed its operations and offices in Ukraine while UPS stated to CNBC that they have suspended service from and to Ukraine, Russia, Belarus.
According to Alperin, 62% of ocean freight capacity is made up of Russian carriers who have stopped operating in Russia.
According to Alperin, the tanker rate has “skyrocketed” with an increase of 157% to 5911%.
Shippers stranded
International Chamber of Shipping warned Thursday that disruptions to supply chains are likely to get worse due to a lack of crew members in the shipping industry.
According to it, 14.5% global shipping personnel is made up of Ukrainian and Russian seafarers.
To maintain free trade, seafarers need to be allowed to board and disembark vessels (crew change), anywhere in the world. It stated that flights to the area have been cancelled, which makes it more difficult. The statement also stated that crews had abandoned ships in Ukraine because of security concerns.
According to the association, shipowners are discouraged from sending vessels to Russia or Ukraine due to concerns over safety of crew and rising insurance premiums.
This association represents 80% global merchant fleets and in February stated that it needed to maintain the ability to pay seafarers via international banking systems.
Canada, its European allies, and the United States have agreed to disconnect key Russian banks form SWIFT (interbank messaging system), which links more than 11,000 banks across over 200 countries.
You can find the following: value of the Russian ruble dropsThis is also expected to result in other positive effects.
James Coombes CEO of Vector.ai digital freight forwarder, said that “Russian businesses cannot pay for the merchandise which is stored in ships” because of the Ruble’s devaluation. Unpaid freight bills will become a burden for forwarders.”
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