Impact of Ukraine and Russian conflict on global shipping
With the conflict in Ukraine still ongoing, the impact of this is being felt across the globe, and global shipping has been impacted hugely. Trade has become more problematic, with massive disruptions to trade with both Ukraine and Russia. Costs have increased, and so shipping has become more difficult, more unpredictable, and more expensive.
Sadly, there has been a loss of life and of vessels in the Black Sea. To ensure the safety of ships and their crew, long detours have become necessary, to avoid conflict zones. This results in longer journeys, goods are taking longer to be delivered, and turnaround times are extended. Of course, a longer journey also requires more fuel, and that increases the costs. This is further exacerbated by the fact that the price of oil and gas has soared due to Russia being a major exporter of these commodities. Fuel is having to be sourced elsewhere, and with demand high, prices are high also. Additionally, the location for the fuel is often a greater distance away than it would previously have been. It takes extra fuel to collect the fuel, a vicious circle that cannot be avoided. Costs for container shipping have increased sevenfold in the last 18 months. This is an astronomical figure that would have previously been unheard of.
As a result of the conflict, many countries have introduced sanctions disallowing the import of Russian products. These banned imports include everything from building materials to luxury goods. Likewise, many countries have stopped exporting products to Russia. Violating these sanctions comes with strict consequences, and so shipping companies are having to cancel long-term contracts with Russian businesses. Additionally, the Russian blockade at the Ukrainian ports has severely hindered vital Ukrainian exports. More than 70% of exports from Ukraine are transported by ship. Ukraine is a major global supplier of grain, and nearly all grain exports leave the country in container ships.
The Black Sea is a major zone for global shipping. Shipping businesses are having to make some serious decisions that impact greatly their finances and operations. Do they avoid the Black Sea area entirely, losing out on business, taking much longer to collect and deliver goods, and spending a lot more money on fuel? Or do they continue to sail within the Black Sea area, potentially risking travel to an area that could put the vessel and crew at risk, and with the extra burden of massively increased insurance premiums? This is not a choice any business wants to make when costs are already at an all-time high.
The situation has also resulted in a shortage of maritime crew. Even before the conflict, there was a problem with crew shortages due to the pandemic, so this couldn’t have come at a worse time. Prior to the crisis, approximately 10% of shipping workers were Russian and 4% Ukrainian. Additionally, hundreds of vessels have been stuck in ports due to the closing of ports and the Russian naval blockade. It is predicted that crew shortages will continue to grow unless a serious recruitment and training schedule is put into place to quickly increase the number of shipping workers across the globe.
While none of this is good news, we feel it’s important to keep our customers abreast of the latest news and development. We are also keen to reassure all our customers that we will do our very best to ensure your items are shipped quickly, safely, and at the best possible price. We’ll continue to keep a close eye on any developments within the world of global shipping, so if you have any questions regarding how this situation may affect your move or shipment, don’t hesitate to get in touch.