Russia’s war in Ukraine has affected large aspects of our lives, and the shipping industry has not been spared. Suddenly, the world doesn’t appear as safe as it did a few months ago. This conflict, along with the sanctions that have now been imposed on Russia by the West, will likely have a huge impact on businesses well into the foreseeable future. But what does the war mean for the shipping industry?
Shipping to Russia has become almost impossible
The first thing to note is that shipping to Russia has become almost impossible. With most major western companies pulling out of the country, it’s more than likely that the ability by any business to ship goods to and from the country will be severely dented. Not so long ago, Russia had a booming economy that was, for all intents and purposes, western centric.
Big brands such as Coca Cola, Apple, Sony, McDonald’s and Starbucks had free reign in the country. Unfortunately, a week can change everything and doing business in Russia has become a huge challenge. Most of the companies that are pulling out are probably doing so to avoid the sanctions that were imposed on the country by the West.
Ukraine is now off-limits
Another major challenge to the shipping industry is that Ukraine is now virtually off limits due to Russia’s attack on the country. For the shipping industry, the impact has been huge, considering that the country is the fifth largest producer of wheat in the world. It’s ports were, therefore, major shipping hubs before the war, with grain flowing to all parts of the world from the country’s Black sea ports.
Today, these very same ports are under siege, and it’s impossible get anything to Ukraine from anywhere in the world. The prognosis is also dire. Even if the war was to end today, the destruction that is being wrought on Ukraine’s infrastructure is such that it may be decades before the country can get back on it’s feet.
Shipping costs are likely to increase across the world
The war in Ukraine will also likely translate into a massive increase in shipping costs. As of the time of writing this post, oil and gas prices had increased from… to… Indeed, some people were going so far as to anticipate that oil would reach …. by the end of the year.
Compounding the situation that we are in is the fact that the world is still reeling under the impact of Covid 19. It’s a double edged sword. Disruptions that are being brought about both by the war and by Russia’s attack in Ukraine have shrunk the scope of the available shipping options. That in turn, has led to an increase in shipping costs.
Just to give an example, it has become very difficult to get anything from the United States or from Europe to Russia. With major airlines pulling out, and Russian airlines being banned from European and U.S airspace, those who relied on air freight will no longer be able to move their goods.
Supply chain disruptions
The world’s supply chains, which were still trying to recover from the effects of the Covid 19 pandemic, are now under attack due to the war in Ukraine. We have already noted this. Any company that previously sourced raw materials from Russia or Ukraine will find it difficult to operate amidst the war and the resultant sanctions.
A few days ago, there was news that Russian automaker Lada had halted production because it could no longer source spare parts from abroad. Russia’s major exports are oil and gas. However, it exports a lot of additional goods that have now been sanctioned.
Just to give an example, the U.S has now banned Russian Vodka and is set to introduce a full trade embargo on the country. That does not portent well for the shipping industry going forward. It means businesses around the world will have to find other markets and other suppliers.
The world was already reeling under a chip shortage. What most people are not aware of is that Ukraine is actually the largest producer of the special neon and a major producer of the palladium that is used in the manufacture of chips by companies in the U.S. So, the impact for the shipping industry will be far reaching.
How to protect your shipping business from effects of the war in Ukraine?
The shipping industry is clearly under siege. But what can you do to protect yourself going forward? At Ship Overseas, we have taken several steps to protect our customers as the world continues to wad into uncertain times.
Book your car shipping today to protect yourself from future price increases
The first thing that you can do if you plan on shipping your car overseas is to make your booking today. At Ship Overseas we allow you to lock your shipping price today. That way you won’t be affected in the event of anticipated price increases.
Reduce or eliminate exposure to Russia, Ukraine and Belarus
It makes sense today for shippers to reduce or eliminate exposure to Russia and Belarus. These countries are likely to be under heavy sanctions well into the foreseeable future. You will want to stay away to avoid falling foul of the financial restrictions that are now in place. Regarding Ukraine, shipping to the country will likely be in terms of humanitarian assistance.
Summary
Russia’s war in Ukraine has had a severe impact on the global shipping industry. The world is now a much more complicated place, with instability in the price of oil, gas and other basic commodities making like difficult for multitudes. Shipping costs will likely continue to rise across the board. Going forward, individuals and companies will need to tread careful to survive in this difficult operating environment.