March 12, 2022

The war between Russia and Ukraine will have far-reaching effects on world trade, technology and shipping. For shipping lines, it is important to identify and understand the implications of the war, as well as the sanctions on Russia that they will have on the shipping and cargo market. Xeneta Chief Analyst Peter Sand spoke about how Russia’s seaborne trade is falling after the invasion of Ukraine.

“Shippers with freight bound for Russia ask, ‘What can I do?’ As major European carriers stopped calling at Russian ports, importers with cargo bound for St. Petersburg and Novorossiysk are facing a number of problems,” Sand said.

“Their cargoes are now spread across different ports, all in the wrong place, with the main (European) ports shunning Russia-bound container handling altogether,” he added.

Xeneta’s figures also show a drop in rates on trades in the Black Sea and Baltic regions, as trade with Russia and Ukraine came to a halt due to sanctions and decisions by many shipping lines not to accept further bookings. to or from the region. In general, shippers can expect to see higher bunker adjustment factors [BAFs] as fuel costs rise.

Impact on supply and demand

For Sand, “global logistics has become a little more difficult to manage than the critical situation suggests. I guess everyone knows that global supply chains are quite strained at the moment as a result of two years fighting Covid-19. Russia’s exclusion from global shipping and networks, which account for 2% to 3% of global containerized goods, is clearly another disruption on top of what we already see in the market.”

For Russia, the suspensions will be a further blow to its economy and the living standards of its citizens, as imported goods risk becoming scarce. Prices of some electronics have already soared by around 30% as the ruble plunged.

“This means more for Russia than for world trade,” said Sand, who stressed that “it will have an impact on the general public in Russia, as well as on companies,” he stressed.