The Russian invasion of Ukraine is causing major disruptions for the global shipping industry, with hundreds of vessels trapped at ports, cargo being derailed and freight rates surging.
Maersk, one of the world’s biggest shipping and logistics groups, says the invasion of Ukraine is hurting global supply chains and pushing up costs as transport routes are scrapped, fuel prices soar and some carriers impose ‘war risk surcharges,’ as reported by the Australian Financial Review. “Customs authorities in the European Union are now inspecting all units to/from Russia transiting their terminals/ports to identify sanctioned and restricted shipments,” Maersk told its customers.
The world’s biggest container ship operators – A.P. Moller-Maersk A/S (Maersk) and Mediterranean Shipping Co. (MSC) – said they would temporarily suspend services to Russian ports, including those far from the conflict in Ukraine.
Maersk said Tuesday it was halting bookings in light of the sanctions imposed on Russia, including congestion being caused by customs authorities inspecting cargo bound for the country and changing credit terms impacting its customers. Maersk and MSC said they would continue to move foodstuffs to and from Russia.
Port congestion in the East Mediterranean and Black Sea will increase and demand for air freight to rise as customers looked for alternatives to ocean freight. The cost of air transport will have a corresponding increase because of airspace restrictions and rising fuel and insurance costs.
As cargo planes divert around Russian airspace, they will take longer and spend more on fuel, and they may opt for smaller and lighter loads as a result. This is expected to have a significant impact on airfreight. Longer trip times could create cascading delays and backlogs for industries that depend on airfreight, including electronics, semiconductors and fast fashion.
FedEx announced last week that it would increase the peak surcharge for express parcels and freight moving between the Asia-Pacific region and other areas of the world from 07 March. The surcharge from parcels sent from Australia will rise to US$1.20 per kilogram from US$1 per kilogram previously.
Since late February, when Russia started attacking Ukraine, global air cargo rates have risen about 25%, according to the Freightos Air Index. Russian air cargo operators such as AirBridgeCargo Airlines, which has 17 Boeing 747 freighters, have also been banned from travelling to many countries, reducing the number of planes available globally to transport goods.
About 16% of shipping containers transported to and from Australia are European-related, according to Shipping Australia, a local industry group that represents shipping lines. They said freight hubs around the world, which are already struggling with congestion and delays because of the COVID-19 pandemic, were being put under more pressure as shipping lanes to Russia and Ukraine shut down.
Automakers, who have complex global supply chains, could see shortages of key materials. Ukraine and Russia are both substantial sources for palladium and platinum, used in catalytic converters, as well as aluminium, steel and chrome.
Semiconductor manufacturers are warily eyeing global stocks of neon, xenon and palladium, necessary to manufacture their products. Makers of potato chips and cosmetics could face shortages of sunflower oil, the bulk of which is produced in Russia and Ukraine.
Russia accounts for about a fifth of the global trade in natural gas, and both Russia and Ukraine are major exporters of wheat, barley, corn and fertilizer.
It also noted that Russian and Ukrainian seafarers accounted for about 14.5% of the global seafaring workforce.
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