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Why & How the Ongoing Russia-Ukraine Conflict Impacts Ocean Shipping

November 2, 2022

Ocean freight is the most popular form of shipping internationally. Roughly 90% of goods are transported across the world by sea. The ongoing Russia- Ukraine conflict affects the overall movement of certain key products and has impacted shipment visibility in a significant way. According to CNBC the Black Sea and Sea of Aov are partly unnavigable. Missile attacks on ships and lane closures for commercial ocean shipping have made it all the more difficult for ocean freight shipping. Other than the war, global sanctions have resulted in a weekly reduction of container vessels at the Russian ports. This has boomeranged back in scarce wheat imports and increased diesel prices around the world. These rising costs and falling capacity access have created a situation where shippers relying on ocean shipments are left scrambling for a solution.

The Conflict Stimulated a Massive Strain on Fuel Costs

 A major yet overlooked effect of the current conflict is the level of supply chain disruption that has occurred.Fuel costs have risen significantly due to sanctions, access difficulties, and transportation issues. Russia supplies 40% of natural gas to Europe according to Nature.com, and rates of ocean shipping of natural gas have fallen significantly. Ocean freight shipping rates will rise and shipping lines will try to pass on the exorbitant price of fuel and other overhead costs to the customers in an attempt to keep profits high.

Lockdowns in China Are Also Impacting the Supply Chain

To add to this chaos surrounding ocean shipping services is the current Shanghai Lockdown over reports of a new coronavirus variant. With reports of the spreading of the omicron variant in Shanghai, their local supply chain is undergoing some serious challenges that create a far-reaching ripple effect that can impact the global supply chain overall. Ocean container software tracking and other innovative services become more necessary as disruptions continue. The supply chain works smoothly only if all its components starting from the manufacturers are functioning normally. China accounts for 18% of all US imports according to an early 2022 report by Fortune. . For computers and electronics that number rises to 35%. With the current situation in Shanghai, there could be a critical shortage of several key electronics and machine components.
Ocean freight shipping costs will go up if cargo is stranded in these ports, resulting in the cost of products increasing  for the consumer.

Blank Sailings Are Continuing

Blank sailings or void sailings happen when an ocean liner skips a port, a leg, or a complete leg due to some sort of delay or issue.. This rolled cargo can happen due to various reasons like bad weather, not enough space in a vessel, last-minute  changes etc. But the most common reason for blank sailings is caused by shipping lines reducing their capacity, thus pushing rates up. Over the last few years,  ocean Shipping has been subject to a lot of these occurrences due to lockdowns and port congestion, and the Russian-Ukraine war. Less shipment means less profit for the shipping lines. As a result, ocean freight shipping charges for ocean containers increase and according to Drewry.com, as many as 725 cancellations are projected to happen by the end of May. 

This is likely to result in higher costs and more pressure on shippers  because, despite the increasing shipping costs, the need for ocean transportation continues to increase at an unprecedented rate. 

Ukraine Supplies Many Vital Resources to the Supply Chain

Besides having rich reserves of oil, Ukraine is a key supplier of several other products. Ocean shipping of many of these vital products has got completely disrupted. One can only imagine the predicament of importers, wholesalers, and retailers as the supply chain continue to reel under this global conflict. According to Deloitte, “Russia and Ukraine account for more than 25% of the world’s trade in wheat and for more than 60% of global sunflower oil and 30% of global barley exports. Russia is also a major global exporter of fertilizers, which means any supply shortages, or restricted access, could impact crop yields globally.

Russia is also a key supplier of several minerals like nickel, titanium, and palladium, which are essential for electronics, vehicles, machinery, and other vital industries.Ocean Shipments of these products are either delayed at international or domestic ports or the vessels themselves are unable to travel the usual cargo shipping lanes at this time. These delays at the first link in the supply chain are creating massive issues with resource access and manufacturing in the US and around the world. 

Know Your Risks and Stay Resilient to Overcome Future Disruptions With Better Ocean Shipping Visibility

With all these challenges in the supply chain, the demand for goods continues to grow globally, putting continual pressure on nan already strained ocean shipping supply chain. It is easy to see how delays with ocean freight shipments can create a chain reaction of issues and disruptions that carry through every leg of the shipping process. A lot of challenges can be mitigated with improved ocean freight visibility and with access to an ocean freight shipping provider like OpenTrack which has a global presence and has a live feed of what is actually going on with the containers as they are sailing on the oceans. Visibility of these liners is a challenge and the current unpredictable and unreliable global situation only behooves that one picks a provider adept in these. Request a demo of OpenTrack’s API to get started.

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