Russia’s Ukraine invasion: supply chain disruption update (02/03)
You can read this article in 6 minutes
Day by day as Russia's invasion of Ukraine intensifies, the world of logistics and supply chain is changing. Today's update contains the latest developments in the transport of goods by truck, sea and air.
Supply chain visibility data shows significant falls in Russian exports
As you would expect, the situation has seen exports from Russia plummet. Supply Chain Visibility provider FourKites has observed the following:
- Russian import volumes down 28% week-over-week as of February 28th.
- Oil & Gas shipments down 12%.
- The Manufacturing and Retail sectors hit hardest, decreasing by 56% and 26% respectively week-over-week.
- 20-30% increases on transaction pricing of air freight from Asia to Europe.
India seeks sanctions workaround to maintain Russian trade
According to reports in India, the country’s government is seeking ways to maintain its trade with Russia following the sanctions implemented by the west.
The Hindu writes that India’s Commerce and Industry Ministry is looking into various ideas from exporters, such as 3rd country payments and allowing deals in rouble. However, the newspaper adds that the unavailability of insurance cover and rising freight rates are other problems the country is wrestling with.
Russia is India’s 25th largest trading partner. Among its main Indian imports are tea, pharmaceuticals, mobile phones and other electronics, machinery, iron and steel and clothing.
COSCO continues operations at Russian ports as other shipping giants pull out
Chinese shipping company COSCO is continuing to serve Russian ports as normal, writes Maritime Executive. It is thus the only shipping company in the world’s top 6 that is still serving the nation that has invaded Ukraine.
“As the stability and safety of our operations is already being directly and indirectly impacted by sanctions, new Maersk bookings to and from Russia will be temporarily suspended, with exception of foodstuffs, medical and humanitarian supplies,” shipping giant Maersk said in a statement released yesterday.
Suez canal increases tolls by up to 10%
Amid all that is going on, you may have missed that Egypt’s Suez Canal Authority said on Sunday it was increasing canal tolls by up to 10% for laden and ballast vessels. The change came into effect yesterday.
Reuters writes that decision was “in line with the significant growth in global trade, the improvement of ships’ economics, the Suez Canal waterway development and the enhancement of the transit service,” according to a series of circulars by the canal authority.
“No time” to address additional supply chain disruption, says former US trade official
Jennifer Hillman, a Georgetown University professor and a former U.S. trade official, has told Bloomberg that there is no time to build resilience into supply chains amid the sudden disruption generated by Russia’s invasion.
“There is still substantial disruption in the supply chain,” Hillman told Bloomberg. “There is an effort to build resilience but that will take time. With Russia invading Ukraine, we don’t have time.”
Bloomberg also reports that Transporeon believes a protracted war could see flights between the Far East and Europe diverted via the USA, increasing both lead times and prices. It is said that issue would be worse for UK importers as a result of the country’s limited capacity at cargo hubs.
BJS Haulage calls for UK Government to implement fuel duty cut
David McWilliams, Sales Director at BJS Haulage , has told Trans.INFO that UK Government help is needed to alleviate the ever-increasing fuel costs faced by logistics operators.
“I think what is needed – for all of us – to limit the negative impact of spiralling costs, is government help. A reduction in fuel duty would mean that even as prices continue to rise, which it looks certain that they will, the burden would not be as great,” said McWilliams. “This isn’t just a profit issue, it is a human one. Supply chains have been in the public eye more over recent years than ever, with empty shelves at the height of the pandemic highlighting the crucial role of supply chains in our day to day life. If the government helps shield hauliers by capping or lowering fuel duty, we can in turn pass this benefit on to consumers who are nervous of rising costs where items are getting more expensive to allow for fuel increases.”
German transport sector fears increased driver shortage
The German transport sector is worried about an increasing driver shortage due to the war in Ukraine and economic sanctions on Belarus. The BGL organisation, who represent the Germany’s hauliers, says that “transport processes could get out of balance relatively quickly” as a result of the situation.
You can read more on this story on our website here.
Consultant says consumers behaviour will change due to energy and food inflation
In article by Just Food on food supply chains, Andy Searle, a managing director and partner at management consultants AlixPartners, says that the rise in the price of food caused by Russia’s invasion will change consumer behaviour:
“Net-net, I think in the short term, you’ve got big shifts in consumer behaviour across Europe and in Russia, with inflation going up,” Searle adds. “We’re going to see continued price increases. I suspect that the buffer in margin and historic cover that’s limited some of the price rises to date is all either used up, or it’s going to be burnt through pretty quickly. We’re going to have to see increased price rises on the shelves.”
Photo: Alf van Beem, Public domain, via Wikimedia Commons