The Russian – Ukrainian war, which began in February 2022 in Ukraine, has had a profound impact on global shipping and logistics, resulting in a range of consequences. Below are some key effects:

Disruption of Trade Routes:

1. • The Black Sea, an essential shipping lane for goods such as grain, oil and natural gas, has become dangerous due to the ongoing conflict. Ports like Odesa in Ukraine and others in the region have experienced significant disruptions, causing delays and vessel rerouting.
   • Some shipping companies have opted to bypass the Black Sea entirely, disrupting global trade flows, particularly to and from Eastern Europe, the Middle East and Africa.

Sanctions and Trade Restrictions:

1. • Sanctions imposed on Russia by the European Union the United Nations and the United States along with other nations  have resulted in a decrease as to Russian imports and exports. Shipping companies, like all other companies, are forced to comply with these sanctions, avoiding Russian ports and limiting trade with certain Russian entities.
   • These sanctions have impacted the availability of critical commodities such as oil, gas and metals, which were major exports from Russia. This has contributed to supply shortages, especially in the energy sector.

Energy Prices and Fuel Costs:

1. • The war has led to a surge in energy prices, particularly for oil and natural gas, raising fuel costs for shipping companies. This has escalated the overall cost of shipping, particularly on long-haul routes.
   • In response, shipping companies have adjusted their rates, often passing on the increased expenses to customers, which has contributed to inflation in global trade.

Cargo Shortages and Delays:

1. • Ukraine is a key producer of agricultural goods like wheat and corn, and the conflict has disrupted supply chains for these commodities. This has led to rising food prices and shortages, particularly in developing countries that depend on Ukrainian exports.
   • Despite some grain shipments resuming, the pace has been significantly slower, and alternative routes, such as the Danube River, are often less efficient.

Insurance and Risk Management:

1. • Shipping insurance premiums have risen sharply due to the heightened risks in the region. War risk premiums have increased for vessels operating near or through conflict zones.
   • Some insurers have excluded coverage for ships in the Black Sea, adding further complexity to logistics in the region.

Crew and Shipping Labour Issues:

1. • The conflict has created difficulties for crews, particularly those from Russia, Ukraine, and neighbouring countries. Political tensions and port closures have made it challenging for seafarers to return home or join new vessels.
   • The interruption of regular crew rotations and labour shortages have impacted shipping operations globally.

Changes in Global Shipping Patterns:

1. • Shipping companies have adjusted their routes and schedules in response to the conflict. The closure of Russian ports, along with shifting dynamics in the Black Sea and Eastern Europe, has led to longer shipping times and higher transportation costs.
   • Alternative ports, such as those in the Mediterranean, have seen increased traffic, leading to congestion and further disruptions.

Impact on Supply Chains:

1. • Global supply chains have been severely affected, as businesses rely on products from Ukraine, Russia, and surrounding areas. This has caused delays in manufacturing, particularly in industries such as automotive, technology and agriculture.
   • Shortages of critical raw materials, including palladium (used in electronics), and essential industrial goods have also been a persistent challenge.

In conclusion, the effects of the ongoing war in Ukraine on global shipping have been widespread, from disrupting trade routes and escalating energy prices to shifting trade patterns and rising costs. The ongoing conflict continues to create volatility in the global shipping and logistics landscape.

The content of this article is valid as at the date of its first publication. It is intended to provide a general view  to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Simos Christodoulou, Director of Business Development at simos.christodoulou@kyprianou.com