The shipping industry has been hit on multiple fronts, with loss of life and ships in the Black Sea, disruption of trade with Russia and Ukraine, and the growing sanctions burden. The industry also faces challenges for day-to-day operations, with impacts on crew, the cost and availability of bunker fuel, and the growing threat posed by cyber risk.
“Despite the tragic situation in Ukraine and the threat to sailors caught up in the conflict, the direct impact on shipping of the war in Ukraine has so far been largely limited to the Black Sea,” he said. he adds. said Captain Rahul Khanna, Global Head of Maritime Risk Consulting at AGCS. “However, the war is creating an additional burden on the maritime industry, which is already facing continued supply chain disruption, port congestion and a crewing crisis caused by the pandemic.”
The International Monetary Fund ( IMF) [1] warned that the war in Ukraine will exacerbate already high shipping costs this year and could keep them – and their inflationary effects – higher for longer. The cost of shipping a container on the world’s transoceanic trade routes has increased sevenfold in the 18 months since March 2020, while the cost of shipping bulk cargo has increased further.
“Trade with Russia and Ukraine will suffer, adding to already strained global supply chains. Longer term, sanctions and reduced trade with Russia could lead to reshuffling of some supply chains supply and trade routes, but all of that takes time and comes at a cost,” Khanna said.
So far, the biggest impact of the war has been on ships operating in the Black Sea and/or trading with Russia. Major Ukrainian ports, including Odessa, have been closed due to the conflict and a Russian naval blockade of Ukraine. The country ships 70% of its exports, of which 99% [2] of its maize exports. Hundreds of ships were trapped in ports or at anchor while thousands of Russian and Ukrainian crews faced an uncertain future, unable to leave ships or return home.
Russian ships have also been banned from entering the UK and EU ports, and were detained due to alleged sanctions violations: in February 2022, French warships stopped a Russian ro-ro cargo ship Head of the Baltic en route to Saint-Petersburg while more than one dozen Russian-owned superyachts have been seized.
The Russian fleet has also been denied access to vital maritime services. A number of ports have cut bunker services for Russian or Russian-flagged vessels, while engine manufacturers, maintenance companies, classification societies and insurers have said they will no longer serve Russian vessels .
The conflict also has a ripple effect on shipping outside the conflict zone. US and European sanctions, in particular, pose a significant compliance challenge for shipping companies and insurers. Many Western companies have voluntarily chosen to cease trading with Russia, creating a complex and uncertain legal situation for contracts, including insurance.
Protracted conflict is also likely to have deeper economic and political consequences, potentially reshaping global trade in energy and other commodities. An expanded ban on Russian oil could drive up the cost and availability of bunker fuel and potentially drive shipowners to use alternative fuels.
“We have already seen requests from shipowners who are considering using non-compliant bunker fuel which has a lower explosive temperature,” said Justus Heinrich, Global Product Manager Marine Hull at AGCS. “Longer term, we could see a shortage of bunker fuel, with more and more ships having to switch to non-compliant or substandard fuels, which could lead to machine failure claims in the future. .”
Much of the maritime sector will be affected in one way or another by the conflict, says Khanna. “In addition to the physical threats to shipping in and around the Black Sea from mines and rocket attacks, which affect trade, the availability and cost of bunker fuel, as well as the safety and well -being of the crew, many container companies have already pulled out of Russia, while the tanker industry faces huge restrictions and disruptions, as do bulk and general cargo operators shipping coal , timber and Russian grain.”
Coinciding with the Covid-19 outbreaks in China, the war in Ukraine is aggravating continued supply and demand pressures for shipping, which has resulted in port congestion, higher shipping costs and delays. longer transit times. According to Clarkson Research [3] container and car carrier congestion in ports is trending towards previous highs, while the impacts of war are likely to create new inefficiencies in the shipping system.
