The invasion of Ukraine by Russian troops has led to multiple fast-changing developments in global ocean supply chains that are still reeling from the ongoing pandemic. Stakeholders are bracing for the potential impacts of this conflict on shipments, freight rates, and additional logistics capacity constraints.
Presently, all Ukrainian seaports have been closed and multiple major ocean carriers have announced the cancellation of port calls to Russia and Ukraine. The Ukrainian port of Kherson, a strategic black seaport, has fallen to Russian forces, and Russian vessels are being blocked by major European ports.
Here are four ways this conflict is already impacting global ocean supply chains.
The clash in Ukraine, the second-largest country by area in Europe, has caused container and bulk carrier vessels to be rerouted, increasing concerns over additional supply chain disruptions. With the ports in Ukraine closed, passage through ports in Ukraine has become impossible and major container lines are rerouting their black sea service to adapt to the imposition of sanctions on Russia. Ocean carrier, CMA CGM has suspended port calls to Ukraine until further notice.
Global port congestion and delays have been further exacerbated by the invasion of Ukraine. Vessels have been skipping port calls through Ukraine, Russia, and neighboring ports due to dangerous conditions of vessels coming under artillery fire. Last week, an Estonian-owned cargo ship sunk off Ukraine's Black Sea port of Odesa after an explosion (Image 1). Within that same week, a Bangladeshi vessel was also hit by another missile. Due to the increasing number of vessels docking at rerouted ports, delays and dwell times have drastically increased at European ports since the invasion. Data from Seavantage's Port Insight platform (Image 2) shows a steep decline in the number of anchored vessels at the port of Odesa.
Global ocean ships connected to Russia and Ukraine have dropped since the invasion. Major ocean container ship operators, MAERSK, MSC, ONE have announced the temporary suspension of their services to Russian ports including ports nearby Ukraine. The government of the UK has banned the entry of all incoming Russian vessels to its ports after the implementation of sanctions in Russia. The suspension of operations has caused a reduction in cargo transport throughout Europe.
Shortly after the invasion, ocean freights rates have been skyrocketing, passing record highs. Freight rates have been increasing due to the rerouting of vessels, increasing fuel costs, and some carriers adding “war risk charges”.
The threat of disruptions to global supply chains from this conflict makes proactively managing these disruptions imperative. With our visibility platform, you can track cargo with predicted ETAs, gain insight into ports and terminals, and be the best prepared.
SeaVantage offers real-time tracking and visibility solutions for freight forwarders, carriers, cargo owners, and terminal/port operators. Our proprietary AI Maritime Traffic Network provides a more informed prediction of vessel or container arrival time for all stakeholders in the supply chain by bringing in additional data streams.
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2022 was another tumultuous year for the ocean shipping industry. The combination of numerous disruptions ranging from geopolitical conflicts, Covid-19 lockdowns, industrial labor strikes, inflationary pressures, and extreme weather events gravely impacted ports worldwide and global supply chains.
The Ukraine crisis and the COVID-19 pandemic impacted global supply chains significantly in 2022, highlighting the importance of being prepared for unexpected disruptions and the need for agility and flexibility in managing these challenges. The Russia/Ukraine war disrupted trade and transportation routes, resulting in delays and increased costs for businesses that rely on imports and exports between the two countries. The ports of Mariupol and Odesa, key transit points for goods in Ukraine were disrupted and had to shut down by the conflict.
Despite the fact that almost everyone has a GPS tracking device in their pocket, tracking the location and status of vessels and containers continue to be one of the top challenges facing freight forwarders in the shipping industry.