Another Cargo Ship Struck at Black Sea

The geopolitical landscape in the Black Sea region has become increasingly strained in recent years. Conflicts, military drills, and inter-state tensions have significantly jeopardized shipping safety.

On September 20, a cargo ship flying the flag of Antigua and Barbuda, scheduled to transport metal pipes to Romania, was struck by a ballistic missile in the port of Odessa, resulting in injuries to two crew members and damage to the port's infrastructure.

Odessa Port stands as Ukraine's largest port and one of the most significant ports along the Black Sea coast, holding immense economic significance. Recently, it has been pivotal in the global food supply chain, particularly given Ukraine's reputation as the "breadbasket of Europe," making its stable operation essential for maintaining food security in international markets.

Ongoing Trade Crisis in Black Sea since the Outbreak of Russia-Ukraine Conflict in 2022

The Black Sea , the largest inland sea in the world, connects to the Mediterranean via the Bosporus and Dardanelles Straits to the west, and to the Sea of Azov via the Kerch Strait to the north. It stretches towards four major regions: Eastern (Southern) Europe, the Caucasus, the Middle East, and Central Asia in Russia, holding significant geopolitical value. With the ongoing Ukraine crisis, energy corridors passing through Ukraine have been obstructed. Following the sabotage of the "Nord Stream" pipeline, Russia's two gas pipelines, "Blue Stream" and "TurkStream," running under the Black Sea to Turkey, boast a combined annual gas transport capacity exceeding 30 billion cubic meters. Despite representing one-sixth of Russia's peak gas exports to Europe, which reached 180 billion cubic meters, it remains a significant channel for European energy.

Notably, the Black Sea has played an increasingly crucial role as a regional trade transshipment hub amid the crisis. Statistics show that in 2023, cargo throughput at the Port of Novorossiysk in Russia reached 154 million tons, making it a crucial export base for oil, minerals, grains, and fertilizers. Port of Samsun in Turkey witnessed its throughput mounting 10 million tons, while Georgia's Poti Port saw a 66% increase in container throughput compared to 2022. Before the suspension of the "Black Sea Grain Initiative," Ukraine exported nearly 18 million tons of grain and food products through its Black Sea ports, and Port of Constan?a in Romania, a transshipment point for Ukrainian containers, experienced a 32% increase in throughput from 2022 to 2024. Thus, the Black Sea remains a critical hub for global and regional trade in energy and food products.

Given the Black Sea's crucial position, the crisis has persisted since the onset of the Russia-Ukraine conflict. On September 11, an attack occurred in the Black Sea involving a Saint Kitts and Nevis-flagged bulk carrier, which was hit by a missile shortly after departing from the port of Chornomorsk in Ukraine while carrying 26,550 tons of grain. The missile strike inflicted severe damage on the ship's bow, deck, port side, cargo hold, and crane, but thankfully, none of the 23 crew members were harmed.

On December 28 last year, a Panamanian-flagged bulk carrier struck a mine in the Black Sea while en route to a Danube port for grain loading, leading to stern damage, machinery and equipment failure, loss of navigation course, and a fire on the upper deck, resulting in injuries to two crew members.

According to statistics, about 80 ships were stranded in Ukrainian ports around mid-last year. During the same period, 16 ships suffered damage, leading to delays in cargo transport and significant economic losses.

The Implications of Geopolitical Crisis

Similarly, the Red Sea region faces security challenges.

Situated between Northeast Africa and the Arabian Peninsula, the Red Sea links to the Mediterranean Sea through the Suez Canal to the north and the Gulf of Aden via the Bab-el-Mandeb Strait to the south. It serves as a vital trade route for vessels traveling between the Atlantic and Indian Oceans, often known as one of the world's busiest, most significant, and controversial waterways. Statistics reveal that about 17,000 vessels navigate through the Bab-el-Mandeb Strait annually, with trade volume reaching $1 trillion.

In recent years, ships have frequently fallen victim to attacks by Houthi militants, significantly elevating risks for vessels passing through the Red Sea. The declining shipping environment has led to a dramatic rise in insurance costs, delays in transit, and increasing freight costs.

The Red Sea crisis will incur hefty costs on firms exporting goods as evidenced by the poor performance of Asian companies reported by Zhitong Finance, while those in cargo transportation will benefit from higher freight rates. Reports indicate that as of mid-July, to mitigate attack risks in the Red Sea, container ships have reduced traffic in the narrow strait by about 70% since December of the previous year, leading to longer transport times and increased freight costs.

Amid these disruptions, the Panama Canal, another crucial global trade route, is grappling with severe drought and diminished navigation capacity, forcing many ships to reroute around the Cape of Good Hope. Estimates indicate that cargo ships rerouting from Rotterdam to Singapore via the Cape of Good Hope will experience a 40% increase in their journey (about 3,800 nautical miles), with transport and fuel costs exceeding $2 million, thereby raising overall shipping expenses.

In the complex security landscape, the international community needs to implement proactive measures. International shipping organizations should establish well-defined maritime safety standards for critical areas to ensure safe operations. Nations should remain committed to diplomatic efforts through dialogue and cooperation to mitigate conflicts. Additionally, navigation security can be effectively enhanced by maintaining safe shipping lanes and conducting naval patrols in international waters. Shipping companies should develop comprehensive emergency initiatives to strengthen risk management in conflict-prone areas, ensuring the safety of crews and cargo. It is also essential to enhance port security measures to improve readiness against potential threats.

Furthermore, smart shipping solutions can assist in navigating these challenges. We can deliver intelligent management solutions for vessels through advanced technologies including artificial intelligence, IoT, and big data. Specifically, we can monitor shipping activities in real-time, evaluate safety risks, and smartly optimize routes and ports, enhancing emergency response effectiveness. For more information, call 400-9208810.