Impact of War: Siege, Sanctions and Shipping

Investigating through the economic history perspicuously indicates that a conflict between two nations can immensely derange world trade. Implying the significance that shipping plays as a major contributor to international trade, war is the last thing a world still recovering from the pandemic needs.

On 24th February 2022, Russia engaged Ukraine in an armed conflict which now seems to have been a preview to a full-blown invasion attempt. For almost two weeks now, the Russian army has been on the offensive targeting key places around the country and ordering troops into major cities. Although the Ukrainian forces and its citizens have defended themselves so far, missile attacks and air raids have led to huge losses of innocent lives and property. Losses aren’t confined to just this eastern European country; the world trade has suffered immensely as well. Severely affected is the ocean freight which embarks on higher costs for fuel, grain, industrial metals, and other raw materials.

The invasion is heaping new disruptions in supply chains that haven’t quite recovered from the shocks caused by the pandemic. The ocean freight costs are imminent to increase across the board and in turn, the transportation costs of the commodities are set to become exorbitant.

The invasion followed by the black sea blockade and in response to this unprovoked breach of peace, the sanctions placed by the global community on Russia and Russian businesses have caused a proliferation in the cost of sea trade. The Ukrainian Black Sea port of Odessa has been shut down since the inception of the invasion. Cargoes destined for Ukraine are being diverted to other ports. Russia and Ukraine are large producers of energy, food, special metals, and gases. The feud between the two nations has already led the fuel prices to leap to an eight-year high of $105/barrel. Rising fuel costs will have a toll on the manufacturing and transportation sectors vastly.

Russia’s widening assault on Ukraine complicates the movement of cargo between Europe and Asia. Therefore, importers from London to Warsaw will soon face an increase in shipping costs and longer delays.

Many big names in the shipping industry like Mediterranean Shipping Co. and A.P. Moller-Maersk A/S halted bookings for Russian freight due to notable delays in those regions.

?In Asia, some international shipping companies are adjusting their schedules amidst the conflict, yet disruptions in the delivery of goods are imminent.

Furthermore, amidst the financial catastrophe that is haunting the shipping industry, there have been incidents of the bombing of ships anchored near the shores of these countries which also brought about the death of a sailor on board. On 2nd March 2022, a stranded Bangladesh bulker on the coasts of the Black Sea at anchorage off the port of Olivia was struck by a Russian missile hitting the superstructure of the bulker. This incident inflicted fatal damage to the ship and also killed the third engineer of the vessel.

IMO Secretary-General Kitack Lim stated that in part read, “The security situation in Ukraine is impacting trade by sea. The safety of marine personnel including seafarers is vital.” The crisis has proved to be a great difficulty for the seafarers. Sudden changes in schedule and shut down of ports, are only adding to the perils of the safety of vessels and personnel on-board.

A war between two nations can lead to difficulties caused in the functioning structure of the whole world and put the world trade and market at great risk of collapsing. An extensively vandalized sector due to war is shipping.

Article By: Snehali Dutta

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