Russian Invasion Adds to Supply Chain Woes

War takes container ships, crews out of action

By Andy Kriege, YSN

Russia’s invasion of Ukraine is wreaking havoc on the global shipping industry.

The conflict is adding to an already constrained supply chain still reeling from a COVID-induced, two-year-long backlog. The war in Ukraine has compounded the crisis by trapping hundreds of vessels along with tens of thousands of scarce containers in ports, pressing global freight rates even higher.

As reported yesterday in The Wall Street Journal, the world’s two largest container ship operators, A.P. Moller-Maersk A/S and Mediterranean Shipping Co., are temporarily suspending services to all Russian ports, including those far from war in Ukraine. Maersk said it was halting booking due to recent sanctions imposed on Russia, coupled with added congestion by customs authorities inspecting cargo bound for the country, and by changing credit terms due to sanctions.

Slava Sorochan, a deputy director at Stark Shipping LLC, a shipping agent in the Ukrainian port of Odessa, told the newspaper that “No one saw this coming. That’s why so many vessels are stuck in ports.”

While the impact on shipping is most severe in the Black Sea, where some commercial ships are taking fire or being detained, it is also being felt around the world, further squeezing an already hobbled shipping industry.

Sailing Without Sailors?

As if having all the additional shipping vessels and containers sidelined in the Black Sea and the Mediterranean were not enough, the shipping industry faces an unprecedented worker shortage, as Russia and Ukraine are two of the largest suppliers of labor to the international fleet.

Over 10 percent of the world’s 1.9 million seafaring labor force is Russian, according to industry publication TradeWinds, while another 4 percent are Ukrainian. That means up to 15 percent of the seafaring workforce is potentially sidelined due to the conflict. Shipowners are now facing the prospect of huge worker shortages and are predicting difficulties in getting thousands of workers in and out of Ukraine and Russia during the crisis.

Workers will be particularly scarce on the Ukrainian side, where every able-bodied male between the ages of 16 and 60 is being conscripted to fight in what could be a protracted war. Of added concern, many vessels employ mixed crews from Russia and Ukraine, creating potentially volatile or hostile working conditions aboard ship.

In addition, Western sanctions could make it difficult to pay seafarers from either country, TradeWinds reported.

Shippers may also be facing further disruptions. According to the Journal, which cited people familiar with the matter. the European Union (EU) is considering blocking Russian ships from calling at its ports. The U.K. already imposed the sanction earlier this week.

Reverberations Felt ’Round the World

Sea freight currently comprises 90 percent of global trade. To allow for the free flow of goods throughout the global marketplace, unfettered movement across international shipping lanes and sufficiently staffed container ships are essential.

While the bulk of sourced goods supplying the furniture and appliance industries are shipped from ports far removed from the war in Ukraine, the supply chain is extremely fragile and any interruption, regardless of where it occurs, will have a profound impact on global supplies.