Supply chain: Ukraine crisis

UPDATED 2nd March: Russia’s invasion of Ukraine and subsequent sanctions and embargoes by the UK and other governments, will add further strain to international supply chains, that are still struggling with the protracted COVID pandemic and other disruption.

The conflict is already impacting capacity and global operations and will reverberate through increased costs. Crude oil has hit its highest point since 2014 and fuel used in container ships and air freight will inevitably get more expensive.

Our advice is to avoid Russia, Ukraine and conflicted region, and expect the impact of sanctions, restrictions and prohibitions to ripple out geographically, and across all transport modes.

• With ‘Force Majeure’ being called by insurers, carriers and other operators, we strongly recommend the suspension of all shipments into or out of the region.
• Maersk, MSC, and CMA CGM have joined Hapag-Lloyd and Ocean Network Express (ONE) in suspending bookings for Russian cargo.
• JAL and ANA have cancelled all flights to/from Europe, while Russian cargo carriers have withdrawn from the market and the avoidance of Russian air space will disrupt operations – all of which effectively reduces capacity – with a direct impact on rates.
• Rail from/to China is impacted – where it transits Russia/ Ukraine – and is either not functioning, or cargo is not being accepted.
• Carriers and many other foreign operators have closed all Ukrainian offices and warehouses.
• UK government is asking ports to reject Russia-bound cargo and Russian flagged, registered or controlled vessels.
• We are seeing delays and detention of cargo by overseas customs authorities seeking Russian and prohibited cargo.
• Fuel prices are increasing dramatically and we are anticipating emergency fuel surcharges will be applied on all modes.
• DfT advise that further sanctions targeting Russian shipping are being developed and we will update you further, as to the impact of these changes.

The UK Government has announced sanctions and prohibitions on trade, which can be enforced by penalties and should be checked carefully before exporting goods to Russia. 

The sanctions and embargoes listing is complex, and there is a Government search tool which simplifies checking the Office of Financial Sanctions Implementation (OFSI) consolidated list, that can be located HERE.

Our trade association, BIFA, is recommending that we review our processes relating to Russia shipments, as insurance cover may be withdrawn and/or premiums increased for goods being shipped to, from, or through Russia