Russian Invasion in Ukraine. How’s that looking for the maritime industry?

Alongside the major mishaps of the Russian invasion, come major repercussions for the maritime industry: trade, borders, and supply chains. Currently, Ukrainian ports are closed after not having an ability to provide maritime security to commercial vessels until the invasion ends. It not only concerns security provided from Ukraine, but there is still a threat of Russian troops landing in Ukrainian ports.

Shipping Companies and Ship Owners can benefit from insurance contingency plans. Insurance premiums have been paid by these players as various ships have suffered attacks and voyages are soaring due to other uncontrollable causes. Even though vessels could receive monetary aid from this unfortunate invasion, current ships who have reached Ukranian waters, specifically in the Azov Sea, have been blocked by the Russian navy. According to Vitaly Kindrativ, the General Director of the Ministry of Infrastructure in Ukraine, “[vessels] will be able to sail after the Russian navy removes its warships from our sovereign water,” and sea routes are safe for navigation.

Starting on February 24th, the invasion is still ongoing, and after six days, vessels have received attacks, including a Bangladeshi bunker hit by a Russian navy rocket. 29 crew members were aboard the vessel, and thankfully none of them were injured. This is now the 4th vessel struck by Russian navy missiles since the invasion began. Current congestion, less ports open to receive cargo, and physical threats faced by vessels in the Black Sea is already causing significant delays over cargo flows. This invasion also came as a surprise to all logistics and supply chain coordinators, which is why more than 200 vessels are waiting on these waters to cross and continue their voyage. Other vessels directly affected by the invasion include the Millennial Spirit. According to the Wall Street Journal, the Millennial Spirit was carrying more than “600 tons of oil and diesel”, and was hit by a missile strike, causing it to catch fire.

Cost increases were already present for players in the shipping industry after freight rates were consistently increased back in 2020. Freight rates my even triple their costs after the Russian invasion, directly impacting supply chains that are still recovering from the pandemic. The situation is even worse, with less air space for shipping due to restrictions for flying into and out of Russia. Specific cases of vessels carrying LNG or crude are facing sanctions as soon as they leave their last port making it costly for ship owners/charterers to handle their operations efficiently. 

When do you think the shipping industry, supply chains, or logistics, will get back from these unprecedented problems? Will we see the industry recover like COVID-19 in around 2 years, or will we bounce back with better practices and lower costs for the future?