Longer shipping freight journeys are becoming commonplace as a consequence of the multiple effects of the war between Russia and Ukraine, a shipping industry expert has explained.
Speaking to Yahoo Finance Live, Genco Shipping and Trading chief executive officer John Wobensmith outlined a range of ways in which the sector has been impacted by the conflict and how sea freight companies have had to respond.
Starting with the most direct impacts of the war, he noted: “We do not have… ships in the Black Sea area right now because trade, for the most part, is very tamped down for obvious reasons,” adding that another issue is staffing, as Ukrainian sailors make up 15 per cent of crew members.
Another key consequence is the lengthening of freight journeys as countries switch from Russia and Ukraine to find other suppliers of important commodities such as wheat, grain and fossil fuels.
Mr Wobensmith stated: “So we’re seeing quite a bit more grain coming out of inventory out of the U.S. Gulf, going into Europe, going into China. Brazil is in peak grain season right now.”
All this is forcing up freight rates, an issue that may have widespread implications as freight operators pass on those costs, making commodities more expensive and pushing up inflation.
Finding replacements for items that would normally come from Russia or Ukraine has been a widespread problem. In some cases, this includes items that cannot readily be sourced elsewhere, such as sunflower seeds. Because the two warring countries produce 80 per cent of them and now would normally be the planting season in Ukraine, a major shortage is certain.
That has led to food manufacturers seeking replacements like rapeseed oil or changing the recipes of their products, which means not only will some freight firms be bringing in more alternative produce from elsewhere, but freight firms that normally include sunflower seeds among their cargos will be deprived of custom in this area in 2022 and perhaps some way into 2023.
Given the unknown duration of the war and sanctions against Russia, it remains to be seen how long such large-scale disruption lasts.