Shipping costs undergo almost 60% hike with war in Ukraine

The economic impact of Russia’s attack on Ukraine is felt in various sectors, with seafaring shipping being one of the most affected. As a result of the conflict, the maritime industry lost access to much of the Black Sea, harming the sale of agricultural products from Ukraine. Besides, economic sanctions restricted shipments from Russia.

According to a report by the United Nations Conference on Trade and Development (UNCTAD), the current scenario increased maritime transportation costs by nearly 60% between February and May of this year. The causes for this are numerous, including the interruption of regional logistics networks and port operations in Ukraine, the damage to critical infrastructure, trade restrictions, rising insurance costs, and higher fuel prices.

According to UNCTAD, many countries had to look for suppliers of oil, gas, and grains in distant locations, increasing the time and the costs of operations.

The agency also stated that while the crisis in Ukraine is key to explaining the cost surge, it is not the only one. It also cited the covid-19 pandemic, congested ports, and the necessity to carry out an energy transition to greener alternatives.

“However, it is clear that the disruptions and higher demand per ton-mile caused by the war in Ukraine strongly contribute to the increase in shipping costs,” UNCTAD said.

High-priced food items

Problems in the shipping industry will cause the cost of food o rise by nearly 4% – half of that increase is a result of high shipping costs.

The entity also reinforced the importance that Russia and Ukraine have for global food chains. Together, the countries account for 53% of all world sunflower seed production, and 27% of all global wheat production, in addition to supplying at least half of the wheat used in 36 countries.

These numbers help visualize the importance of both countries to global food chains but also reveal a market that has yet to be explored. Brazil is one of the countries that can benefit from this situation.

According to UNCTAD, Brazil is expected to increase its wheat and grain exports by 37% in 2022. The United Kingdom and the European Union are expected to expand their exports by 8% in the same year.

In the medium term, Australia, Brazil, and the United States can take over the food supply to North Africa and the Middle East.

Source: Valor Econômico

To read the full original article, please go to: https://valor.globo.com/mundo/noticia/2022/06/28/custos-de-transporte-martimo-subiram-quase-60-pontos-percentuais-desde-o-incio-da-guerra-na-ucrnia.ghtml

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