According to UN Conference on Trade and Development (UNCTAD) the war in the Ukraine is stifling trade and logistics of the country and the Black Sea region, resulting an increase in cost of shipping and global vessel demand around the world.
With the halting of ports, shipping and transport hurdles in the Black Sea region to disruptions in regional logistics, trade restrictions, increased insurance costs, the destruction of important infrastructure, increased insurance costs and higher fuel prices, Ukraine’s trading partners are forced to turn to other countries for import of commodities, increasing shipping distance along with transit times and costs.
Notably fewer grain shipments are available around the world with over longer shipping distances leading to higher food prices and 3.7% increase in consumer food prices globally. Transport of dry bulk have also increased by 60% between February and May 2022.
Yield of grain may also become low and prices may increase consequencing a global food security as supply chain of fertilizer from Russian federation are being disrupted.
“Confronted with trade restrictions and logistical challenges, the cost of oil and gas has increased as alternative sources of supply, often at more distant locations, are called upon,” UNCTAD reported.
The higher energy price not only caused a dramatic increase in daily rates of smaller-size tankers, which are key for regional oil trading in the Black Sea, Baltic Sea and Mediterranean Sea regions, but also marine bunker prices, raising shipping costs for all maritime transport sectors.
The global average price for very low Sulphur fuel oil had increased by 64% by end of May 2022 since the start of the year.
All in all these increased costs imply higher prices for consumers, threatening to increase poverty.
Urgent actions to open Ukraine’s ports to international shipping are being called by UNCTAD, emphasizing the need for continued collaboration among actors in the shipping industry to maintain all necessary services, including bunkering supplies, health services for sailors and certification of regulatory compliance.
UNCTAD urged to pursue alternative ways of transport and calls for more investment in transport services and trade and transit facilitation asking for international support for developing countries.