Geneva, 30 June 2022 (TDI): Amid the context of the war between Russia and Ukraine global shipping prices rise again.
The war between Russia and Ukraine is negatively affecting the stability of maritime freight shipping costs.
In multiple countries, the supply of oil and gas has become more complicated. As a consequence, the price of certain commodities has also increased.
The United Nations Conference on Trade and Development (UNCTAD) shared the news on its official Twitter account.
The war in Ukraine is worsening global shipping disruptions from #COVID19.
Many countries have to look farther for suppliers of oil, gas & grain.@UNCTAD data shows longer shipping distances & transit times and higher costs. https://t.co/AavDyaxl2i pic.twitter.com/wSF8uzS77Y
— UNCTAD (@UNCTAD) June 29, 2022
As seen on the graph, shipping prices had already started going down in early 2022. However, in February 2022, the war started and prices started going up again.
Covid-19 effect on Maritime Freight Shipping Costs
Global shipping prices had already been disrupted by the covid-19 pandemic. For instance, in 2021, maritime freight shipping costs became unstable and more expensive.
A lack of shipping containers caused by pandemic-related logistical inefficiencies was the cause of the increase.
The lack of containers created great congestion in the international trade system and made freight costs go up. Global supply chains were threatened. The consequences were global.
The maritime transportation routes going out of Asia were the ones most affected. In some cases, shipping costs became three times more expensive than usual.
War effect on Maritime Freight Shipping Costs
Some shipping routes are being blocked by Russian forces. Additionally, some parts of the black sea have become dangerous for cargo ships to pass through.
Secondly, the airspace over Ukraine has been closed since February 24, 2022. Along with the fact that multiple airlines have decided to avoid Russian airspace.
As a result, logistics companies have suspended multiple services in the area. Nowadays, the demand for shipping services in the area is higher than the supply. Hence another reason for the increase in shipping prices.
Multiple factors have come together for costs to increase. The lack of shipping containers caused by covid-19 logistical inefficiencies has come together with the war in Ukraine to make maritime freight shipping prices higher. Shipping prices rise again.
This situation negatively affects multiple stakeholders. For instance, some households are now facing difficulties to bring food to the table due to the rise in prices of some food commodities.
To sum up, unless the conflict in Ukraine stops soon the global trade system could become more affected. In a world where shipping costs were already higher due to the covid-19 pandemic, a new issue has emerged.
