WP_Post Object ( [ID] => 286287 [post_author] => 1 [post_date] => 2023-03-01 00:18:36 [post_date_gmt] => 2023-03-01 00:18:36 [post_content] =>

"It's like when you were a kid and played a game where you laid siege to a castle and surrounded it, trying to starve the people out. However, due to Russian sanctions, half of the castle has been left undefended. "Every day, they can just open the doors and get resupplied with food and trade," said Scorpio Tankers president Robert Bugbee.

Russia invaded Ukraine a year ago. Bugbee's remarks, delivered last month at the Norwegian-Hellenic Chambers of Commerce shipping conference, summarize how the war has affected shipping markets and global trade over the past year.

A plethora of sanctions have been imposed. Russia has faced difficulties in importing and exporting. However, cargo has continued to flow, as if gravity were drawing water around a stone.

Cargoes either take a longer route or are replaced. The first year of the war has shaken markets but not stopped trade across all major ocean shipping segments — containers, tankers, dry bulk, and gas.

Container Shipping

There are numerous reasons to discontinue serving Russia, regardless of the shipping segment. There is financial risk from actual sanctions in some cases, as well as a desire to "self sanction" even if trade is permitted.

There is operational risk from ship delays, which is a major issue for container shipping due to export-control requirements to inspect for prohibited dual-use (civilian/military) goods.

There is also a moral component. Some shipping executives refuse to allow their firms to serve Russia because they believe it is wrong. There are also reputational reasons to refrain: financial ramifications from being perceived as supporting Russia by customers.

Almost all of the major container shipping lines stopped serving Russian ports shortly after the war began and have not returned. Maersk and CMA CGM have sold their holdings in Russian ports.

Tanker Shipping

Because Russia is a comparatively small market, the impact of the war on container shipping has been minimal. Tanker transport is an exception.

The second-largest exporter of both crude oil and diesel in the globe is Russia. The war has had a significant effect on tanker markets.

The conflict was described as "a generational geopolitical event that is likely to alter seaborne flows of the world's most important commodity for years" by Evercore ISI analyst Jon Chappell. "The redrawing of the global trade map has only reached the early innings," according to Chappell.

As of December 5, 2022 and February 5, 2023, the EU forbade the purchase of Russian seaborne crude and Russian petroleum products. The European Union, the G-7 nations, Japan, and Australia prohibited providing shipping services (including insurance) to tankers transporting cargo valued above a price limit to non-EU nations on the same days.

The cap plan is specially made to compel Russia to sell its oil at a loss while maintaining cargo flow. In Bugbee's terms, to leave the castle's doors open.

LNG Shipping

The conflict has had a significant impact on the transport of liquefied natural gas, just like it has on crude and other goods.

The EU nations, and Germany in particular, were heavily reliant on Russian pipeline gas prior to the attack. In an apparent effort to scare the EU into not fully supporting Ukraine, Russia looked to have reduced the supply of its pipelines on purpose. Until the Nord Stream pipes were blown up in September.

Europe was forced to look for alternative supplies after the pipeline gas source was lost. Last year, a fleet of LNG ships from the American Gulf carried out freight deliveries. The highest day rate ever charged for a commercial ship was $500,000 per day at the height of the demand craze for LNG carriers.

Dry Bulk Shipping

The war has had a significant influence on the dry bulk shipping industry as well. The impact of missing Ukrainian wheat and corn export shipments on global hunger is in the forefront right now.

The worldwide grain trade fell 3.1% last year, according to Petros Pappas, CEO of Star Bulk, "as the war abruptly halted Ukrainian shipments, which account for 10% of the overall grain trade, for six months." Via the Black Sea Grain Initiative, exports started to pick up pace in August.

In January, a report on the effects of the conflict was released by the U.S. Department of Agriculture (USDA). The USDA reported that Ukraine's combined wheat and corn exports in September and October were higher than the five-year average due to the Black Sea Grain Initiative, which permits bulkers to transit through the Black Sea (and which will expire on March 18 if not extended). Volumes in December were comparable to the average. [post_title] => How the Ukraine-Russia War Has Reshaped Shipping Over the Past Year [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => open [post_password] => [post_name] => 286287-2 [to_ping] => [pinged] => [post_modified] => 2023-03-01 00:25:25 [post_modified_gmt] => 2023-03-01 00:25:25 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.clipperoil.com/?p=286287 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )