BY STEFAN KARLÖF
After more than two years of disruptions in global supply chains, the problems now appear set to continue as a result of Putin’s war. Russia’s invasion of Ukraine has further disrupted the already strained global supply chains, leading to additional delivery delays, cost increases, and risks. At the same time, the logistics industry is halting further shipments to and from Russia.
The extremely severe and highly justified sanctions against Russia are also putting pressure on global companies to comply with these historically tough sanctions and distance themselves from Russia, a pariah state. In the week since the war began, numerous companies have decided to completely exit the Russian market or suspend their operations. Examples of the former include most of the international energy giants, such as BP and Exxon; aircraft manufacturers Boeing and Airbus; the world’s largest company, Apple; and essentially the entire automotive industry. Examples of the latter include Swedish companies H&M, IKEA, and Spotify. Russia is being severely isolated, and the flow of people, goods, and money has been made virtually impossible as a result of historically harsh economic sanctions—including Russian banks being cut off from the SWIFT system, flight bans, ports closed to Russian ships, and immense pressure from outraged citizens in most countries around the world.
The logistics industry says "nyjet"
The logistics industry is feeling the impact of both the sanctions and public opinion. This week, Maersk announced that all shipments to and from Russia are being suspended until further notice—a suspension that applies to all modes of transport. MSC (Mediterranean Shipping Company), which has now surpassed Maersk as the world’s largest container carrier, and its competitor CMA CGM have also stopped calling at Russian ports. Several other transportation and logistics companies have followed suit and stopped offering their services for shipments to and from Russia, including Deutsche Post and its subsidiary DHL, as well as many others.
Consequences for the Global Economy as a Whole
Unfortunately, however, the consequences of the economic war against Russia do not affect only the Russian criminal state and its more or less innocent citizens. The entire global economy and supply chains are being negatively affected by, among other things, shortages of vital raw materials, rising oil prices, and the resulting increase in transportation costs. Already, automakers are reporting shortages of components, materials, and raw materials such as aluminum, steel, and chromium, as well as the vital metal palladium and the mineral xenon—both of which are crucial components for the semiconductor industry. Ukraine’s large-scale exports of agricultural products—particularly sunflower seeds, flax seeds, and soybeans—are, of course, also being hampered as a result of the war, which is expected to lead to significant shortages and rising prices for these products as well.
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Stefan Karlöf is the editor-in-chief of Supply Chain Effect
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