World’s biggest shipping groups suspend Russian cargo bookings

Economy News


The world’s two largest container shipping groups MSC and Maersk suspended cargo bookings to and from Russia on Tuesday as sanctions unleashed a renewed wave of disruption for strained global supply chains.

The suspension, which excluded food and medicines, followed similar moves by rival groups Ocean Network Express and Hapag-Lloyd as the container companies sought to avoid the risk of carrying sanctioned cargo.

Maersk said sanctions on Russia were starting to have an impact on trade, causing delays and leading to the detention of cargo by customs authorities.

This is likely to create further supply bottlenecks as ports across the world remain severely clogged because of an unexpected rebound in demand for goods during coronavirus lockdowns.

On Monday, the UK banned entry of all Russian vessels to its ports.

“It’s making a tough time for global logistics even worse now,” said Peter Sand, an analyst at Xeneta, an Oslo-based shipping research group.

The disruption has also spread to the air cargo market, where industry executives expect prices to rise as aircraft are forced to reroute.

An already existing shortage of planes is likely to be worsened by the loss of Russian and Ukrainian specialist cargo aircraft for large goods.

“If they are sidelined now, you are taking some real capacity out of the market. We will in all likelihood begin to see rates [to transport goods] rise, ”said Neel Jones Shah, global head of air freight at Flexport brokerage.

Russian and European airlines are nearly completely banned from each other’s skies, complicating flight paths for planes delivering goods and materials from Asia to Europe.

The shipping industry also faces further problems because of difficulties switching Russian and Ukrainian crews that supply 14.5 per cent of the world’s seafarers, according to the International Chamber of Shipping.

Last week, Russia halted commercial shipping in the Sea of ​​Azov, while Ukraine ceased operations at all of its ports, including those on the Black Sea on its southern coast.

The invasion of Ukraine has also led insurers to quote additional premiums equivalent to hundreds of thousands of dollars to cover ships traveling to the Black Sea against getting caught in crossfire. Three non-military ships have been struck by missiles since the conflict began.

Elsewhere, the suspension of shipping services is pushing up prices for several industrial metals.

Aluminum, used in electric vehicles and airplanes, rose 1.8 per cent to a record high of $ 3,457 a tonne on Tuesday. Russia accounts for about 6 per cent of global aluminum supply.

In addition, freight rates for oil tankers have surged as traders bet that more crude will be exported out of West Africa, the Middle East and the US to replace Russian supplies.

Svein Moxnes Harfjeld, co-chief executive of DHT Holdings, a tanker company, said rates for supertankers running between the Middle East and Asia – one of the most used routes – have more than doubled to $ 25,000- $ 35,000 a day in the past week.



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