As the invasion of Ukraine enters its second week, the international shipping community is suspending cargo routes to and from Russia, disrupting trade in everything from electronics and metals to clothing.
On Tuesday the world’s three largest container lines, A.P. Moller-Maersk A/S, MSC Mediterranean Shipping Co. and CMA CGM S.A., joined Hapag-Lloyd AG and Asia’s Ocean Network Express Pte. Ltd. in halting services in the wake of Russia’s invasion of Ukraine. These companies represent 47% of the global shipping trade.
“As the stability and safety of our operations is already being directly and indirectly impacted by sanctions, new Maersk bookings to and from Russia will be temporarily suspended, with exception of foodstuffs, medical and humanitarian supplies," Denmark-based Maersk said in a statement.
“We are deeply concerned by how the crisis keeps escalating in Ukraine,” the world’s second largest container line said, adding that it is “seeing the effect on global supply chain flows such as delays, detention of cargo by customs authorities across various transshipment hubs and unpredictable operational impacts.”
Russia accounts for 3% of global containerized trade and is the world’s 12th largest economy.
Shipping joins a host of other industries that are cutting business ties or investments in Russia, including financial institutions, energy companies, sporting events, manufacturing firms and airlines.
Ports in Ukraine are closed and the invasion has severely affected cargo ships that ply the Black Sea, a busy route for oil and bulk food exports, and caused backlogs at many European ports. This comes on the heels of shipping supply chain problems already crippling global trade due to surging demand during the pandemic.
The war could cause ocean shipping rates to double or triple, Glen Koepke, general manager of network collaboration at the supply chain consultancy FourKites told The New York Times, adding that the invasion could also make global supply chain bottlenecks even worse as seasonal demand picks up in the spring.
He said rates could jump from $10,000 per 40-foot container to $30,000. Since the beginning of the pandemic, ocean shipping rates have already skyrocketed.
Russian ships have already been banned from entering U.K. ports, while cargo ships destined for Russia from ports in Belgium, Holland and Germany will be stopped and inspected.