Freight rates for containerised goods, oil, grains, and coal could increase
Major geographic and political events with tragic human costs have major effects on shipping rates — sometimes negative but very often positive.
As the Russian invasion of Ukraine intensifies, the scenarios for higher tanker, dry bulk, and container shipping rates that were considered low probability just a few weeks ago suddenly look more likely.
Last week Wednesday, the U.S. imposed blocking sanctions on two state-owned Russian banks, development bank VEB and military bank PSB. Sanctions were also announced by the EU, U.K., and Japan. On Thursday, the U.S. and U.K sanctioned VTB, Russia’s second-largest lender. Future sanctions may even target Russian energy exports.
“Russia’s oil and gas exports would be firmly in the firing line of any sanctions, given that they are the lifeblood of Russia’s economy, accounting for around 40% of Russia’s revenues,” said brokerage BRS on Monday.
Analysts around the world seem to think that If we see severe sanctions, Russia will very likely respond with cyberattacks. There is a very real risk that critical infrastructure might be targeted, and obviously shipping lines, ports, and terminals are critical infrastructure.
During FreightWaves’ global supply chain event last week, Jensen recounted how Maersk, then the world’s largest shipping line, was hit by a massive cyberattack in 2017 and was “completely off the grid for roughly a week, and it took them a few weeks to get back up and running.” Maersk was “purely collateral damage” in a cyberattack targeting Ukraine that Western intelligence blamed on Russia.
“The situation now is markedly different than in 2017. In 2017, we could essentially lose the largest carrier in the world for a week and it didn’t cause any major problems in the supply chains. There was plenty of buffer capacity: ships, terminals, everything. Right now, we have literally zero buffer capacity. We have insufficient ships because they’re caught in queues. We have ports and terminals that are horribly congested,” he said.
“If — and I stress if — all the ports and terminals have done their jobs very well and boosted their cyber defenses over the last five years, it still doesn’t render them impermeable, but they will have a good backup plan, which means they could be fully up and running again in two, three or four days.
“But think about that in the current environment. Just taking one major port out of action for two or three or four days, on top of what we are already dealing with, will have major global ramifications on the supply chain”.
“War is a bad thing, except for shipping.” – Cleaves Asset Management CEO Joakim Hannisdahl