How The War In Ukraine Is Impacting Supply Chains

Ocean freight has been making headlines recently due to discussions over grain shipments from Ukraine. These shipments are integral to global food supply, and since 24 February 2022 they have been drastically reduced.

This has proved disastrous for countries in the Middle East and Africa who suffer a lack of foodstuff like corn and seeds. And while there have been efforts to broker an agreement between Russia and Ukraine, there is still uncertainty on whether a trade channel can remain open. 

An international issue 

The UN World Food Programme imports 50% of its wheat from Ukraine. African countries can import anywhere from 15 to 70% of their grain from the region. Turkey, who brokered a deal between the two countries, also relies on the affected imports. 

So, recognising the international impact, on 22 July grain shipments were approved by Russia and Ukraine for test voyages. A ten nautical mile safe zone was set up, with no military assets of either side allowed within it. 

With this new lane in place, estimated exports are 2-5 million tonnes a month. One third of these exports will go to lower-income nations to help them recover from the food price crisis that occurred at the start of the year. 

A temporary solution 

Since the start of the deal 2.8 million tonnes of grain on 129 fully laden ships have departed Ukrainian ports. Now, low-income countries in need of food can buy from both Ukraine and the UN World Food Programme.  

The result? Global food prices have dropped, and stocks are being replenished. 

But it’s not all plain sailing. Russia has been firm on inspecting ships to prevent weapons and artillery being smuggled into Ukraine. Checks have been set up and subsequently deliveries have been delayed. 

Slow, but steady progress

The reality is that war is unpredictable. This deal will only last as long as both parties continue to agree to the terms and already Russia is threatening to pull out. 

For Russia, the consequences of withdrawing would arguably be minimal. Whereas Ukraine and the nations that rely on its foodstuff would be heavily impacted. A result Russia might find advantageous to its war aims. 

That being said, as of right now the deal is intact. And it would seem both parties understand the consequences of a breakdown in communication. There is reason to be hopeful, even if the logistics industry should remain cautious. 

Stay up to date 

At Cardinal, we stay conscious of world events that could impact your cargo. As such, our team can advise when you need to change course. 

Whether it’s strikes, storms or other situations outside of your control, we can help you enhance your supply chain. Get in touch with a member of our team today to find out how.