Russia-Ukraine tensions and its effect on the supply chain

Over the past nearly 3 years, the world has been faced with a health crisis that has strained our economies and has interrupted the flow of international trade. Increases in COVID-19 case numbers inside factories, ports, and retail stores slowed down the production process which caused a supply shortage across the world.

At the other end of the spectrum, the demand for products remained relatively unchanged and, in some cases, increased substantially. One such case is the demand for luxury goods, which has skyrocketed over the course of the pandemic as evidenced by the stock trends of companies such as LVMH and others. With many people finding extra time and money savings due to reduced travel costs, their focused has now shifted.

Recent tension between Russia and Ukraine are adding stress to an already-strained supply chain system. The COVID-19 pandemic has taken a toll across the world already, causing container shortages, shipping delays and higher prices for goods and services.

But this situation in which demand had relatively gone up and supply had significantly gone down, has created significant inflationary pressures in most markets.

Fast forward to today’s political and economic climate – while the fear of COVID-19 seems to have subsided, a new story has made its way into our media outlets. The Russian invasion of Ukraine has now taken over most news headlines and it poses as the next major threat to our world economy.

Words like world war, sanctions, and invasion are causing fear and uncertainty over where the economy is moving to next. So far, the most notable change for the Western world is the price of gasoline, which has gone up considerably.

Due to both countries preparing, and actively engaging in war, our supply chains will face further strain and affect the movement of goods through the world. The focus is now on transporting supplies towards Ukraine, Russian oil and gas pipelines being closed and many exports out of Russia having either gone up in price, or entirely stopped due to restrictions from world leaders.
Unfortunately, we can’t fully predict what the future will look like and how long the situation will last for. We will continue to monitor the conditions and may make updates to this blog posts, or post new ones in the future. In the meantime, these uncertainties will likely continue to trickle down to commodities and affect the supply and price of shipping containers worldwide.