IMPACT OF RUSSIA-UKRAINE WAR ON

SHIPPING INDUSTRY
- By HRISHIRAJ SINGH
“THE WAR WILL END
THE LEADERS WILL SHAKE HANDS
THE OLD WOMAN WILL KEEP WAITING
FOR HER MARTYRED SON
THAT GIRL WILL WAIT FOR
HER BELOVED HUSBAND
AND THOSE CHILDREN WILL WAIT
FOR THEIR HEROIC FATHER
DON’T KNOW WHO SOLD
OUR HOMELAND. BUT I SAW
WHO PAID THE PRICE”
This is a poem by ‘Mahmoud Darwish’ which sends a shiver down the spine, gets us
acquainted and gives us a glimpse about how chaotic and devastating a war can be. No
matter who’s victorious and who lost , everyone mourns and endures agony. But the
elephant in the room is Shipping Industry. Let us take a quick glance on how the ongoing
Russia-Ukraine war is affecting the Seafarers.

The current ongoing war is threatening to change the global status quo and set the wall
back a few decades. With countries and government still trying to convalesce from the
pandemic, its impact on global trade and shipping companies is going to be destructive.
With military intervention at this point, the West is resorting to sanctions as a mean of
trying to pressure Russia into ending the conflict. Right now investment in Russian
market, exports of goods and access to EU financial markets have all been limited
cutting off Russia's ability to transact. The consequences are Russia is unable to trade
financing from US or EU as they target 80% of all Russian banking assets.

Out of approximately 44,000 cargo and tanker vessels operating in the world in the last
two years, approximately 2,000 are owned by companies registered in Russia. This
means that any ship owner, shipping company, trader or Bank working with Russian
companies is immediately more exposed to risk as they can be blacklisted anytime. The
similar situation happened with the US sanction Costco Dalian and in 2019, that
effectively remove one 140-1 50 tankers from global charter market overnight, causing
spot rates to surge above $100,000 per day. So although OFAC has so far sanctioned
Sovcomplot Shipping (who owns more than 230 vessels ), the growing sanctions can
ultimately result in the removal of over 2,000 Russian vessels from the global market
overnight. In the last 12 months alone we witnessed 10,025 port calls by Russian owned
vessels and 6,331 Port calls by Russian flag vessels in Europe.

Russia and Ukraine's port on the Black sea are big export hubs for wheat, corn and crude
oil. With the Black sea area being the world's second largest gain exporting region in
2021 with 111.2 million tons of cargo and Russia and Ukraine accounting for 30% of
global wheat exports, the economic and agricultural impact of this conflict is yet to be
fully revealed.

These past few days have been an emotional roller coaster for the modern world. With
the wound of the pandemic just beginning to heal, many organizations are perplexed on
their operation in general as well as their maritime domain. Situations like this call out
for selfless act and AI platform advancement in Maritime industry. So keeping
everything in mind I would summarize it in a nutshell that this Russia- Ukraine war has
its own pros and cons in the shipping industry. Some may perceive it as a loss of
livelihood for the Seafarers and some may ponder that it's the right time to buy some
shipping stocks.

- HRISHIRAJ SINGH
-BSc (Nautical Science), Sem - 4
-Roll No. - 20613
- MITU20BSNS0038