There are major uncertainties in all areas of food and agribusiness logistics (F&A), especially if more sanctions are given to countries that support Russia, rabobank reports. "As logistics has become increasingly geopolitical, greater risks to global trade are expected," concludes a report by the agro-based bank.

"An increase in fuel cost alone would increase overall freight rates (probably in terms of surcharges). On the other hand, global logistics systems can undergo radical changes if the global F&A trade map is completely redesigned as a result of the Covid-19 (far-sourcing) and geopolitical events such as the Russia-Ukraine war. Such changes will certainly bring massive demand and tariff volatility," warn experts.

The report, signed by market analysts Viet Nguyen and Xinnan Li, points out that all ports in Ukraine were closed shortly after the invasion began. On March 7, major carriers such as Ocean Network Express, Hapag-Lloyd, MSC, Maersk and CMA CGM simply suspended new bookings to or from Russia and Ukraine.

"The immediate impact of the war on global container shipping capacity is quite limited, given the small volumes and limited intercontinental routes in the region. However, the rerouting of cargo to Russia and extra customs inspections for dual-use goods will exacerbate port congestion in Europe, while indirectly impacting the rest of the world," they said. 

According to them, in addition to increased sea freight insurance, container shipping lines will also try to pass on the breakneck cost of fuel. "All of these factors will reverse the gradual decline in container rates we've seen in the last three months, though not on a large scale," Rabobank said.

"The current impact on dry and fractional bulk transportation is limited. However, if the export of agricultural commodities, especially wheat, is not possible from Russia and Ukraine during the high summer 2022 season, solid and fractional bulk rates will be highly volatile (increasing or decreasing), depending on how grain business is carried out. between Europe, North America and other regions," concludes the financial institution.

Source: Agrolink