The conflict between Russia and Ukraine strongly affects logistics e raw material. Shipping goods is becoming more complicated and expensive every day: with closed Russian skies and territories, routes are lengthening, cargo capacity is reduced and, consequently, freight rates increase. As if that weren't enough, we also have to deal with the increases in fuel prices necessary to make the cargo travel which, obviously, only increases the cost of the route. This translates into longer delivery times and many obstacles to normal business operations.
“The war has done nothing but worsen a situation that was already an emergency for companies”. Thus the president of Assolombarda, Alessandro Spada commented on the alert launched by the Assolombarda Study Center with a focus on the costs of international shipping and on the obstacles to exports.
The Russia-Ukraine war and its impact on logistics
“More than a month after the outbreak of the war, the prices of energy and non-energy raw materials remain at very high levels – continued Spada -. It is necessary to act more decisively and rapidly to reduce the impacts of the emergency in the short term and at the same time act in the medium-long term for a balanced development without prejudice to the various technologies and energy sources - such as renewables, latest generation nuclear power and hydrogen - to reduce as much as possible dependence on politically unstable countries”.
The Study Center highlights how the war in Ukraine has aggravated the critical issues on supply chains caused by the pandemic, with sharp increases in the prices of some raw materials and with growing delays and increases in freight logistics that hinder normal business operations. In fact, in the first quarter of 2022, more than half of the manufacturing companies in the North-West (51%) declared that they were experiencing obstacles to exports. Among the main adverse factors, "prices and costs" emerge (for 24% of companies) and "extension of delivery times" (for 15%). Furthermore, the share of companies that highlight "other factors" among the main obstacles affecting exports has increased considerably, from 8% in the fourth quarter of 2021 to 26% in the first quarter of 2022, an increase at least partly attributable to the instability caused by the conflict.
Lengthening of delivery times and sea freight costs
The crisis in Ukraine fits into a logistics framework already characterized by strong instability: throughout 2021, delays in supply chains gradually intensified, to then decrease between January and February 2022, thanks to the first signs of easing of pandemic restrictions detected in January and February. But in March 2022, with the escalation of the war, average delivery times started to grow again throughout the euro area.
The invasion of Russia has also led to considerable increases in the freight rates of the maritime routes bordering the affected territories, with reference both to small-sized tankers employed between the Black Sea and the Mediterranean, and to cargo ships transporting grain and cereals passing through the Black Sea For the moment, the local price increases connected to the war do not affect the aggregate indices, with global shipping costs continuing to move along the previously ongoing trends (stationary on high levels of air cargo costs and especially container freights, high volatility for bulk carriers).
Prices of energy, industrial and food raw materials
As for the prices of raw materials, more than a month after the start of the conflict, they remain at higher levels than those at the beginning of February 2022 and above all well above the pre-Covid period. The price of European natural gas, after the extraordinary peak at the beginning of March, stood at 28 euro/MWh on 2022 March 102,5, registering +818,2% compared to January 2020; the price of crude continues on a growth trend (+79%).
Strong tensions are also confirmed for i prices of wheat and corn (+89,4% and +96,2%), sunflower oil (+182%) and for the fertilizzante urea and ammonium nitrate (+396%). Steel is unable to reabsorb the increase recorded after the outbreak of the conflict (+208,3%); The nickel price continues to be characterized by high volatility (+154,3%); aluminum e copper remain at particularly high levels (+106,0% and +71,2%).
