How has the Ukraine-Russia War Reshaped Ocean Shipping?

Container Shipping: Nearly all major container shipping lines suspended service to Russian ports shortly after the war broke out and have not returned. Mediterranean Shipping Co. (MSC), the world’s largest container shipping line, served Russia up until 1 March, wherein they announced a temporary stoppage on all cargo bookings to/from Russia, covering all access areas including Baltics, Black Sea and Far East Russia, for all deliveries except for essential goods such as food, medical equipment and humanitarian goods. Turkish short-sea carriers Arkas, Admiral, Akkon and Medkon have come in to fill the gap.

Crude & Diesel: WithRussia being the world’s second-largest exporter of crude oil and diesel, tanker markets have been heavily impacted by the war. Sanctions have forced most Russian cargoes to move on tankers in the “shadow fleet” — vessels with opaque ownership that operate outside Western insurance and financial systems. The other primary consequence of the war is much longer voyage distances, as Russian crude that used to go short-haul to the EU now goes almost exclusively on long-haul voyages to China and India. Russian diesel is now traveling much farther as well.

LNG Shipping: The transport of liquefied natural gas has been greatly affected by the war. With the loss of the Nord Stream pipelines last September, Europe scrambled to find a replacement supply, leading to a surge in demand for LNG carriers to deliver the cargo. In a release this month, Shell said that in 2022, Europe increased its LGN imports by 66% to replace Russian gas. In the report, Shell stated, “2022 can go down as the year that reshaped global energy markets. The events of the year triggered structural shifts in market dynamics that may impact the long-term trajectory of the LNG industry.”

Dry Bulk Shipping: This sector has also been greatly impacted by the war. Petros Pappas, CEO of Star Bulk, said global grain trade declined 3.1% in 2022 “as the war abruptly halted Ukrainian exports, which account for 10% of the total grain trade, for six months.” The U.S. Department of Agriculture (USDA) expects that in the 2022-23 marketing year, Ukraine will export 13.5 million tons of wheat, down 28% from 2021-22, and corn exports in 2022-23 will be down 17% year on year. Meanwhile, with the ban on imports of Russian coal, the EU ramped up coal imports from non-Russian sources (Colombia, South Africa, U.S., Australia) to a new high in December, up 30.5% year on year in January.