The impact of the Russian-Ukrainian war on maritime trade

Russia’s unprovoked invasion of Ukraine has triggered significant reactions in the maritime trade world. In a matter of days since the start of the main Russian offensive, the price of bunker fuel used for ship propulsion systems has skyrocketed, as have tanker charter rates and war risk premiums for ships. in transit to or from conflict-affected regions, including the Baltic and the Black Sea, which have been designated as “Classified Areas” by the Insurance Industry’s War Risk Board. The Russian Navy has closed access to the Sea of ​​Azov (the body of water guarded by the Crimean peninsula that allows Ukraine access by sea to the Black Sea, as well as the port of Odessa further east), and blocked the movement of many merchant ships in this region and in the Black Sea, stranding their crews short of supplies and halting the export of Ukrainian grain, which will seriously affect the global grain supply. The United States imposed blocking sanctions on the Central Bank of Russia and the two largest commercial banks Sberbank and VTB, as well as other sanctions on Russian companies, including restricting the access of Russia’s largest maritime and freight transport SovComFlot to long-term debt, which could affect its ability to build thirty ships on order, which may impact contracted shipyards and may indirectly affect the company’s ability to charter its fleet of 140 ships. The European Union has imposed similar sanctions on Russian banks and companies. The US and EU have also agreed to restrict SWIFT bank transfers from a number of Russian banks. In addition to other sanctions that mirror those implemented by the US and EU, Canada has banned vessels owned or registered by Russia from entering Canadian waters. The UK has taken similar action. Remarkably, many major Western companies are cutting ties with Russia or shutting down business activities, which will further stifle the flow of investment capital to what could soon become the largest country in the third world.

A Russian vessel subject to the United States Treasury Department’s Office of Foreign Asset Control (OFAC) sanctions list was seized by France, various superyachts belonging to Russian oligarchs were seized and a number of ships were seized. approaching Ukrainian waters were hit by missiles, including the tanker millennial spirit and freighters Yasa Jupiter, Queen Namura, Lord Nelson and Banglar Samriddhi. A sixth ship, the Helt, was hit below the waterline and sank. International traders are more reluctant to charter Russian-owned or operated vessels for fear of downstream sanctions issues, or to buy Russian oil and fuel, even if sanctions have not yet been imposed on Russian exports crude oil, gas, or coal (except for the Prohibition on Importing These Products into the United States). Maritime traffic to Russia has fallen by more than 50% since the start of the war.