Navigation navigates the fallout from Russia’s invasion of Ukraine
Global shipping reacted sharply to Russia’s full-scale invasion of Ukraine yesterday, with an armada of international merchant ships leaving the area for safer waters and tanker rates recording historic gains.
Russian forces close in on the capital Kiev today as Ukrainian ports such as Odessa, Kherson and Mariupol came under heavy shelling.
Analysts at the Sea/ maritime platform yesterday tracked a rapid exit of many international ships from the region, a departure made more urgent following a missile firing at a Turkish bulk carrier.
“While some have fled and made it to the Bosphorus, others are still on the way and some seem to be waiting just before the border,” a Sea/ spokesperson said. Splash today.
Currently, 23 ships are inactive in the northeast corner of Romania, where the border begins with Ukraine, having left Ukrainian anchorages in the last 24 hours or simply unable to enter at all. On top of that, 43 ships have now diverted or left Ukrainian anchorages in the past two days, up from 30 yesterday.
Russia’s pincer attacks appear to be attempting to create a land bridge between Russia and Crimea north of the Sea of Azov, an area that Russia yesterday closed to merchant shipping. Ukrainian ports have ceased operations and liner operators have informed their customers that services to Ukraine have been suspended.
“As the situation evolves, there remains a high degree of uncertainty regarding freedom of navigation throughout the Black Sea,” security consultant Dryad Global warned yesterday, adding: “As such, the primary risk to all vessels and commercial operations operating beyond the key risk area remains that of commercial uncertainty rather than crew safety risks Vessels and commercial operators are reminded to avoid all operations and the transit in the EEZ of Russia and Ukraine at this time No attempt should be made to gain access to the Sea of Azov.
The U.S. Department of Transportation has advised that one of the risks vessels may face is GPS interference, AIS spoofing and/or other communications jamming while navigating in the Black Sea and the Sea of Azov.
Lars Jensen, CEO of online consultancy Vespucci Maritime, said via LinkedIn that the closure of the Ukrainian port will worsen congestion problems at ports and terminals in the Eastern Mediterranean and Black Sea.
“We already have congestion issues and new Ukrainian containers will be added to the mix with a high probability that they will remain in ports – or nearby depots – for an extended period of time,” Jensen warned, adding that shippers using The land services by rail or truck between Asia and Europe will likely also face service interruptions.
Reacting to the attacks, US President Joe Biden yesterday unveiled a series of additional sanctions and other economic measures against Russian entities, including new debt restrictions on Sovcomflot, the country’s main shipping company. Splash reported yesterday that five cargo vessels operated by FESCO have also subject to sanctions. The White House also said upcoming sanctions would impact Russia’s shipbuilding industry.
Vivek Srivastava, senior trade analyst at VesselsValue, looked at the impact of new sanctions on Russia’s merchant fleet. Potentially, 7.4% of the world fleet of tankers would be threatened, as would 3.5% of the world fleet of LNG carriers.
“With extremely low utilization and freight rates affecting these two sectors in recent months, unlike the booming dry bulk carrier and container ship sectors, sanctions against Russian shipping companies could wipe out some oversupply of vessels from the openly competitive market without causing such a significant upward movement in freight rates,” Srivastava said in a new report yesterday.
Tanker fares exploded massively yesterday, with the aframax TD17 Baltic route in the UK/Mainland stunning jumping from $108,155 in one day to $121,741. Splash understands that this is the first time in history that a ship segment has jumped over $100,000 in one day.
In terms of dry bulk, research by Arrow brokers suggests that the ship class most at risk is the small, practical-sized sector, of which around 16% of trades load or unload in Russia or Ukraine, with 10% being the Black Sea only. . A third of this trade is coal, but the rest is mainly split between grain, steel and fertilizers. Panamaxes are mainly exposed to the coal trade from the Baltic, but also to certain grains from the Black Sea.
The International Chamber of Shipping (ICS) has warned of supply chain disruption if the free movement of Ukrainian and Russian seafarers is hampered.
The Seafarer Workforce Report, published in 2021 by BIMCO and ICS, reports that 1.89 million seafarers currently operate more than 74,000 vessels in the global merchant fleet.
Of this total workforce, 198,123 (10.5%) of seafarers are Russian, while Ukraine accounts for 76,442 (4%). Ukrainian airports are closed and all crew movements have ceased.
For all the news on how the invasion of Ukraine is affecting global shipping, check out Splash’s dedicated article blanket here.