MIAMI (AP) — Sanctions on Russia are beginning to wreak havoc on global trade, with potentially devastating consequences for energy and grain importers while generating ripple effects in a world still grappling with pandemic-induced supply chain disruptions.
Since Russia’s invasion of Ukraine, hundreds of tankers and bulk carriers have been diverted from the Black Sea, while dozens more have been stranded in ports and at sea, unable to unload their precious cargoes. Russia is a leading exporter of grain and a major supplier of crude oil, metals, wood and plastics, all of which are used around the world in a range of products and by a multitude of industries, from steelmakers to Car manufacturers.
Only a small handful of Russia’s 2,000 freighters and tankers have been sanctioned by Western powers, but freezing the assets of the country’s biggest banks means import and export business from Russia will be hit hard. Companies from Apple and Nike to major shippers like Maersk are abandoning the country, whose extensive trade ties with the West have been all but severed, intensifying the pressure.
“It’s an earthquake like we’ve never seen before,” said Ami Daniel, co-founder of Windward, a maritime intelligence firm that advises governments. He added, “Companies go far beyond what is legally required and take action based on their own values even before their customers demand it.”
A potential escape valve for Russian exports is China, whose rapidly growing economy is starved of natural resources. But China, perhaps the biggest beneficiary of globalization, has so far shown little appetite to fully back President Vladimir Putin despite abstaining in a UN vote condemning the land grab. .
Tensions are already being felt at Interunity Group, a family-owned Greek shipping company whose 60 tankers and bulk carriers are operated by dozens of Russian and Ukrainian captains and officers.
After the invasion, the Russian part of the Interunity workforce wondered how they were going to get home after the European Union imposed a flight ban on their country. The Ukrainian half did not know if she would have a home to return to.
A senior Ukrainian officer stranded on an oil tanker in the Gulf of Mexico was so distraught he demanded to be allowed to disembark months before his contract was up, said George Mangos, one of Interunity’s directors.
“He told me he wanted to get off at the next port so he could fight for his homeland,” said Mangos, who expressed his admiration for his patriotism. “Operating a highly sophisticated tanker with dangerous cargo is stressful even in normal situations, so all you can do is ask people to focus on work and leave politics behind. is difficult, but they are very stoic people, and I was impressed by their dedication.
So far, the war’s impact on world trade has been most severe in the Black Sea, where Russian and Ukrainian ports are major hubs for wheat and corn. Traffic came to a halt, shutting down the world’s second-largest grain-exporting region.
Unlike oil production, which can increase rapidly elsewhere, increasing grain supplies takes time and the very volume that could be diverted due to war and sanctions – Ukraine accounts for 16% of exports corn and, with Russia, 30% of wheat exports – means that the poorest countries that depend on imports could face major supply shocks.
“The question is not whether there will be severe economic effects and critical food shortages in already fragile countries, the question is what Russia will do with it and how the West will react,” said Rohini Ralby, director of IR Consilium, a US-based marine consultancy.