International logistics are being disrupted as a result of the Russia-Ukraine conflict. The United States is no exception, and we are seeing supply chain problems. As Russian military cut off shipping routes, logistics companies cease services, and sanctions lead to higher gas prices, logistics companies across the country are raising their costs.
In this post, we’ll look at the primary implications of the Russia-Ukraine conflict on the logistics industry in the United States so that your company can prepare for the changes ahead.
Russian naval vessels are obstructing transportation in and out of the Sea of Azov, one of Ukraine’s few ports for ocean trade.
A huge number of ships are now awaiting passage through the Kerch Strait in the Sea of Azos. Nearly 70% of Ukraine’s exports are anticipated to be delivered by sea, and as traffic congestion worsens, the consequences of no imports or exports are reverberating across Europe and the United States.
Trucking in the United States: The Effects
The crisis is wreaking havoc on the already jumbled logistics industry. The price of diesel fuel, which affects trucking freight, is one of the most significant influences.
The price of West Texas Intermediate and Brent crude futures surged to over $100 a barrel almost immediately after the battle began. Since 2014, prices have not been this high.
Futures have dropped below $100, but with Russia’s sanctions affecting gas supply, we should expect prices to remain high for the foreseeable future.
Russia is the world’s second-largest fossil fuel producer. Sanctions imposed by the United States and the European Union have led liquid natural gas prices on the Asian spot market to rise by up to 50%.
Because of the dramatic increase in petrol and diesel prices, logistics companies will have to charge more for their services, raising costs along the supply chain, and all businesses will be affected.
Freight companies shut down a major operations
Some major freight companies with U.S. hubs and operations in Ukraine are particularly heavily impacted by the conflict. Freight brokers and third-party logistics companies with a significant presence in Ukraine have suspended their operations.
Impacts Can Be Seen Throughout The Logistics Industry
The logistics business is feeling the effects of the Russia-Ukraine conflict. With peace talks currently failing to produce an agreement to end the conflict, sanctions on Russia, and route interruptions set to continue, it is causing waves that are reaching the United States.
As petroleum prices climb and commodities become more difficult to transport, businesses across the United States will need to prepare for higher shipping expenses.
MPI can offer alternate solutions to your supply chain problems. We can help alleviate some of the following issues as global sourcing experts.