Freight News, Sea

Putin’s war causes only a ripple in container shipping – so far

[ February 25, 2022   //   ]

Russia’s invasion of Ukraine has had only a small effect on the container shipping market, although that could change quickly, says analyst Drewry.

Shipping will avoid the Black Sea for the foreseeable future and the Ukraine port of Odessa was closed shortly after the invasion but only three major inter-continental services called there, “so disruption to international liner networks will not be catastrophic”.

The affected services are the Ocean Alliance’s Asia-Med route with ships of around 9,500 teu and Maersk’s Europe-Middle East and North America-Med routes which used ships of around 4,300-4,500teu.

Possibly the biggest immediate concern for shipping are cyber-attacks and fast-rising fuel costs says Drewry.

However, container shipping is intrinsically tied to the global economy and it is a near certainty that Putin’s invasion will lead to more volatility, heaping even more inflation on a world still reeling from the pandemic.

While Oxford Economics only shaved 0.2 percentage points from its global GDP outlook for 2022 on news of Russia’s full-scale invasion, Drewry would expect to see much stiffer downgrades if the situation were to escalate

It adds: “There are some dark timelines ahead, including one in which China feels emboldened to copy Putin’s playbook in Taiwan, something that would hit shipping very hard.”

Drewry adds that it can envision a scenario, but which it puts as only a very low probability, in which an inflation-racked economy leads to an unexpected contraction in container demand, steep enough to release some of the pressure on the container supply chain and giving ports breathing space to break out of the congestion cycle. But it says: “War would be far too high a price to pay for that cure.”