The UN Conference on Trade and Development (UNCTAD) says the war in Ukraine is stifling trade and logistics of the country and the Black Sea region, increasing global vessel demand and the cost of shipping around the world.
In a report entitled "Maritime trade disrupted: The war in Ukraine and its effects on maritime trade logistics" published on June 28, UNCTAD said Ukraine's trading partners now have to turn to other countries for the commodities they import.
It then attributed the shipping and transport hurdles in the Black Sea region to disruptions in regional logistics, the halting of port operations in Ukraine, the destruction of important infrastructure, trade restrictions, increased insurance costs, and higher fuel prices.
UNCTAD noted that as shipping distances have increased, so are transit times and costs.
Higher energy prices exacerbate challenges for shippers
The intergovernmental organization intended to promote the interests of developing states in world trade also pointed out that the Russian Federation is a leading oil and gas exporter.
"Confronted with trade restrictions and logistical challenges, the cost of oil and gas has increased as alternative sources of supply, often at more distant locations, are called upon," the report said.
It added that daily rates for smaller-size tankers, which are key for regional oil trading in the Black Sea, Baltic Sea, and Mediterranean Sea regions, have dramatically increased.
The higher energy costs have also led to higher marine bunker prices, raising shipping costs for all maritime transport sectors, UNCTAD said.
"According to the report, by the end of May 2022, the global average price for very low sulphur fuel oil had increased by 64% since the start of the year," the report added.
UNCTAD said the war in Ukraine has exacerbated the rise of grain prices and shipping costs which began in 2020.
The report added that between February and May 2022, the price paid for the transport of dry bulk goods such as grains increased by nearly 60%.
The accompanying increase in grain prices and freight rates would lead to a 3.7% increase in consumer food prices globally, UNCTAD added.
Call to keep global trade flowing
"UNCTAD calls for urgent action to open Ukraine's ports to international shipping so the country's grain can reach overseas markets, at lower shipping costs," the report said.
The organization says continued collaboration is needed among vessel flag states, port states, and other actors in the shipping industry to maintain all necessary services, including bunkering supplies, health services for sailors, and certification of regulatory compliance.
UNCTAD also says alternative ways of transport must be pursued and that easing transit and the movement of transport workers – even temporarily – can reduce the pressure on cross-border trade and transit.
