March 4, 2022

Impacts on shipping of the tragic conflict in the Ukraine

Pictured: a large containership underway; Photo Credit – Maritime Filming UK from Pixabay.

Shipping Australia notes, regrets, and is profoundly saddened by, the tragic conflict in the Ukraine and the appalling loss of life and property. We wish for a speedy end to the fighting.

We make the following observations in relation to the tragedy:

  • The International Transport Workers’ Federation in Australia has written to Shipping Australia noting the conflict and that there will be many issues with payment of wages, repatriation, and personal suffering. The ITF in Australia has offered to help Russian and Ukrainian seafarers. The ITF in Australia can be contacted as follows: Ian Bray, ITF Sydney office, Level 2, 365 Sussex Street, Sydney, NSW 2000, Australia, Tel: +61 (0) 2 9265 8453 or email sy**********@it*.uk. You can visit their website https://www.itfglobal.org/en/region/itf-asia-pacific.
  • General media reports have indicated that ships in the Black Sea, in the vicinity of Ukraine and Russia have been subject to explosions. Seafarers of a variety of nationalities are reported to be missing.
  • Ships have reportedly been attacked by artillery fire, according to Bloomberg.
  • Fighting has been reported in the vicinity of Ukrainian seaports. Global insurers are warning that there could be “dangerous seas” in the area. Ship managers and operators have been advised to monitor the situation and to stay in contact with their insurers.
  • In Russia, port security levels have been elevated although they are reported to be operationally ready. Certain sea areas are closed e.g. the Sea of Azov (North of England P&I Club; Insurance Marine News)
  • Russian and Ukrainian seafarers account for about 14.5% of the global seafaring workforce, according to the International Chamber of Shipping.
  • About 198,123 (10.5%) of seafarers are Russian, of which 71,652 are officers and 126,471 are ratings.
  • About 76,442 (4%) of seafarers are Ukrainian, of which 47,058 are officers and 29,238 are ratings. Ukrainian men aged between 18 and 60 are no longer allowed to leave Ukraine and so there will be no further Ukrainian replacements as / when contracts for Ukrainian seafarers expire.
  • Ship managers have warned about the potential for conflict in mixed crews. Business leaders have called for shipping leaders to step up and support all crews regardless of nationality. They specifically urged that seafarers should not be demonised on the basis of their nationality.
  • Some shipping managers have noted that some Ukrainian seafarers have expressed a wish to end their contracts early so that they can go home and fight.
  • The cost of marine fuel is a major component of the daily operational costs of shipping. The price of marine fuel has escalated. In or about April 2020 the price of a tonne of Intermediate Fuel Oil 180 centistoke (Singapore) was about USD$155. On Thursday 3 March 2022, that price was USD$649 per tonne. The average fuel price is about USD$383 per tonne.
  • However, over the last couple of years, the price has trended upwards from that average. The average in January this year was about USD$488.50 per tonne, although that somewhat disguises an escalation in price. The price per tonne of marine fuel was in the USD$454 range at the beginning of January and had risen to USD$527 by the beginning of February. In recent days, the price has sharply escalated.
  • The price in Singapore closely tracks world marine fuel prices, although there can be divergence from time to time. The difference between the global and the Singapore price is currently narrowing to a few dollars.
  • Extensive sanctions have been placed on Russia by the international community. Many international companies have announced that they can not, or will not, do business with Russian counterparts.
  • Cargo volumes to and from Russia, and to and from the Ukraine, are certain to decline.
  • Ocean shipping companies have reported that they too can no longer do business with Russian counterparts, with the exception of foodstuffs, medical and humanitarian supplies. Service providers that provide services to ocean shipping companies have reported that they can no longer do business with any parties handling Russian cargoes.
  • Ocean shipping companies are now declining to take any further orders for Russian and Ukrainian business. This is both as a direct consequence of sanctions and also as an indirect reaction to pressures put upon the global logistics system. Cargoes that are already en-route appear to be getting diverted to ports in non-belligerent nations and may possibly be trucked overland.
  • Increasing stress is being placed on those ports in other, non-belligerent, nations and there is reported to be increasing pressure placed on trans-shipment hubs all over the world.
  • Trade flows are being disrupted and delayed by customs authorities around the world who are reportedly holding back vessels in search of restricted commodities (especially dual-use items).
  • About 16% of container flows to / from Australia are European-related.
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