\n
Bloomberg News <\/p>\n
Bryce Baschuk, Lizzy Burden and Enda Curran <\/p>\n<\/p><\/div><\/div><\/div>\n<\/header>\n\nArticle content<\/h2>\n
(Bloomberg) \u2014 Supply Lines is a daily newsletter that tracks Covid-19\u2019s impact on trade.\u00a0Sign up here.<\/p>\n
Importers from London to Warsaw will soon face higher shipping costs, longer delays and an obstacle course of sanctions to navigate as Russia\u2019s widening assault on Ukraine complicates the movement of cargo between Europe and Asia.<\/p>\n
President Vladimir Putin\u2019s invasion, and retaliatory steps designed to paralyze the Russian economy, are heaping new disruptions on supply chains that never recovered from unprecedented shocks caused by the pandemic. Beyond the devastating human toll, the war threatens higher costs for fuel, grain, industrial metals, and other raw materials used in Asian-made consumer goods headed for Europe and beyond.<\/p>\n<\/section>\n
\n
\nAdvertisement<\/h2>\n\n
\n
\n
\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section><\/div>\n\nArticle content<\/h2>\n
Mediterranean Shipping Co. and A.P. Moller-Maersk A\/S, the world\u2019s biggest container carriers, halted bookings for Russian freight, with Maersk on Wednesday warning customers, \u201cthis is a global impact, and not only limited to trade with Russia.\u201d Not a good signal for European economies already facing energy spikes, product shortages, clogged ports and the highest inflation since the inception of the common currency more than two decades ago.<\/p>\n
\u201cThere is still substantial disruption in the supply chain,\u201d said Jennifer Hillman, a Georgetown University professor and a former U.S. trade official. \u201cThere is an effort to build resilience but that will take time. With Russia invading Ukraine, we don\u2019t have time.\u201d<\/p>\n<\/section>\n
\n
\nAdvertisement<\/h2>\n\n
\n
\n
\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section><\/div>\n\nArticle content<\/h2>\n
Aside from their commodity exports, Russia and Ukraine aren\u2019t big global traders. Russia is the world\u2019s 16th-largest goods exporter, led by petroleum, coal and gas. Ukraine ranks 48th, led by shipments of grain and iron ore, according to 2020 data from the World Trade Organization.<\/p>\n
But they are situated along one of the world\u2019s oldest trade lanes, one that China has sought to use for its Belt-and-Road initiative and a route where much of the airspace is now restricted. Meanwhile, container ships can\u2019t access Ukrainian ports and many are trying to avoid Russia\u2019s.<\/p>\n
Currently, there\u2019s little if any spare ocean freight capacity to move globally traded goods to absorb even an isolated, regional shock, said Jan Hoffmann, the head of trade logistics at the United Nations Conference on Trade and Development.<\/p>\n<\/section>\n
\n
\nAdvertisement<\/h2>\n\n
\n
\n
\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section><\/div>\n\nArticle content<\/h2>\n
\u201cThere is no slack in the system so anything that holds up ships anywhere will lead to less capacity,\u201d Hoffmann said.<\/p>\n
For cargo between Asia to Europe, that leaves Russia\u2019s rail network \u2014 behind only the U.S. and China with its 54,000 miles (87,000 kilometers) of track \u2014 as another possible option.<\/p>\n
Both Maersk and DB Schenker, the logistics unit of German national railway operator Deutsche Bahn, offer intermodal services \u2014 by sea from Asia, then on Russian rail lines to Europe \u2014 but even those are coming under new restrictions and sanctions concerns.<\/p>\n
\u201cShying away from sanctions is a key risk,\u201d said Peter Sand, a chief analyst at Oslo-based Xeneta, a freight market-analytics platform. \u201cThat means higher prices for bulk shipping, which will make it more expensive to trade and ship around the world.\u201d<\/p>\n<\/section>\n
\n
\nAdvertisement<\/h2>\n\n
\n
\n
\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section><\/div>\n\nArticle content<\/h2>\n
There\u2019s anecdotal evidence of train disruptions already. Networking equipment maker Zyxel Communications Corp. has stopped shipping from China to Europe by rail as the conflict threatens to snarl a key land route.<\/p>\n
Zyxel, a maker of routers and switches controlled by Taiwan\u2019s Unizyx Holding Corp., suspended freight through the link operated by China Railway about three days ago, President Karsten Gewecke said.<\/p>\n
In Asia, some international shipping companies are adjusting their schedules and the conflict means disruption to the delivery of goods is inevitable, according to Gary Lau, chairman of the Hong Kong Association of Freight Forwarding and Logistics.<\/p>\n
\u201cThe longer the tension lasts, the greater the impact on the entire European logistics chain,\u201d Lau said.<\/p>\n<\/section>\n
\n
\nAdvertisement<\/h2>\n\n
\n
\n
\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section><\/div>\n\nArticle content<\/h2>\n
Manufacturing executives such as Ricky Chan, whose Hong Kong-based company makes automotive parts including door handles and mirror shells for global clients, said the crisis may add to transportation constraints that the company was already juggling before the crisis began.<\/p>\n
\u201cFor our business in Europe, we may face a longer lead time for our logistics,\u201d said Chan, chief executive officer of Jing Mei Automotive, whose manufacturing facilities are based in Guangdong and Hebei.<\/p>\n
Even before the crisis began, Bloomberg Economics estimated logistics constraints for China\u2019s manufacturers appeared to be the most severe on record. The United Nations estimates around 41% of global exports are sourced from Asia, making it the world economy\u2019s factory floor.<\/p>\n<\/section>\n