Russia-Ukraine War Cause Oil, Cargo Prices to Soar

Still dysfunctional from the coronavirus pandemic, the war between Russia and Ukraine is scrambling the supply chain even more.

Source : Flickr

March 7, 2022

Author : Alex Bustillos

Rising oil prices are barely worth a headline since the pain at the pump is acutely felt by nearly every American. But the side effect of cargo costs is something many may have not noticed… yet.

Ocean shipping rates are expected to rise by double or triple, Glenn Koepke, the general manager of the supply chain consultancy firm FourKites told The New York Times. That means shipping rates could jump from $10,000 per 40-foot container to $30,000. 

Ocean shipping rates were already at an all-time high from the pandemic. Meanwhile, shipping tends to accelerate during the summer months.

Last week, over 200 ships were waiting to cross the Kerch Strait which connects the Black Sea to the Sea of Azov between Ukraine and Russia.

According to Business Insider, shipping hubs across Northern Europe are also congested.

In terms of air cargo, the cost of fuel compounds with the necessity of avoiding Russian airspace, which is closed to 36 countries, meaning longer flights to ship goods to the West.

Experts speaking to Business Insider say the rising costs are likely to be passed on to consumers.

It’s worth noting that inflation is already rising faster than it has in nearly 40 years.

And air cargo is not faring any better.

According to CNBC, air cargo rates from China to Europe have jumped 80 percent.

It’s expected that air cargo rates will increase even more than the two-to-three times expected of ocean rates.

Photo via Flickr.

Category : Coronavirus Pandemic International Market Watch Material Costs Ports

Related Article