Russia’s war in Ukraine shakes global shipping, rates could triple (OTCMKTS:AMKBY)

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The war in Ukraine threatens to disrupt the global shipping industry, which is still trying to recover from the coronavirus pandemic. Two of the largest shipping container groups, Maersk (OTCPK: AMKBY) and Mediterranean Shipping, have already suspended cargo bookings to and from Russia as sanctions begin to impact trade. Shipping rates could even double or triple from the current $10,000 per 40ft container, according to to Glenn Koepke of supply chain consultancy FourKites.

Training effect: Cargo checks are now one of the biggest disruptions for shippers, ensuring they don’t breach sanctions at EU ports and UK businesses are also halting operations due to uncertainty over waters. For example, a ship loaded with crude or LNG could face penalties just days after embarking on its journey, leaving the cargo stranded and the company forced to swallow the costs.

Things are getting worse with the closure of airspace, which is a key alternative to the seas. The European Union, Canada and the United States closed their skies to Russian carriers, prompting Moscow to retaliate in kind. The country plays a role in the East-West air cargo corridor, with some Japanese carriers having already stopped booking air cargo to Europe. The sanctions also affect the Trans-Siberian Railway, which carries goods from China to Europe via Russia.

Personnel issues: Russian and Ukrainian sailors make up 1 of 7 of the world’s maritime workforce, according to the International Chamber of Shipping. These essential workers are not easily replaceable, while airspace bans have compounded the problems by making it more difficult to transport personnel to and from ports. Ship movements in the Black Sea, a key export route for commodities, have also been frozen since Russia invaded Ukraine, and staffing these ports will be a security concern. major even if they open in the near future.

Associated codes: danaos (NYSE:DAC)Global Ship Rentals (NYSE: GSL)ZIM (NYSE: ZIM)Matson (NYSE:MATX) and Navios Maritime Partners (NYSE: NMM)and Maersk (OTCPK:AMKBY).