The Russia-Ukraine war is severely disrupting international logistics. The U.S. is no exception, and we are seeing disruptions across the supply chain. As Russian forces cut off shipping routes, logistics firms suspend services, and sanctions lead to gas price increases, logistics operations across the country are increasing their fees.
In this article, we take a look into the main effects of the Russia-Ukraine war in the U.S. logistics industry so your business can prepare itself for the changes that are coming.
Sea Freight Is Being Stopped
Russian naval vessels are blocking shipping coming in and out of the Sea of Azov — one of the few access points to ocean trade in Ukraine.
There is now a large buildup of vessels waiting to get through the Kerch Strait in the Sea of Azos. Almost 70% of Ukraine’s exports are estimated to be shipped via the sea, and with congestion worsening, the impacts of no imports or exports are having a knock-on effect across Europe and the U.S.
Impacts On U.S. Trucking
The Russia-Ukraine crisis is having severe impacts on an already chaotic logistics industry. One of the most significant impacts is the price of diesel fuel affecting trucking freight.
Immediately after the war started, West Texas Intermediate and Brent crude futures jumped to over $100 a barrel. Prices have not been this high since 2014. Futures have dipped back down under $100, but with sanctions on Russia impacting the supply of gas, we can expect prices to stay high for the foreseeable future.
Russia is the world’s second-largest producer of fossil fuels. Sanctions from the U.S. and European Union have caused liquid natural gas prices to soar up to 50% on the Asian spot market. The huge increase in gas and diesel prices means that logistics companies have to charge more for their services, increasing charges across the supply chain, and all businesses will feel the impact.
Landstar Systems Closes Down Large Operation
Some major freight operators with U.S. centers and operations in Ukraine feel the war’s impacts particularly hard. For example, Landstar System Inc. is a freight broker and third-party logistics provider with a large portion of its operations in Ukraine. The effects of the war and the shipping crisis it has created in Ukraine have caused the company to suspend its operations there.
The Jacksonville, Florida-based Landstar’s Ukrainian agency has gone “offline” due to disruptions in the supply chain.
The company has an annual revenue of $1.1 billion from its Ukrainian operations. It also employs over 400 people.
Impacts Felt All Over The Logistics Industry
The impacts of the Russia-Ukraine war are being felt in the logistics industry. It is creating waves that are reaching the U.S. with peace talks not currently looking to generate an agreement to stop the violence, sanctions on Russia, and disruptions of routes are expected to continue. Businesses across the U.S. will need to prepare themselves for increased costs on shipping as gas prices rise and goods become difficult to move.
If you’re feeling the effects of the war and facing major supply chain challenges, we can help. As logistics experts, we can help mitigate some of the above pain points. Let us help you with your logistics. We’ll get things running smoothly again!