Truck in an otherwise empty warehouse

Events before February 2022

Due to the fact that the eastern part of Ukraine borders Russia, conflicts have occurred repeatedly over the past two decades. Especially the eastern part of the country (the regions of Luhansk and Donetsk), where many people are of Russian descent, consequently had a pro-Russian orientation, while the rest of Ukraine wanted to cooperate more with the European Union as well as the Western military alliance of NATO. In 2013, there were protests against the Ukrainian president, which led to his resignation shortly afterwards.

This situation led to further unrest and renewed protests on the Crimean peninsula in 2014, this time against the newly elected president. Russia then sent military troops to the area and the peninsula was brought under Russian control shortly afterwards.

The conflicts in eastern Ukraine with the pro-Russian separatists, whose goal was to declare Luhansk and Donetsk independent states, also continued. The Russian president Putin spoke increasingly and vehemently against Ukraine joining NATO and for an end to NATO's eastward expansion.

Fateful hour of February 20th, 2022

After the European Union failed to respond to Putin's demands, he recognized the Luhansk and Donetsk regions as independent on February 20th, 2022 and sent Russian troops into Ukraine shortly afterwards. This was not limited to the eastern part of the country and was thus seen as a declaration of war by Ukraine as well as by many countries in the world.

In response, sanctions against Russia were imposed by the European Union and the USA, among others. The aim here is to exert non-military influence and to try to end the current conflict.

Impact on global supply chains

There are already significant economic constraints, but the biggest challenges will only be felt in the long term. Many global supply chains and markets are still weakened by the pandemic and will not be able to recover as a result of what is happening now. In addition to natural gas and oil, shortages of raw metals and metal-bearing feedstocks for industrial processing are looming.

Air freight

Air freight is currently the most affected type of cargo. Aircrafts from Germany and 35 other countries are no longer allowed to fly over Russia. This massively increases flight times, the costs for aviation fuel rises, and planes are only allowed to fly with up to 20% less capacity. The European Union, the USA and Canada, among others, have banned Russian airlines from using their airspace, so there are massive disruptions in the entire supply chain of many international companies.

Sea freight

Increased costs for fuel are also a major factor in significantly increasing expenses for this mode of transport. There are high additional costs, including rising insurance premiums for ships in the Black or Azov Seas. In general, it is becoming more and more difficult for cargo ships to cross these inland seas, which means that increasingly expensive diversions have to be used for cargo, for example combinations of sea and land freight.

Rail freight

The borders are still open, but caution is required as the situation can change at any time. The unpredictable state of the rail link also plays a significant role that should not be underestimated. Should there be any obstructions, it would be necessary to bypass Russia and Ukraine by means of expensive ship passages.

Always one step ahead with ABRAMS world trade wiki

In times of crisis, companies need to have clear plans of action in order to maintain stable and functioning supply chains. As it is difficult to predict what problems will occur internationally, ABRAMS world trade wiki always provides sound and, above all, up-to-date knowledge that can be used to react to problems as quickly as possible so that supply chains are not interrupted.

Should the current crisis lead to interruptions in supply chains in your industry, the tool "Sourcing Intelligence" can help you to find new and suitable alternative suppliers immediately. These ensure that companies can continue to operate in a stable manner in the areas of production and trade, which ultimately leads to the successful delivery of products to end customers.

In combination with the tools "Company Transparency" and "Supply Chain Intelligence", existing and new suppliers can be analyzed and monitored. This is not only limited to Tier 1 suppliers, but is also possible across multi-level supply chains, for example Tier 2 to Tier 7. This means that potential risks can be anticipated at a very early stage, before they develop into acute problems in a supply chain.