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The Russian attack on Ukraine could have ongoing economic repercussions globally.

 

Exact estimates of financial impacts on industry sectors is hard to predict in exact quantum but expected to impact across supply chains with rising prices in both international and domestic markets globally.

 

Russia is a major producer of oil and gas on the global market. The current geopolitical conflict has seen both commodity prices rise sharply from the onset of the conflict.

 

Crude oil, previously averaging at USD 90.00 per barrel in global markets, is now hovering between USD 116.00 and USD 120.00 per barrel in some markets and it is predicted to climb higher.

 

Shipping lines have commenced publishing announcements of both Low Sulphur Surcharges and Fuel recovery Surcharges as a direct result of the commodity price increases.

 

Domestically, this global hike in crude oil prices is expected to push our petrol and diesel prices higher, with transport costs predicted to rise in accordance with same.

 

For Europe in particular, the war in Ukraine has had the effect of reducing cargo capacity at a crucial time when the supply was still struggling to recover from pandemic cut-backs.

 

Due to many countries banning Russian aircraft from their airspace, the retaliatory ban of those same countries from Russian airspace has been implemented. Facing these airspace restrictions, carriers will need to fly alternative routes, predictably longer, increasing flying time and thus fuel consumption, at a time fuel will be a rising cost.

 

Our domestic question will be if this will trigger a capacity constraint to Australia. Our International borders have just opened on 21st February. Our capacity has been severely reduced during the pandemic and the cargo space supply is yet to recover to pre-pandemic levels. Only time will tell if there is a corresponding negative impact to our market.

 

We will continue to hold the negotiation of costs as of paramount importance within  our business so as to minimise negative financial impacts to our clients.

 

We shall endeavour to keep you abreast of all such publications within the supply chain network.

 

Should you have any questions regarding the above subject matter please contact our office directly.

 

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