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ONE suspends some bookings as Russia-Ukraine conflict escalates


Supply chain likely affected due to Russia's invasion of Ukraine: sources

Seafarers must be kept "safe and secure" amid military action: IMO

  • Author
  • Surabhi Sahu    Sameer Mohindru    Ayush Verma
  • Editor
  • Ankit Ajmera
  • Commodity
  • Agriculture Shipping

Singapore-headquartered Ocean Network Express, or ONE, has suspended bookings at Odessa, Ukraine and Novorossiysk, Russia with immediate effect until further notice, as concerns about supply chain disruptions rise in the shipping sector due to an escalating Russia-Ukraine conflict.

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"Due to the recent developments in Ukraine and Russia, we regret to inform that our operations in the area are disrupted and our ability to complete the carriage of consignments to some destinations is, or is likely to become, obstructed," ONE said Feb. 28.

ONE also suspended booking acceptance to and from St. Petersburg, Russia until further notice, as it evaluates "operational feasibility", it said.

Other container shipping companies, such as MSC, Maersk, and CMA CGM, have already announced suspensions of vessel calls to Ukraine until further notice.

Containers' trade has come to a standstill as the port is shut, Ravi Singh, a pulses broker in Odessa told S&P Global Platts. The last container shipment from Odessa was done around a week ago, said Singh, who brokered a container shipment of yellow split peas that left for Colombo Feb. 21 just before the shutdown.

Supplies are still available, but nothing has been loaded in the last one week due to a halt in port activities, Singh said.

Ukraine and Russia are among the world's largest exports of agricultural commodities, such as corn, pulses, and wheat. Buyers are now looking for alternative sources amid spiraling prices and the imposition of sanctions on key Russian banks, leading to uncertainty over payments for even earlier deliveries worldwide, shipping sources said.

A logistics provider based in Indonesia said there was no change in container booking rates following Russia's invasion of Ukraine, with some liners even extending rates from Indonesia to North America until end-March.

"But we are uncertain of what will happen [even] next week -- there could be severe implications on the supply chains ... Many liners could make blank sailing into Europe due to this issue, further clogging up the system," the logistics provider said.

Platts Container Rate 25 -- Southeast Asia-to-East Coast North America -- was assessed at $10,500/FEU Feb. 28. The price has remained nearly stable during the last few weeks, due to a lull in demand because of the Lunar New Year festival. The all-inclusive rate for the route is currently at $16,500-$17,500/FEU.

Exercising caution

Maersk said Feb. 27 it was moving cargo to and from Ukraine to ports with less yard density that still possess the required reefer plugs to retain perishable commodities, to prevent congestion at key ports. The company said it was offering options to its customers, such as free change of destination services and no cancellation fees on bookings to and from Ukraine.

CMA CGM said Feb. 24 it was redirecting the floating cargo meant for Ukraine to the ports of Constanza in Romania, Tripoli in Lebanon, or Piraeus in Greece, while taking steps to ensure supply chain continuity.

Mediterranean Shipping Company, or MSC, said in a customer advisory Feb. 24 that for now "MSC ships will not call at Ukrainian ports and we are implementing various other operational changes to other vessels in the region to make use of our wide Black Sea port network. In such cases we will declare the voyage as ended in the last port prior to Ukraine."

"MSC is also preparing in case of potential new government measures that could impact trade in the region. As at Feb. 24, our services to and from Russia are maintained," it said.

The International Maritime Organization has also expressed concern over the plight of the seafarers amid the conflict.

"I am gravely concerned about the spillover effects of the military action in Ukraine on global shipping, and logistics and supply chains, in particular the impacts on the delivery of commodities and food to developing nations and the impacts on energy supplies," IMO Secretary-General Kitack Lim said Feb. 26. "Shipping, particularly seafarers, cannot be collateral victims in a larger political and military crisis -- they must be safe and secure."