The Invasion of Ukraine Is Causing Crisis at Sea

The Invasion of Ukraine Is Causing Crisis at Sea
Elisabeth Braw March 7, 2022 https://foreignpolicy.com/2022/03/07/ukraine-shipping-supply-war/

Russian ships have nowhere to dock, and supply chains will suffer.

The United Kingdom has banned Russian ships from calling on its ports, and the European Union is about to do the same. The world’s three largest shipping lines will no longer call on Russian ports. Ukraine’s ports are closed. Russia’s invasion of Ukraine is wreaking havoc on global shipping, which transports 80 percent of the world’s trade. Ships are now sailing the oceans unable to deliver and pick up cargo, while some 140 other merchant vessels are stuck in Ukrainian ports, at risk of coming under fire and with food and other provisions running low. The rest of the world should care about their desperate situation—if nothing else because the cargo they carry is crucial to our daily lives.

On March 1, the crude oil tanker NS Champion suddenly encountered an urgent problem. It was steering toward Scotland’s Orkney oil terminal. Like many other cargo vessels, the NS Champion sails under a Liberian flag, but it is owned by Sovcomflot, Russia’s largest shipping company, and on Feb. 24 the U.S. government had placed the company under sanctions. Even so, the tanker had the right to make its next port call, because sanctions don’t affect ships that are already en route. But before it arrived, the British government announced it was immediately closing U.K. ports to Russian vessels. The Champion had to sail on, oil undelivered, to its next point of call, Denmark’s Port of Skagen.

Very soon, it won’t be able to deliver its oil there either. The EU is expected to imminently follow the U.K.’s lead and close its ports to vessels owned or operated by Russian companies or sailing under the Russian flag. Canada already has. Switzerland-based Mediterranean Shipping Company, the world’s largest shipping company, has announced that it’s suspending all container traffic to and from Russia. So have the other two members of global shipping’s top three, Denmark-based Maersk and France’s CMA CGM. Singapore-based Ocean Network Express and Germany’s Hapag-Lloyd had already made similar announcements. The companies will only make humanitarian deliveries, usually understood as food and medication.

The United Kingdom has banned Russian ships from calling on its ports, and the European Union is about to do the same. The world’s three largest shipping lines will no longer call on Russian ports. Ukraine’s ports are closed. Russia’s invasion of Ukraine is wreaking havoc on global shipping, which transports 80 percent of the world’s trade. Ships are now sailing the oceans unable to deliver and pick up cargo, while some 140 other merchant vessels are stuck in Ukrainian ports, at risk of coming under fire and with food and other provisions running low. The rest of the world should care about their desperate situation—if nothing else because the cargo they carry is crucial to our daily lives.

On March 1, the crude oil tanker NS Champion suddenly encountered an urgent problem. It was steering toward Scotland’s Orkney oil terminal. Like many other cargo vessels, the NS Champion sails under a Liberian flag, but it is owned by Sovcomflot, Russia’s largest shipping company, and on Feb. 24 the U.S. government had placed the company under sanctions. Even so, the tanker had the right to make its next port call, because sanctions don’t affect ships that are already en route. But before it arrived, the British government announced it was immediately closing U.K. ports to Russian vessels. The Champion had to sail on, oil undelivered, to its next point of call, Denmark’s Port of Skagen.

Very soon, it won’t be able to deliver its oil there either. The EU is expected to imminently follow the U.K.’s lead and close its ports to vessels owned or operated by Russian companies or sailing under the Russian flag. Canada already has. Switzerland-based Mediterranean Shipping Company, the world’s largest shipping company, has announced that it’s suspending all container traffic to and from Russia. So have the other two members of global shipping’s top three, Denmark-based Maersk and France’s CMA CGM. Singapore-based Ocean Network Express and Germany’s Hapag-Lloyd had already made similar announcements. The companies will only make humanitarian deliveries, usually understood as food and medication.

That means Russia will be cut off from much of the world, able to send and receive goods only via primarily Asian shipping companies such as China’s COSCO. Ukraine, meanwhile, has already been cut off. The week before the invasion, maritime insurers red-listed the Russian and Ukrainian parts of the Black Sea and the Sea of Azov, making it difficult and expensive for ships to sail through the waters. When Russia invaded last month, Ukraine closed its ports. The country is already running low on oxygen and other medical supplies.

That’s terrible news for Ukraine. It’s terrible news for ordinary Russians, even though their government is clearly to blame. But it’s also dreadful news for the global shipping industry. The world’s oceans are now filled with ships whose onward journeys have been thrown into turmoil. Because they are no longer allowed to call on certain ports, they can’t deliver the cargo they have on board and can’t collect the cargo other customers expect. The cargo already onboard must be brought back to the sender, but by whom? The shipping industry already operates on small margins, instead making its money through the massive volumes it transports. (Before the invasion of Ukraine, it annually delivered an average of 1.5 tons of goods per person on the planet.) And ports don’t have space to suddenly store enormous quantities of goods, some of which may be perishable.

An even more urgent problem is the crews on such vessels whose destinations are now, so to speak, up in the air. “Because of this new crisis we’re having to repatriate seafarers,” Guy Platten, the secretary-general of the International Chamber of Shipping, told me. “But where do we repatriate them to? Some don’t want to go home. For example, if you’re Ukrainian, going home means you can’t then leave, and some seafarers are apprehensive about that.” This crisis is hitting a global seafarer corps that has suffered enormously due to COVID-19. When the pandemic hit, many seafarers were unable to return home after their contracts ended, because air travel had been slashed. Then, things got worse still when countries around the world barred seafarers from leaving their ships during port calls. Seafarers became prisoners of their vessels—and just as COVID-19 cases are declining, they face the same misery again.

Russian seafarers, meanwhile, face not just the uncertainty of whether there will be enough work to keep them and other seafarers employed but also the prospect of not being paid now that Russia is under massive sanctions. “There are a lot of Russian crew members on ships that are not Russian. How do we pay them, considering they’re paid by companies outside Russia?” asked Platten, who is still trying to find an answer. “Shipping is an industry interconnected like no other.”

If you think, “to hell with Russian sailors,” consider this: More than 10 percent of the world’s 1.89 million seafarers come from Russia (and another 4 percent come from Ukraine). I have often thought that if the Kremlin wanted to engage in more gray-zone aggression against the West, it could force its seafarers to stay home. Even now, Russia could just ask its seafarers not to return to sea after a home stay. Global shipping and thus the global supply of goods would face immediate collapse.

For now, Russian President Vladimir Putin seems focused on military violence, not more subtle means of assault. And for seafarers, that means another urgent problem. Some 140 cargo ships are stuck at Ukraine’s now-closed ports, unable to leave because traveling through the Black Sea involves extreme risk. Some two dozen merchant vessels are, for example, caught at the Port of Odessa. On March 3, an Estonian-owned cargo ship with a crew of six—incidentally, two Russians and four Ukrainians—sank off the Port of Odessa. At the time of writing, four crew members are missing.

Three other merchant vessels in the Black Sea have been hit by Russian missiles; one of the attacks killed a Bangladeshi crew member. “We’re trying to help the crews to leave [the ports],” Platten told me. “We’re using all diplomatic means, but at the moment it’s almost impossible. We’re also trying to get food to them.” A reminder: Crews are not allowed to leave the ship to which they’re assigned. And cargo vessels typically only carry enough food for a couple of weeks. So dire is the situation that the International Maritime Organization will hold an emergency session this week.

Even if the combined efforts of shipping companies, seafarer charities, and diplomats succeed and all the stranded seafarers are repatriated or brought to a safe country, the shipping industry faces continued turmoil—because the world is splitting into two spheres. One part will, for now, function as before, with ships crossing borders with minimal hurdles. The other part—Russia and Ukraine, and possibly other countries—has been amputated even as its citizens’ daily needs remain the same as those of other countries’ citizens and companies.

“The uncertainty and pace of restrictions is having one of the most stifling impacts to shipping I’ve ever seen,” Cormac Mc Garry, a maritime analyst with the Control Risks consultancy, told me. “The world’s largest logistics companies suspending all nonessential calls to Russia is a gigantic shift. Pretty much any company will have to seek alternative routing.” Of course, Russian ships can travel to Russia—but they won’t be able to deliver much now if they’re banned from calling on European ports. “Companies in Russia are looking for alternative routes to import into, but it’s all closing off fast,” Mc Garry said. “I find it difficult to conceive of any contingency plan for companies unless Russia somehow reshores its nonessential supply chains.”

Even before Russia’s invasion of Ukraine last month, it was becoming obvious that the current extreme degree of globalization was unsustainable. Companies can’t keep operating as if there are no borders when countries are increasingly squaring off against one another. Russia has now dealt a severe blow to globalization and its foremost representative, global shipping. China’s massively promoted rail link with Europe is also sputtering as a result of the invasion.

But even in this dark situation, there is humaneness in the most surprising quarters. One major shipping company, which owns nearly 400 vessels, employs mainly Russian and Ukrainian seafarers. Now, one would think, there’d be daggers drawn; they might even kill one another. “But there’s no trouble on board,” Platten told me.