The Russian invasion of Ukraine has made it harder for companies to move goods around the world, adding to rising costs and other challenges.
The conflict in Ukraine has caused some flights to be canceled or diverted, putting pressure on cargo capacity and raising concerns about further supply chain disruptions. It's putting at risk global supplies of products like aluminum, steel, and Platinum, as well as shuttering factories in Europe, Ukraine, and Russia. It has raised shipping costs.
The conflict is setting off a scramble among global companies as they cut off trade with Russia to comply with the most far-reaching sanctions imposed on a major economic power since the end of the Cold War.
More than two years of disruptions, delays and higher prices for companies that use global supply chains to move products around the world have led to new challenges. Many industries are bracing for a bad situation to get worse because of the war and sanctions on Russia.
Laura Rabinowitz, a trade lawyer at Greenberg Traurig, said that the global supply chains are already hurting because of the swine flu. She said the effects would vary for specific industries and depend on the length of the invasion, but the impacts would be magnified because of an already-vulnerable supply chain.
There is still a lot of port congestion in the United States. The freight costs are high. She said that factory closings in Asia are still an issue.
The effects are already being felt by companies with complex global supply chains. Volkswagen said Tuesday that it would have to shut down production at several other factories in the coming weeks because of parts shortages, including its main factory in Wolfsburg.
There could be shortages of other key materials. Russia and Ukraine are both major sources of metals and chrome.
Semiconductor manufacturers are looking for global stocks of neon, xenon and palladium to make their products. The majority of the oil for potato chips and cosmetics is produced in Russia and Ukraine.
If the conflict continues, it could threaten the summer wheat harvest, which supplies bread, pasta and packaged food to many people in Europe, North Africa and the Middle East. The risk of social unrest in poorer countries is increasing because of the disruptions in the global supply chain.
The global shipping giant Maersk announced on Tuesday that it would temporarily suspend all shipments to and from Russia by ocean, air and rail, with the exception of food and medicine. The world's other major ocean carriers have announced similar suspensions.
Christopher F. Graham is a partner at White and Williams.
The global economy appeared to be unaffected by the conflict, according to the head of global economics service at Capital Economics. She said that the current difficulties for those industries could be caused by shortages of materials like palladium and xenon. Semiconductor shortages have halted production at car plants and other facilities, fueling price increases and weighing on sales.
She said that it could cause further damage to global growth by adding to the shortages that we are already seeing.
International companies are trying to comply with financial sanctions imposed by Europe, the United States and a number of other countries that have stopped the flow of goods and money into and out of Russia.
In a few days, Western governments moved to limit the Russian central bank's ability to prop up the ruble, cut off shipments of high-tech goods, and freeze the global assets of Russian billionaires.
About a fifth of Russian imports would be stopped by technology restrictions alone, according to the Biden administration. Eswar Prasad, a professor of trade policy at Cornell University, said that the financial curbs were likely to cut off Russia's imports from and exports to nearly all of its major trading partners.
Even when trade flows between Russia and its trading partners are direct, the reality is that payments are usually made in a Western currency.
The president of the European Commission, Ursula von der Leyen, said in a statement Saturday that Europe and its allies were going to continue imposing massive costs on Russia and that they were also going to stop Russian trade.
She said that cutting banks off will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports.
The economic consequences of these moves are not completely clear. The implications for other countries may be limited because Russia accounts for less than 2% of global domestic product.
The impact could be catastrophic for the Russian government and economy, both of which are heavily dependent on trade to generate revenue. Russian gross domestic product could contract by 5 percent this year, a change that would not have much of an effect on global growth.
Financial sanctions are putting a halt to the trade of metals and agricultural commodities, which is likely to cause strains in global supply chains.
The Industrial and Commercial Bank of China and Credit Suisse have stopped financing for commodity trading with Russia.
There is a rising concern. Russia's attack on Ukraine could cause spikes in energy and food prices. Some countries and industries would suffer severe economic damage from supply disruptions and economic sanctions.
The price of energy. As the conflict has intensified, oil prices have risen to their highest level in more than two years. One of every 10 barrels the global economy consumes is supplied by Russia.
There is gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. European leaders accuse Russia of reducing supplies to gain a political edge, as natural gas reserves are running low.
There are shortages of essential metals. Russia is the world's largest exporter of the metal and the price of it has gone up as a result. The price of nickel has gone up.
Financial turmoil. Sanctions designed to restrict Russia's access to foreign capital and limit its ability to process payments in dollars, euros and other currencies are expected to have an effect on global banks. Russia is also on alert for cyberattacks.
There could be some self-sanctioning going on. She said that people are nervous about taking up contracts on Russian commodities. All trade apart from energy is being targeted, and governments haven't released many specifics on what kind of trades will be allowed.
The conflict could affect the flight networks that companies use to deliver goods around the world.
Dozens of cargo vessels have been halted by the closing of shipping ports around the Black Sea. The chief marketing officer of the Freightos Group, a digital freight booking platform, said that air shipments between Asia and Europe will have to divert around Russian airspace.
Travel between Russia and Western Europe has been stopped because of the flight bans. Jen Psaki, the White House press secretary, said on Monday that the U.S. ban on Russian flights was not off the table.
As shipping planes divert around Russian airspace, they will take longer and spend more on fuel, and they may opt for smaller and lighter loads as a result.
According to an analysis by Flexport, flights along major trade routes have slowed down. The flights between New Delhi and London were about 8 percent longer on average between Wednesday and Sunday compared with similar flights three months prior.
Longer trip times could cause cascading delays for industries that rely on air freight.
The flight bans have had limited effects so far. Many countries have strict coronaviruses policies, so there were not many tourists traveling between Europe and Asia.
John Grant is a senior consultant with OAG, an aviation advisory and data firm.
Jack and Niraj contributed to the report.
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