Since the escalation of the situation between Russia and Ukraine, the passage of merchant ships in many waters near the two countries has been affected, and the aviation industry has also been hit hard. Since Russia and Ukraine mainly export commodities such as energy and grain, the related international oil prices have also soared.
“Oil grabbing” phenomenon reappears
Increased more than five times in one day
After the Russia-Ukraine war began, crude oil prices soared to their highest levels since 2014, reaching more than $105 a barrel, and analysts expect it to reach $130 within weeks.
There are numerous reports that traders are reluctant to buy Russian stocks. Whether it’s the fear of being punished for trading Russian products or the difficulty of transacting with Russian banks, one word has cropped up in online discussions: “self-sanction.”
Due to the impact of self-sanctions or financial sanctions, Russian oil is difficult to circulate and may lose a considerable share of oil in the world market, which is a key factor driving up oil prices.
At the same time, the “oil rush” phenomenon reappeared, and the freight rates of small and medium-sized oil tankers, represented by Suezmax and Aframax tankers that are common in the Black Sea area, increased more than five times a day.
Analysts pointed out that the reasons for the “oil rush” are that traders are worried that Russia’s oil and natural gas exports will be sanctioned. In addition, the market is also worried that Russian shipping companies will be sanctioned, which will lead to a significant reduction in the shipping capacity of some ship types and an increase in freight rates. .
Shipping companies to impose emergency fuel surcharge
With oil prices hitting eight-year highs, shippers are bracing for a raft of emergency fuel surcharges from ocean carriers.
Low-sulfur fuel oil (LSFO) from Rotterdam has surged by more than $30 to $731.50 per ton in recent days, a 40% increase since December.
It is understood that before the war broke out, shipping companies were considering imposing emergency BAF. According to reliable sources at the shipping company, the increase in emergency fuel surcharges was “doomed.”
“Many of our contracts have the BAF algorithm attached to them, but for our spot and short-term trading we have no choice but to recoup as much of the additional cost as possible.”
According to a foreign NVOCC, he has been informed by the shipping company that an emergency BAF will be imposed “within a few weeks”, and his shipping company said that the good news in the future is that there is space, and the bad news is that the new BAF is coming.
The latest indices from WCI, FBX and XSI on Friday showed that container spot prices from Asia to Northern Europe were unchanged from the previous week, at US$13,625, US$14,269 and US$14,226 per 40 feet respectively.
Transpacific freight rates start to rise:
◦The Shanghai to West America WCI and FBX indices rose by 3% and 2% respectively;
◦The Shanghai to US East WCI and FBX indices both rose 1%;
◦WCI’s latest index last week showed that the West Coast of the United States rose 3% to $11,030/FEU;
◦The latest FBX index, which includes premiums, rose about 2% to $15,808/FEU;
◦On the East Coast of the United States, gains were smaller, with WCI rising 1% to $13,160/FEU; FBXYE rising 1% to $18,020/FEU.
▲FBX Shanghai to East America Freight Index
▲FBX Shanghai to West America Freight Index
▲Drewry WCI World Container Freight Index
Industry insiders said that there are still many uncertain factors in the impact of the Russia-Ukraine situation on global shipping, which will depend on the deterioration of the situation and the intensity of subsequent sanctions.
Flights canceled, fuel prices soaring
The global aviation industry has been hit hard
The deteriorating situation between Russia and Ukraine has also hit the aviation industry hard. Many countries have announced the closure of their airspace to Russia, and a large number of flights have been canceled. The surge in international oil prices has also doubled the pressure on the aviation industry.
According to Reuters, several European countries and Canada announced that they would close their airspace to Russian aircraft, an unprecedented move.
According to the BBC, the President of the European Commission announced that the EU has implemented a comprehensive flight ban on Russian aircraft. “We are closing EU airspace to Russian-owned, Russian-registered or Russian-controlled aircraft,” she said. All such aircraft, including private jets, will now be unable to land, take off or fly over any EU country.
Countries including Germany, the United Kingdom, the Czech Republic, Poland, Romania, Lithuania, Latvia, Estonia, Bulgaria and Slovenia have banned Russian aircraft from entering their airspace.Affected by this incident, European air freight prices in the involved areas began to skyrocket.
Regarding the “no-fly” sanctions imposed by many European countries, Russia is not to be outdone. As of Saturday local time, the Kremlin had banned aircraft from Britain, Bulgaria, Poland and the Czech Republic from entering its airspace.
In addition to the risk of airspace closures, when cargo planes have to avoid Russian airspace, it will lead to longer flight times, and soaring oil prices have also impacted airline companies. International crude oil prices once exceeded US$100 per barrel, which will further increase airline operating costs.
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