Conflict in Russia and Ukraine could send the ocean and air freight prices soaring, while global supply chains are still reeling from the pandemic.
Ocean freight rates could double or triple because of the intrusion, said Glenn Koepke, general manager of cyber collaboration at FourKites, a supply chain consultancy. Freight rates could soar from 10,000 to 30,000 per 40-foot container, while air freight rates could jump even higher, Kepke said in an interview with The New York Times.
Ocean freight rates have hit record highs since the outbreak began. Kepke warned that the war could be another blow to global supply chains. He noted that while the shipping industry has not yet reached peak season, "companies are preparing for summer business volumes that will have a significant impact on our supply chain."
The Russian invasion has severely affected freighters crossing the Black Sea, a key channel for oil and bulk food exports. Several ships have been shelled or detained since Thursday.
On Monday, Britain banned all Russian ships from entering its ports. Meanwhile, shipping executives and port officials in Belgium, the Netherlands, and Germany said cargo ships bound for Russia would be stopped and inspected.
Ukraine's largest port was closed on Thursday as the conflict caused many ships to be diverted, adding to congestion at other ports in Europe. As of Monday, more than 200 ships were waiting to pass through the Kerch Strait, according to Lloyd's List. This strait connects the Black Sea and the Sea of Azov.
"All of the hubs in northern Europe are already very congested, and any little thing that delays a shipment will exacerbate the problem," Vincent Clark, head of Maersk's shipping and logistics services, told The Wall Street Journal.
On Tuesday, Maersk, one of the world's largest shipping companies, announced it would suspend shipping to and from Russia and Ukraine. The shipping company joined ONE, MSC, and Heberlord in making the decision, a move that will affect at least 47 percent of the world's container shipping.
The decision by shipping leaders to cut off Russian shipping will further hinder the country's ability to send and receive goods, which is already curtailed by Western sanctions.
Global air cargo also faced some difficulties during the invasion. Russia has so far closed its airspace to 36 countries, forcing shipping planes to find new routes. Chris Rogers, the chief supply chain economist at Flexport, said on Monday that the conflict will negatively impact global air capacity and push up air cargo prices as airlines will be forced to take longer routes and spend more on fuel funds.
Experts have previously told Insider that the extra shipping costs could be passed on to consumers. The conflict could push up gas and food prices at a time when U.S. inflation has reached its highest level since the 1980s.