Consequences of Russia’s invasion of Ukraine for trade and logistics

Russia’s military invasion of Ukraine has far-reaching consequences for logistics and trade with Ukraine and the surrounding region. ESC is first and foremost seriously concerned about the consequences of the invasion for the population of Ukraine. In addition, this invasion will certainly influence international trade and logistics. A lot of entrepreneurs will be affected. ESC is calling for the EU’s engagement to de-escalate the conflict.

The sanctions imposed by the international community on Russia and possibly Belarus will also be noticeable to European entrepreneurs. It is important for entrepreneurs in international trade and logistics to be informed as well as possible about the consequences of the raid and sanctions to be able to properly assess the impact on their own business operations.

According to ESC, it is important for entrepreneurs to be resilient and agile in times of crises such as these. The business community has also been affected by sanctions in the past and ESC will inform and support entrepreneurs in order to cope with the current crisis and its consequences.

Implications for logistics: transport from, to, and through Ukraine

  • For road transport, there are stricter controls at various borders and waiting times increase significantly at the Ukrainian border with several EU Member States and at the Russian border with Estonia, Latvia, and Lithuania. The Ukraine-Russia border and the Ukraine-Belarus border are completely closed.
  • The Ukrainian seaports of Odessa and Mariupol are closed and damaged because of the fighting. International maritime traffic off the coast of Ukraine is also completely blocked.
  • Air traffic over Ukraine and Moldova has been completely halted due to air bombing of Ukraine. Airports in Ukraine have also been heavily damaged because of bombing.
  • The China-EU railroad (also known as the Chinese Silk Road) runs through Russia and Belarus to Poland. It is still unknown whether this railroad line is still functioning properly. Russia transports a lot of military equipment to Belarus via this railroad.
  • Fuel prices will increase because of the invasion. This will lead to higher fuel costs for all modes.
  • The number of cyber attacks on sensitive infrastructure, such as transportation systems, may increase. In 2018, a cyber attack on Ukraine from Russia caused serious damage to automation systems.

Implications for international trade

  • On Friday, the European Commission will impose a comprehensive sanctions package on Russia; possibly also on Belarus. What that entails is still unclear. In any case, it will affect the transport, energy, high-tech, and financial sectors in Russia, according to the European Commission.
  • Sanctions already in place are primarily aimed at individuals and various financial institutions in Russia. It is still unclear whether Russia will impose countersanctions (retaliation) on the EU and which sectors they will target.
  • The raid and sanctions affect the coverage of various insurance policies, such as credit insurance and transport insurance.
  • The impact on international trade will vary by sector and depends on how the conflict develops.