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As pandemic supply chain problems subside, conflict in Ukraine could cause other global supply issues

Experts explain how Ukraine War could impact supply chain.png
Posted at 9:24 PM, Mar 15, 2022
and last updated 2022-03-15 21:24:29-04

Drive along the cargo terminals on our country’s supply routes and containers are still stacked high.

“It’s just a lack of space and growing demand,” Jessica Alvarenga said.

Cargo at the port in Long Beach, California is sitting here more than twice as long as pre-pandemic. On average, that’s around 7.8 days, according to stats by the Pacific Merchant Shipping Association.

“Last year we saw a lot of congestion at the ports of Los Angeles and Long Beach, but then things were easing up a little bit. But then all of a sudden we observed there was a war,” Christopher Tang, the faculty director for the Center for Global Management at the University of California, Los Angeles Anderson School of Management, said.

“Because of the war in Ukraine the ocean freight is disrupted from the Mediterranean Sea to the Black Sea,” he said.

Other shipping experts worry if the war persists, companies whose ships move around the region face safety concerns.

“If there is not a solution, I think companies will continue making these decisions, especially shipping companies. And they will probably, on their own, stop these services if things don't get any better,” Luis Montes, vice president of Freight Right Global Logistics, said.

“I think there's going to be some delays. Definitely people are thinking about what kind of products and if at all they should be engaging that particular area of the world, because you never know when there may be sanctions coming down on some of the shippers or importers,” he said. Montes said right now he sees more of an impact on air freight – due to parked planes or the inability to fly over Russia.

So what goods will be impacted here in the U.S.?

“We’re already witnessing the exponential increase in the gasoline price,” Tang said. “We will see the shortages of semiconductors continue.”

He expects that shortage to last another year.

“It will create a ripple effect for all the electronic products including electric cars and many other products as well,” he said.

Tang also said to watch out for food supplies. Russia stopped shipping out fertilizers, which they are a major producer of. Ukraine’s wheat exports may be impacted down the line if they aren’t able to plant this spring.

“As a result, we will see that the total supply of food will be reduced. Consequently, we’ll see higher prices, unfortunately,” he said.

Even if things stabilize in Ukraine and Russia, Jessica Alvarenga, who advocates for terminal operators and ocean carriers, said it’s important to remember it will take time before the shipping disruptions subside in the U.S.

“Even once things stabilize and our truckers, our ports, our terminal are able to catch up, it's still going to take a few months at least to be able to get back to the levels we saw a pre-pandemic surge,” Alvarenga, the manager of government affairs for the Pacific Merchant Shipping Association, said.