While much of the focus to date has been
on the near-term impact to the tanker and bulker markets from Russia’s invasion
of the Ukraine, shipowners’ association BIMCO is looking toward the wider
analysis indicating that it sees the potential for sustained spill-over
impacting the global economy and all sectors of the shipping industry.
BIMCO is looking at the impact on consumer
confidence and the global economy
While saying that the full impact of the
war is likely a ways off, BIMCO is looking at the impact on consumer confidence
and the global economy pointing out despite longer-term contracts having
already been set for 2022, that the war will likely lower growth prospects and
be the factor to finally reduce demand after a year and a half surge in volumes
related to the pandemic.
“The National Institute of Economic
Research in the UK has estimated that the war could reduce global GDP growth by
as much as one percentage point,” says Niels Rasmussen, Chief Shipping Analyst
Near-term the obvious impact has been on
shipping from the Black Sea region, where Ukraine and Russia export a broad
range of commodities.
” While none of the commodities are
currently sanctioned, BIMCO believes that the Black Sea exports are at a higher
risk of seeing disruptions due to the lack of shipping companies’ willingness
to serve the area and/or increasing shipping costs.
Further adding to the near-term concerns
is the fact that Russia controls about 10 percent of all seaborne exports of
both crude oil and refined products. BIMCO highlights that the majority of the
oil products are exported from Black Sea ports, while Russia’s coal also comes
from its Pacific ports.
BIMCO reports that
European buyers appear to be shying away from Russian crude oil
While the energy products so far, despite
pressures in the EU and U.S., are not included in the sanctions, BIMCO reports
that European buyers appear to be shying away from Russian crude oil. “It is
being reported that as much as 70 percent of crude exports do not have a buyer despite
being heavily discounted,” says BIMCO while speculating that China could emerge
as a buyer from Russian crude, which would help alleviate some of the current
global supply concerns.
The EU could buy more oil from the Middle East
if China takes up the Russian supply.
Some segments of shipping are likely to
have a less direct impact from the closing of ports and sanctions
may also hurt the shipping industry.
All segments of the industry, however,
are experiencing increased shipping costs due to historically high bunker
prices that will only further add to the inflationary pressure. BIMCO believes
OPEC + sticking to its already planned increases and crude oil price futures
indicate that oil prices will remain above $100 per barrel likely to cause
demand destruction while supply shortages may also hurt the shipping industry.
The slowing growth
could ease congestion in ports
“The impact of the
war on the global economy and consumer confidence,” BIMCO concludes, “may
weaken growth prospects.” While saying that the impact is likely some way off,
BIMCO sees a weakening of growth prospects combined with high prices which it
believes could lead to an earlier “return to normal,” from the current elevated
demand levels. They, however, see one positive, noting that the slowing growth
could ease congestion in ports.