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What did the conflict between Russia and Ukraine cause in the logistics chain and what is the current situation?

What did the conflict between Russia and Ukraine cause in the logistics chain and what is the current situation?
15/06/2022 zweiarts

The world is separated between the most buying and the most selling countries. Brazil is a more importing country, while China and the United States are exporters. What is happening with China comes from before the 2020 pandemic, but there was a flow that worked, from production, shipping, and transport, which had their weekly routes. In the pre-pandemic, the ship arrived at the Port of Santos every Wednesday at noon, coming from Asia, and left at midnight, so the punctuality level was around 93%. The largest point of entry into the United States was Los Angeles, because the ship left China and traveled through the Pacific. Nowadays he leaves Shanghai and arrives in Los Angeles in 12 days. The “Just in time” used to work.

China stopped for 40 days, so it didn’t produce any more, and what it had in supply, worldwide, was consumed. Inventories disappeared with this stop and after these days, China started to produce and fill containers to deliver purchase orders, but in the process, buyers stopped. The cargo was blocked in the ports, causing the transport, which has its schedule counted, lose the rhythm.

Afraid of losing stocks, buyers started to increase their size, but the governments, which stayed about four months with the economy stopped, provided benefits to encourage the turnover of the economy, lowering prices and taxes so that the industry could resume its activities.

EXCHANGE 

The exchange rate has been having problems not only because of the war, but also because of politics, since the interest held it, but this is no longer seen as much of a problem. There are greater concerns, after all Russia is a major supplier of energy and 40% of the gas consumed by Europe comes from it.

GROUND TRANSPORTATION

The planes were in the wrong places, the schedule of ships blew up, the ports with the COVID restriction were also unproductive and overcrowded. The best way out was to resort to trucks, but there were no professionals due to the high demand.

With England leaving the Eurozone, there were difficulties with the lack of thousands of drivers. All these problems meant that nothing returned to normal. When Europe started to take a breather, many countries were hopeful that the flow would return, but only at the beginning of this year was a possible improvement observed, and in a different way.

AIR TRANSPORT

Just like ships, planes are not leaving China. Most of the cargo is transported on commercial (passenger) planes, as airlines provide space for these products to be taken to a certain location and, with the resumption of the virus, this form of transport was harmed, both to make its route , as well as with excess load.

In the standard operation, the Federal Revenue will impact the cargo that is already in Brazil, because those that are not yet, are unable to arrive. If the supplier gets a ship to ship the cargo, there is overcrowding in the ports. That’s why you need to know everything that’s going on.

There are several obscure factors that generated the current war and nobody knows. If it crosses these two countries, it becomes a global risk. This is because, currently, what the conflict really impacts on the world economy is the value of fuel, due to the need to supply planes, making its value increase.

SEA TRANSPORT

Regarding the organization of ships, Ukraine’s war with Russia does not affect the logistics chain much, as the Black Sea does not have a great impact on world freight transport. Cargo destined for these two countries were boycotted and stopped at European ports with a delivery ban, but only in these regions.

WHAT TO DO TO AVOID THE IMPACT ON YOUR BUSINESS?

A new wave of COVID in and around Shanghai has caused everything to close again, including the ports, which have approximately 320 ships docked. There are almost 3 million containers stopped and the world situation can get worse, as the logistics chain is being directly affected, with a lack of input, factories in need of products and many other problems.

For customers, it’s important to know what’s going on at the source locations, with an extra 60 days of delay if you don’t find new sources, in places that have better access. It is ideal to regionalize, because the closer, the better, both for the transport of cargo and for logistical costs.

It is essential that an importer, or company, that deals with foreign trade, assumes its logistics chain, and also has specialized people who know what is happening in the world to guide correctly, showing the risks of undelivered goods. There is a great chance of facing problems with loss of goods and profits, after all, it will be difficult months, both for imports and for exports.