Top shipping companies are suspending bookings to and from Russia

Russia is becoming increasingly isolated from the rest of the globe as the world’s three biggest container shipping companies announced that they will be suspending cargo deliveries to and from the country as a result of sanctions imposed against them for invading Ukraine.

Shipping giant Maersk announced that it will be suspending all bookings to and from Russia except for food, medical and humanitarian supplies. In a statement, the company noted: “We are deeply concerned by how the crisis keeps escalating in Ukraine.”

They added that the stability and safety of their operations have already been impacted by sanctions. Maersk said it has been “seeing the effect on global supply chain flows such as delays, detention of cargo by customs authorities across various transshipment hubs, unpredictable operational impacts.” They have also been unable to make or receive payments to and from sanctioned Russian banks and other sanctioned parties.

The company operates container shipping routes to Kaliningrad and St. Petersburg in the Baltic Sea, along with Vladivostok and Vostochny on Russia’s east coast and Novorossiysk in the Black Sea. Last week, they temporarily stopped port calls in Ukraine, where they have around 60 employees in Odessa. They have around 500 employees in Russia.

Copenhagen-based Maersk, which has been active in Russia since 1992, owns a 31 percent stake in Russian port operator Global Ports, who runs six terminals in Russia along with two in Finland. Global Ports shareholders also include Russian businessman Sergey Shiskarev and Russian state nuclear company Rosatom.

At the same time, the biggest container shipping company by capacity in the world, Mediterranean Shipping Company, announced that it will also stop cargo bookings to and from Russia covering all access areas. This includes Far East Russia, the Black Sea and the Baltics. MSC had previously introduced a temporary stoppage to cargo bookings to and from the country.

However, the Swiss-owned container shipping line added: “MSC will continue to accept and screen bookings for delivery of essential goods such as food, medical equipment and humanitarian goods.”

The company said that it will be contacting customers directly regarding Russia-related cargo that is currently in transit and will be monitoring governmental advice related to any new sanctions that are issued.

Similar decisions have already been made by Germany’s Hapag Lloyd, France’s CMA CGM and Singapore’s Ocean Network Express. This means Russia is now effectively cut off from top global container shipping companies and adds to the existing freight challenges that have been leading to supply chain problems throughout the world.

Container shipping companies play a vital role in global trade, carrying most of the manufactured goods made in the world today. This means that Russia will now be excluded from a significant proportion of the world’s shipping capacity.

Escalating conflict and severe sanctions will have a long-term impact on the shipping industry

The news comes as Russia continues to intensify its onslaught of major Ukrainian cities. Fighting is ongoing in the country’s north, east and south, with the UN reporting that a million refugees have now fled to nearby countries.

Experts believe that the escalating conflict and the severe nature of Russian sanctions will continue to impact the shipping industry for a long time. Although halting sailings has not been required by the sanctions placed by Western nations on Russia in response to its Ukraine invasion so far, it is another sign that many businesses are choosing to cut ties with the country, which is certain to add to Russia’s economic woes.

Sources for this article include:

ZeroHedge.com

CNBC.com