The report pointed out that the obstacles to shipping and transportation in the Black Sea region are mainly due to the disruption of regional logistics, the shutdown of Ukrainian port operations, the damage of important infrastructure, trade restrictions, increased insurance costs and rising fuel prices. This situation makes the movement of grains of particular concern, given the dominance of both Russia and Ukraine in the agri-food market and the link between grains and food security and poverty reduction.
Shipping Costs And Fool Prices Soar
In fact, grain prices and the cost of transporting them have been rising since 2020, but the war in Ukraine exacerbated the trend, while also bringing an end to a brief decline in shipping prices. According to the report, from February to May 2022, the transportation price of dry bulk cargo such as grains has increased by nearly 60%, and the resulting increase in food prices will lead to a 3.7% increase in global consumer food prices.
Rising Energy Prices Add to Shipping Sector Challenges
Russia is also a major oil and gas exporter. The report said that the cost of oil and gas was "increasing all boats" as some importing countries began to seek more distant alternative sources of supply as the country was affected by trade restrictions and logistical challenges.
Daily freight rates for small tankers crucial to regional oil trading in the Black Sea, Baltic and Mediterranean have risen sharply. Higher energy costs also lead to higher bunker prices at sea, raising shipping costs across all maritime sectors.
According to the report, as of the end of May 2022, the global average price of very low sulfur fuel oil has increased by 64% since the beginning of the year.
Policy Actions to Keep Global Trade Flowing
UNCTAD has called for urgent action to open Ukraine's ports to international shipping so the country's grain can reach overseas markets at lower transport costs. The group said flag states, port states and other players in the shipping industry needed to continue to collaborate to maintain all essential services, including ship bunkering, crew health services and regulatory compliance certification, which would help keep costs down.
UNCTAD also stated that alternative modes of transport must be sought, and even a temporary relaxation of the conditions for the movement of transit and transport workers can reduce the pressure on cross-border trade and transit.
In addition, UNCTAD called for more investment in transport services and trade and transit facilitation, and more international support for developing countries, especially the most vulnerable economies.