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Mar 03,2022

Shipping companies may impose emergency fuel surcharges, and ocean freight prices will rise

Since the escalation of the situation between Russia and Ukraine, the passage of merchant ships in many glasses of water near the two countries has been affected, and the aviation industry has also been hit hard. Since Russia and Uzbekistan mainly export commodities such as energy and grain, the related international oil prices have also soared. Crude prices surged to their highest level since 2014, above $105 a barrel, and analysts expect $130 in a few weeks. This will lead to higher ocean freight prices.


There were numerous reports that traders were reluctant to buy Russian stocks. Whether it's because of fear of punishment for trading Russian products or because it's difficult to do business with Russian banks, a word has popped up in online discussions: "self-sanction."


ocean freight prices will rise


Russian oil is difficult to circulate due to the impact of self-sanctions or financial sanctions and could lose a considerable share of oil in the world market, which is a key factor driving oil prices.


At the same time, the phenomenon of "oil grabbing" appeared again, and the freight rates of small and medium-sized oil tankers represented by the common Suezmax and Aframax tankers in the Black Sea region rose more than five times a day.


According to the BBC, the president of the European Commission announced that the European Union has imposed a blanket flight ban on Russian aircraft. "We are closing EU airspace to Russian-owned, Russian-registered, or Russian-controlled aircraft," she said. All such aircraft, including private jets, will now be unable to land, take off or fly over any EU country.

At present, countries including Germany, the United Kingdom, the Czech Republic, Poland, Romania, Lithuania, Latvia, Estonia, Bulgaria, and Slovenia have successively banned Russian aircraft from entering their airspace. Affected by this incident, the European air freight prices in the involved regions began to skyrocket. 


In addition to the risk of airspace closures, when cargo planes have to avoid Russian airspace, it will lead to longer flight times, and soaring oil prices have also hit airlines. The international crude oil price once exceeded US$100 per barrel, which will further increase the operating costs of airlines.