Ukraine war’s impact on trade and development

Published on 17/03/2022
Karel Novak

The report of UNCTAD shows heightened financial volatility, sustainable development divestment, complex global supply chain reconfigurations and mounting trade costs.

Ukraine war’s impact on trade and development
credit by PhotographyLke

Freight rate hikes

Restrictive measures on airspace, contractor uncertainty and security concerns are complicating all trade routes going through Russia and Ukraine. The two countries are a key geographical component of the Eurasian Land Bridge.

In 2021, 1.5 million containers of cargo were shipped by rail west from China to Europe. If the volumes currently going by container rail were added to the Asia-Europe ocean freight demand, this would mean a 5% to 8% increase in an already congested trade route.

"On top of this, already expensive and overstretched maritime trade will find it difficult to replace these suddenly unviable land and air routes," the report says. "The impact of the war in Ukraine can be expected to lead to even higher freight rates.”

Such increases, it says, would have a significant impact on economies and households.

In 2021, UNCTAD simulated that the freight rate increase during the pandemic raised global consumer prices by 1.5%, “with particularly oversized effects in vulnerable economies such as small island developing states, landlocked developing states and least developed countries”.

credit by Al3xanderD
credit by Al3xanderD

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