Regarding Ukraine: The Impact on Customs, Logistics, and Supply Chain Operations
Russia’s military invasion of Ukraine impacts world trade and supply chains across the globe. What’s happening in Ukraine is a tragedy for civilians, and our thoughts are with all those affected by this situation. The impact on citizens in the region is enormous. That said, we want to report on the effects of the situation in Russia and Ukraine on supply chain and logistics operations in Europe.
The EU has announced sanctions against Russia:
The EU will prohibit the sale, supply, transfer or export to Russia of specific goods and technologies in oil refining, and will introduce restrictions on the provision of related services.
The EU introduced an export ban covering goods and technology in the aviation and space industry, as well as a prohibition on the provision of insurance and reinsurance and maintenance services related to those goods and technology. The EU will also prohibit the provision of related technical and financial assistance.
The EU imposed further restrictions on exports of dual-use goods and technology, as well as restrictions on exports of certain goods and technology which might contribute to Russia’s technological enhancement of its defence and security sector.
This will include products such as semiconductors or cutting-edge technologies.
The European Union is actively enforcing these sanctions. The BBC reports that the French Navy has seized a Russian ship suspected of carrying embargoed goods.
Impact on Customs
From a customs point of view, the main issues are related to the sanctions imposed by the European Union, the United States and other countries on Russia.
The primary sanctions against Russia impact dual-use goods, defence-related goods, and goods and materials related to energy. Until these sanctions are lifted and because we are subject to laws and regulations, Customs Support can not process any shipments to Russia for goods falling in these categories.
This also counts for goods with another destination, but that may have Russia as their final destination. Indirect logistical flows are also subject to the sanctions mentioned above. For transit goods, it is necessary to ensure that Customs Authorities in the destination country can close the Transit before Customs brokers like Customs Support can process it.
Impact on Logistics and Transportation
Waiting times at the Ukrainian borders with EU-member states are increasing. The same goes for the borders between Russia and various EU-member states, Estonia, Latvia and Lithuania.
Road: The border between Ukraine and Russia and Ukraine and Belarus are closed. Road transportation in the region will further be impacted by more stringent border controls and heavy traffic coming out of Ukraine. Transport companies will also be affected by rising costs for fuel.
Sea: Similar to road shipments, increased border controls and other measures can also impact transport via sea routes, limiting the traffic in Ukrainian and Russian waters. Next to this, seaports in Ukraine are closed and damaged. No international shipping is possible to Ukraine.
Air: Companies shipping via air freight may also be impacted by closed air space in Ukraine and Russia. Ukrainian and Russian airspace is closed, affecting specific air freight destinations.
Rail: Rail freight traffic through Russia will also be impacted by sanctions and border patrols.
Impact on Supply Chains
The export of fruits and vegetables to the Ukraine and Russia has stopped. Many exporters have halted their shipments. This impacts both companies that sell fruits and vegetables grown in Europe and those using EU ports for transit.
The situation in Ukraine will impact many supply chains across the world. Fuel and gas prices and costs for other commodities are rising. For some parts or products, availability may become a problem in the supply chain. The fact that goods can no longer flow across Russia without issue will also cause delays.
Another potential impact is on digital services. Cyber security experts already see disruptive cyberattacks on Ukrainian companies and organisations. These attacks may not be limited to Ukraine. Companies like American logistics service provider Expeditors have been reported under cyber attack. With supply chains heavily reliant on digital systems, these attacks can cause significant supply chain disruptions.
We will keep you posted on further developments, especially when it comes to those impacting customs and the flow of goods.