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Russia’s war in Ukraine has distorted global trade routes
bne IntelliNews
Russia’s invasion of Ukraine and related sanctions have distorted trade routes across Europe and Asia. Ukraine was forced to find new export routes for
its grain after its Black Sea ports were blockaded. China and other Far Eastern exporters that previously sent goods via Russia’s railways to Europe are looking for alternative routes not compromised by sanctions. European countries are importing gas from Azerbaijan and North Africa, and liquefied natural gas (LNG) from the US, as they seek to fully free themselves from dependence on Russia.
For Russia itself, sanctions have necessitated finding new sources of imports, especially those critical for its manufacturing industries, as well as a pivot to Asia, in particular China, after European sanctions restricted its Westward oil and gas exports.
Ukraine finds new grain export routes
Right at the start of the invasion, alongside the movement of troops overland into Ukraine, Russia dispatched its navy to blockade Odesa and other Ukrainian Black Sea ports. That prevented the transport of grain from Ukraine, in normal years one of the world’s top grain exporters, not only restricting Ukraine’s ability to earn export revenues but also sparking fears of food shortages, especially in the Middle East and North Africa.
Sympathetic to Ukraine’s plight, friendly nations in Central and Southeast Europe were quick to offer their own ports to get Ukraine’s grain to international markets, a lifeline for Kyiv until the Black Sea Grain Initiative that allowed maritime exports was brokered by Turkey and the UN.
By last summer it was reported that the flow of merchandise through Romania’s Port of Constanta had tripled since the war in Ukraine started. Steps taken to facilitate exports from Ukraine included repairing a railway line compatible with the wider-gauge trains used in Moldova and Ukraine from the Moldovan port of Giurgiulesti to the Romanian port
of Galati on the Danube. That has meant freight trains coming from Ukraine through Moldova no longer have to be reloaded at the border between Moldova and Romania.
However, while the Romanian government sought to help Ukraine’s exporters access international markets, local exporters complained that opening Romanian ports to Ukrainian companies was causing problems for them, by putting pressure on the capacity of the ports. In mid-2022, trucks were reportedly waiting in queues of over 30 km to unload their containers at Constanta.
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Further north there were also reports of trucks backed up for miles at border checkpoints between Ukraine and Poland and other Central European countries. In response, Poland doubled the number of access points for trucks on its border with Ukraine in June. Michal Dworczyk, the Polish prime minister’s chief of staff, told a press conference in June this was intended both to help Ukraine and to benefit Poland
by increasing transit trade. New rail terminals have also been added.
Road freight transportation between Slovakia and Ukraine used to be modest, as the two countries have only a short shared border with a small number of crossings. “The Russian aggression in Ukraine caused a significant increase in the transported volumes and a change in the composition of traded categories,” says a recent comment from think-tank
“The Russian aggression in Ukraine caused a significant increase in the transported volumes and a change in the composition of traded categories”
GlobSec. “As the threat of attack from the east continues to loom and Ukraine becomes more integrated with the European market, the exchange of goods between Slovakia and Ukraine will continue to grow.” Now Slovakia wants to build a motorway connection with Ukraine in anticipation of future trade.
Meanwhile, the EU is building up the Paths of Solidarity initiative, which has allowed the export of 15mn tonnes of agricultural products as well as non-agricultural Ukrainian goods, and enabled the war-torn country to import what it needs, such as fuel and humanitarian assistance. The European Commission has described the initiative as “the lifeline of Ukraine’s economy”, bringing in more than €15bn of much- needed income to Ukrainian farmers and businesses.
Russia turns East
Russia’s trade has shifted dramatically Eastwards after Western countries imposed sanctions.
Amid confusion over the impact of sanctions, trade with China briefly dipped in the spring, but has since rapidly