War in Ukraine puts shipping’s recovery in jeopardy
Bloomberg March 10, 2022
Russia’s ongoing invasion of Ukraine has the shipping industry bracing for new shocks to its labor force, which relies on experienced crew from both countries.
Ukrainian and Russian seafarers make up nearly 15% of the industry’s 1.9 million seafarers and a high proportion of its officers and ranked crew. Now Ukraine has conscripted men under 60 and forbidden them to leave the country, while some of those who are on board already have asked to go home to fight or reunite with their families. Flight bans have made it hard for Russian seafarers to get to their ships or to return home, and are interfering with crew rotations.
Fears over the safety of crews and soaring insurance premiums are discouraging ship owners from sending vessels to Ukraine or Russia, according to the International Chamber of Shipping. Trade flows of goods from wheat to crude oil are expected to face disruption, it said in an e-mailed statement.
Meanwhile, global sanctions against Russia and limited access to hard currency have made it difficult for seafarers to collect the wages they’re owed or to send money home to family.
“The combined effect of Covid and the war is a disaster for shipping,” said Columbia Shipmanagement chief executive officer Mark O’Neil. “The restrictions on Russian and Ukrainian seafarers caused by the war, combined with Covid disruption, will wreak havoc on supply chains as well as driving seafarer wages ever higher.”
Nearly all of the world’s economies have seen a drop in international trade as a result of disruptions triggered by the war, according to the Kiel Institute for the World Economy. The impact on shipping, one of the world’s oldest industries, was almost immediate after the invasion started.
At least five commercial vessels have been damaged by explosions off Ukraine’s coast. At least one seafarer died, and the Panamanian-flagged cargo ship Helt sank last week outside the port of Odesa after an explosion. More than 140 ships with more than 1,000 seafarers on board have been trapped in Ukraine waters since the Russian invasion began. The nearby ports are closed, and ships aren’t leaving out of fear they’ll be hit by missiles or underwater mines in the Black Sea.
Some ship managers are advising Ukrainian crew to remain on board, saying it’s dangerous to return, and some workers have asked to extend their contracts rather than return to the conflict zone. Many seafarers live in Kherson or Mariupol, southern cities that are now under heavy Russian attack, said Kuba Szymanski, secretary general of InterManager which represents ship managers. Those who wish to return home are often taken to nearby European countries such as Poland and Romania to reunite with families or wait it out, he said.
Most of the crew on board ships for BBC Chartering, a shipper based in Germany, are Russian or Ukrainian. Now the company is concerned a high number of its Ukrainian crew want to get home to families, and any potential replacements in Russia can’t fly out of the country.
“We carry heavy-lift cargo, so there’s a question of who is going to replace these crew members,” said Denis Bandura, a managing director for the firm’s Mideast unit. “The knowledge of lifting and storage of the cargoes comes from Russian and Ukrainian crews.”
The crewing challenges are manageable for now, with some shipping companies sending Russians seafarers to the Middle East where Russian flights can still land. A.P. Moller-Maersk, said it’s stopped crew changes in Ukraine due to security concerns and has set up Ukrainian mariners who were returning home temporary in Poland.
There’s also the problem, for workers, of getting paid. Most Ukrainians banks have imposed limits on daily withdrawals of cash to protect from a run on banks, and many of the Russian financial institutions that process seafarers’ pay have been sanctioned. In the meanwhile, seafarers are getting paid in cash or having their salaries transferred to debit cards or credit cards, which will likely be hit with sanctions soon too.
And on board vessels, tensions are rising. Columbia’s O’Neil said it has told crew not discuss the war on board. He’s also sent regular videos to seafarers to encourage solidarity, empathy and respect.
“Russian seafarers also feel villainized by many,” said O’Neil, who estimates there are about 600 Russians and 800 Ukrainians aboard its managed vessels at any one time. “Tensions on board vessels with mixed Russian and Ukrainian crews inevitably run high.”
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Bloomberg’s Jack Wittels and Clara Hernanz Lizarraga contributed to this report.