After Russia invaded Ukraine, some came to know of a country by that name and lying by the Black Sea and is the breadbasket of Europe. It was once part of the old Soviet Union, made of 15 republics with Russia as the big brother. Beyond the fear that this invasion would cascade into a bigger war, we have noticed how interconnected the supply chains and logistics are.
Planes started taking longer routes to avoid Russian airspace, and trips became more costly, by extension. Once you bought your ticket, you never bothered to know where your plane would fly through. You just got on the plane. Not anymore.
It is not just flights that were interrupted; shipping too. The Black Sea became a theatre of war as Ukraine ports came under attack from Russia. Mariupol, Kherson, Sevastopol, and Azov sea became familiar names.
Beyond media, we felt the effects of the Ukrainian war in our pockets. Russia is one of the world’s biggest oil and gas exporters. As Russians prefer, warfare or special operations in Ukraine reduced the amount of oil from Russia, leading to a hike in prices. The uncertainty over when the war will end add to price raises.
Add the fact that Europe gets 40 percent of her gas from Russia and its winter. With sanctions on Russia, oil and gas are in demand elsewhere, at higher prices!
Remember, new pipelines and oil wells cannot be built overnight. That is why oil hit over 100$ a barrel. That feeds into the cost of transport and logistics.
You may not locate Ukraine on a map, but you will feel it in your pocket. Remember wheat, sunflower oil, and other commodities imported from Ukraine? Their shortage will lead to higher prices. However, some items like wheat are staples.
Some think it’s Kenya’s golden chance to start exporting oil, and it’s more profitable now. But we can’t do that overnight. It takes time to build the infrastructure. It’s an open question of how sustainable is high oil prices as Russia has started withdrawing from Kyiv. But no one can predict the end game of the Russian invasion. Will Ukraine be partitioned?
The Ukraine crisis could force us to adjust our energy mix with more focus on renewables. Nothing illustrates that than wind farms in the North Sea where oil rigs once ruled supreme. Seen them from the plane as you head to Heathrow?
Shall we shift faster to electric cars? What of geothermal, wind, solar, and even more hydro where available? Let’s face a fact, the oil will one day run out, even if not in our lifetime. The world will not stop. Innovation will forestall that. Who thought electric cars would become a reality in our lifetime, charged like our phones?
One area where oil plays a significant role is in the logistics and transport sector, the nervous system of any economy. Bramex occupies that space. It’s not just about oil and gas. There is greater use of ICT like fleet management, optimization using many modes of transport, consolidation, outsourcing, and climatic change.
The Ukraine crisis made it clear that transport and logistics go beyond oil and gas into geopolitics and other human factors. The unpredictability of such factors has made logistics and transport more complex. You need a helping hand to navigate the changing geopolitics and geoeconomics. That helping hand is Bramex.
Just try us.
