From logistics to food, Singapore businesses are feeling squeezed by soaring fuel and supply costs amid Ukraine invasion
SINGAPORE: Businesses in various sectors are facing increasing pressure as Russia’s invasion of Ukraine further disrupts global supply chains and drives up the prices of fuel and key food ingredients.
With Russia being one of the world’s top three oil producers, fears of supply problems have pushed up global oil prices and, consequently, prices at the pump.
The conflict has also sparked fears over global grain production and the supply of edible oil.
Russia and Ukraine together account for more than a quarter of global wheat exports, while Ukraine alone accounts for nearly half of sunflower oil exports. Both are key products used in many food products.
These concerns have sent commodity prices soaring, reflecting the crisis in energy markets. Meanwhile, already strained global supply chains have come under new pressure.
“Not only has the conflict been a source of direct disruption to trade in key commodities…but government policies and sanctions that have been introduced since the start of the conflict have forced carriers to reroute their operations and carry less freight between east and west”. hemispheres,” said a report from Moody’s Analytics this week.
With “no reprieve” in sight for global supply chains, experts added that freight rates, delivery delays and import prices are expected to rise further in the near term.
“IT CAUSED A LOT OF PANIC”
Transport and delivery companies are among those immediately affected, as rising gasoline and diesel prices make every trip on the road more expensive.
Rising fuel costs – up to 30% over the past year – can contribute up to a third of small business operating costs, said Singapore Logistics Association Honorary Treasurer Ken Ngan .
“With continued delays and slower turnaround times at ports of entry, carriers are incurring higher costs, having to plan more trips to fulfill orders in a timely manner,” he added. .
Air and ocean freight rates are also expected to increase, with fuel surcharges, such as the Ocean Cargo Bunker Adjustment Factor and Air Cargo Fuel Adjustment Factor, likely to increase accordingly with recent oil price increases.
It is also likely that ocean liners and airlines will charge higher insurance premiums for war risk factors, Ngan told CNA.
“The recent spike in fuel and electricity costs due to the Russian-Ukrainian conflict is aggravating the difficult operating environment for logistics companies, and the logistics industry expects operating costs to continue to decline. ‘rise sharply in the short term,’ he said.