War in Ukraine will trigger product shortages and soaring costs, UK businesses told

UK firms will feel the impact of war in Ukraine even if they have no business in Eastern Europe, with rising diesel prices and a shortage of food and industrial products squeezing bottom lines, according to ParcelHero.

With freight transport services to the stricken country unsurprisingly at a virtual stop and services to Russia suspended, the parcel company said the cost of the conflict will soon come to bear on UK businesses.

And it said that looking beyond the immediate logistical problems for deliveries, there will be an increase in costs in Britain due in large part to spiralling fuel costs – the RAC said this week diesel was already 154.72p per litre.

David Jinks, ParcelHero head of consumer research, said: “Food retailers are likely to see an increase in prices.

“The Russia-Ukraine plains were once called ‘the breadbasket of Europe’. The area exports about a quarter of the world’s wheat and half of its sunflower products, such as seeds and oil.

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“In addition, Ukraine sells a lot of corn globally. Some analysts are predicting a doubling of global wheat prices.

“Ukraine has a very large heavy-industry base and is one of the largest refiners of metallurgical products in Eastern Europe,” Jinks continued.

“It’s also well-known for its production of high-tech goods and transport products, such as aircraft.

“There are five industries where the share of Russian exports to the EU is significant: textiles, pharmaceuticals, electrical equipment, machinery and transport equipment.

“Supply chains and costs could be impacted in all these sectors,” he added.

Supply chain visibility platform FourKites said that as well as seeing rates “skyrocket” for ocean and air freight as TEUs transported from China to the EU by rail are shifted to other modes, shippers, 3PLs and freight forwarders are now in crisis mode: “Although we’re in a slower season right now, companies are ramping up for summer volume and that’s going to have a major impact on our supply chain,” said Glenn Koepke, FourKites senior vice president.