Tankers logistics to be hit; shipping, transport costs up: Allcargo Logistics
CNBC-TV18 spoke to Ravi Jakhar, Chief Strategy Officer, Allcargo Logistics, to understand how the geopolitical tensions between Russia and Ukraine could impact the global supply chain. Jakhar pointed out that dry bulk and tanker logisitics could face more disruptions. He also mentioned that shipping and transport costs have increased for companies in the industry.
The Russia-Ukraine war has had its fair share of impact on businesses, especially on the logistics sector. To understand how the geopolitical tensions between the two countries could impact the global supply chain, CNBC-TV18 spoke to Ravi Jakhar, Chief Strategy Officer, Allcargo Logistics.
According to Jakhar, there are going to be a couple of factors that will have an impact as far as the Russia-Ukraine crisis is concerned. He explained that the movements in the Black Sea will be constrained and that will disrupt dry bulk and tanker logistics even more. He further elaborated that shipping costs and transport costs have been impacted heavily as well.
Jakhar said, "If you look at the Russia-Ukraine crisis, there are two or three key things that are going to create an impact. One, the movement in the Black Sea will be constrained. However, if you look at the kind of shipping which goes through that, that is largely dry bulk and tanker. We believe that there will be more disruptions to dry bulk and tankers, the two sectors that we as a company will not participate in as compared to container logistics."
He added, "Secondly, the chances that there could be a complete ban on Russian oil and that's leading to a significant spike in the Brent crude prices and everything is linked so marine bunker fuel prices are also going up. So because of that, naturally, there is a pressure on the shipping costs, and also on the domestic side- on the transport costs as well."
He also explained that ocean freight is a pass-through for the company and hence the rising costs may not prove to be too much of a worry for the company. Additionally, he said that container inventory will remain constrained.
He said, “As far as we as a company are concerned, we do not have any offices in Russia or Ukraine. So we do not play in that sector so the impact is marginal.”
On higher crude prices and its impact on business, Jakhar said, "We operate the world's largest LCL consolidation network, where ocean freight is almost like a pass-through cost for us. So it does lead to a marginal increment in the cost side, but that kind of gets passed on to the end customers. So from our perspective, it does not really impact our margins in that sense."
Watch the video for the full interview.
First Published: Mar 7, 2022 11:13 AM IST
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