War in Ukraine: short term implications for Forestry / Wood Products Trade

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Fordaq
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Trade with Ukraine has reduced considerably following the imposition of martial law in Ukraine & draft of men. One of the challenges for factories still operating in Western Ukraine is transportation to Europe since Ukrainian truck drivers are not allowed to leave Ukraine. We don't expect any change in this situation till an end of the war.
 
Forestry / Wood exports from Russia are not under sanctions. The main difficulties of wood exporters are linked to payments & transportation. 
  • The banks that are now under sanctions and will be excluded from SWIFT in the next days (Sberbank, VTB, Otkritie, Sovkombank, Promsvyazbank, Novikombank) represent around half of the Russian banking system. Exporters are switching to other banks to solve this problem;
  • The main difficulty facing exporters is logistics. Road & rail transportation is hugely disturbed from Russia to Europe. The alternative route via the Baltic Sea is suffering from a shortage of shipping vessels. Shipping capacity is reported to have halved following the decisions of various shipping lines to stop their activities in Russia. 
EU exports of machinery & furniture to Russia have become challenging:
  • Importers have been switching banks and opening subsidiaries/accounts in other countries such as Kazakhstan 
  • Transportation suffers from the same problems described above;
  • Credit agencies have stopped covering Russia & EU/US export finance agencies and are not working with Russia anymore. 
Trade between China & Russia is being reorganised:
  • Chinese importers doing business with Russia are switching to RMB payments. Chinese banks are expanding their operations in Russia. 
  • Sea transportation is very difficult with Western Russia but Rail & road links are fully operational between the 2 countries and we understand that rail capacity is now fully used with the Russian rail service asking for 1 month advance bookings. 
We are updating this article with new information on a regular basis
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