by Freedonia Industry Studies
March 8, 2022
So you think your business won’t be impacted by the fighting in Ukraine and accompanying sanctions on Russia? Maybe…
But do any of these statements sound familiar?
“I don’t source my wheat from Russia.”
Other companies do and substitutes for Ukrainian and Russian wheat have to come from somewhere.
Global food processors that typically source from Ukraine and Russia might approach US farmers and processors to get what they need. Result: rising prices for wheat worldwide.
“We’ll transition to electric vehicles as a way around Russian oil and rising gas prices.”
That might a good long-term strategy to become less dependent on oil in general, and many companies are making moves in that direction with stated goals to convert their fleet.
But that won’t necessarily help if you’re in Europe, where your electricity might still be generated by Russian natural gas.
It also might not be much near term help if you can’t get access to a hybrid or electric vehicle to replace your conventional gas-powered vehicle. Semiconductor chip shortages and supply challenges in accessing parts of all stripes are still leaving car dealers and medium- and heavy-duty vehicle vendors with reduced inventory and potentially long wait times.
“I source from Eastern Asia & the EU, not Russia.”
Closures of ports and changes in air space regulations and allowances might slow the international flow of goods, even if they don’t actually come from Russia. Russia is a very large country, so any shipping routes (air, land, or sea) that need to go around Russia or its ports could take longer and require more fuel. Result: potentially more time to ship and rising shipping costs in an era already challenged by high shipping costs and long lead times.
Freedonia analysts will continue to watch changes in sanctions and economic losses (crops, industrial and transportation infrastructure, worker productivity) as well as both the direct and indirect effects leading to price changes or opportunities to supply goods and services into new markets.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.