How the Russian-Ukraine War Affects U.S. Logistics in 2023

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How the Russian-Ukraine war affects U.S. logistics in 2023

  Nowadays, the Russian invasion in Ukraine has affected all industries and the global economy. If someone is still wondering why the gas prices are higher than ever, we are here to clarify the situation. So let’s start from the very beginning and find out how the war in Central Europe has impacted logistics all around the world and what impact it will have in 2023 which is around the corner.

Stopped Sea Freight

After the invasion, Russia blocked all the ports and ways to the ocean in Ukraine. According to Reuters, in 2021 Ukraine exported about 16,5 million tonnes which made up 16% of the world's corn exports. As the Azov sea was the major way for all ships with goods, like rice and other grain crops, the prices started to raise.

While the shipment and export were stopped, Ukrainian export had 70% with congestion worsening, which leads to a huge lack of no imports and export with a knock-on effect across Europe and the U.S. 

The next impact that affects mostly the global economy more than U.S. logistics is the lack of Ukrainian goods export. This led to the closure of some European ports. Even though in the summer of 2022 both countries signed a resolution that permits some ports in Odesa to work. Right on that day, Russia launched several missiles at Odesa’s ports. Also, it should be considered that some sea routes are still not working because of Russian aggression.

All these factors have a crucial impact on the global economy. 

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U.S. Trucking Impact

Sanctions from the European Union and the U.S. led to the highest fuel price since 2014. As Russia is the second-largest country with natural gas, the price per barrel in the U.S. soar up to $80 in some states. Right after the day when the war started, West Texas Intermediate and Brent Crude futures raised over $100 a barrel.

As a consequence, the services of logistics companies become more costly. Some truck drivers were striking, making the situation even worse. 

Another case was with some American companies that had a chain supply with Ukraine. Some companies as Landstar System Inc in Jacksonville went “offline” because the majority of their connections were with Ukraine. Now it is still operating on someday if there is any huge need for it.

However, there is a light dot in this chaos.

For example, WEZOM helps American logistics companies to save expenses with the TMS app. After the deep briefing, we create a TMS app special for company needs. The TMS app is a great solution to save expenses when working with trucks. With this application, the driver will be able to calculate the path in which the least fuel will be used, as well as see which gas station has the cheapest fuel. Also, this application gives the opportunity to automate many processes in the company, which will also reduce many costs. As an example, there are about 5-6 accountants in the logistics company. TMS app can automize the process of calculating payments and others, so the company can downsize the stuff. 

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Predictions for the next Year

Due to the all aspects mentioned above, there are several predictions that can tell us what will happen with U.S. logistics in 2023.

Less busy but cheaper

Some specialists said that logistics supply would not be less chaotic, but a little cheaper than in previous years. However, the export to the U.S. would be shorter than in 2019.

New strategies due to e-commerce

As people will start to buy more on the internet whether offline (according to Forbes), the delivery and shipment industry will some global changes. The first one is a new strategy that will gain more customers and high-quality delivery and service. The second change is lower delivery prices due to the market competition. The middle price for shipping in the US is about $5,7 now. So it is expected to be lower in the next year. 

The lack of truck drivers

This problem is still popular in 2022 and is predicted not to be solved in 2023. Moreover, some companies said that this would an issue number one in the logistics industry. At this moment, drivers are more likely to find a less stressful job with higher pay and bonuses. The other aspect that makes drivers live their job is a great number of other jobs that need driving skills and are not that hard or stressful. That’s why logistics companies are trying to maintain their current drivers. So long-term relationships with drivers would be a new trend in 2023. 

Machine Learning

Machine learning (ML) is expected to be a new trend in 2023. As logistics companies are trying to optimize all the work processes inside the company to prevent money loss, it is believed that TMS apps and other programs for optimization would be used. Some processes as setting the route and creating the contact for drivers can be easily managed with ML built in TMS for example. I can help with logistics management as well.

According to this, it is highly recommended to start working with your own application for optimization already. 

At this moment, the war in Ukraine is still going on. But there is a high expectation that it will be over in 2023. After the Ukrainian glory, logistics will be the first industry to develop as the country will rebuild its road and chain supply. Thanks to the European investments, the logistics will be reloaded and development in the country will affect the global economy and change some crucial aspects for the better. 

Last Advice

Let’s sum up all the information. 2023 in logistics is expected to be a year of technologies and customer retention. The companies will focus on long-term relationships with other companies and their customers. The tech progress will finally hit this industry and optimize all the processes. The next year's slogan in logistics will be "more does not mean better, but better means high quality”. 

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