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Is Namport affected by the war between Ukraine and Russia?

Is Namport affected by the war between Ukraine and Russia?

By Namport

The rise in geopolitical tensions between Ukraine and Russia is one of many reasons stock market instability and flattening yield curves across developed markets are occurring.

Foreign investors are worried about a potential new “Cold War” and are trying to hedge against the subsequent economic, financial and political aftermath. Global commodity markets are on edge as a result of the situation between Ukraine and Russia. Crude oil prices are approaching N$1,511.03 (US$100.00) per barrel.

As if this is not bad enough, the war might halt the manufacturing and export of a wide range of other goods. All of this is projected to have a significant impact on global economies and fuel inflation, which is already rising in many nations.

While the situation remains highly fluid and the outlook is subject to extraordinary uncertainty, the economic consequences are already very serious. Energy and commodity prices, including wheat and other grains, have surged, adding to inflationary pressures from supply chain disruptions and the rebound from the Covid 19 pandemic.

Price shocks will have an impact worldwide, especially on poor households for whom food and fuel are a higher proportion of expenses. Namibia can expect to see higher prices for bread, corn, baking flours, honey, beverages in aluminium cans, cheese, cooking oils and many other products.

In 2021, food and non-alcoholic beverages accounted for about 20% of inflation (the second biggest contributor). Should the conflict escalate, the economic damage would be even more devastating.

The sanctions on Russia will also have a substantial impact on the global economy and financial markets, with significant spillovers to other countries. Imports of wheat, ammonium nitrate and poultry originating from Russia will undoubtedly be impacted negatively, as importers are now sourcing from alternative or new suppliers.

Namport handles the following commodities originating and exported from Russia and Ukraine:

1) Wheat – Few Namibian companies no longer source from Russia and are now pursuing new suppliers in Europe, namely Latvia and Germany, as alternative sources. We are informed that negotiations with these suppliers are at an advanced stage.

2) Ammonium Nitrate (AN) – Namibian companies importing AN, originating from Russia, are now sourcing from Latvia. The next import shipment of 3,500 tons is expected to arrive at the Port of Walvis Bay on 20 May 2022.

3) Poultry – Zambia and the Democratic Republic of Congo (DRC) are the main consumers of poultry imported via the Port of Walvis Bay, which is mainly sourced from MHP, the largest frozen warehouse in Ukraine, which was recently bombed and destroyed by Russian shellings and from Genetic Resources based in Russia. Poultry will now mainly be sourced and imported from the USA, Turkey and Canada.

4) Sulphur – Zambia and the DRC imports are predominantly sourced from Kazakhstan, but loaded in the Russian Port of Ust-Luga. There is currently no indication that Sulphur imports originating from Kazakhstan will be negatively impacted by the sanctions on Russia and we are informed that there is currently a vessel waiting outside Russia’s Port of Ust-Luga to load Sulphur, whereby 15,000 tons is to be discharged at the Port of Walvis Bay. Some local mines predominantly source Sulphur from the United Arabs Emirates.

With the above interventions for sourcing wheat, ammonium nitrate and poultry from new suppliers and the uninterrupted exports of Sulphur from Kazakhstan via Russia’s Ust-Luga port, no immediate negative impacts on imports is expected and hence no need to panic at this stage.

Nonetheless, the risk of a more severe outcome remains possible over the longer term. The rising fuel costs, however, have a direct impact on Namport’s cost of doing business, and also affects the competitiveness of Namibia’s transport corridors. (Namport Quayside Bulletin – March 2022).


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