Russia and Ukraine: How will your business be affected?
24th February 2022
* This article is solely to discuss the effect on trade. The news coming from Kiev this morning will undoubtedly draw in other countries as the situation escalates. This article focuses on the effect this has on trade.
In general, trade between the UK and Ukraine to the year-end of Q2 2021 was £1.6bn in total. Four fifths of this in goods, with imports of:
- Iron and steel (about a quarter of all Ukrainian goods imports to the UK)
- Cereals and grains (22%)
- Vegetable oils and fats (15%)
- Oil-seeds/oleaginous fruits (14%)
- Animal feed (3%).
Key UK exports to Russia are machinery,
- Nuclear reactors, boilers ($743m in 2020)
- Vehicles ($504m in 2020)
- Pharmaceuticals ($293m)
- Electrical & electronic equipment ($153m).
How it affects your Business
Businesses in the South Yorkshire region will inevitably be affected, not only from the supply chain movements for goods coming from Russia and Ukraine, but we must also consider our importing/exporting profiles from the Donetsk and Luhansk areas.
If you have raw material suppliers or customers in these regions you must be prepared for disruption and alter your expectations accordingly. It may be difficult to find alternative suppliers.
We should also expect closure of airspace, which will have a significant impact on the movement of goods and people. Prices for certain raw materials and energy will increase. Russia is the second biggest exporter of crude oil and is also the world's largest natural gas exporter. Since the news broke during the night, the price of oil has increased almost immediately, topping $105 a barrel. The combined effect of increased gas and oil prices, disruption in supply chain movements, restrictions in supplies and tightening of cash flows will undoubtedly affect the flow of business with Europe, Ukraine and possibly the wider Eurasia Economic Union of which Armenia, Belarus, Kazakhstan, Kyrgyzstan are members, along with Russia.
With the introduction of economic sanctions, there is also potential for Russia to introduce higher tariffs or full sanctions on UK exports. This will be challenging for a number of South Yorkshire manufacturers whom we have worked with for several years, ensuring their goods destined for Ukraine and Russia arrive without issues. These combined exports amount to significant value.
Nick Patrick, Head of the International Trade Centre is in constant communication with the British Chambers of Commerce and the relevant government departments. We will be posting regular updates accordingly as this fast moving, fluid situation evolves.
If you are an importer or exporter experiencing problems, or concerned for the stability of your trade, please get in touch: via international@scci.org.uk/ or by calling 0114 213 2991.
Written by Nick Patrick, Head of the Sheffield Chamber’s International Trade Centre and William Bain, Head of Trade Policy at the British Chambers of Commerce.
