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Shanghai lockdown exposes global supply chain strains



In early March truck drivers at Suto Logistics were ferrying 1,000 tonnes of goods every day in and out of Shanghai, China’s most important economic hub and the world’s busiest port. By the end of April, five weeks after local authorities had forced factories to close and residents to isolate in their homes, just one or two trucks were being dispatched daily, according to the company. And even they were no longer delivering their usual cargo of industrial materials, but “livelihood supplies” — groceries to sustain the city’s 26mn residents in their enforced isolation.

Suto is not alone in feeling the shock of Shanghai’s sudden lockdown, as authorities raced to contain an outbreak of the highly infectious coronavirus variant Omicron. The repercussions have rippled across the globe, with multinationals from Apple, Tesla and General Electric, to Amazon, Adidas and Estée Lauder warning of disruption to their supply chains due to the lockdown of a city that handles 20 per cent of China’s international trade.

Those warnings are likely to intensify if China digs its heels in and continues to pursue a zero-Covid policy that has left millions of workers across the country confined to their homes. President Xi Jinping, architect of the controversial policy, has vowed to crack down on criticism of it despite signs that the zero-Covid approach is damaging the economy.

Concern has been building since the port city of Shenzhen was closed briefly in March and Shanghai went into lockdown at the end of that month. Authorities have now imposed restrictions on Beijing, while the central Chinese city of Zhengzhou, a gateway for air freight, also limited the movement of people in May.

The rolling lockdowns are raising alarm bells at businesses that rely on raw materials, goods and components from China — home to seven of the world’s 10 biggest container ports, including Ningbo, Shenzhen and Guangzhou.

Near-empty roads during a lockdown due to Covid-19 in Shanghai in April
Near-empty roads during a lockdown due to Covid-19 in Shanghai in April. The city has lost roughly 45 per cent of its trucking capacity since the end of March © Bloomberg

“In 2022 China is closing down again,” says Marie-Christine Lombard, chief executive of Geodis, the global transport and logistics provider owned by SNCF of France. “Our customers’ plants [in China] cannot work, their products cannot be produced. So it is pretty bad [ . . . ] first Shenzhen, then Shanghai and now Beijing. That creates anxiety in the minds of our customers.” 

Joerg Wuttke, president of the EU Chamber of Commerce in China that represents about 1,000 businesses in the country, recently warned of “shortages on shelves in Europe at some stage [ . . .] we never had this kind of uncertainty before,” he said in early May. “It gets worse week by week. We don’t know [ . . .] where [restrictions] will pop up.”

Such disruptions to the global supply chain threaten to stoke the inflationary pressures exacerbated by Russia’s war on Ukraine. At the height of the upheaval caused by Covid-19 in 2020/2021, the rates paid for ocean and air freight soared to new highs. For example, rates for 40ft containers on routes from Shanghai to the west coast of the US nearly doubled during 2021 from $4,018 to $7,681, according to Shipping Intelligence Network. The IMF estimates that global freight increases alone added 1.5 percentage points to this year’s inflation forecasts.

Many in the transport and logistics sector remain hopeful that the worst can be avoided. But they are also aware that when China’s factories return to normal and sea freight starts moving again there is a risk that some European and US ports, plus infrastructure including land transport and warehousing, could be overwhelmed, adding more pressure to an already stretched global supply chain.

“We definitely see cargo still finding its way to Rotterdam,” says Hans Nagtegaal, director of containers at Europe’s biggest port. But “it’s becoming a little more complicated than normal. It tells me we are not out of the storm.” 

‘We cannot find lorry drivers’

Chinese authorities, conscious of the country’s key role in the supply chain, have kept ports open, requiring workers to live on site in a so-called “closed-loop system”. Additionally, some cargo is being diverted to other Chinese ports such as Ningbo, 200km south of Shanghai, to allow shipments to continue.

Gene Seroka, executive director of the Port of Los Angeles, said at the start of May that those initiatives had helped to keep goods flowing. “Although conditions could change. I don’t see a bust coming anytime soon,” he told reporters. “The authorities in China, the port director himself, [are] making sure that transpacific trade and cargo specifically coming here to Southern California [are] prioritised.”

During the pandemic, soaring consumer appetite created serious disruption for a logistics chain based on just-in-time delivery, with little elasticity for unexpected demand. The Asia-to-US trade lane was all of a sudden “growing at double-digit volumes”, says Lombard of Geodis, “but there are only so many vessels.”

Technicians make microchips for export at a workshop in Sihong Economic Development Zone in Jiangsu province
Technicians make microchips for export at a workshop in Sihong Economic Development Zone in Jiangsu province. Not only have factories shut, but China’s patchwork system of regulations governing movement between towns and cities is making collection and delivery of cargo almost impossible © CFOTO/Future Publishing/Getty Images

On the surface the current crisis might look like a rerun of the upheavals of 2020, which left the world short of everything from cars to bicycles. But in 2022 the situation is different, say experts, with China’s strict zero-Covid approach being the exception in Asia. Two years ago, many countries in Asia introduced tight Covid restrictions that hit production. But this time round “manufacturing in most Asian countries has restarted,” says Siew Loong Wong, president of Asia-Pacific at Kuehne+Nagel. “We should keep this in mind when assessing the overall impact on the global supply chain.”

Today, the logistics problem lies beyond the ports and airports, in inland China. Not only have factories shut, but the country’s patchwork system of regulations governing movement between towns and cities is making collection and delivery of cargo almost impossible.

“It is very hard for trucks to come into the city and leave without the right permit,” says one Shanghai-based shipping executive, who asked not to be named. “The problem is that permits issued by one place are not accepted universally.”

Drivers may be required to take Covid tests in one province that are not valid at the destination, so more testing is required. Permits to travel may not be recognised from one municipality to another, so containers have to be dropped off at borders — to be collected by a driver from another province. Or “drivers do not want to deliver to a restricted area because they worry they will not be able to come out again”, says Danny Lau, who owns an aluminium factory in Dongguan, near Shenzhen. His plant is struggling to deliver to customers. “We cannot find lorry drivers.” 

A container ship sails towards the dock of Shanghai’s Yangshan port.
A container ship sails towards the dock of Shanghai’s Yangshan port. Shanghai has pledged to ease restrictions by mid-May and there is evidence from Yantian port that recovery can come quickly © Chen Jianli/Xinhua/AP

Freightos, which operates an online freight marketplace, estimates that Shanghai has lost roughly 45 per cent of its trucking capacity since the end of March.

With no drivers to collect the goods, those factories that are still running are scrambling to get products to customers and costs are soaring. “We only have 20-30 per cent of [normal] transport capacity remaining,” says the manager of one Shanghai chemical plant. “Fees have increased almost fivefold. Prices fluctuate every day.”

The absence of drivers is also creating congestion at ports. With 90 per cent of global trade volumes moved by sea, terminals have to work smoothly to get goods to their destinations on time. But without drivers to collect containers, goods arriving at Chinese ports are sitting in terminals for much longer than normal.

In Shanghai, the average waiting time for import containers was 12.9 days on May 12, a 174 per cent increase on March 28, according to Project 44, the shipment tracker. Across the rest of China, the waiting time for export containers had increased 22 per cent by early May compared with March 12, says FourKites, another freight tracker.

As containers stack up, it is harder to load and unload vessels, which are then forced to wait in port for longer. By mid-April, the number of container ships waiting to unload at Chinese ports had doubled in less than two months, according to Windward, the maritime tracking platform.

Animated map of ships waiting off the port of Shanghai. Hundreds of ships can be seen circling as they wait to enter the port

The situation has eased somewhat, thanks to lower volumes coming in, but roughly 24 per cent of all container vessels queueing to unload globally were waiting outside Chinese ports at the end of last Thursday, says Windward. On average they were waiting 3.58 days, or 86 hours, against 115 hours in the first 12 days of April.

These delays have knock-on effects, meaning that vessels arrive late at ports in Rotterdam and Los Angeles, which have still not fully recovered from the disruptions of 2020/21. “When China [lockdowns] happened supply chains were [already] very backed up,” says Zvi Schreiber, chief executive of Freightos.

“Two years ago only about 20 per cent of vessels were being delayed,” says Rotterdam’s Nagtegaal. “Today that number is about 80 per cent.”

‘The quayside is only so large’

This volatility and uncertainty have become a way of life for many reliant on China for goods. Susanne Waidzunas, global supply chain operations manager for furniture retailer Ikea, says it now takes “50 per cent longer for us to send goods from our suppliers in China to our logistic units in the US and Europe”, due to port congestion and other supply chain bottlenecks. Shanghai’s lockdown “is just another disruption”, adds Waidzunas. “We have set ourselves up for it.”

Ikea is diverting goods from Shanghai to other ports, including Ningbo, using rail freight rather than trucks, and ordering earlier, she says. “We are operating in a volatile situation when it comes to demand and supply. We have learnt a lot in the past two years.”

Pete Buttigieg, US transportation secretary, at the Port of Long Beach in January
Pete Buttigieg, US transportation secretary, at the Port of Long Beach in January as part of a task force studying supply chain disruptions © Mario Tama/Getty Images

That caution is echoed by Adam Lewis of digital customs broker Clear-It. “When we see an ETA for a ship coming in on May 2, we know that boat is probably not going to arrive for another two to three weeks. That’s been the name of the game for two years.”

Yet Nick Vyas, who runs the Kendrick Global Supply Chain Institute at the University of Southern California Marshall School of Business, warns that those two years of disruptions have “desensitised” western companies to the impact of China’s zero-Covid policy. Even if many order goods earlier than previously, sooner or later “we will be running out of things”, argues Vyas. “Ultimately the system has a finite capacity.”

That finite capacity could run into its limits when factories in China begin turning again. The worry is that the return to normal will coincide with peak season demand in the third quarter, and before current problems of port congestion and a scarcity of truck drivers are resolved.

“We expect an armada of vessels moving towards Europe again and that will have a bigger effect [than the Shanghai lockdown],” says Nagtegaal of Rotterdam port. “The quayside is only so large. It will move the logistical challenges from China towards Europe.”

Permits, pay talks and a return to ‘normal’

The decline in volumes from China could actually be a blessing in disguise, argue several industry executives. Data from FourKites shows that the 14-day average of shipment volumes travelling from China to the US was down 24 per cent as of May 6, having dipped as much as 36 per cent three weeks earlier. Roughly a third of deliveries to US customers have been delayed, down from 39 per cent at the end of April.

Mario Cordero, executive director of the Port of Long Beach, says the “chaos” caused to supply chains by the lockdowns has helped cut the backlog of container ships waiting to enter his port and the neighbouring Port of Los Angeles from more than 100 in January to 35 now.

A person rides aboard a ferry near shipping containers stacked on container ships at the Port of Los Angeles
Officials at the Port of Los Angeles are monitoring data from China on energy consumption, traffic patterns and pollution, to understand how busy the country’s factories are so they can prepare for the volumes of cargo to come © Mario Tama/Getty Images

West coast ports are waiting to see whether the slowdown in imports is followed by a surge in the coming months, once restrictions lift, he adds.

Seroka of the Port of Los Angeles, for example, is monitoring data from China on energy consumption, traffic patterns and pollution, to understand how busy the country’s factories are so it can prepare for the volumes of cargo to come. “I’m on the phone most evenings with friends . . . in Shanghai telling me what’s happening on the ground,” Seroka said.

Others fear that recently-launched contract talks between ports on the west coast of the US and unionised dockworkers could disrupt activity, as has happened in previous years, just as imports surge.

“If China kicks loose and starts sending those ships [ . . .] back at us we’re going see a really big surge,” Jim McKenna, chief executive of the Pacific Maritime Association, told reporters.

There are already signs that the blockages are beginning to ease. FourKites data shows that volumes were recovering and delays decreasing in the first week of May. Shanghai has pledged to ease restrictions by mid-May and there is evidence elsewhere that recovery can come quickly. Shenzhen’s Yantian port returned to normal within a month after coming out of lockdown in 2021, says Josh Brazil, vice-president of Project 44.

There are also indications that lessons have been learnt from the problems encountered in Shanghai. The government is urging local authorities to collaborate on permitting schemes to resolve the trucking crisis, says the Shanghai-based shipping executive.

Yet a return to normal will take time, says Rico Luman, senior economist on transport, logistics and automotive at ING Research. With more than 11 per cent of global container capacity stuck in ports, “stabilisation of the supply chain will take at least a couple of months after the end of the lockdowns. It takes time because everything is connected.” Container capacity is not expected to expand in a significant way before next year, he adds.

In Shanghai, some 2,000 factories have been authorised to resume production in recent weeks. But the conditions for a return to work remain complicated and difficult. “We still have to see if the workers are able to get to the factories,” says the Chinese shipping executive, who has spent nearly two months in some form of lockdown. “Public transport has stopped and a lot people don’t have cars.”

“I don’t think the situation will be dramatically changed until late May or early June,” the executive adds. “Shanghai can keep telling the world what it wants to accomplish, but others will have to play ball.”

Additional reporting by Wang Xueqiao in Shanghai

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Jeff Bezos turns up heat on Joe Biden over US inflation



Jeff Bezos lashed out at Joe Biden’s White House on Monday over policies he claimed risked stoking inflation, escalating a war of words over the cause of sharply rising prices that are dominating US politics in an election year.

The Amazon founder and world’s third-richest person took aim at the Biden administration’s failed Build Back Better bill, which would have increased taxes on the wealthy and large companies to pay for spending on childcare, education and programmes to curb climate change.

“Administration tried their best to add another $3.5tn to federal spending,” Bezos wrote on Twitter. “They failed, but if they had succeeded, inflation would be even higher than it is today, and inflation today is at a 40-year high.”

Bezos’s attack was an uncharacteristic outburst for one of the world’s best-known businesspeople, who has not previously used Twitter to wade into contentious political disputes.

It followed a back-and-forth with the White House that began on Friday, when Bezos criticised a tweet from Biden that suggested one reason inflation had taken off was that wealthy companies did not pay enough in tax. Bezos retorted that while high inflation and the level of taxes paid by companies were issues that deserved to be discussed, linking the two was a “non sequitur” that should be put before “the newly created Disinformation Board”.

The White House reacted scathingly to the Bezos tweets. “It doesn’t require a huge leap to figure out why one of the wealthiest individuals on Earth opposes an economic agenda for the middle class that cuts some of the biggest costs families face, fights inflation for the long haul and adds to the historic deficit reduction the President is achieving by asking the richest taxpayers and corporations to pay their fair share,” a spokesperson said.

Bezos also came under fire on Monday from Lawrence Summers, the former US Treasury secretary, who broke with most economists early last year to start warning about the rising risk of inflation. Summers called the tech entrepreneur “mostly wrong”, adding that it was “perfectly reasonable to believe . . . that we should raise taxes to reduce demand to contain inflation and that the increases should be as progressive as possible”.

Tensions between Bezos and the White House have been exacerbated by the president’s support for organised labour, including unionisation efforts at Amazon that have been building since Biden took office 18 months ago. “It’s also unsurprising that this tweet comes after the President met with labour organisers, including Amazon employees,” the White House spokesperson said.

Since stepping down as chief executive of Amazon last year, Bezos has become increasingly active on Twitter and used it to make occasional barbed asides related to his personal views, though not with the frequency or vehemence of rival tech billionaire Elon Musk.

Last month, Bezos suggested that Tesla’s heavy dependence on sales to China could give the Chinese government leverage to force Musk to bow to censorship after his planned purchase of Twitter.

As with Musk, Bezos has shown libertarian political instincts and once waged a bitter fight with Amazon’s home city of Seattle over a proposed tax increase. Amazon has also long resisted unionisation by its employees, putting it at odds with the Biden administration.

However, Bezos has also at times backed liberal causes, including donating heavily to defend same-sex marriage in Washington state and hiring Jay Carney, a former press secretary in the Obama White House, to head public policy and communications at Amazon.

The public spat between Bezos and the White House was symptomatic of broader frictions between business and the Biden administration and Democratic lawmakers over inflation, with some officials blaming corporate America for price-gouging and taking advantage of rising prices at the expense of ordinary consumers.

However, most economists said inflationary pressures were due to a combination of factors including high demand driven by government stimulus and the rebound from the coronavirus pandemic downturn, as well as the oil price shock exacerbated by the war in Ukraine and supply chain bottlenecks that have been more persistent than expected.

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China’s extreme Covid lockdowns drag down economic activity



This article is an onsite version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a week

Good evening,

Could Covid be the undoing of the Chinese economic miracle? Figures released today show that lockdowns to enable President Xi Jinping’s zero-Covid strategy are enacting a significant toll on economic activity.

Industrial production, the motor that drove China out of the initial Covid shock in early 2020, dropped 2.9 per cent in April. This ran counter to expectations of a slight increase.

Meanwhile, retail sales, the country’s main gauge of consumer activity, slumped 11.1 per cent year on year, compared with forecasts of a 6.6 per cent fall from economists polled by Bloomberg.

Today’s data are a stark reminder of the economic damage being done by China’s zero tolerance approach to coronavirus, enacted through citywide lockdowns, mass testing and quarantine centres. Xi has reaffirmed his commitment to the policy as the tool to eradicate Covid ahead of his bid for a third term in power later this year, but it is expected to have deep ramifications, not just for China but for global supply chains.

The immediate future looks equally difficult for the world’s second-largest economy and its neighbours. The benchmark coal price for the Asian market was pushed to a record high today because of weak supplies from Australia.

High-energy coal shipped from the Australian port of Newcastle was assessed at almost $400 a tonne by Argus, a price reporting agency. That topped the previous high set in March after the invasion of Ukraine raised gas prices, pushing power stations to burn coal to generate electricity instead.

Latest news

For up-to-the-minute news updates, visit our live blog

Need to know: the economy

The economic gloom has spread to the EU. Today, Brussels cut its growth forecasts further and lifted its inflation outlook, blaming the energy crisis triggered by Russia’s invasion of Ukraine.

Both the EU and euro area are set to expand by 2.7 per cent this year, significantly lower than the previous forecast of 4 per cent. Inflation is now expected to surpass 6 per cent, with some central and eastern European countries likely to see double-digit price rises in 2022.

Latest for the UK and Europe

British manufacturers are bringing production back to the UK, reversing the “offshoring” trend of recent years because of concerns about how the pandemic and Brexit have disrupted supply chains. Three-quarters of companies have increased the number of their British suppliers in the past two years, according to a survey by Make UK, the manufacturers’ trade group.

A key part of the problem for Europe in its effort to wean itself off Russian oil and gas is the existence of infrastructure “pinch points” across the continent. Jonathan Stern, research fellow at the Oxford Institute for Energy Studies, said many projects being reconsidered have been planned for years but rejected as not commercially viable when assessed against cheap Russian gas supplies. That assessment has now changed.

Global latest

G7 foreign ministers have warned of a global hunger crisis unless Russia lifts its Ukraine blockade. Speaking at the conclusion of a three-day meeting in Germany on Saturday, German foreign minister Annalena Baerbock said some 25mn tonnes of grain were stuck in Ukrainian ports that were being blockaded by Russian forces — “grain that the world urgently needs”.

Inflation has returned to haunt Brazilians, triggered by the surge in global food and fuel costs. At 12 per cent, it is now at an almost two-decade high and officials are increasingly concerned that price pressures are becoming entrenched across the economy.

Need to know: business

America’s shale oil companies are enjoying a cash bonanza, following months of capital restraint by a sector that suddenly finds itself in demand thanks to the global energy crisis. Operators will generate about $180bn of free cash flow — operating income minus capital and maintenance outflows — this year at current crude prices, according to research company Rystad Energy.

Column chart of $bn  showing US shale free cash flows are soaring

McDonald’s has announced that the invasion of Ukraine means it can no longer run outlets in Russia. The Chicago-based company, which operated 850 restaurants in Russia and employed 62,000 people, is looking for a Russian buyer that would retain these staff. It said it expected to book a non-cash charge of $1.2bn to $1.4bn for the exit.

Renault has sold its Russian business Avtovaz, which made the Lada, to a state-backed car institute for two roubles. The French company’s exit highlights the meagre options facing businesses trying to leave Russia without huge losses on their investments.

Ryanair chief executive Michael O’Leary has warned that the outlook for flying remained fragile and vulnerable to new shocks, as the carrier reported a loss of €355mn for the 12 months to the end of March, down from €1.015bn the year before. O’Leary added the airline would “do very well” over the summer if travel was not disrupted by a new coronavirus variant or the war in Ukraine spreading.

City centre shopping malls may at last be evolving into multipurpose hubs for business and leisure as well as shopping, as envisaged by their 20th century creator, Vienna-born architect Victor Gruen. But reinvigorating older centres will require investment, a challenge in a cash-strapped sector that has suffered from brutal value destruction, according to an FT analysis of the property sector.

The World of Work

Anger about high bonus payments for executives, often paid on top of hefty salaries, is easy to understand. But now studies have found that the whole system of paying people to hit targets is flawed. This is in large part because a lot of bonus systems are outdated in an age of knowledge work, writes FT columnist Pilita Clark.

Male managers in the UK are blocking efforts to improve the gender balance at British companies, according to research by the Chartered Management Institute. Two-thirds of the male respondents in the survey of 1,149 managers said they believed their organisation could successfully manage future challenges without gender-balanced leadership. The survey follows widespread condemnation of sexist remarks directed at Aviva chief executive Amanda Blanc at the company’s AGM last week.

Packing up a workspace is a huge task, but one Oxford scientist did just that and moved his team to the Netherlands, in part to be closer to his family after 14 years of working in the UK and partly to avoid the adverse consequences of Brexit for British science.

Covid cases and vaccinations

Total global cases: 515.2mn

Total doses given: 11.7bn

Get the latest worldwide picture with our vaccine tracker

And finally . . . 

Illustration of ‘Rutherford Hall’
© Eliot Wyatt

The FT has a new columnist, critical communications strategist Rutherford Hall. He kicks off this week by offering some (rather suspect) advice to London-based Russian businessman (don’t on any account say oligarch) Oleg on why building a new swimming pool in the upstairs of his South Kensington mansion might not be the best way to improve his image. Hat tip to the FT’s UK editor-at-large Robert Shrimsley for “recovering” these emails.

Working it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up here

FT Asset Management — The inside story on the movers and shakers behind a multitrillion-dollar industry. Sign up here

Thanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at Thank you

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Ukraine will need massive economic support, too



Vladimir Putin’s war on Ukraine has proved a catastrophic mistake. After Russian forces withdrew from around Kyiv last month, Ukrainian troops were on Monday filmed restoring border posts on the Russian frontier, having mostly pushed Moscow’s army back from the second city of Kharkiv. Finland and Sweden are meanwhile due this week to apply to join Nato — an expansion of the alliance that is the exact opposite of what the Kremlin’s war was meant to achieve. Yet Ukraine’s military successes should not obscure the need for the west to accelerate both weapons supplies, and financial support to counter Russia’s crippling economic war against its neighbour.

Large-scale help is starting to flow. The US Senate should this week approve a support package including military, humanitarian and economic aid that lawmakers have increased to $40bn from the $33bn President Joe Biden asked for last month. For now, though, this remains a budget line. The sooner it can be converted into further arms supplies, the greater Ukraine’s chance of containing and repelling Russian forces in eastern and southern Ukraine before they have time to regroup.

The prospect of a lengthy and vicious war of attrition in the east, while Russia continues to bombard military, infrastructure and economic targets elsewhere and to blockade Ukraine’s Black Sea ports, makes economic and non-military aid vital too — on a grand scale. Without a ceasefire, economic output is forecast to plunge more than 40 per cent this year. The Kyiv School of Economics puts direct damage to Ukraine’s infrastructure at more than $94bn by May 10, roughly one-third each accounted for by residential buildings and roads, with $10bn of damage to industry and factories and $15bn to railways, hospitals, bridges, schools and colleges.

One priority is budgetary support. War widened the deficit to $3.8bn in April, with $1.1bn of domestic debt redemptions — in line with the IMF’s assessment that Ukraine faces a financing gap of about $5bn a month for several months. Economic aid of $9bn in the coming US package takes western budgetary support commitments over $20bn, but these, too, will take time to arrive. The IMF is looking at transferring 10 per cent of unused special drawing rights to Ukraine, but the initiative must surmount EU legal hurdles.

Other problems require material and logistical support. Grain exports — crucial to Ukraine’s economy and to global food supplies — are impossible via the Black Sea thanks to Russia’s blockade of Odesa and other ports and seizure of Mariupol. That will require what Brussels calls a “gigantesque” effort to move grain via road and rail to Baltic and other European ports. But efforts are complicated by Ukraine’s different rail gauge and shortages of trucks. The EU has pledged to establish “solidarity lanes” to ensure Ukraine can export grain and import necessary goods, from humanitarian aid to fertilisers and animal feed.

Shortages of motor fuel — thanks to damage to a refinery at Kremenchuk in central Ukraine — threaten to hamper both the civilian and military economy. And border delays are hindering exports of those manufactured goods Ukraine is still managing to produce.

Including indirect costs such as forgone GDP, corporate profit and investments, labour outflows, and higher defence and social spending, Kyiv economists already estimate Ukraine’s total losses from the war at $560bn-$600bn. With Nato allies unwilling to go to war with a nuclear-armed Russia, Ukraine is having to fight alone. It will need all the international support it can muster to deal with the long-term economic devastation.

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