After a long stalemate between Russia and Ukraine, the war officially began on February 24, when Russian troops landed in Odessa, Ukraine, and ukrainian President Zelenskiy said that the whole territory of Ukraine would enter a wartime state.
Images are from the web
The two countries went to war, the world situation was turbulent, and the resulting chain effect quickly spread to various industries.
In Ukraine, because of the internal war, the normal social order could not be maintained, and the local residents began to grab supplies, resulting in a rapid rise in prices. Also because of the war, Ukraine's foreign trade industry has almost fallen into a state of suspension, and all overseas ships have not dared to dock in port, triggering a vicious circle of material shortages. Coupled with the previous large-scale flight of Ukrainian capital, its domestic economic market is even more vulnerable.
Not only Ukraine, because of the war, Russia's domestic economic development has also been hit hard, the Russian RTS index fell by more than 40%, and the Moscow Exchange suspended trading. Subsequently, the European Union and the United States froze all Russian assets in their territory, and some European and American countries also decided to start financial sanctions against Russia. Because of the impact, the Asia-Pacific stock market and the European and American stock markets are also surging all the way, and the whole line is bearish.
First, the impact of the war on the foreign trade industry
Judging from the current situation, the impact of the war on the mainland's foreign trade industry is mainly concentrated on enterprises engaged in the development of the Ukrainian and Russian markets.
1. Foreign trade orders between Ukraine and Russia have plummeted
The mainland is Ukraine's largest trading partner, and in 2021, the trade volume of goods between China and Ukraine hit a record high, bringing a large number of orders to the foreign trade industry. But now because of the war between Russia and Ukraine, the Ukrainian market is in a depression, there is no demand, and orders have plummeted in a short period of time.
A foreign trader engaged in exports to Ukraine in Yiwu said that in previous years, the shipment volume to Ukraine was very large, but now, the tension between Russia and Ukraine, coupled with the instability of the exchange rate, his Ukrainian foreign trade business has almost fallen into a standstill.
He is not alone, when Ukraine and Russia are still in the confrontation stage, the market performance of the two countries has not been as good as usual, overseas buyers are more worried about the occurrence of risks and a large number of reductions or suspension of normal procurement plans, the relevant enterprises on the mainland have also been greatly affected.
2. Sea freight rates may be high for a long time
Fueled by tensions in Russia and Ukraine, the spot price of Brent crude oil briefly hit the $100-a-barrel mark last week to an eight-year high, and futures rose to more than $97 a barrel this week. Fuel is one of the biggest costs for container routes, but is ultimately passed on to cargo shippers through a fuel adjustment factor surcharge.
Port security is a second consideration. As the escalation of the war poses a risk to shipping services in Ukrainian ports, about 70 percent of Ukraine's imports and exports are transported by water, of which the port of Odessa is responsible for about three-quarters, and the port is now controlled by Russia.
The Shipping Insurance Industry's War Risk Committee said last week that the Black Sea and Sea of Azov waters in Ukraine and Russia had been added to high-risk areas. This will directly lead to an increase in the price of shipping insurance, and these increases will be apportioned to foreign traders through different forms.
3. Exchange rate changes affect foreign trade profits
As geopolitical risks continue to rise, the currencies of Russia and Ukraine have depreciated sharply. On February 24, the Russian ruble plummeted, with the Russian ruble falling to 1:86 against the dollar at one point, the lowest since January 2016.
On the same day, the global economic market was turbulent and the stock market fell sharply. But at the same time, the renminbi is approaching the 6.3 mark, a new high since April 25, 2018. Because the renminbi has certain hedging attributes, the demand for safe-haven funds to allocate RMB assets has increased in the current situation of escalation of the war.
But for foreign traders, the exchange rate of the customer country plummeted, and the cost of customer imports soared; the renminbi appreciated, and the profit of exports will be directly affected!
4. The risk of trade with Russia and Ukraine has become greater
Regarding the risk of default on the payment of goods by buyers caused by the political turmoil in Russia and Ukraine and the response methods, it has been analyzed in detail in the previous article, and you can click on the link below to view the full content.
Ukraine's political turmoil and economic downturn! Foreign traders should be vigilant
Second, how to deal with the impact of war on foreign trade
The war between Ukraine and Russia has a great impact on the domestic foreign trade industry, but will the foreign traders have to sit still?
Of course not? Difficult to change, the crisis into opportunity is the right solution, the following three points, foreign traders must learn!
1. Quickly open up new markets
The best way to hedge against the loss of Orders in Ukraine and Russia is to quickly find new customers from other countries and fill the vacancy with new orders. How to quickly find customers while ensuring the stability of new markets is the primary job of foreign trade salesmen. Using Grande to check the world and obtain the full version of the buyer report, you can quickly help foreign traders to judge the market situation, obtain accurate overseas buyer lists, and help foreign traders enter the customer development stage efficiently and quickly sign orders.
2. Quickly avoid the risk of "detonating mines" of Ukrainian and Russian customers
In addition to finding new customers to sign orders through "open source", it is also necessary to "throttle" by recovering the payment for existing orders. After all, in the political turmoil of Ukraine and Russia, whether it is the customer's intention or not, the local enterprises themselves are at risk, and may go bankrupt and fail. Then cooperation with domestic manufacturers may lead to arrears in payment and loss of contact with customers.
Therefore, domestic foreign traders need to start from two aspects. On the one hand, it is necessary to pay attention to the risk situation of overseas customers, retrieve the Grand Global Credit Report of overseas customers to verify the true credit status of customers, and monitor risks. If there is an abnormal change, make an emergency plan in advance, change the cooperation strategy, and reduce your own losses as much as possible.
On the other hand, if you have encountered customers who are in arrears, then use Grande To urge the world in a timely manner, submit collection needs, and recover the payment through professional collection channels at the first time.
In addition to open source and throttling, what foreign traders need to do more is to stabilize their mentality and not to mess up. War is an emergency, no one can predict the development of the war, at present, Ukraine has been in a dilemma, the foreign trade market will not return to the previous in the short term, so methodically deal with the crisis, as soon as possible to formulate "plan B", reduce the loss of enterprises is the best way to save themselves.
Finally, hope for world peace!