War affect on Logistic: Freight, Fuel and Insurance

Freight and Route Instability

Freight — the transport of goods by land, sea, or air — is one of the first systems to feel the pressure of war. Conflict zones often see the destruction or closure of critical infrastructure such as ports, railways, highways, and airports. This leads to delays, rerouting, or even complete halts in delivery services.

Shipping routes may be blocked or considered unsafe, especially if naval conflict or missile strikes are involved. For example, commercial ships may avoid key areas like the Black Sea or Red Sea during conflicts, creating longer transit times and higher shipping costs. Land transport can also be heavily affected, as freight trucks face road closures, fuel shortages, or security threats.

The result? Higher costs, slower deliveries, and increased pressure on logistics providers to find new and safer routes.

Fuel Shortages and Price Volatility

Fuel is the engine behind logistics — literally. But war can disrupt both the production and distribution of oil and gas, causing major issues for transport systems worldwide. Conflict in oil-rich regions, or the bombing of refineries and pipelines, can drastically reduce supply.

At the same time, the uncertainty of war leads to panic buying, hoarding, and speculation in global energy markets. Prices often skyrocket — not just in war zones, but globally. This directly affects every part of the supply chain, from trucks and cargo ships to airplanes.

Higher fuel prices increase transportation costs, which are often passed on to consumers in the form of more expensive goods. For logistics companies, this means tightening margins and difficult decisions about what routes and services they can afford to maintain.

Source: https://www.bbc.com/news/articles/cg5vr2rvzg4o

Rising Insurance Costs and Risk Management

War increases risk — and with risk comes higher insurance costs. Freight companies, shipping lines, and airlines must pay significantly more for war-risk insurance when operating near or through conflict zones. In some cases, insurers may refuse coverage entirely for high-risk areas.

This leads to several consequences. Some carriers may avoid the area completely, reducing available freight capacity. Others may continue operating but raise prices to cover the insurance premiums. Either way, the end result is higher logistics costs and more uncertainty for businesses relying on the timely delivery of goods.

In humanitarian cases, aid shipments may be delayed or blocked if insurance can’t be secured, making war’s impact even more severe on vulnerable populations.

The impact on Import and export

War has a significant impact on imports and exports, often disrupting the flow of goods and services across borders. During conflict, key infrastructure like ports, roads, and factories may be damaged, making it difficult or impossible to transport products. Imports may decrease as trade routes become unsafe or blocked, leading to shortages of essential goods such as food, medicine, and fuel. At the same time, exports are often halted due to damaged production facilities, labor shortages, or international sanctions imposed on the warring country. War also creates economic instability, causing currency fluctuations and loss of investor confidence, which further hampers trade. As a result, both importing and exporting nations suffer, and global supply chains can experience ripple effects far beyond the immediate conflict zone.

Source: https://www.linkedin.com/pulse/how-wars-between-two-countries-impact-import-export-business-gadkar-4mbyf/

For Vietnam, Houthi attacks on cargo ships have forced many vessels to divert from the Red Sea, leading to longer shipping times and increased transportation and insurance costs. According to Vietnam Maritime Administration, freight rates from Vietnam to the US East Coast surged from $2,600 per container in December 2023 to $4,100–4,500 in January 2024 (up 58–73%). Rates to Europe, such as Hamburg, nearly tripled over the same period.

These continued disruptions are prompting companies operating in Vietnam to reassess their supply chains and consider more secure but costlier trade routes. Some may shift towards near-shoring or re-shoring production, although such changes come with higher costs and operational challenges.

Conclusion

In conclusion, war has a profound and far-reaching impact on logistics, imports, and exports, disrupting the movement of goods, damaging critical infrastructure, and creating widespread economic instability. Logistics networks are often the first to be affected, as transportation routes become unsafe or unusable. This directly hampers both imports and exports, leading to shortages of essential goods and a decline in trade revenue. International sanctions, labor disruptions, and loss of market access further worsen the situation. Ultimately, war not only affects the countries directly involved but also causes ripple effects across global supply chains, highlighting the importance of peace and stability for sustainable international trade.