A look at how trucking companies and the supply chain could be impacted.
When the clock struck midnight on January 1, 2022, many walked into the new year hoping that it would be a year of recovery. After having lived through almost two years of a pandemic, the hope was that this would be the year where the supply chain would finally catch up and that things would get back to “normal.” However, that all changed when Russia invaded Ukraine last month. Now, gas prices are on the rise and the supply chain is bracing to take another hit. Truly understanding how this crisis across the globe will impact us here in North America is still to be determined. However, here is a look at what you need to know.
Pain at the Pump
Driving by a gas station and seeing the current cost of diesel can make your stomach turn. You don’t have to look far to see that gas prices are climbing. Russia is the third-largest oil producer in the world and the largest oil exporter in the world according to the U.S. Energy Information Administration (EIA). Plus, the United States has banned Russian oil and a number of gas companies have also cut ties with Russia. At any time, Russian President Vladimir Putin could cut off crude oil supplies altogether in response to sanctions from the United States and European Union. In an effort to send a message to Putin and oil markets, the 31 countries that make up the International Energy Agency have agreed to release 60 million barrels of oil from their strategic reserves. The issue is that there is not even enough oil to get the world through one entire day. For now, it appears that trucking companies and drivers across the globe will continue to watch gas prices rise. Dan McTeague, President of Canadians for Affordable Energy, told TruckNews.com that he “[doesn’t] see any end in sight,” and that, “prices are going to reach stratospheric levels.” We will continue to keep an eye on this issue as the situation in Ukraine and Russia progresses.
The Tidal Wave
As you well know, the supply chain still has not by any means completely recovered from the impact of the pandemic. Now, it is preparing to take another brutal hit. As of now, analysts anticipate that European countries will take the brunt of the impact. However, this does not mean that North American countries are out of the woods. Countries in the Western hemisphere are already dealing with inflation. Even if trucking companies raise driver wages, that money will not go as far. The main supplies at risk as of now are global supplies like aluminum, sunflower oil, steel and platinum. Automakers are also bracing for shortages because both Ukraine and Russia are “substantial sources” for materials that are used in catalytic converters like palladium and platinum. Also, another global chip shortage could be on the horizon because Ukraine is responsible for half of the world’s neon gas which is used to manufacture semiconductor chips. Although we may not feel all of these impacts immediately, we should go ahead and prepare.
What’s Next?
Right now we are still uncertain about all of the ways the freight industry will be affected by this crisis. The United States government is encouraging companies and individuals to prepare now for the possibility of Russian cyberattacks as a repercussion of sanctions placed on Putin and Russia. In 2021, America’s Colonial Pipeline underwent a ransomware attack that caused panic in the Southeastern region of the country. Gas stations experienced long lines and many ended up running out of gas. The situation was resolved within a matter of days. However, what would happen if this occurred on a nationwide or globe-wide scale? Dave Cundiff, Vice President of cybersecurity firm Cyvatar.ai, was spot on when he told USA Today that, “the fear of the unknown is what gives cyberattacks their greatest power.” Now is a good time for companies to put together an action plan if they do not already have one for how they will respond in the event of a cyberattack. You can find additional resources to help you do this by visiting sba.gov or ready.gov.