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The Impact Of Russia’s Invasion Of Ukraine On Supply Chains

April 2022
Peter Deragon
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The conflict puts even greater pressure on already-exhausted global production

Navigating supply chain concerns is never easy. The ebbs and flows of supply and demand can be difficult to forecast, and unforeseen challenges can arise from countless different factors. The increasing globalization and international dependence on the same economic lines of transport and trade weave an ever more complex web of interdependencies — and potential weaknesses.

The world’s supply chains, including those in the United States, were already on the edge when Russia invaded Ukraine in late February. This unexpected move threw a wrench into an already struggling system that has moved even closer to a serious economic crisis.

Before Russian troops ever set foot in Ukraine, the world’s supply chain had already been grappling with a mounting string of challenges, and the pandemic was at the heart of many of these issues. China’s zero-Covid strategy repeatedly shut down shipping on its own shores. U.S. ports struggled to process the unpredictable quantities of waterborne goods arriving in key bottleneck points like the Ports of Los Angeles and Long Beach. 

In Canada, truckers went on strike early in the year and the Canadian Pacific Railway faced a lockout of 3,000 workers in March. Ongoing international backlogs in the aviation industry hinted at potential struggles for airborne trade and travel, as well.

When Russia invaded Ukraine, it sparked a massive reaction, not just from Ukrainians but from the rest of the world. Sanctions were swift and both political and corporate entities from all industries attempted to disassociate themselves with any activity that had to do with Russia.

The impact immediately rippled across the supply chain in the form of one commodity, in particular: oil. Russia is the second-largest crude oil exporter in the world, and areas like Europe are critically dependent on the supply coming from its northwestern neighbor.

While the global economy continues to grapple with oil concerns in the short term, though, it’s likely just the first of many potential supply chain pressures coming down the pipeline. Agriculture will also be hit hard in certain areas. For instance, Ukraine supplies 10% and 14% of global wheat and corn exports, respectively. The invasion also shuttered two Ukrainian companies that happen to produce roughly half of the world’s supply of semiconductor-grade neon. This threatens to exacerbate an ongoing chip shortage, disrupting countless chip-dependent products, and ultimately shaking up supply chains, as well.

Finding The True Leaders

While supply chain challenges have always existed, there’s no doubt that we’re in a uniquely stressful time. From shipping to aviation, railways to trucking, every area of the supply chain is being tested. In addition, supply is struggling to meet demand in all areas of life, from transportation to food to electronics and beyond. 

“From shipping to aviation, railways to trucking, every area of the supply chain is being tested.”

It’s during tough times such as these that true leaders are found. They are the ones who can stand up in the middle of the storm and calmly and decisively make decisions that bring a little more order to the ongoing chaos. Strong leaders can face fears and make calm, rational decisions rather than allowing themselves to be guided by emotional reasoning.

These are the kinds of impressive individuals that our executive recruitment team at Stanton Chase’s Los Angeles office are used to working with. Over the years, we’ve learned to comb through lists of candidates in order to find those who don’t just have the best resume or track record. We look for professionals with the best characteristics to operate as sound decision-makers and leaders in high-pressure industries like the supply chain.

If you’re looking for a new member to fill an executive leadership role in the supply chain, tech, finance, or any similar industries, you want the Stanton Chase LA team by your side. We can set informed search parameters and help guide the recruitment process so that you can find the right leader to address not just your current needs, but any other challenges that will arise in the future.

About the Author:

Peter Deragon is a Managing Parter at the Stanton Chase Los Angeles office and is Global Practice Leader for Supply Chain, Logistics, and Transportation.

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