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Implications of the Russian Invasion on the Logistical Competition for Corn Shipments from the United States and Ukraine

Author

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  • Wilson, William W.
  • Bullock, David W.
  • Lakkakula, Prithviraj

Abstract

The Russian invasion of Ukraine disrupted the grain flows from that region and worldwide. These changes are critical due to the war’s influence on logistical costs, routes and capacities. As a result of the invasion, Ukraine has evolved from having some of the lowest logistical costs in the world to having the highest logistical cost. Logistics are critical for international competitiveness in commodities, and due to the invasion, these functions have been severely affected. Essential features for a logistical competition include internal logistical functions and costs, quality, port capacity and ocean shipping costs, each compounded by seasonal demands. This paper’s purpose is to analyze the effects of the Russian invasion on the logistical functions and the costs for corn exports from Ukraine and its competitors using an optimized Monte Carlo simulation model. The findings indicate that before the invasion, Ukraine had logistical advantages for shipments to the European Union (EU) and was highly competitive in Indonesia and China; the United States had a logistical cost advantage over Ukraine to serve China, South Korea (from the U.S. Gulf) and Japan (from the Pacific Northwest (PNW)). The changes due to the invasion are substantial. Most important is the radical increase in shipping costs from Ukraine, reduced port capacity and export supplies. However, concurrent with the invasion were changes in some critical trade and marketing policies, thus influencing the international competition for corn.

Suggested Citation

  • Wilson, William W. & Bullock, David W. & Lakkakula, Prithviraj, 2023. "Implications of the Russian Invasion on the Logistical Competition for Corn Shipments from the United States and Ukraine," Agribusiness & Applied Economics Report 338529, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaae:338529
    DOI: 10.22004/ag.econ.338529
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    References listed on IDEAS

    as
    1. Schade, Burkhard & Wiesenthal, Tobias, 2011. "Biofuels: A model based assessment under uncertainty applying the Monte Carlo method," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 92-126, January.
    2. Bullock, David W. & Lakkakula, Prithviraj & Wilson, William W., 2023. "Russia-Ukraine Conflict and the Global Food Grain Price Analysis," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 38(2).
    3. Padilla, Samantha & Ufer, Danielle J. & Morgan, Stephen & Link, Noah, 2023. "U.S. Export Competitiveness in Select Crop Markets," USDA Miscellaneous 333553, United States Department of Agriculture.
    4. Ahn, Soojung & Kim, Dongin & Steinbach, Sandro, 2023. "Global Grain Trade Implications of the Russia-Ukraine War," 2023 Annual Meeting, July 23-25, Washington D.C. 335482, Agricultural and Applied Economics Association.
    5. Steinbach, Sandro, 2023. "The Russia–Ukraine war and global trade reallocations," Economics Letters, Elsevier, vol. 226(C).
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    Keywords

    Crop Production/Industries; International Development; International Relations/Trade;
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