How Russian Sanctions Are Impacting Global Supply Chains!

Russian Sanctions

There are a variety of ongoing disruptions caused by Russia’s invasion of Ukraine and the resulting economic Russian sanctions coming from other countries. The foundation of international markets is shaky, and threats of food insecurity could push other regions at greater risk. 

The modern supply chain is global and often depends on Russia for production, either equipment or materials. Sanctions make these elements harder to procure elsewhere while preventing many companies from using existing Russian sources. Some companies have walked away from billions of dollars worth of infrastructure as they moved operations out of the country. 

Now is a time when businesses must consider recalibrating their supply chains, not out of optimization potential but out of necessity.

What’s impacted?

Raw materials

Many raw materials have been at risk since before the current conflict because of the dependence on specific, small regions for production. Russia and Ukraine supply critical materials for industrial production, the development of advanced batteries, and other items related to making industrial applications greener. Some of the biggest concerns are aluminum, nickel, palladium, potash, and vanadium.

Prices for these stocks and related final products are likely to continue to rise as the year progresses. This comes both from a change in sourcing and an availability concern as many alternative suppliers face export restrictions.

Expect to see this complex situation become more costly as Russian citizens are added to more sanctions lists. United Company Rusal International is partially owned by a sanctioned individual, leading to its suppliers halting delivery of materials necessary for Rusal to smelt and produce aluminum.

Addressing raw material shortages in supply chains will be tough and expensive. In many instances, alternative sources are limited. In other situations, economic and environmental concerns have kept businesses and countries away from developing alternatives. 


Generally speaking, there are few sanctions related to food and agricultural products because of the concern that the conflict is having on global food insecurity. In a recent document, the U.S. government clarified that it “has not imposed sanctions on the production, manufacturing, sale, or transport of agricultural commodities (including fertilizer), agricultural equipment, or medicine” related to Russia.

However, it has prohibited some imports to the United States of certain goods, such as Russian seafood, while not extending this prohibition to any other country.

Despite relatively loose sanctions, there is still a dramatic impact from the war itself. After months of concern, supply chains only started moving again in the middle of Summer. Ukraine has been able to ship 370,000 tons of agricultural products, largely corn and livestock crops. 

As of August 8, it has yet to export any wheat. That report notes Ukraine has an estimated 20 million tons of grain available from the 2021 harvest and may have a similar yield from the upcoming 2022 harvest. It will take a massive fleet to export that volume, and the war may make this difficult due to fighting and mines placed in the sea.


Energy is one of the more complicated measures here. Sanctions have been announced, and that pressure is pushing oil and natural gas pricing higher. That is being felt as increased diesel pricing in many domestic supply chains, while international efforts face a variety of higher energy costs.

The long-term impact is less clear because there’s more on the horizon. Many announced sanctions have not yet taken effect. The coal ban begins next month, while others, such as some sea-based oil imports, start closer to the end of the year. India and China seem to be importing more energy and crude oil in recent months, while Russia itself has been restricting some energy supplies.

Countries are trying to create sanctions that restrict Russia without disrupting global markets, but there’s still no clear picture of how that may occur and what it will feel like economically.

How are companies responding?

You’ll see two types of responses to these trends:

  1. Short-term: Increasing immediate inventory ordering and holding. Companies will grab what they can from existing suppliers and may test new suppliers for products or raw materials. The goal is to enhance safety stock while the company waits to see how long the disruption will last.
  2. Long-term: Shoring up additional supply lines for raw materials or even some finished goods. More than just acquiring additional items, companies are trying to switch providers and countries. This approach heavily focuses on upstream efforts to find alternative sourcing. It can take time, so companies taking this approach either have an immediate risk (such as relying on raw materials for things like advanced batteries) or have the capital to spend and move large portions of production.

The intensity of those approaches varies wildly based on how connected a supply chain is to a Russian or Ukrainian supply. Generalizations are difficult to assess because of the scope, too. It’s estimated that more than 550,000 U.S. businesses rely on affected suppliers, sometimes directly and others for energy products and byproducts.

We see a core difficulty with machinery and heavy materials that are already facing high freight rates due to other pandemic and capacity issues.

What can you do next?

Most companies directly impacted by current sanctions have started analyzing their supply chains and logistics to look for bottlenecks and alternative sources of materials. These efforts are mission-critical steps for every company, even those that may not feel at risk. The ongoing pandemic has shown how quickly one supply chain issue can ripple through the globe, and you may not necessarily understand when your partners are at risk.

Slowdowns in industrial equipment production and in shortages of trucks and vans may feel passable now but could be a more significant concern come the year-end peak shipping season.

Work with your partners to identify potential direct impacts. Then, look to your 3PL and other distribution partners to start building any year-end inventory and warehouse space. When possible, leverage a 3PL’s order volume to help you secure capacity with carriers to ensure your orders are fulfilled promptly.

The global impact of sanctions on Russia will hit both global efforts and your local movements. You’ll see it from rising fuel prices and fluctuations in container availability to stock shortages and longer lead times from manufacturers. The best prep work is to build up your safety net and set expectations for partners and customers that things may take a little longer this year, too.

Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse that was born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.

Russian Sanctions article and permission to publish here provided by Jake Rheude. Originally written for Supply Chain Game Changer and published on August 19, 2022.