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The Impact Of War in Ukraine On The Eyewear Industry

March 11, 2022

Ukraine's military began firing mortars and rocket launchers at 05:30 Moscow time on February 17 (10:30 Beijing time) in four residential areas of Luhansk, according to the news released by The Sputnik of Russia quoted by Global Network. 


  • Shipping Costs Increase


Although container traffic in and out of the Black Sea is relatively small, a war between Russia and Ukraine could have disastrous consequences for the global container supply chain.

At the Freightwaves global supply chain conference two weeks ago, the head of the maritime industry said that the chain reaction of military confrontation could spread beyond the region and hit world trade. Some in the industry speculate that the war is likely to trigger a repeat of the NotPetya cyberattack on Ukraine in 2017. Maersk, the world's largest carrier, has been down for about two weeks in a "stealth war" that has weakened systems at Maersk and FedEx's European subsidiary TNT. Although there was no real impact on the supply chain at the time, as there was enough buffer capacity in the global system to replace it. However, with almost zero buffer capacity for container shipping in 2022, a similar cyber attack could have devastating effects on global supply chains.

The rise in container shipping has in turn affected the price of air freight. Plus the aviation restrictions caused by the war. Compared with January 2022, the air freight price of goods exported from China to Europe has not risen significantly because the end of the year and the beginning of the year are the busiest seasons for transportation. As a result, air freight prices in March increase more than twice compared to in February.


  • Raw Materials Costs Increase


Russian raw material exports are restricted (resulting in a rise in global raw material supply prices, which in turn affects the cost of raw material imports for Chinese manufacturing); resulting in higher purchase prices in China.

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Manufacturing supply chains will also be affected by conflict or sanctions targeting Russia and Ukraine. Russia's share of global nickel exports is estimated at around 49%, palladium 42%, aluminium 26%, platinum 13%, steel 7% and copper 4%. "This, along with half of the world's nickel exports, including kitchen utensils, cell phones, medical equipment, transportation, construction and electricity; palladium used in catalytic converters, electrodes and electronics; and a quarter of aluminium used in automobiles, construction , machinery and packaging, which will put significant upward pressure on prices.”

The eyewear industry was not immune to the effects of the war in Ukraine .The raw materials used in the eyeglasses industry, such as metals, titanium alloys, acetates, plastics, etc., have risen in price in an all-round way.This is undoubtedly a bad news for the eyewear manufacturing industry.


  • Rising Energy Costs


Global oil and gas: prices up 50-150%

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Gas

In the short term, a Russian-Ukrainian war, even a limited one, could trigger further sharp increases in oil and gas prices, especially in Europe. Russia supplies about 30% of Europe's oil and 35% of its natural gas, which would be cut off in the event of a conflict. That could push oil prices up to $125 a barrel from around $90 a barrel, which has already risen, with natural gas prices following suit, according to RaboBank.


While countries such as Saudi Arabia could step in to help address Russia's supply shortage, the delivery infrastructure is incomplete. But if longer-term, tougher sanctions are imposed, "the potential price impact would be significant, with oil rising to $175 and gas to $250."

Either war or harsh sanctions could lead to a safe haven in financial markets, pushing up bond prices and lowering interest rates. This could be a counterbalance to the current upward trend in interest rates in many advanced economies.

Experts expect the dollar, yen, Swiss franc and gold to be the obvious choices in the event of a conflict. In the event of war or sanctions, the Russian ruble will depreciate, as will the euro. Even if conflict is avoided, there will be some lingering consequences, as this would still have significant policy implications, and it will accelerate some of the global trends that are already taking place, many of which were sparked by the Covid-19 crisis and increasingly aggressive foreign and trade policies .



  • Feedback from Customers,industry


Most eyewear brands or their agents delayed purchasing plans, which may have a lot to do with the Ukrainian war and economic sanctions resulting in the shrinking of the exchange rate. On the contrary, the purchasing demand of European and American e-commerce buyers and emerging brands has increased.


  • What YMO Eyewear will do


Top quality Carbon fiber sunglasses

YMO Eyewear will, as always, be committed to the innovation of production technology, the research and development of new products, the control of product quality, and to provide all our customers with professional solutions and cost-effective eyewear products.


Chongqing Yameiou Optical Co., Ltd. and Shenzhen Yameiou Optical Co., Ltd. do not represent any political position. Our proposition is world peace. We hope that the war in Ukraine will end soon and the global Corona Virus epidemic will end soon.


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