Examining the Effects of the Russia-Ukraine Conflict on Global Supply Chains

1. Introduction

A supply chain is an integrated system that starts from the procurement of raw materials or semi-finished products, proceeds through production, packaging, storage, and distribution, and finishes with the delivery of final products to end customers. The links of this chain are not limited to manufacturers and suppliers only. There are many different parties in a supply chain, such as logistics service providers, retailers, insurance companies, customs brokerages, and customers (Cooper et al., 1997; Min & Zhou, 2002; Chopra & Meindl, 2007). Especially in recent years, national supply chains have been insufficient in terms of raw material supply, product diversity, and the ability of national companies to develop sustainable success strategies; therefore, there is a need to improve the existing traditional structures (Beamon, 1999; Choi et al., 2004; Sampson & Spring, 2012). In this context, an understanding of global-scale commercial activity comes to the fore. Globalization of supply chain links allow commercial activities to be conducted across country borders by offering several benefits, such as low-cost procurement of raw materials and semi-finished products, efficient outsourcing, and a wide customer portfolio, instead of local and limited markets (Prasad & Sounderpandian, 2003; Meixell & Gargeya, 2005; Christopher et al., 2006). Unlike those serving in local markets, companies that engage in commercial activities and ventures in the global market can expand their supplier and customer networks and develop low-cost and high-quality production and distribution strategies with various resources (Duclos et., 2003; Gereffi & Lee, 2012; Choi et al., 2012). However, although globalization has several advantages for multinational companies, wide-ranging issues affecting nations such as epidemics and wars can cause unforeseen disruption in supply chain links (Toygar & Nart, 2022). In fact, such problems have recently been experienced by companies conducting global-scale commercial activities. The Coronavirus disease, which started in the People’s Republic of China (PRC) in December 2019 and was declared a global pandemic in March 2020, had negative effects on global supply chain links (Toygar & Yıldırım, 2021; Jagtap et al., 2022). The COVID-19 pandemic also caused unprecedented disruptions in global trade (Barlow et al., 2021; Wang et al., 2021; Verschuur et al., 2021), with sharp decreases in global trade volumes of agricultural commodities (Anderson et al., 2021). As a result of the pressure of the pandemic on global trade, wheat prices have risen to levels that have never been observed in the last 14 years (Mckenna, 2022). After 2 years with the COVID-19 pandemic, 60% of the global working population earned income less than that in the pre-pandemic period (UNCTAD, 2022d). In this process, historical records were broken in transportation costs, especially due to disruptions in logistics services and increased prices of energy commodities, such as crude oil and natural gas (Maliszewska et al., 2020; Burgos & Ivanov, 2021).