Salvatore Capasso, Giovanni Canitano (a cura di)
Mediterranean Economies 2023
DOI: 10.1401/9788815411167/c7
– Damage to infrastructures: Wars and conflicts can significantly damage transportation infrastructures, such as roads, railways and ports. One of the major concerns is the damage to transportation infrastructures in eastern Ukraine. This can make it difficult and costly to transport goods (e.g. steel and food products), resulting in longer transit times and higher
{p. 245}transportation costs. Damage to infrastructure can also result in interruptions in the supply chain, particularly in areas where there are no alternative routes available. In turn, this could lead to a slowdown in import and export operations. According to Railtarget (https://www.railtarget.eu/) since the beginning of the Russia’s military invasion of Ukraine, up to 30 per cent of transport infrastructure has been damaged, the extent ranging from complete destruction to relatively minor repairs. The damage is estimated at US $ 2.9 billion (see fig. 1).
Fig. 1. Estimated direct losses from damage to physical infrastructure related to the war in Ukraine by type - December 2022 (in billion US dollars).
Source: Statista on Kyiv School of Economics and Ministry of Economy of Ukraine data.
– Increased costs: Wars and conflicts can also lead to increased transportation costs. This can be due to a variety of factors, including damage to infrastructure, higher insurance costs and increased security measures. For example, insurance premiums for cargo ships may increase due to the perceived higher risk of piracy or damage during a conflict. Figure 2 reports the trend in the price of {p. 246}shipping in the period 2021-2022 (Q2). The data show that, after the rise in shipping prices during the pandemic, there has been a gradual decline in maritime freight prices. With the beginning of the war, maritime transport prices significantly resumed growth.
Fig. 2. Price of shipping 2021-2022 (Q2).
Source: European Parliament [2022] (https://www.europarl.europa.eu/RegData/etudes/ATAG/2022/733603/EPRS_ATA(2022)733603_EN.pdf) European Parliament UNCTAD (2022b), based on the «Clarksea index», tracking vessel earnings across major shipping sectors.
– Disruption to supply chains: Wars and conflicts can cause disruptions to supply chains, particularly in areas where goods need to cross conflict zones. This can result in delays (and higher costs) for importers and exporters, as well as increased risk of cargo theft and damage. Figure 3 provides a visualization of the time gap between the period a chip is ordered and when it is delivered (lead time). The impact of war pushed the lead time upwards to over 25 weeks in the first six months of 2022.
– Political and economic uncertainty: wars and conflicts can create political and economic uncertainty, making it difficult for businesses to plan and make strategic decisions. In some cases, businesses may choose to relocate to other regions in order to mitigate the risks associated with conflict. This uncertainty can result in decreased investment, decreased demand for goods and {p. 247}services, reduced trade flows, input shortages and price increases [Arvis, Rastogi and Saslavsky 2022]. Figure 4 reports the wheat prices and trade policy measures. Since the beginning of the war at the end of February 2022, 67 new trade policies have been imposed or announced. Export restrictions alone have added seven percentage points to the price of wheat [Ruta 2022].
Fig. 3. Gap between ordering a chip and delivery (lead time in weeks).
Source: Bloomberg [2022].
– Impact on regional trade: wars and conflicts can have a significant impact on regional trade, particularly in areas where trade routes pass through conflict zones [UNCTAD 2022a]. For example, conflicts in the Middle East have had a significant impact on the flow of goods through the Suez Canal, which is a key trade route connecting Europe and Asia. Interruptions to this trade route can result in higher transportation costs and delays.
In summary, wars and conflicts can have a significant impact on freight transport, influencing the movement of goods within affected countries as well as the flow of goods through regional trade routes. In addition, the impact of wars may result in increased logistics costs, disruptions to supply chains and reduced trade volumes. {p. 248}
Fig. 4. International wheat prices and trade policy measures.
Source: Ruta [2022].

3. Russia-Ukraine war and its impact on the agriculture and agrifood supply chains

The Mediterranean agriculture and agrifood sectors play a key role at the global economy’s scale. Despite the difficulties associated with the transformation processes of the economy and the challenge of climate change, the agricultural and agrifood sector has experienced renewed consumer interest. In recent years, greater consumer awareness of the health benefits of food is emerging [Sgroi, Moscato and Moscato 2022] with the effect of encouraging food production in this region.
The role that Mediterranean agriculture and agrifood sectors have taken on a global scale is certainly due to their geographical location, which benefits from favourable climatic conditions for crops, but also on-going waves of restructuring processes related to neoliberal policies. Since the 1980s, the Mediterranean agriculture and agrifood industry have experienced multifaceted changes related to a number of combined factors. Among many others, we should list the following: (i) the transformation of the relationship between agriculture, the food industry, large-scale retailing and the financial sector occurring at global level and (ii) the heritage of the distinctive aspects of the agriculture and agrifood businesses in the region, which are still mainly based on small-scale, often undercapitalized, family units. These factors have negatively affected both working conditions [Cillo and Toffanin 2014; Gertel and Sippel 2014; Avola 2022; Perrotta and Raeymaekers 2022] and resource availability for research and innovation [Marzin et al. 2016]. In addition, climate change has exacerbated existing environmental problems with the lack of water resources, pollution, declining biodiversity, urbanization and land abandonment. Current changes are increasing risks and leading the Mediterranean region towards severe dependence on key imported inputs such as energy and additives for animal feed and agricultural fertilisers [EPRS 2022].
The above-mentioned dilemma of the agriculture and the agrifood systems in the Mediterranean area prompted us to reflect on the increasing interdependence between the countries of this area and the global economy. The COVID-19 outbreak drew attention to the interdependence of socio-economic processes as well as the consequences of uncoordinated domestic
{p. 250}policies. At the same time, the pandemic revealed the critical role of supply chains in the transportation of certain goods, namely medical supplies [Kahkonen et al. 2021] and food products. The importance of supply chains was even more critical in countries with poor, disconnected or deteriorated infrastructure such as those in the area under consideration.