The Russia-Ukraine conflict, wider geopolitical implications and renewed COVID-19 lockdowns in China have compounded an already bleak global supply chain situation. Existing restrictions imposed on Russia and the potential for further restrictions continue to impact fuel costs, contributing to the wider supply chain crisis. While freight markets have limited direct exposure to Russia and Ukraine, global logistics will have to contend with an increasing number of risk factors, including restrictions to airspace, uncertainty on the future path of consumer demand and ongoing bottlenecks related to China’s COVID-19 response.

J.P. Morgan Research examines the reasons behind supply chain issues and what would need to happen to resolve them, as well as looking ahead to potential future shortages and examining the sectors that will feel the effects. 

What’s Behind the Global Supply Chain Crisis?


Supply chain problems emerged during COVID-10 lockdowns due to shifts in demand, labor shortages and structural factors.


Evolving geopolitical factors are now causing new risks and pockets of stress.


Affected sectors include metals and mining, chemicals, automotives, semiconductors and technology.


A possible solution? Increased capacity or a fall in demand.

Why is there a supply chain problem?

Supply chain problems were prominent during the COVID-19 lockdown amid a “perfect storm” of causes, including shifts in demand, labor shortages and structural factors. The Russia-Ukraine conflict and COVID-19 lockdowns in China have recently exacerbated issues, affecting supply in certain sectors including consumer goods, metals, food, chemicals and commodities.

Will supply chain bottlenecks continue?

Will Supply Chain Bottlenecks Continue?

Some sectors are likely to be further implicated in future supply chain issues than others. Russia’s dominant role in global energy, industrial metals and soft commodities supply has already pushed commodity price inflation to the highest levels since around 1960.  The EU and the U.K. have also banned Russian ships from docking at ports, which poses a significant risk to European supply chains and commodity prices.

Future supply chain issues: Where will the effects be felt?

Metals and mining

So far, most Russian mining companies have not experienced significant logistics disruption during metal export from Russia to Europe. However, logistical bottlenecks are increasing which have pushed up export costs and are extending delivery times. A high concentration of industrial metal supply relies on Russia, specifically nickel, palladium, platinum, rhodium, aluminum and copper. Aluminum faces the most significant and immediate disruption risk, as around 60% of Russia’s traditional alumina import requirements are closed off or disrupted. This is because Australia has banned the export of Australian alumina ores and related products to Russia. In recent years, Australia has accounted for around 20-30% of Russia’s import requirements. Ukraine is the largest exporter of alumina to Russia and operations were suspended in early March. The potential for alumina shortages is an immediate and tangible issue, which could be problematic for supply chains as aluminum is a critical metal used in packaging, transport (automobiles and aerospace), renewable energy infrastructure and wiring.

Russia’s exports of select commodities – historical total volumes (Mt)

Russia exported 412 million tonnes (Mt) of oil and oil products in 2019 and 380 Mt in 2020. Looking at coal, Russia exported 218 Mt in 2019 and 212 in 2020. The other commodities listed (ferrous metals, fertilizers, grain, iron ore) have lower but still significant export volumes between 22 and 41 Mt.

Russia export graph

Chemical supply

Chemical Supply For most European chemicals companies, the direct sales and earnings exposure to Russia is low at only around 1-2% of sales. However, the supply of fertilizers is likely to be impacted as Russia is a very significant producer/exporter of potash, with around 18% of global potash production in 2021. Another 17% of global production in 2021 came from Belarus where the major producer has already declared force majeure. Russia also accounts for roughly 10% of global ammonia production, 20-25% of global ammonia exports and 5% of global urea production. Low or no supply from Russia combined with high energy prices is likely to result in a significant disruption to the supply of fertilizers in the foreseeable future and the situation has already resulted in price spikes. 

The automotive sector 

The automotive sector is facing disruption due to rising costs and the availability of nickel, copper, platinum group metals, aluminum and steel products. Escalating Russia risks, complex automotive supply chains and dependence on key metals could make the situation volatile in the coming months. J.P. Morgan Research’s global car production assumptions have been updated from +4% to -1% for the 2022 fiscal year (FY22), and from 6% to 7% for the 2023 fiscal year (FY23).

“We believe that the second half of 2022 will reflect the recovery of the supply chain situation in Russia and Ukraine, and we expect a quick recovery of production in China as the country gains control of the COVID-19 pandemic,” said Jose M Asumendi, Head of European Autos at J.P. Morgan. “With this in mind, we write off any hopes of seeing full-year production volume growth recovery in 2022 but do expect to see sequential production recovery taking place globally from the second quarter of FY22 onwards for the remainder of the year.”

We believe that the second half of 2022 will reflect the recovery of the supply chain situation in Russia-Ukraine. With this in mind, we write off any hopes of seeing full-year global car production volume recovery in 2022.


 While the geopolitical situation does not affect metals directly required in semiconductor production, neon gas could become an issue. Neon gas is a by-product of steel manufacturing in Ukraine, although most semiconductor vendors have found a second source since the annexation of Crimea in 2014.

The more significant issue for the semiconductor sector lies in its end markets, namely the supply of palladium to the auto industry and nickel to battery makers. The autos end market is key for European semis, with major device companies having 30-45% exposure. Currently, semiconductor supply is a major bottleneck for the industry and as a result, volumes have struggled to recover. J.P. Morgan Research believes that the semiconductor supply crisis will begin to resolve in the first half of 2023.


The industry-wide silicon chip shortage and disruptions related to COVID-19 lockdowns in China have left the technology sector facing renewed supply constraints. For technology giant Apple, the main focus is still on supply despite concerns about inflation affecting consumer purchases and the pausing of sales in Russia, which will impact year-over-year growth by around 150 basis points. In the first quarter of 2022 Apple saw a 26% quarter-over-quarter drop in product sales, with worse still to come. Apple is expecting the impact on revenue in the second quarter of 2022 to be $4 billion-$8 billion, substantially larger than the loss seen in the first quarter of the year.

Finding a way out of supply shortages

What would need to happen to solve the ongoing supply chain issues? The solution seems likely to be either an increase in capacity or a fall in demand. “On the capacity side, increased U.S. trucking capacity and reduced working restrictions related to COVID-19 should help” said Samuel Bland, European Transport and Logistics Analyst at J.P. Morgan. “The shipping fleet is also expected to expand faster during 2023 and 2024, following a more constrained capacity situation since the COVID-19 pandemic. On airfreight, we expect the recovery in capacity to be linked to the return of commercial airline flying, particularly for inter-continental capacity. On the demand side, we expect the recovery in inventories seen in many importing countries to help. We also expect some shift in the mix of consumer spending back to discretionary services may help. More generally, increasing pressures on consumer budgets may also force a slowdown in import demand.”

We expect some shift in the mix of consumer spending back to discretionary services may help. More generally, increasing pressures on consumer budgets may also force a slowdown in import demand.

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