Ukraine crisis impacts air, sea and rail from Asia

Air freight capacity from Asia has shrunk by 22% in a week, rail freight services have been suspended and sea freight bunker surcharges are expected to spike, with crude oil more than double the price at the beginning of the year.

The European Union joined the United States and Canada in closing its airspace to aircraft from Russia and suspended air carriers based in Russia from operating cargo air services, including Aeroflot and all-cargo carrier AirBridgeCargo Airlines, adding further pressure to an already tight air freight market.

The destruction and grounding of much of the heavy-lift fleet will make oversized project cargo shipping much more challenging and in the short-term may add costs and delays for many industries, most notably the energy sector.

Flight distance, times, fuel burnt and cost will rise as airlines reroute flights between Asia and Europe to avoid Russian air space. Average flight times on six key trade routes from Asia to Northern Europe increased by 3.4% within days of Russia’s invasion.

Freight costs are likely to increase further, as are fuel costs and many carriers are introducing War Risk Surcharges to compensate for the costs of adjusting operations.

Some carriers may cancel their Asia-Europe services as they face longer and costlier routes and those carriers that do continue to fly, will pass on higher fuel costs, while the weight of the additional fuel could limit the amount of cargo carried.

Port dwell times have increased 43% across Europe since Russia’s invasion of Ukraine, with consumer packaged goods, food and beverages, hit particularly hard, as dwell times increased by 55%.

Container ships are skipping ports to try and maintain their schedules or, at best, limit delays, which are averaging 17 days and unchanged since last November.

Average round trip duration for all seven OCEAN Alliance Asia – North Europe loops however stood at 93 days, compared to an average round voyage time of 78 days.

China to Europe rail freight operations are apparently continuing, though major service providers have added Moscow ally Belarus to their booking suspensions, which effectively blocks rail shipments on much of the Asia-North Europe network, because containers must be transferred to different gauge trains on entering Europe, with the busiest crossing at the Małaszewicze-Brest reloading area on the Poland-Belarus border.

Increasing in popularity with shippers, particularly for high-value products that would benefit from a faster transit, rail freight from China has grown massively since the advent of the COVID pandemic, with volumes surging 29% last year, to 1.46m teu.

The displacement of such massive volumes will have a profound impact on other modes from Asia, taking much needed capacity and putting even more pressure on pricing.

Supply chains have never faced so many challenges and with local conditions changing rapidly, we work closely with the Noatum office network to maintain the ability to react quickly to new challenges and protect our customers.

With so many supply chain challenges, we work closely with our office network, to react quickly, overcome issues and protect our customers.