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War in Ukraine: impact for international transport, March 15

15-03-2022

Restrictions for international freight

Airspace of Ukraine is closed for any commercial traffic. European airspace is closed for all Russian airlines. As a countermeasure Russian and Belarusian airspace is closed for European airlines. As a result, flights between Europe and Asia have been disrupted as European airlines need to fly longer routes now to avoid Russian airspace. A flight between Tokyo and Helsinki used to take 9 hours, but the adjusted route adds 4 hours of flying time now. Routes between Europe and China make a 3 hours detour on average.
Russian airlines, like Air Bridge Cargo which operated a significant amount of cargo flights between Europe and Asia, are banned to operate in European Union. After numerous cancellations and rearrangements, European carriers have managed to reestablished regular service between Europe and Asia amid the restrictions.

Although Russian Railways has been added to the list of sanctioned companies, it is still possible to keep goods moving on rail from China to Europe via Russia and Belarus. It is important to keep in mind the high risks involved. Risks related to both the war situation and any potential political decisions between EU, Russia and China can have an unexpected result for cargo on the way under not being able to enter the EU.

Most main ocean carriers have decided to stop serving Russian ports. Combined with thriving oil prices this affects freight rates. Long-term impact is yet to be seen as the market is still showing first reactions.

Coronavirus situation in China

As Coronavirus has started to spread with increasing speed in China again. China’s government has locked down Shenzhen, a city of 17.5 million people to halt the Covid outbreak. This means that also production companies cannot produce the goods. So far shipments are moving without bigger delays, but still, the risk for hold-ups is increased.

MyDello service update

The dynamics of this situation are changing fast. That’s why we are closely monitoring the situation and will report if there should be any changes or disruptions in our services. This is to ensure as smooth service as possible.

· Air freight. Service on Asia-Europe trade lane is now recovering, but the impact of reorganizing routes and a huge increase in oil price affects the rates. Air rates from China to Europe have increased on average 140% over the last two weeks. For other lanes like between Europe and Americas, there is no dramatic increase.

· Rail freight. Service on China-Europe lane is operating with no noteworthy disruptions up to this time. Shipments on the way are moving as scheduled. From the current week MyDello resumed accepting rail freight shipments from China to Europe.

· Ocean freight. Demand for ocean transport from Asia to Europe is increasing. This results in a longer waiting time between booking and vessel departure. As many ocean carriers have stopped serving Russian ports, the demand for the feeder ships in the Baltic has dropped, which may result in a less frequent feeder schedule to Baltic ports.

More updates to come in the upcoming days.

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