impact on shipping, ports, air transport

A patrol boat at the port of Mariupol on Ukraine’s Black Sea on February 11, 2022.

ALEKSEY FILIPPOV | AFP | beautiful pictures

The Russian-Ukrainian war is severely disrupting air and freight transport. Russian forces are cutting off shipping routes, logistics companies are suspending service and air rates are skyrocketing, supply chain companies say.

The Russian navy has closed navigation in and out of the Sea of ​​Azov, one of the few access points to road trade, said Dylan Alperin, head of professional services at supply chain software platform Keelvar. sea ​​in Ukraine.

He told CNBC: “This has created a huge amount of boats waiting to pass through the Kerch Strait. With 70% of Ukraine’s exports being delivered via ships, the congestion is getting worse. than”.

Christian Roeloffs, CEO of container booking company Container xChange, said: “The areas of the Black Sea and the Sea of ​​Azov are now very dangerous or impassable. There have been missile attacks on boats, seizure of ships and closure of shipping lanes. Commerce.”

The situation on the ground in Ukraine is extremely complex, and reports from the area are difficult or impossible to confirm.

“Many ships were hit, crew members were killed and injured and crew members of all nationalities were stranded on ships moored in port,” the International Chamber of Transport warned on Thursday.

Supply chain companies told CNBC that freight shipments are at a standstill because the Ukrainian ports of Odessa and Mariupol are closed, damaged or attacked. Roeloffs added that container operations have stopped, with cargo stuck at ports.

Prices skyrocketed

Limited cargo capacity offers a double benefit to shippers. According to the companies, with Ukrainian airspace being closed to civilian flights and airlines avoiding Russian airspace, air freight rates are skyrocketing.

“The flight ban has canceled many of these flights and removed 10 million miles of airspace from international freight routes,” Alperin said. “With airlines responsible for flying around 20% of the cargo, this will significantly reduce the capacity of airlines to supply.”

Judah Levine, head of research at cargo booking firm Freightos Group, said that as airlines avoid Russian airspace, they will take alternative, longer routes – increasing fuel costs Whether.

Alperin said a record spike in oil prices would worsen the already dire outlook for carriers as fuel costs rise. “We are experiencing record backlogs and delays while experiencing some of the highest prices on record for shipping and more.”

The price of oil has been rising for weeks and has risen to record levels.

The Freightos Air Index’s China-to-Europe freight rates rose more than 80 percent at the end of February to $11.36 per kilogram, Levine said, with some airlines already imposing a war risk surcharge.

Bindiya Vakil, CEO of supply chain risk management firm Resilinc, said some insurers are also increasing premiums for cargo shipped in the Black Sea.

Many logistics companies have also suspended deliveries to and from Russia and Ukraine, while Container shipping companies are staying away from Russia.

DHL said it was closing its offices and operations in Ukraine until further notice, while UPS told CNBC it had suspended services to and from Ukraine, Russia and Belarus.

Alperin notes that the growing number of carriers suspending service in Russia accounts for about 62% of total sea freight capacity.

Meanwhile, tanker prices have “jumped,” with a jump from 157% to 591%, Alperin said.

Transport crew trapped

The Department of International Shipping warned on Thursday that supply chain disruptions could be made worse by war-related shortages of shipping crews.

Ukrainian and Russian seafarers make up 14.5% of the global shipping workforce.

“To maintain this unfettered commercial operation, seafarers must be able to join and disembark (crew changes) freely around the world. However, flights have been canceled to and away from the area, making it increasingly difficult,” it said in a statement. It added that some crew members abandoned their ships in Ukraine due to security concerns.

The association added: “Concerns about the safety of the crew and the increased insurance premiums for sending ships to Ukraine or Russia have also discouraged shipowners from sending ships to these countries.”

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