The European supply chain, which was already strained after months of congestion and bottlenecks stemming from the pandemic, is increasingly feeling the effects of the Ukrainian war and the sanctions aimed at punishing Russia for starting the conflict.
In the last two weeks, some European terminal operators have rejected ships transporting cargo to the Eurasian country. Britain even banned Russian vessels from entering its ports to restrict Russia’s economic interests and some 20 vessels have already been diverted from British ports.
In the Dutch Port of Rotterdam, some terminals have become a ‘parking lot’ for hundreds of freight containers bound for Russia, said Tie Schellekens, the port’s spokesman. In addition, many of the containers stacked on the docks undergo time-consuming customs inspections to ensure that they do not carry blacklisted items, such as aircraft or semiconductor spare parts.
Many logistics companies have also suspended deliveries to and from Russia and Ukraine, while UPS also included Belarus. The problems, however, are not only limited to logistics.
“Many Russian companies are unable to pay the goods that are on the ships because of the devaluation of the rouble so a lot of these goods will be abandoned and there will be a lot of unpaid debts, which will obviously harm many freight forwarders,” stated James Coombes, the executive director of Digital Freight.
Increase in airfares
In addition, the closure of airspace over Ukraine to civilian flights and the airlines’ avoidance of Russian airspace have boosted air freight rates. Judah Levine, head of research at freight reservations firm Freightos Group, said that the airlines avoiding Russian airspace will take longer alternative routes, which will increase fuel costs.
In addition, the oil prices are reaching record levels, which will worsen the already poor outlook for cargo airlines as fuel costs rise. According to Freightos Air Index, the rates from China to Europe rose by more than 80 percent at the end of February to US$11.36/kg and some lines are already imposing war risk surcharges, Levine stated.
Some insurers are also increasing the premiums for shipping goods in the Black Sea.