impact on navigation, ports, air freight

A patrol boat in the Ukrainian port of Mariupol on the Black Sea, February 11, 2022.

ALEKSEY FILIPPOV | AFP | Getty Images

The Russian-Ukrainian war seriously disrupts shipping and air freight. Russian forces are cutting off shipping routes, logistics companies are suspending services and air freight rates are skyrocketing, supply chain companies said.

Russian naval forces have closed shipping to and from the Sea of ​​Azov – one of Ukraine’s few maritime trade access points, said Dylan Alperin, head of software platform professional services. of Keelvar supply chain.

“This has created a heavy accumulation of ships waiting to cross the Kerch Strait. With 70% of Ukrainian exports distributed by ship, the congestion is getting worse by the hour,” he told CNBC.

Christian Roeloffs, CEO of a container booking company Container xChange, said: “Parts of the Black Sea and the Sea of ​​Azov are now dangerous or impassable. There have been missile attacks on ships and arrests of ships and closures of lanes for shipping commercial.”

The situation on the ground in Ukraine is extremely fluid and reports from the region are difficult if not impossible to confirm.

“Several ships have been hit by munitions, sailors have been killed and injured and sailors of all nationalities are trapped on ships moored in ports,” the International Chamber of Shipping warned on Thursday.

Supply chain companies told CNBC that cargo movements have stalled as Ukraine’s ports of Odessa and Mariupol are closed, damaged or attacked. Roeloffs added that container movements have come to a halt, with cargo stuck at ports.

Skyrocketing prices

Limited air capacity presents a double whammy for shippers. With the airspace over Ukraine closed to civilian flights and airlines avoiding Russian airspace, air freight rates are rising, companies say.

“The flight ban canceled many of those flights and removed 10 million miles of airspace from international cargo routes,” Alperin said. “With airlines responsible for carrying around 20% of cargo, this will significantly reduce the capacity provided by carriers.”

Judah Levine, head of research at freight booking company Freightos Group, said as airlines avoid Russian airspace, they will fly alternate and longer routes, which will drive up fuel costs.

Record spikes in oil prices will worsen an already poor outlook for carriers as fuel prices rise, Alperin said. “We are facing record backlogs and delays while experiencing some of the highest prices ever for transportation and beyond.”

Oil prices have been rising for weeks and are at record highs.

Levine said Freightos Air Index China-Europe fares soared more than 80% in late February to $11.36/kg, with some carriers already imposing war risk surcharges.

Bindiya Vakil, CEO of supply chain risk management firm Resilinc, said some insurers were also raising premiums for shipping goods to the Black Sea.

Many logistics companies have also suspended deliveries to and from Russia as well as Ukraine, while container shipping companies avoid Russia.

DHL said it has closed offices and operations in Ukraine until further notice, while UPS told CNBC it has suspended services to and from Ukraine, Russia and Belarus.

Alperin noted that the growing number of carriers that have suspended services to Russia accounts for about 62% of total sea freight capacity.

Meanwhile, tanker prices “skyrocketed”, peaking from 157% to 591%, Alperin said.

Stranded ship crew

The International Chamber of Shipping warned on Thursday that supply chain disruptions are set to be compounded by a shortage of transport crews due to the war.

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

“To keep this trade unhindered, seafarers must be able to freely embark and disembark (crew change) vessels across the world. However, flights have been canceled to and from the region, making increasingly difficult,” he said in a statement. He added that some crews had abandoned their ships in Ukraine due to security concerns.

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

In February, the association, which represents 80% of the world’s merchant fleets, said “the ability to pay seafarers must also be maintained through international banking systems”.

The United States, European allies and Canada have agreed to cut major Russian banks from the SWIFT interbank messaging system, which connects more than 11,000 banks and financial institutions in more than 200 countries and territories.

As the the value of the Russian ruble falls, this should also have other ripple effects.

“With the devaluation of the rouble, many Russian companies cannot afford to pay for the goods that are in the ships and this is going to lead to many abandoned shipments and unpaid debts for orders on the water,” James said. Coombes, CEO of Digital Freight. Vector.ai forwarding company. “Freight forwarders will end up with many unpaid freight bills.”