There will be a spike in airfreight rates for air cargo shippers on the Asia to Europe lanes as a massive amount of capacity has been removed from the market. With the EU/UK ban on Russian Aircraft in their airspace, Volga-Dnepr Group’s AirBridgeCargo has removed all their aircrafts from Europe.
While the U.S. is considering a ban on Russian airlines, it hasn’t been executed yet. ABC had 2 aircraft in the U.S., but now both are gone. It’s not just Russian airlines that are affected, however, as Finnair Cargo has cut all operations to east Asia as well. This has reduced capacity even more, creating a strain on the supply chain that was already rife with capacity issues in the first place. Finnair stated it would not be operating in Osaka, Tokyo, Seoul, Shanghai, or Guangzhou either. The review of that decision to not operate in those areas is to take place on the 6th of March where they will decide if further action is to be taken or the restrictions lifted.
The impact created from these events is likely to be substantial on the market, even stretching and destroying the rail on Asia-Europe’s capacity. Several forwarders stopped taking bookings on the overland service, but others are likely to follow as economic sanctions and the Swift payment ban begin to take effect.
Ukraine’s foreign minister, Dmytro Kuleba stated on twitter “Russia may have destroyed our Mriya [a ship who’s name translated is Dream], but they will never be able to destroy our dream of a strong, free, and democratic European state. We shall prevail.”
While the conflict in Ukraine continues to unfold, the impact of sanctions on Russia will continue to bounce off the supply chain and logistics industry. Under the stress of the pandemic, the air freight issues that we expect to see will likely be substantial. When this level of disruption hits, it’s our responsibility to put over seven decades of experience to work for our clients. We’ve worked through conflicts and sanctions, supported relief efforts and managed supply and medical shipments into areas where they’re desperately needed.
During this time, you need a creative, experienced forwarder to work with your cargo and mitigate any issues that arise from current events. If you have concerns about your cargo and the impact cargo capacity and airfreight rates will have, reach out to your Coppersmith representative today for more information.
