The impact of Russia-Ukraine conflict on international trade logistics and transportation industry

As early as before the Russia-Ukraine war, there had been insufficient global sea and air transport capacity, serious congestion of major terminals, and high international logistics prices. With the outbreak of the Russia-Ukraine war, this kind of contradiction intensified, coupled with the rise of international crude oil prices, the cost of going out to sea logistics will rise again, sea and air freight prices soared again, radiation to the global logistics chain. Many logistics companies, including Seko Logistics, have stopped taking orders from Russia, Major international express and package delivery operators such as FedEx, UPS, USPS, DPD, and DHL have suspended services in Ukraine or Russia, while freight forwarders such as DSV and Deutsche Schenker have also suspended operations in Ukraine. The resumption of logistics between Russia and Ukraine depends on the extension of the war situation. At this stage, it is impossible to judge the length of logistics interruption.
1. The shipping
Data show that among the 1.89 million seafarers in the world, Russians account for 10.5% and Ukrainians account for 4%. Due to the large proportion of Russian and Ukrainian seafarers, the Russia-Ukraine conflict makes the shipping situation face a more serious problem of labor shortage.
Some shipping companies in St. Petersburg and other ports on the west coast of Russia have suspended flights, while ports in Vladivostok and other ports on the east coast remain open. If Europe pushes ahead with the embargo, there will be more cases of cross-border logistics ship suspension, port jumping, and suspension. The situation of port logistics interruption cannot be ruled out, nor can goods bound for Russia be stopped by the previous port countries. Currently, hapag-Lloyd AG, ONE, Maersk, MSC, CMA CGM, and other shipping companies have suspended bookings to and from Russia. There are export enterprises that can not deliver samples and bills of lading to Russia.
Ukraine has suspended commercial shipping at its ports, and almost all shipping companies have suspended orders to Ukraine. The closure of most of Ukraine's ports, including Odesa and Hersun, has led to a large number of cargo ships blocking the ports, leaving cargo waiting to be unloaded. Both FOB and CIF containers shipped to Ukraine will face an increase in demurrage charges. When the buyer loses contact or refuses to pay the charges, the enterprise will bear the risks and costs of goods rejection.
2. The air freight
The Ukrainian authorities have declared the airspace over the country a no-fly zone. The move by Europe, the United States, and Russia to close their airspace to each other has had a huge impact on the aviation industry.
Ukraine's airspace has always been a very important air corridor between the Eurasian continent. Most flights from China to Europe pass through Ukraine, and more than 70% of direct flights to Europe pass through Ukraine. For example, starting from East China to Fly to Europe, except for a southern route through the Middle East to Fly to Europe, a northern route through Russia to reach Europe through Ukraine, as the preferred route of China's civil aviation, has relatively less mileage and time. The war clearly affected the best route through central Europe.
The number of all-cargo aircraft in China is small, and most of them are European all-cargo aircraft for domestic transportation. Now, affected by the airspace closure event, the Cargo airlines between China and Europe need to find stopovers and detours to reduce flight efficiency, resulting in increased flight time and fuel consumption. Due to the war to reduce flights, insufficient capacity, time-consuming consumption of fuel, and the rise in global fuel costs, and push up the cost of air transport, air prices will rise significantly.
3. The land transportation
Earlier, Ukrainian forces blew up the railway junction connecting Ukraine's railway system with Russia's. All freight trains crossing Ukraine have been suspended or diverted.
Ukraine, as an important hub connecting Eurasia, is known as the gateway to Europe. After the outbreak of the war, Eastern Europe was seriously affected, but fortunately, the impact on the China-Europe freight train was relatively small. Because the online time in Ukraine is still short, the impact on the freight train transportation of Chinese sellers is limited. The Ukrainian line accounts for less than 3 percent of China-Europe freight trains. The main routes of China-Europe freight train are respectively one northern European route and one southern European route. Ukraine is only a country on the branch line of the Northern European route of China-Europe freight train, and the interruption of the Ukrainian railway system has little involvement with the mainline.
But the uncertain situation has also raised market concerns about the stability of the China-Europe train service, which could be further affected if more parties are involved.
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