Russian invasion of Ukraine: freight updates and FAQs

Ocean

Suspension of bookings to Russian and Ukrainian ports. 

Some carriers are beginning to stop calling at Russian and Ukrainian ports. 

• ONE and Hapag-Lloyd have suspended bookings to Russia and announced a suspension of booking acceptance to St. Petersburg and Novorossiysk.
• Maersk has suspended all new bookings to and from all Russian gateway ports, with the exception of foodstuffs, medical and humanitarian supplies.
• MSC has introduced a temporary suspension on all cargo bookings to and from Russia, covering all access areas including the Baltics, Black Sea and Far East Russia.
  • MSC will continue to accept and screen bookings for delivery of essential goods such as food, medical equipment and humanitarian goods.
  • Ships will not call at Ukrainian ports. For cargo destined to Ukraine, they will declare the voyage as terminating in the last port prior to Ukraine.

Sanction controls.

Countries such as the Netherlands, Belgium and Germany are holding back vessels en route to Russia in search of restricted commodities prohibited by sanctions against Russia.

Container terminals are blocking cargo.

ECT in Rotterdam has announced that containers travelling to Russia will be blocked by customs and cannot be loaded. 

Russian ships denied access to ports. 

In the UK, Grant Shapps, the Transport Secretary, has written to all UK ports asking them to deny access to any Russian-flagged and operated ships.

Port congestion.

Stacking areas at hubs in Europe are already very full and we expect the impact of the Ukraine situation to present additional challenges on top of existing global supply chain disruptions.

As carriers begin to suspend shipments to and from Russia and Ukraine, ships will divert to European ports, making congestion highly likely.

Shippers are cancelling Far East Asia-Europe rail freight bookings amid speculation that sanctions could prevent cargo transiting Russia. This may result in a further uptick of demand for ocean bookings.

Fuel cost effect. 

BAF (bunker adjustment factor) will fluctuate with oil prices, so rates will shift accordingly depending on review dates. MSC is first carrier to announce that Fuel surcharges will be reviewed fortnightly and not monthly for all spot and quarterly volumes – effective April 15th

Dwell times in Europe 

Dwell times are increasing across Europe. This varies from 25% to 55% depending on the type of goods.  Transhipment complications and heavily congested ports are also increasing transit times. 

Air

Fuel cost effect. 

Changes in the price of fuel directly affects the cost of air freight. Rerouting flights to avoid Russian airspace will also result in higher fuel usage, also driving up the cost of operations.

Some airlines are therefore implementing fuel surcharges (FSC), adding to the overall cost of a booking.

Russian airline sanctions.

Russian airlines are not allowed to call at European airports. Volga-Dnepr Group’s AirBridgeCargo is the main cargo carrier affected by this, controlling lots of capacity from Asia into Europe and the US. 

Other airlines affected include Aeroflot (SU), Siberia Airlines (S7), and E-Cargo (RF), SkyGates (U3).

Europe carriers potentially cancelling or rerouting Asia flights.

Europe carriers will not fly to Russia, and many are banned from Russian airspace, which is the main route for flights to and from Asia.

It remains unclear whether carriers will choose to reroute or cancel their flights. Rerouting will require more fuel; for passenger flights, this is likely to result in airlines prioritising passengers over cargo.

Finnair have already made several changes to their schedules , and other airlines are following. Lufthansa and Air France-KLM have already cancelled lots of Asia flights. Finnair announced yesterday that as of March 9, they will resume their flights to Narita, Japan, avoiding Russian airspace resulting in an additional 3 hours of flight time. 

Virgin Atlantic have cancelled cargo services to Hong Kong & Beijing.

Additional potential risks. 

Based on a previous update where airlines were expected to install war risk surcharges, resulting in an extra charge per kilogram on top of the usual per kilogram rate, Cargolux cargo airlines announced a war risk of 0.2$/kg for cargo to & from Asia.

The reaction from Asian and Middle Eastern carriers will also be critical with regards to flying over Russian airspace. Lots of cargo is on carriers like China Eastern, China Southern, Korean Air and China Cargo Airlines. So far, there has been no effect, but any changes will represent a further risk to the passage of goods between Asia and Europe via air.

Middle East based carriers already see a surge of bookings out of Europe, and confirmations are already up to 2 weeks for departure. 

Continued change in airspace and flight bans.

On Tuesday 1st March, the US government announced a ban on Russian flights as well, following Europe and Canada bans. 

Below is a graphic showing countries that shut their airspace to Russian airlines.

As a result of all the above factors, the market started seeing rate increases of up to 50% or more on the per kg rate of February.