The forwarding sector said the airspace restrictions imposed by Russia, European states, Canada, the UK and in North America were forcing airlines to cancel and adjust services.

“Adjustments to flight schedules are unavoidable and increased transit times must be expected. As a result, we also expect a financial impact on airfreight rates,” warned Copenhagen-headquartered forwarder DSV. “We are not able to provide an exact estimate of the impact at this stage.”

It added: “Due to ongoing developments in the Russia-Ukraine conflict, several air carriers have stopped using Russian airspace. This will have a direct effect on air freight services in the coming period.

“DSV is in close dialogue with our carriers to find alternative routings to ensure we provide the best possible service for our customers.”

Kuehne+Nagel warned: “Due to the closure of the air corridors over Russia and Ukraine and the mentioned sanctions, we foresee capacity restrictions and, as a consequence, longer lead times.”

Scan Global Logistics (SGL) said that fuel prices will contribute to higher rates.

The forwarder pointed out that one of the most affected airlines will be Russian carrier AirBridgeCargo, which is blocked from European and North American airspace, two of its biggest markets.

“Overall we expect the current situation will trigger an immediate capacity constraint across transport modes, as well as pressure on freight rate levels, including oil price increases.”

SGL said that many airlines have already initiated to suspend a number of flights and design alternative routes, leading to extended flight time and increased fuel cost.

“Russian freighter carriers Airbridge and Volga are significantly impacted. They have cancelled the majority of flights to/from Asia, with this having a significant overall capacity impact. Asian airlines are not banned from Russian airspace, however, note, we also see Asian-based carriers cancelling flights.”

Singapore Airlines, Swiss, Japan Airlines, FedEx, and UPS have suspended direct flights to/from Russia, SGL said.

Flexport said its research showed that average flight times on six key trade routes from Asia to Northern Europe have increased by 3.4% (range 0.6% to 6.9%) in the five days to February 28 compared to the December 1 through February 22 period.

“The most significant impact is the need for rerouting around the conflict zone, extending transit times, and increased carbon emissions,” Flexport said.

“Some flights between Asia and Northern Europe will need to be rerouted via new southerly routings over Saudi Arabia, amid restrictions linked to Iran, Syria, and Yemen.”

The company added: “It is worth noting that many flights from China and the northern part of Southeast Asia as well as South Korea and Japan typically travel north of the affected region.”

The forwarder pointed out that Antonov’s fleet of freighters – mainly used for heavylift operations – are also affected.

It said that all but five of its freighters were in Ukraine in the days before the start of the conflict.

The remaining five, all AN-124 class with 150 tons capacity each, landed in Europe or the US in the days before.

The forwarder added that several lease firms have reportedly confirmed they will end their contracts with Russian airlines.

The 43 jets of the Volga-Dnepr Group, which includes AirBridgeCargo, features 27 Boeing and 11 Antonov jets. For Aeroflot, 82% of its fleet are Airbus or Boeing planes.

Sanctions could also hit the provision of aircraft parts making maintenance operations difficult.

Despite this, AirBridgeCargo has continued flying since the start of March with more than 15 flights completed, according to FlightRadar24. Destinations include Shanghai, Beijing, Hong Kong, Dubai, Shenzhen, Seoul and Bahrain.

However, Flexport said the loss of Russian cargo capacity will have less of an impact on the overall market than the extended transit times.

“The impact on global airfreight may be minimal given both airlines each represented less than 0.5% of global airfreight carried in 2019,” Flexport said.

Source: www.aircargo.com

Image: www.aircargo.com

The post Supply chain costs to rise as Ukraine crisis bites appeared first on Cargo News Today.

Despite, and partly because of, ongoing turbulence, air cargo keeps going strong. The industry flew through 2021 with an 18.7% increase in traffic over 2020 and 6.9% higher than in 2019. According to IATA, growth was well ahead of the rise in global trade.

2022 has continued in this vein and predictions are for more of the same at least for the first half of the year. IATA conducted a survey of airline chief financial officers and heads of cargo in December and January, who reported improved passenger and cargo volumes and expressed optimism that cargo yields would remain at lofty heights.

The air cargo industry is soaring on strong fundamentals. Inventory-to-sales ratios remain at low levels, necessitating ongoing re-stocking, with strong impetus from economic growth and rising glocargobal trade. In addition, the congestion that has plagued ocean cargo over the past year is not expected to abate significantly in the near term, with some voices predicting this to last through 2022, which promises elevated need for airfreight.

This spells continuing pressure on capacity, even though passenger airlines are in recovery mode. Aviation intelligence firm IBA predicts capacity of US and European low-cost airlines to exceed pre-Covid levels this year and transatlantic passenger traffic to recover to 2019 levels. However, Asia Pacific carriers continue to limp, with some not expected to reach half of their 2019 capacity this year.

[ED: On top of this is the invasion of Ukraine, which has severely limited AirBridgeCargo’s and Volga-Dnepr’s capacity while other airlines are scrambling to maintain services with extended routings to avoid Russian or European airspace.]

The experience with the Omicron variant was a powerful illustration how volatile the situation remains. Stringent Covid-related restrictions have severely hobbled Cathay Pacific’s longhaul freighter operations for months and Lufthansa Cargo had to embargo flows through its Frankfurt hub in late January after an Omicron outbreak decimated ground staff there.

The inevitable hunt for capacity is keeping rates in the stratosphere, and the trajectory of the oil price is adding fuel to the fire. Shippers are bracing themselves for more squeeze on their wallets. For the red-hot trucking industry, which has shown similar capacity pressures as airfreight, a recent survey reported that 97% of shippers expected to increase their freight procurement budget this year, more than half anticipating increases of 25% or more.

Forwarders are responding to the situation with moves to tie up more dedicated lift, from large players like Flexport to mid-sized companies like cargo-partner.

The scramble for capacity will go on. Those that have automated processes will find the going somewhat less strenuous.

Source: www.aircargo.com

Image: www.pixybay.com

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