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.

This is according to the latest data from industry analysts CLIVE Data Services, which found chargeable weight in February was at 0.7% down on the pre-Covid level in 2019, and up 2.6% compared to February 2021, with capacity in the market down 5.4% and up 6.9% to the respective 2019 and 2021 figures.

However, CLIVE warned that the war in Ukraine means the air cargo market is heading into another period of significant uncertainty with a rise in rates.

“Airfreight market conditions feel insignificant when you see what is happening in Ukraine and the suffering of the Ukrainian people since Russia’s invasion,” said Niall van de Wouw, managing director of CLIVE Data Services, which was acquired by air and ocean rate data provider Xeneta in January.

“The war in Ukraine is another example of an external event of which the air cargo industry has no control over, but which is having a profound impact, as happened with Covid. When we consider the recovery of the aviation industry from the pandemic, the return of passengers is still a big question mark. The war in Ukraine presents another big question mark, particularly over Europe-Asia trade flows. It is difficult to overestimate what this could mean down the line.”

The sudden drop in capacity on Europe-Asia routes and overflight issues were already having an effect into North East Asia routes in the closing days of February, he said. CLIVE is closely monitoring the situation on a daily basis. Rising oil prices are also expected to significantly impact global airfreight rates.

“Whilst we were seeing some clear signs of normality returning, there is still so little slack in the global air cargo system. It is quite unlikely that the trend of slowly declining rates will continue in March,” said van de Wouw.

“The war in Ukraine causes immediate capacity issues to North East Asia and, therefore, will likely  push up rates even more for these particular markets. Air cargo trucking services might also be affected as numerous Ukrainian drivers – which form an important share of the truck drivers in Europe – have decided to go back to their home country.

“A fragile global air cargo supply chain is already sensitive to minor shocks. War in Europe and its resulting sanctions could turn the industry upside down once again, just at the time when the covid impact was looking more under control. We remain in volatile and uncertain times.”

CLIVE’s weekly and monthly analyses of the general air cargo market continues to measure performance to the pre-Covid 2019 level, as well as giving 2021 year-over-year comparisons, to provide a meaningful assessment of its current performance.

Consequently, CLIVE’s ‘dynamic load factor’ – which considers both the volume and weight perspectives of cargo flown and capacity available to produce a true indicator of airline performance – of 65% was 4.5 percentage points lower than in 2021 and close to two percentage points higher than in 2019.

After the peak season pressures placed on supply chains in November and December, which saw average airfreight rates increase by as much as 168% in the final month of 2021, the quieter market conditions at the start of the year saw overall rates ease for a second consecutive month.

Rates, while still very high, were seen to be slowly winding down in February  – up 137% versus 2019 – as capacity returned to the market and the stress on supply chains seen over the past two years began to ease.

General air cargo volumes in January 2022 recorded a 0.1% increase in chargeable weight compared to January 2021.

Source: www.aircargo.com

Image: www.pixabay.com

The post Air cargo market close to pre-pandemic levels but uncertainty ahead appeared first on Cargo News Today.