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.

Fortunately, shippers can turn to a variety of solutions and tools that can help drive capacity, control for rates, enable visibility, manage inbound and outbound execution of shipments, and improve the freight audit and payment processes—cumulatively addressing those nagging obstacles that frequently surface.

ORDER MANAGEMENT

For instance, a lack of information on inbound orders can cause shippers to need to devote additional costs to labor throughout the supply chain. However, an order management tool within a transportation management system software solution can serve to provide shippers with full visibility for tracking and tracing shipments and the capability to manage events.

That visibility includes a view of purchase order fulfillment and creates the ability to quickly review with the supplier the timing of the shipment to schedule labor at distribution centers for outbound shipment execution.

When shippers struggle to find capacity from their providers, it leads to increased freight spend and labor costs. Getting status updates on shipments also can eat up time and resources. Through outbound shipment execution tools, shippers can take sales orders and interface with a transportation management system to manually or auto rate and auto tender shipments to transportation providers. Shippers can gain visibility of shipments down to part level, order number; receive alerts for shipments out of the delivery window; and at the same time control costs.

SPOT AUCTION

Global inbound shipments have been in turmoil in 2021 and are forecasted to remain that way at least through the first three quarters of 2022. Ocean shipments, in particular, are facing not only capacity challenges and longer transit times, but extremely high rates.

Operating in these markets means relying heavily on spot auction tools and automated bidding solutions to identify and lock in the best possible rates that match capacity and transit needs. Spot auctioning can be executed for all modes in a timed automated tool for both inbound and outbound shipments.

CONTRACT MANAGEMENT

Contract management is a necessary condition for successful end-to-end procurement and supplier performance—and arguably even more critical than the “sourcing” phase in the end-to-end supplier engagement process. Contract management tools can improve business functioning, control spending through better visibility of spending and identification of future savings, help to monitor and evaluate suppliers, and ensure compliance with clear rules and procedures.

PROCUREMENT TOOL

An RFP bid/tender sourced in one tool for multiple transportation providers offers the ability to run global multi-modes and establish tasks and activities. Shippers can build a generic bid and quickly view the low-cost providers. They also can award and allocate multiple providers a percentage of the lane or lanes that need carriers.

FREIGHT AUDIT AND PAYMENT

Tech-based tools can help avoid early payments (driving cash flow), duplicate payments, and late payment penalties, while ensuring shippers take advantage of payment terms. They also provide data for future rate negotiations and invaluable visibility to supply chain costs.

Source: www.inboundlogistics.com

Author: Dave Maddox, Senior Vice President, Global Supply Chain Sales & Marketing, nVision Global

Image: www.pexels.com

The post Addressing Supply Chain Pain Points for Shippers appeared first on Cargo News Today.