impact on shipping, ports, air freight

The Russia-Ukraine war is severely disrupting shipping and air freight. Russian forces are cutting off shipping routes, logistics firms are suspending services and air freight rates are skyrocketing, supply chain firms said.

Russian naval forces have closed shipping in and out of the Sea of Azov — one of the few access points to ocean trade in Ukraine, said Dylan Alperin, head of professional services at supply chain software platform Keelvar.

“This has created a heavy buildup of vessels waiting to get through the Kerch strait. With 70% of Ukraine’s exports distributed via ship, the congestion is worsening by the hour,” he told CNBC.

Christian Roeloffs, CEO of container booking firm Container xChange, said: “Parts of the Black Sea and Sea of Azov are now dangerous or unpassable. There have been missile attacks on vessels and ship arrests and lane closures for commercial shipping.”

The situation on the ground in Ukraine is extremely fluid, and reports from the area are difficult or impossible to confirm.

“Multiple ships have been hit by munitions, seafarers have been killed and injured and seafarers of all nationalities are trapped on ships berthed in ports,” the International Chamber of Shipping warned on Thursday.

Supply chain firms told CNBC that cargo movements are at a standstill as the Ukrainian ports of Odessa and Mariupol are closed, damaged or under attack. Roeloffs added that container movements have stopped, with cargo stuck at ports.

Limited air capacity presents a double whammy for shippers. With airspace over Ukraine closed to civilian flights and airlines avoiding Russian airspace, air freight rates are spiking, according to the firms.

“The flying ban has canceled many of these flights and removed 10 million miles of airspace from international freight routes,” Alperin said. “With airlines responsible for flying around 20% of cargo, this will dramatically decrease capacity provided by carriers.”

Judah Levine, head of research at freight booking company Freightos Group, said that as airlines avoid Russian airspace, they will take alternate, longer routes — jacking up fuel costs.

Record price spikes for oil will worsen the already bad outlook for carriers as fuel costs rise, Alperin said. “We’re in for record backlogs and delays while experiencing some of the highest prices on record for transportation and beyond.”

Oil prices have been rising for weeks and surging to record levels.

Levine said that the Freightos Air Index’s China-to-Europe rates climbed more than 80% in late February to $11.36/kg, with some carriers already imposing war risk surcharges.

Bindiya Vakil, CEO of supply chain risk management firm Resilinc, said some insurers are also increasing premiums for shipping goods in the Black Sea.

Many logistics companies have also suspended deliveries to and from Russia as well as Ukraine, while container…