Airspace closures after Ukraine invasion further hurt the global supply chain

The airspace closures after Russia’s invasion of Ukraine hit the already hurt global supply chain and further adds to the disruptions and cost inflations in the air freight industry.

The reciprocal airspace bans that bar European carriers from flying over Siberia and Russian airlines from flying to Europe has been particularly problematic for carrying out transportation between Europe and north Asian destinations like Japan, South Korea, and China.

These bans are affecting the movements of airlines responsible for moving around 20% of the world’s air cargo.

While many airlines like Germany’s Lufthansa, Air France KLM, Finnair, and Virgin Atlantic have already canceled north Asian cargo flights over airspace issues, some major Asian carriers like Korean Air Lines and Japan’s ANA Holdings are still using Russian airspace, just like the Middle Eastern airlines.

The airspace bans are also the same for some of the only cargo carriers like Russia’s AirBridgeCargo Airlines and Luxembourg’s Cargolux, which is sending the already elevated air freight rates – due to a lack of passenger capacity during the pandemic – soaring further.

Earlier, in December 2021 IATA said that the air cargo rates were 150% above 2019 levels, adding to inflation affecting industries and economies around the world.

Sanctions imposed by the west on Russia following its invasion of Ukraine are further known to disrupt global supply chains.

Russia’s AirBridgeCargo alone moves just under 4% of global international air cargo, with most of that between Europe and Asia, Frederic Horst, managing director of Cargo Facts Consulting.

“All up you could be looking at perhaps a quarter of air cargo between Asia and Europe needing to find alternate means of transportation,” Horst said.

“Yields are high enough that flying a longer route via Southeast Asia, South Asia or the Middle East is an option, but it will still pull capacity out of the market.”

As per IATA, last year the demand for air cargo was 6.9% above 2019’s pre-pandemic levels on the back of growing e-commerce demand during the pandemic and increase in air cargo activity due to lack of shipping containers and port bottlenecks. In December, air cargo rates were 150% above 2019 levels, IATA said.

Looking at the volatility of the market airlines are looking to be flexible and add flights to meet the demand.

On Tuesday, Taiwan’s EVA Airways said its cargo flights to and from Europe were operating normally and it would consider adding more services to meet market demand. Similarly, China Airlines, also based in Taiwan, said it would continue to pay attention to the global economic and political situation and flexibly adjust cargo capacity.

As per experts, the European routes are expected to be more affected as compared to Asia-North America cargo routes, because many carriers already use Anchorage, Alaska as a cargo hub and stopover point.

Japanese automakers Toyota Motor Corp and Nissan Motor Co said on Tuesday they were keeping an eye on any disruption to supply chains as a result of what Russia calls its “special operation” in Ukraine.

U.S.-based United Parcel Service Inc and FedEx Corp, two of the world’s largest logistics companies, have halted deliveries to Russia.

source: ET

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