As Russia’s AirBridgeCargo exits Europe, shippers expect air freight rates to soar

Air cargo shippers on Asia to Europe lanes should expect a spike in prices as a substantial amount of capacity has come out of the market.

The EU and UK ban on Russian aircraft in their airspace, in the past three days has forced Volga-Dnepr Group’s AirBridgeCargo (ABC) remove all its aircraft from Europe.

With the ban in place, at least four aircrafts have departed the EU yesterday,  according to FlightRadar24. ABC in the current marketplace has a large capacity with its fleet containing 15 747Fs, and one 777F.

With Asia-Europe its key operating region, the aircraft are currently either in Russia or operating to destinations in Asia. It remains to be seen what volumes it can carry in its new restricted world.

Volga-Dnepr Airlines’ aircraft have also left the EU, with one AN-124 destined to arrive in Marseille yesterday, diverted to Tunis. Canada has also banned Russian airlines from its airspace, but one AN-124 appears to be in Toronto, and it is unclear whether it will be able to leave.

Even the US is considering a ban on Russian airlines but has not yet implemented it. ABC had two aircraft in the US which departed over the weekend.

EU airlines associated with Volga-Dnepr – Cargologicair in the UK and Cargologic Germany – continue to operate normally, and all aircraft are currently in the EU or UK.

The impact is not only being felt by the Russian airlines. Finnair Cargo has also cut all its operations to east Asia, reducing capacity again. The airline will not operate to Osaka, Tokyo, Seoul, Shanghai or Guangzhou, with a review of the situation to take place on 6 March.

The airline said: “The potential Russian airspace closure would notably impact air traffic between Europe and Asia, which plays an important role in Finnair’s network. The negative financial impacts on Finnair will be significant, especially if the situation prolongs.”

CEO Topi Manner, added: “The crisis in Ukraine touches all Europeans and we understand the EU’s decision to close its airspace. We are implementing our contingency plan as the situation has a considerable impact on Finnair. Bypassing Russian airspace lengthens flight times to Asia considerably and, thus, the operation of most our passenger and cargo flights to Asia is not economically sustainable or competitive.”

The carrier, which said it was withdrawing its earnings guidance as a result, added that it was “considering different solutions in case the situation prolongs”.

While SAS continued to operate routes to Tokyo and China, it said that it is “closely monitoring the situation”.

Highlighting the substantial impact on the market, one industry executive said: “If this continues, the implications for the supply chain will be difficult to overestimate. Supply chains are so intertwined, there any many possible side effects.”

He also pointed to potential macro effects, such as additional inflation in Europe, denting consumer demand. But he also speculated as to how ABC could try to operate.

“There could be a creative solution, perhaps via Istanbul, or working with partners,” he suggested.  “Although customers may add to the pressures on the airline. In an already fragile environment, this will have a profound impact on supply chains.”

Rail on Asia-Europe is also likely to be affected, reducing capacity even further.

Leave a Reply

Your email address will not be published. Required fields are marked *