May 2, 2022Influence of the Russia-Ukraine War on the World’s Logistic Market
May 2, 20222022 managed to surprise and upset a lot because the current situation in the world simply does not fit in the head. People forget about faulty software snarls sign-ups (Coronavirus vaccine) because the accent has been changed. Many still remember when the New York Times published the article about how Russia closes in on Ukraine with buildup on land and sea (February 10, 2022). They still cannot believe that such a large-scale war as between Russia and Ukraine is possible in the 21st century. Despite all the psychological attempts of the people to deny this, the world is gradually adapting to new realities, looking for the most profitable solutions to current problems. We still remember news about a Russian container found in Ukraine (actually, this container was left by Russian forces), crews, who were abandoned on ships in record numbers without any way out or food, Russian post delays 2022, and European countries, which switched off the air transportation, faulty software snarls in many Ukrainian companies, and the actual problems in the Black sea caused traffic jams in ports, etc. All these peculiarities have a great impact on shipping processes all over the world.
There are not only Russian military supply chain issues but additional ones, as Russian cargo carriers have already felt the impact of international sanctions. There was already nothing to carry in the directions that used to provide the Russian regions with imports. Even new trucks are put up for sale by the thousands because of this but it is not clear what to do with these vehicles, except to disassemble them into parts for subsequent resale. After all, there are also problems with the supply of new spare parts from abroad, so shipping from Russia to USA 2022 the same as Black sea transportation processes are under challenge. Moreover, you will easily find out how Russia’s airline industry was pushed to the brink due to the EU and US sanctions after checking some news. It’s no surprise that the sector tried to recover from the pandemia but there appeared more obstacles and freight wars.
Ukrzaliznytsia has doubled the transportation of goods to Poland through Volyn since the beginning of the war. 644 wagons were processed per day in both directions in February, then the figure reached 1.320 wagons in May. The volume of freight traffic through railway checkpoints located in the Volyn region increased by 58% in comparison to the last year. The share of agricultural exported products also significantly increased – from 12% to 21%. Recall that earlier Ukraine and Poland agreed to establish a joint logistics enterprise, which is designed to increase the volume of railway transportation of Ukrainian exports to the EU and world markets through Europe.
GMK Center reported that Ukraine is exploring opportunities for exporting steel products and grains to the world market through Baltic countries’ ports, so the shipping from Ukraine will become much easier and more profitable. Ukrzaliznytsia increased the transportation of goods by 14.4% compared to the previous month – up to 9.15 million tons. UZ transported 65.1 million tons of cargo in January-April, which is 31.8% less than in the same period last year.
Turkish Minister of Transport and Infrastructure Adil Karaismailoglu said that the situation in Ukraine formed risks for the Northern Transport Corridor, increasing the significance of the alternative – the Middle Corridor, both in terms of distance, and in the context of the timing and safety of cargo transportation. He noted that the route of the Middle Corridor runs through regions that cover up to 30% of all world trade. The median corridor serves to increase the flow of goods from China to Turkey and European countries, as well as in the opposite direction. Corridor route: China – Kazakhstan – Caspian Sea – Azerbaijan – Georgia – Turkey or Black Sea – Europe.
A freight train departing today from China to Europe overcomes a distance of 7.000 kilometers along the Middle Corridor in 12 days. The same train will deliver goods from China to Europe over 10,000 kilometers through Russian territory along the Northern Route in 12 days. If cargo transportation is carried out along the Southern Corridor through the Suez Canal, then customers in Europe will have to wait from 45 to 60 days for deliveries from Asia over a distance of 20 thousand kilometers. According to Karaismailoglu, these indicators underline the profitability of cargo transportation along the Middle Corridor.
The head of the Turkish Ministry of Transport said that up to 1.070.000 tons of cargo were transported through the Middle Transport Corridor from the beginning of this year to the end of April. The minister plans to reduce the delivery time of goods by rail between Turkey and China from 12 to 10 days. We will bet on Turkey’s transit opportunities, which will contribute to the development of trade throughout the region. At the same time, well-known logistics giant DFDS says that the freight volumes are up in April 2022 (we are talking about Mediterranean and Channel business units). Of course, it’s impossible to say something about Ukraine Russian container transportation as the buildup on land and sea Russia closes in on Ukraine more and more. The world’s logistic companies can’t look at war ports and rely on them, so everything has to be done by turns of the indirect corkscrew.
DHL shipping from Russia to the USA was also put on hold as DHL closed Russian and Ukrainian trucking until the end of the war as the last one is a great delivery hinder. Maersk also belongs to the list of those logistic companies that refuse to cooperate with Russia due to the war aggression. The logistics giant is ending operations in Russia and is selling its stake in Global Ports Investments, which operates container terminals in the Baltic Sea and the Russian Far East. Yes, DHL closed the branches in Ukraine, Russian, and Belarus and it might seem that all the companies refuse to provide the logistic service in Ukraine but that’s not true. Some organizations take care of the cargo transportation to Ukraine of almost all types of cargo, including humanitarian and military. This is:
Regular shelling, bombing, and rocket strikes in almost all regions of Ukraine significantly complicate domestic and international logistics. Therefore, freight transportation is most often carried out by the road. Various types of trucks are used for this.
Such a large selection of trucks and Ukraine containers makes it possible to organize the process of transportation of any goods, in compliance with all European norms and standards, in the shortest possible time and with a guarantee of their integrity and safety for personnel. This can be achieved through the correct choice of the method of movement and mode of transport, as well as the development of the safest routes (main and alternate). So, as you see, Ukraine shipping is not an easy process but quite possible even with land sea Russia closes.
In general, specialists think that the volume of traffic may fall by a third due to the sanctions imposed by the European Union and the United States due to the war. All links in the logistics chains will suffer but aviation and water transport will suffer the most. The losses of the transport industry due to restrictions can range from 25 to 40%. These are the data of the analytical review of the National rating agency. If the European Union introduces a complete embargo on the international activities of Russian ports, this will require a revision of certain logistics and a reduction in the cargo base. It is very difficult to predict, everything can change in two or three days, so the world has to be ready for new alterations. Once there was an opinion that the transportation market is very conservative and business prefers to use the same routes. Today, this is irrelevant because the companies need to adapt to continue full-fledged work and further development.
