The "chain reaction" of the Russia-Ukraine issue may push up shipping costs again

The ongoing Russia-Ukraine issue has had a significant impact on cross-border cargo transportation. UNCTAD ( UNCTAD) said that the Russia-Ukraine conflict may cause 1.5 million containers transported by rail between Asia and Europe to be diverted to sea transportation, further pushing up freight rates.

If the cargo is rerouted, it means that in terms of sea transportation, the overall cargo transportation volume and shipping capacity will face greater challenges.

The report said that over the past two years, due to the epidemic and global supply chain disruptions, shippers have increasingly turned to rail, air and even truck transportation from China to Europe to solve the congestion of maritime trade between Asia and Europe, which has caused freight rates to hit record highs and greatly reduced service reliability.

It is understood that about 1.5 million shipping containers will be shipped from western China to Europe by rail in 2021. If the freight volume currently transported by container rail is added to the demand for Asia-Europe shipping, this will increase the volume of the already congested trade route by 5% to 8% .

Given trade capacity constraints, the result could be higher ocean freight rates between Asia and Europe, even if they are now falling from previous record highs.

UNCTAD said this has more to do with the global trend of easing pandemic lockdowns and phasing out stimulus packages, while congestion in some parts of the world’s ports is slowly improving. However, upward pressure on prices may soon balance this out.

It is understood that since the Russian-Ukrainian conflict, the export stay time at European ports has increased by 25%, and the stay time for transit goods has increased by 43% . In addition to the possibility of rerouting existing land cargo, in terms of air transport, many routes have chosen to bypass or even cancel, forcing airlines to increase relevant rates between Europe and Asia, and air transport has also seen an increase.

Although the shipping costs are relatively stable, some companies have begun to charge fuel surcharges, and people are talking about a sharp increase in shipping costs. Sellers still need to make corresponding plans to ensure the normal transportation of goods.

Russia and Ukraine

Ocean Freight