Regional Pulse: Ukraine-Russia conflict drives airfreight rates, capacity shortages on Europe-Asia trade lane

While air cargo demand remains strong in the region, Europe-Asia trade lanes are facing capacity shortages and high airfreight rates as many carriers have been forced to reroute flight paths and operate flights at reduced frequencies to avoid Russian airspace. Finnair Cargo, for one, earns more than half of its revenue from passenger and cargo traffic between Asia and Europe, and has rerouted flights using either the Southern or Northern route, a Finnair spokesperson told Air Cargo World . The Northern route operates from Finland to Norway, over Svalbard and the North Pole toward Alaska before crossing the Bering Sea to Japan. [caption id="attachment_96105" align="alignright" width="568"] Finnair A350. Photo courtesy of Finnair Cargo.[/caption] “Only the flights that are both economically and operationally viable can be operated,” the spokesperson said. “Our network is now smaller, and we offer fewer frequencies to those destinations that we operate. Also, some route openings are pushed forward, and due to higher operational costs and limited capacities, freight prices are higher.” Finnair is also still able to offer transport solutions through its COOL Nordic Cargo Hub at Helsinki Airport (HEL), as well as the carrier’s Stockholm hub (ARN) for select destinations, despite the additional hours added to Northeast Asia routes. Currently, Northeast Asian routes, particularly routes to Japan and South Korea, have felt the greatest impact, according to the spokesperson. However, within a week from the airspace closure, Finnair was able to return to some of its key Asian markets but with fewer weekly frequencies, they added. Forwarders face capacity loss The loss of capacity on Asia-Europe trade lanes is being felt by freight forwarders, as difficulties in ocean freight had already elevated rates on that mode. “With sea freight from Asia so high currently, we have found in some circumstances airfreight is cheaper, which in my 35-plus years in the business is a new one for me,” Carl Day, CEO of U.K.-based freight forwarder Anchor Freight Ltd., said. While airfreight was more attractive for a time, the rise in jet fuel prices and subsequent surcharges from carriers, along with the impact of the war, are pushing costs up in air as well. “Airfreight rates are also lifting and therefore less attractive for non-urgent items,” said Day. In fact, some routes have been indefinitely suspended altogether, including Nippon Cargo Airlines’ routes from Tokyo (NRT) to Amsterdam (AMS), AMS-NRT via Milan (MXP), NRT-MXP via AMS and MXP-NRT, according to a carrier update from forwarder AIT Worldwide Logistics. KLM flights to Kansai (KIX) via Seoul (ICN) and to NRT via ICN were restarted in March. Alternate routes to Asia, such as a route via North America, unfortunately often increase costs as longer distances require additional fuel and a second clew, a spokesperson from Italy-based freight forwarder Savino Del Bene told Air Cargo World. Typically, the forwarder operates regular console to Shanghai (PVG), Hong Kong (HKG), NRT, ICN and Singapore (SIN). Cargolux was another carrier forced to reroute flights to avoid Russian airspace and subsequently instituted a war surcharge as of March 7 to compensate for its operational adjustments, the carrier said in a notice to its customers last month. Mitigating challenges Forwarders have also opted to utilize other carriers to help mitigate the challenges caused by the closure of the Russian airspace and the restrictions imposed on Russian Airlines due to EU sanctions against Russia. “We chose Middle East airlines that have different routes and Chinese airlines that are allowed to fly the Russian air space,” Savino Del Bene’s spokesperson said. “We can say that our capacity [has] returned to 100%.” Forwarders that previously served Russian customers are still managing the loss of that business as well, according to Anchor Freight’s Day. Anchor Freight previously managed whiskey shipments into Russia by air, rail and sea for a customer. Shipments still move into Russia via Turkey, said Day, but with sanctions still in place due to the conflict, “if we were involved as a British company, we’d find ourselves in hot water.” The Air Cargo Tech Summit, the new airfreight logistics event presented by Air Cargo World , will take place live in Miami from June 6-7. Learn more and register here.

Regional Pulse: Ukraine-Russia conflict drives airfreight rates, capacity shortages on Europe-Asia trade lane

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