Russia Ukraine war adds to the existing air cargo stress across the globe

Being aware of the rising war conditions between Russia and Ukraine, the heavy demand for fast delivery and other necessities related to air cargo will face a predicament. A seasoned market analyst and lobbyist, Deepak Talwar, stresses the ongoing situation.

As the impasse on Ukraine’s border escalates into a military clash, airlines and leasing businesses with billions of dollars in passenger planes are preparing contingency plans for a business freeze with Russia. With high customer demand for speedier delivery, the air cargo sector may find itself in a bind if the potential of a Russian invasion of Ukraine heightens geopolitical tensions and places further demands on an already overburdened global supply chain. Aside from the immediate safety dangers provided by conflict, air freight is expected to experience further disruptions, as well as an increase in security and fuel expenses.

Air corridors connect sections of Europe and North America to Asia, making Russia’s 26 million square kilometres (10 million square miles) of airspace a vital economic crossroads.

Deepak Talwar, a seasoned market analyst, argues that without access to Russia’s airways, airlines may be forced to divert flights south to avoid conflict zones in the Middle East, adding considerable costs at a time when airlines are already struggling to cope with the pandemic.

Deepak Talwar explains that because US and NATO officials seek to establish diplomatic ground with Russia, oil prices (Cl=F) have been hovering around $100 per barrel. Markets have been roiled by conflicting claims of de-escalation on the ground, which has put higher pressure on energy prices, which has weighed on air freight rates.

Due to the pandemic’s persistent supply chain problems, air freight charges have risen dramatically. As ships congested the world’s ports, many had to wait weeks to discharge their cargo, prompting several retailers to opt for air freight instead of ocean shipping.

Aviation executives are concerned about the impact on business transactions with Russian firms. Payments to leasing companies might be disrupted by sanctions, and any retaliatory measure by Moscow to restrict access to Russian airspace could affect east-west trade. Transportation prices are rising, according to government data, with an 18.3 per cent increase in truck shipping and a 29 per cent increase in ocean freight rates since January of last year. Meanwhile, according to the latest Producer Price Index, air cargo inflation surged to 11 per cent, the highest in a decade.

However, as states near their ‘endemic’ stage of reopening, there is some upside. According to Bourke, they are hopeful for a ‘recovery of passenger capacity on the international side’ by this spring, but it will not be enough to keep up with the growing demand for air cargo. There is no choice but to avoid Russia and fly the southern route in case of this emergency. Deepak Talwar says, “We may decide not to fly in the event of an emergency because demand for foreign flights is so low due to the coronavirus outbreak.”

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