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War in Ukraine adversely impacts the air cargo sector

Rising air freight costs, reduced air capacity and the war in Ukraine are seriously impacting on the ability of the international air cargo sector – already hit hard by the pandemic – to transport goods to their intended destinations.

FLIGHTS CANCELLED, AIRSPACE CLOSED

The cancellation of flights to Russia from the UK, the EU, the US and the closure of airspace above Russia and Ukraine is leading to lengthy detours for air freight, particularly to Asian markets, such as Japan, South Korea and China. The closure of the direct route via Russia’s Siberian air corridor is adding hours to flight times between the UK and Asia, and flight bans are estimated to affect over a fifth of air freight.

Earlier this month (6 March 2022), Russian airlines stopped almost all flights to foreign countries to prevent seizure of their planes, many of which are leased from foreign owners. Air routes above Russia, the world’s largest country, are by far the fastest means to get goods between Europe and Asia.

AIR FREIGHT CHARGES SOAR

Air freight charges had already increased following the pandemic and the reduced capacity in passenger flights. Air cargo rates were 150% above 2019 levels in December, according to the International Air Transport Association, and the longer routes, which require additional fuel and flight time, are making flights more expensive. Following the blockage of the Suez Canal by the MV Ever Given in July 2021, there was evidence that many shippers were choosing air cargo over maritime. In December 2021, air freight rates between Hong Kong and North America were at an all-time high of US $12.75 per kilogramme.

CAPACITY CRUNCH

Prior to the pandemic, bellyhold cargo at Heathrow accounted for around 60% of UK air freight volume. However, after COVID-19 had hit, the reduction of passenger travel had a major impact on air cargo, with UK air freight falling from 2,535 thousand tonnes in 2019 to 2,002 thousand tonnes in 2020 – a drop of more than a fifth. According to the Civil Aviation Authority, total UK air freight tonnes increased by 5.9% in November 2021 compared with November 2020, but was still 6.4% down on November 2019.

Alexandra Herdman, Public Policy Manager, Logistics UK, said: “With rising prices, reduced capacity and the situation in Ukraine worsening by the day, the outlook for the international air cargo sector looks set to remain challenging for the foreseeable future.

“However, air cargo capacity is urgently needed to move donated food, medicines, clothing and other items to Poland and Germany to support those fleeing the fighting in Ukraine. In these extraordinary times, Logistics UK urges its members to put their resources behind these activities where they can, as humanitarian aid must be prioritised.”

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