Invasion of Ukraine crippling transport links

As Russian military forces conducted a multi-pronged invasion of Ukraine on February 24, air, road, sea and rail links to the country were affected.

Operations at the main Black Sea port of Odessa were halted early in the day. The port sees approximately one million TEUs of import containers every year.

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Terminal operator Hamburger Hafen und Logistik AG (HHLA) said it was forced to shut down, and told its 480 employees to stay home.

“This is a bitter day for all peace-loving people worldwide. We condemn the invasion of the independent nation Ukraine by Russian troops in the strongest possible terms. This is an act contrary to international law that destroys the security architecture that has been tried and tested in Europe for 30 years,” said Angela Titzrath, CEO of HHLA.

The company has paid all its Ukrainian staff a month’s salary up front so they can stock up on essentials as the country falls under martial law. “We must…assume that Ukrainian HHLA employees will also be obliged to do military service, Titzrath said.

“Ports are part of the critical infrastructure. They are essential for the supply. Therefore, we expect our employees to be able to continue their service on land at the terminal.”

Learn more: Five critical supply chain effects of the invasion

Ocean carriers Maersk, Hapag Lloyd and CMA CGM Group issued statements explaining their vessels would not be calling at Ukranian ports until further notice. inbound cargo is being discharged at either Port Said, Egypt, or Korfez, Turkey. Maersk will not accept orders for service to or from Ukraine and said service to Russia may be disrupted in the near future.

CMA CGM said Thursday its staff are all safe and working from home. It has suspended all vessel calls in Ukraine and inbound cargo is being rerouted to Constanza, Romania, Tripoli, Lebanon, or Piraeus, Greece. Five ships are currently affected.

Likewise, Hapag Lloyd has stopped booking cargo to or from Ukraine, and suspended bookings for Russia.

“Maersk will be closely following how events unfold to gain a better insight into the situation, with teams across the company working with the intense focus of keeping global logistics moving. We will continue to adapt to the situation in order to deliver your cargo safely,” the carrier said in a note to customers on February 24.

According to Simon Heaney, senior manager of container research at analyst firm Drewry, the impacts to container shippping will likley remain localized in the short term. “Retaliatory cyber-attacks that might affect shipping and fast-rising fuel costs are probably the main concerns right now,” he noted in an analysis published February 24th. “However, the outlook for container shipping is intrinsically tied to the global economy and it is a near certainty that Putin’s gambit will lead to more economic volatility, heaping even more inflation on to people all over the world still reeling from the pandemic.”

Heaney added that there is a chance, although low, of increasing inflation leading to a contraction in container demand. “It is within the realms of possibility that a trade slowdown will be steep enough to release some of the pressure on the container supply chain, giving ports the necessary breathing space to break out of the congestion cycle. War would be far too high a price to pay for that cure,” he said.

In the air

Ukraine International Airlines (UIA) reported the suspension of all charter and scheduled flights to and from Ukraine, “in order to minimize any risks to passenger safety”.

The Ukrainian airspace remains closed, and air traffic is routing around the country to the east and west. The European Union Aviation Safety Agency declared the area an active conflict zone.

Reports from inside Ukraine show the Russian forces have deliberately destroyed numerous airports, pointing to a long-term infrastructure challenge once the fighting is over.

Rail

Although most train traffic through Ukraine is currently halted, the principal cargo carriers in the area say their operations are not generally affected. DB Cargo Eurasia said in a message to customers on February 24 that its operations are not affected by the situation in Ukraine.

Given its location, Ukraine is an important link between Europe and the far east, but it is one that has been gradually downgraded due to geopolitical instability over the past decade. “In the past years we didn’t use Ukraine for rail transfers because of the local situation there. That’s why Belarus and the Baltic states were always our first choice. In addition, the rail route is so important for China and Russia that we will do everything we can to assure that no train to Europe is affected by the situation in Ukraine”, said Chinese operator New Silk Road Intermodal on Linkedin.

Over the road

The road transport situation is a little more murky according to analysts. S&P Global reported that numerous steel plants have shut down and stopped shipping product. It spoke to a steel mill source who said: “We do not understand how supply chains are now operating in the country. At the moment, we perceive it as a risk to ship products by road. Consignments may get stuck or abandoned.”  The source also told S&P Global that truck drivers were being told to stay home.

With Russian forces advancing from the south and east, the western land borders of Ukraine remain unaffected by the conflict. That means truck traffic through Moldova, Romania, Hungary, Poland Slovakia and Belarus may remain largely unimpeded for the moment. However, with numerous manufacturing plants closing or reducing production – including steel mills operated by ArcelorMittal and Interpipe, along with Carlsberg, Coco-Cola, Mondelez and Nestle – truck traffic is likely to dwindle as inbound and shipments are not required.