SURCHARGES MOUNT AS RUSSIA-UKRAINE CONFLICT PERSIST

Logistics companies are upping surcharges as the persisting Russia-Ukraine conflict adds more drag to the already strained supply chain worldwide causing further disruptions in the market.

 

FedEx Express announced that beginning March 7, it will be increasing its peak surcharges on its parcel and freight shipments and TNT shipments for freight moving between Asia Pacific (APAC), Europe, Latin America and the Carribean (LAC) as well as Middle East, Indian subcontinent and Africa (MEISA).

 

The express delivery firm is hiking its surcharge by 20 to 30 cents per kilogram for most of Asia-Pacific with price increases starting on March 21 in other areas.

 

According to the tariff schedule, European exports and imports are rising a tenth of a euro, or 11 cents, per kilogram. Increases also apply in the Indian subcontinent, Africa and Latin America.

 

"Due to continued disruptions in the global supply chain, air cargo capacity remains limited. We are incurring incremental costs as we continue to adjust our international networks and operate in this constrained environment," FedEx said in a customer update.

 

DHL Express have yet to announce any change to its surcharges but said it is "temporarily suspended DHL Express shipments to and from Ukraine, Belarus and for inbound shipments to Russia."

 

UPS said separately that it is also hiking its peak/demand surchages for shipments from major Asia Pacific centres (excluding China, Hong Kong and Macau) to 19 countries in Europe effective February 27 "until further notice."

 

Impact on supply chains

 

Freight forwarders, shipping lines and air cargo operators have announced temporary suspension of operations in Russia and Ukraine amid the former's invasion of it's neighbour which has triggered multiple sanctions from the West.

 

Industry players have warned of higher supply chain costs as operators are forced to take longer routes as airspace and ports were also shut.

 

Airspace restrictions are currently imposed by Russia, the United Kingdom, Canada, the European Union and the United States.

 

Lufthansa Cargo CEO Dorothea von Boxberg said last week that the air cargo market alone would incur a 10% capacity loss as freighters have to fly around Russia to get to Asia from Europe after Moscow also banned European airlines from flying in its airspace.