Major Freight Forwarders Suspend Russia Services

Date: Friday, March 4, 2022
Source: The Wall Street Journal

Several of the world’s largest freight forwarders have suspended services to Russia, citing growing restrictions from shipping lines and air carriers that are cutting off the country’s access to global trade lanes over Moscow’s invasion of Ukraine.

Switzerland-based Kuehne + Nagel International AG and Germany’s DB Schenker both said in customer advisories they are halting deliveries to and from Russia by air, land and sea. Denmark-based DSV A/S and France’s Geodis said they were also suspending deliveries to Moscow ally Belarus.

“Knowing that today’s decision to suspend transport to and from Russia and Belarus will further add to the supply chain disruption and complexity for our customers, we want to underline that…we are doing our utmost to alleviate the negative supply chain effects from these measures,” DSV said in a notice on Thursday.

Digital cargo marketplace Freightos said the disruptions in services and in transportation connections to Russia, along with rising oil prices, threaten to further drive up shipping costs for companies world-wide.

Some airfreight carriers are already introducing war-risk surcharges to cover rising operating costs, Freightos said in a report Thursday. The diversion of ocean freight shipments to other ports “is already resulting in pileups at origin ports in Europe and elsewhere, possibly causing congestion and increasing rates on these lanes,” the company said.

DHL, a unit of Deutsche Post AG , had earlier halted handling of inbound shipments for Russia.

DHL, Kuehne + Nagel, DB Schenker and DSV are the world’s four largest freight forwarders by revenue, according to research group Armstrong & Associates, and Geodis is the No. 9 logistics provider.

Container shipping lines A.P. Moller-Maersk A/S, Mediterranean Shipping Co. and CMA CGM SA had earlier this week suspended their freight services to and from Russia, with exceptions for foodstuffs, medical shipments and humanitarian aid.

Many major freight operators have already frozen operations in Ukraine, closing offices and telling workers there to remain home.

Geodis said it was also suspending bookings on Asia-Europe freight rail services, an overland corridor that has grown increasingly popular in the past two years as shippers and freight operators have sought to get around pandemic-driven port congestion that has slowed ocean transport. The company says it is expanding its use of chartered 747 freighters for China-Europe operations to make up for diminished services from commercial airlines seeking to avoid flying through Russian airspace.

The equivalent of about 10,000 containers travel by rail from Asia to Europe each week, according to Freightos. “If sanctions or fear of disruption shifts significant numbers of containers from rail to ocean, this new demand will also put upward pressure on Asia-Europe rates as more shippers compete for already scarce capacity,” the company said.

 

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