As the war continues in Ukraine, the human costs are increasing with significant loss of life and insecurity driving over 3 million people to leave the country to find safe havens across Europe.
The extremely unstable geopolitical situation across the entire region is presenting significant challenges to all sectors of society and business. This includes the logistics and transport of medical supplies
Some of the main issues include:
1. Difficulties with transportation:
a. Closure of airspaces
b. Lack of availability of flights and reduction of cargo capacity
c. Insecurity in shipping routes and port closures
d. Increased customs inspections of goods due to sanctions
2. Increases in fuel prices
3. Increasing freight charges
4. War risk surcharges
5. Threat of cyberattacks
Closure of airspaces
Airspace over Ukraine is closed to all civil air traffic since February 24 due to the conflict. In response to sanctions and closure of airspaces to Russian aircraft in the US and EU, Russian authorities closed its airspace to 36 countries. This has resulted in cancellation of flights and a major reduction in Asia-Europe air cargo capacity. This means that when transporting goods from China to Europe logistics providers must source alternate routes making transport more costly and potentially causing delays. This includes using routes through Kazakhstan and Turkey. In the case of Finland, airlines are retracing “Cold War” routesflying thousands of miles around Siberia. These diversions mean more fuel at higher costs and less cargo capacity.
Rail routes are being impacted by insecurity in the region as RailFreight.com reports a significant drop off in use of the “Silk Road” route - “the logistics industry at large reports of a decreased demand for services on the main route between China and Europe. This route runs through Russia and Belarus, and although sanctions in principle do not stand in the way of this rail freight journey, there is a growing list of customers and transport companies that do not wish to take this route for the time being.” The American Journal of Transportation, also reports that many companies are switching from rail to ocean on this route which is placing upward pressure on Asia-Europe rates.
The conflict in Ukraine is also having significant effects on shipping with disruption to shipping routes and closure of ports leading to major maritime congestion across the region. There are also reports of backlogs at European ports and delays to shipping due to increased customs checks. Re-routing or sourcing alternative routes is necessary but this also puts upward pressure on costs as fuel prices continue to soar. In addition, to increases in fuel prices, some carriers are also introducing War Risk Surcharges on certain shipping routes further driving up costs.
Even before the conflict began in Ukraine, cybersecurity experts were warning of a heightened risk of major cyberattacks to all businesses. In January 2022, The US Cybersecurity and Infrastructure Security Agency issued a warning to all American businesses to double down on cybersecurity measures. Organizations that support the medical supply chain infrastructure including third party logistics companies, freight forwarders, and port authorities are particularly vulnerable to attacks that could disrupt medical supply.
COREX Logistics is closely monitoring the situation and updating its routes and services in response to the latest developments. Our team continues to work on alternate routes and ways to mitigate risks associated with the conflict in Ukraine. We are committed to the continued supply of vital medicines and clinical supplies to the patients we serve. Check our website for latest operational updates.