Price increase! Prices of air cargo to Europe have doubled, and prices of air cargo to the United States have also increased

Recently, everyone's attention has been focused on the conflict between Russia and Ukraine. Does the tense situation between Russia and Ukraine have a big impact on export sellers? There are many different opinions...

Cross-border e-commerce is facing the impact of global air delivery disorder! According to the feedback from freight forwarders, the price of European air delivery has skyrocketed, from the lowest 18 to more than 50, and such abnormal increase may continue.

The direct reason for the sharp increase in European air transport prices is the conflict between Russia and Ukraine. Recently, EU countries such as Germany, the Czech Republic, Poland, as well as the United Kingdom, Canada and other countries have successively announced the closure of their airspace to Russian civil aircraft. In response, Russia has restricted airlines from 36 countries from flying in Russian airspace.

In addition to European air cargo, the price of US air cargo has also shown a slight upward trend, with the Hong Kong epidemic being the main reason . However, industry insiders estimate that there is still room for US air cargo prices to rise. "If US airlines are also closed by Russia in the future, the routes from North America to Asia will also be affected to a certain extent," an expert predicted.

The conflict between Russia and Ukraine has also caused people to worry about the global supply chain. Not only air transport, but also cross-border shipping cannot be "immune". A freight forwarder told the editor that the price of Mason has begun to rise. Although the increase is not large, it is worrying. According to data, Russian and Ukrainian seafarers account for about 15% of the world's seafarers. Shipping may face a more serious labor shortage. At present, Maersk, MSC and others have successively announced the suspension of all Russian and Ukrainian business bookings!

In addition to logistics, what other impacts will the Russia-Ukraine situation have on export sellers?

European air delivery prices have skyrocketed!

In the past two days, European air delivery prices have skyrocketed, and freight forwarders have all started to increase prices and post messages on social media:

Prices in Europe have risen sharply , and prices are subject to arrival at warehouse .

The air traffic control experts are going crazy. It was 21 a few days ago , and now it has directly risen to 55 .

European short positions have been rising rapidly, and were only in the 20s some time ago .

Oh my god, the air freight price to Europe has increased by more than ten yuan

Big drops and big rises, the air delivery prices are really exciting!

Europe has now started to charge fuel surcharges, and the price for air freight changes every day.

…

According to the feedback from the freight forwarder, the air delivery price in Europe was only around 20 last week, and the lowest was only 18. At the beginning of the new week, the air delivery price skyrocketed to 50+, and some quotes even reached 60, which is a direct 3-fold increase.

Normally, the price of air shipments is related to the seller's shipment volume. Some time ago, there was generally no goods on the market. Not only air shipments, but also sea shipments fell dramatically. As domestic factories began to resume work, production capacity recovered, and export sellers increased shipments, air shipments prices will surely rise slowly, but they will not rise as exaggeratedly as they are now, and they will not rise directly and sharply. Therefore, industry insiders unanimously stated that the abnormal increase in European air shipment prices is mainly due to the conflict between Russia and Ukraine. Affected by this, many routes have been restricted, domestic air shipments have limited warehouses, and airlines have urgently adjusted prices. In the future, European air shipment prices will have room to rise.

"Now both Russia and Ukraine have banned flights from passing through. You don't let me fly, and I don't let you fly. Many flights have been suspended. There will definitely be problems with air transport capacity to Europe, air transport space is tight, and freight price increases are inevitable. " Industry insiders detailed that most flights to Europe have to pass through Russia. It is currently known that RU, QR, KL, and SV have all suspended flights, so it is unquestionable and unavoidable that the European logistics line has been severely affected, and prices will continue to increase in the future.

On February 27, local time , European Commission President Ursula von der Leyen announced the closure of the airspace to Russia. Von der Leyen said that the European Commission proposed to ban all aircraft owned, registered or controlled by Russia from landing, taking off or flying over the EU airspace.

As of February 28, except for Croatia, 26 EU member states including France, Germany, Poland, Italy and Spain have issued a "no-fly" order against Russia. Russia has also retaliated by restricting aircraft from these countries from passing through Russian airspace, including transit flights.

Many airlines have to re-plan their routes, resulting in longer flight times and higher fuel costs. Industry analysts said that after the re-planning of passenger routes, some airlines' hourly flight costs will increase by $4,000 to $12,000.

As airline costs increase, the price increase trend of air delivery may continue. How should cross-border sellers deal with it? Two cross-border logistics professionals gave their insights.

"The increase in air delivery prices means that sellers' operating costs will increase. At this stage, we can only suggest that cross-border sellers make early arrangements for goods and communicate with cooperating freight forwarders in advance if they have shipping plans, so as to secure some guaranteed space as soon as possible," said Mark, director of Haosutong Logistics.

Another freight forwarder also said that under the current circumstances, it is best for cross-border sellers to ship goods in advance and strive to have more budget for logistics timeliness. At the same time, given that logistics prices are uncontrollable, earlier shipment can also save logistics costs to a certain extent.

A cross-border seller himself said that the EU and Russia banned each other's aircraft from passing through, resulting in a significant reduction in flights. The prices of air and express delivery in Europe have soared. If the sales prices of his peers do not increase in the future and they continue to engage in price wars, he will switch to freight forwarding.

The impact of the Hong Kong epidemic has boosted the price of US air cargo slightly

The current cross-border logistics situation, in addition to the skyrocketing air freight prices in Europe, the logistics situation in other regions may not be optimistic.

The main reasons are the questionable attitude of the United States in the context of the Russia-Ukraine conflict and the impact of the Hong Kong epidemic on cross-border logistics operations.

Now everyone is waiting to see whether the United States will join the "no-fly" team. According to Reuters, taking corresponding measures against Russian airspace has caused heated discussions within the US government. The White House said on Monday that although the decision to close the airspace to Russian airlines has not been ruled out, no conclusion has been made yet.

According to data from aviation analysis company Cirium, about 600 flights taking off or landing in Europe fly over Russian airspace every day. Many international airlines usually fly through Russian airspace when operating some flights on the Eurasian route. If the United States closes its airspace against Russia, Russia may also respond to this. In the future, if the airspace of American airlines is also closed by Russia, the routes from North America to Asia will also be affected to a certain extent.

If this is possible, it will undoubtedly exacerbate the poor situation of cross-border logistics from the United States. According to freight forwarding feedback, affected by the Hong Kong epidemic, the price of air delivery to the United States has shown an upward trend. In addition, UPS has also delayed pickup.

"There have been hundreds of cases of infection among Hong Kong truck drivers. There is a serious shortage of Hong Kong truck drivers now. The pickup time for sea freight to Hong Kong and express delivery to Hong Kong is very slow, usually about 3-4 days ," a freight forwarder told the editor. The Shenzhen Port has newly detected 21 cross-border truck drivers with positive nucleic acid. They are all engaged in the cross-border transportation industry. They entered the country in a closed loop from the Shenzhen Bay Port and returned to Hong Kong, and tested positive. As truck drivers continue to be infected, there is a shortage of manpower, and anti-epidemic policies are becoming increasingly stringent, delays in goods for related cross-border sellers are inevitable.

So far, Hong Kong has confirmed more than 200,000 cases, and the total number of deaths in this round of epidemic has reached 753. According to reports from multiple Hong Kong media, as of 00:00 on March 1, Hong Kong had 32,597 new confirmed cases. As of 00:00 on February 28, Hong Kong had 34,466 new confirmed cases of COVID-19. This means that Hong Kong has had more than 30,000 new confirmed cases for two consecutive days.

As the Guangdong epidemic is closely related to cross-border transportation between Guangdong and Hong Kong, health control of cross-border truck drivers is particularly important. Recently, a series of notices have been issued to adjust the epidemic prevention and control measures for cross-border truck drivers between Guangdong and Hong Kong . From March 1, cross-border cargo transportation between Shenzhen and Hong Kong will be closed for the entire process with fixed routes and fixed points.

In addition to affecting delivery time, the epidemic has also boosted prices. According to the quotations of freight forwarders, the prices of air shipments to the United States have also increased.

"Some time ago, the price of air delivery to the United States fell below 20, but now the quotations have increased for both connecting flights and direct flights," an industry insider told the editor. Now the price of connecting flights has basically risen to around 30, and the price of direct flights can be as high as 40. Although the increase in the price of air delivery to the United States is partly due to the recovery of production capacity and increased shipments, a large part of the reason is the constraints of the epidemic in Hong Kong, insufficient transportation capacity, and price increases. In addition, the epidemic restricts work and timeliness will also be delayed. "For many freight forwarders in South China who do international express and air transportation, goods will inevitably have to transit through Hong Kong, which undoubtedly increases the difficulty of their work."

Logistics channels such as shipping have also been affected. Maersk and MSC have successively announced the suspension of all Russian business bookings!

Next, the timeliness of cross-border shipping will also change.

First, Russian and Ukrainian seafarers account for about 15% of the world's seafarers , and shipping may face a more serious labor shortage. According to a statement issued by the International Chamber of Shipping ( ICS), nearly 15% of the world's seafarers come from Russia and Ukraine. Among the world's 1.89 million seafarers, 10.5% are Russians and the other 4% are Ukrainians. As Ukraine has entered a state of war, Ukrainian male citizens aged 18 to 60 will be prohibited from leaving Ukraine. The war forced them to return to their country to take care of their families. As 90% of global trade is transported by ships, the shipping industry may face a more serious labor shortage problem due to the situation in Ukraine .

In addition, the UK has banned any Russian-related ships from entering, which will cause delays in shipping time.

According to foreign media reports, the UK has notified all its ports to ban any Russian-related ships from entering. The ban covers ships flying the Russian flag, registered in Russia, and owned, leased or operated by companies or individuals related to Russia.

"The maritime sector is vital to international trade and we must play our part in limiting Russian economic interests and holding the Russian government to account," British Transport Secretary Grant Shapps said in a letter.

It is reported that in addition to the UK, other EU countries such as Spain and Denmark may also take similar measures.

As the conflict between Russia and Ukraine continues, Maersk and MSC have announced the suspension of all Russian business bookings!

On March 1, Maersk’s official website announced that it would suspend new bookings for sea, air and intercontinental rail to and from Russia from March 1, covering all Russian gateway ports, and Maersk will announce more details in the coming days. MSC Mediterranean Shipping also announced at the same time that it would suspend all bookings for cargo to and from Russia, including the Baltic Sea, the Black Sea and the Russian Far East.

In view of the current tense situation between Russia and Ukraine, two of the world's largest logistics companies, United Parcel Service (UPS) and FedEx Corp, have recently announced that they will suspend delivery services to Russia and Ukraine.

How much impact does the situation in Russia and Ukraine have on the order volume of cross-border sellers?

In addition to logistics, how else will the situation between Russia and Ukraine affect export sellers? Whether orders will be affected is the focus of attention of many cross-border people. The editor summarizes the views of many industry insiders on the impact of the situation between Russia and Ukraine.

First of all, it is difficult to get foreign trade orders from Russia and Ukraine , not only because of the restrictions on Swift, but also because of the depreciation of the ruble. He said that when the ruble depreciated sharply in the last round, many foreign trade people lost many of their big Russian customers, and this time may be more serious than the last time.

At present, many export sellers have reported that the ruble has depreciated too much and they are unable to quote prices to Russian customers, which has put factories that mainly do business with Russia and Ukraine in a dilemma.

They dare not accept orders, but are worried about not having any orders. Relevant sellers said that the number of orders placed by Russian customers of their peers has directly decreased by 20% , and even all the orders were gone overnight. An export seller who mainly sells swimsuits said that Russia and Ukraine are both major customers. Not only have all the orders disappeared overnight, but there has also been no news about the goods that had been shipped out. He was so anxious that his mouth was full of bubbles.

Many factories have also taken the initiative to suspend their business with Russia and Ukraine. "All orders for export to Russia have been suspended. After all, no one knows how the situation will change in the future. We are currently waiting for customers to pay." Many export sellers are worried that even if they take great risks to deliver the goods, they will not be able to get their money back in the end.

It is reported that many foreign trade sellers are currently anxious about how to receive the final payment from Russian customers. One seller said, "There are still 8 cabinets that have not been shipped from Russia. One of our customers bought US dollars some time ago and wanted to pay us, but their bank could not pay. Other customers are now more reluctant to pay because the ruble has depreciated too much."

In addition, sellers on related cross-border e-commerce platforms will also be affected. It is reported that the largest market for many cross-border sellers is Russia. Although some sellers said that the order volume has not been affected, but has exploded, many sellers also said that the order volume has dropped sharply. "There used to be more than a dozen orders, but today there was only one order." A seller on a certain platform said that their company's orders from the Russian market account for more than 50%, and they are now particularly afraid of currency depreciation and a decline in various types of consumption power, which will have a lasting impact on orders.

Finally, international relations are very complicated, and no one can be completely immune. If the situation between Russia and Ukraine remains unclear, the foreign trade of other countries is also likely to be affected. In addition to the "fly ban", if there are other policies or more countries join in, the scope of sellers affected will eventually expand.

E-commerce environment in Russia and Ukraine

Next, the editor will use a series of data to explain in detail to the readers the development of e-commerce in Russia and Ukraine, so that everyone can more directly understand the impact of the Russian-Ukrainian situation on export sellers.

1. Russian e-commerce environment: The e-commerce market grew by 40% in 2021

As of October 2019, China has remained Russia's largest trading partner for many years in a row.

Russia is the ninth largest e-commerce market in the world, after China, the United States, the United Kingdom, Japan, Germany, France, South Korea and Canada. Given Russia's population and geographical distribution, its e-commerce market is in a booming stage and also has great potential.

According to Infoline's preliminary forecast, Russia's e-commerce market grew by 40% in 2021, and representative platforms Wildberries, Ozon and AliExpress Russia all grew rapidly. According to another report, the Russian online market shipments reached 1.57 billion pieces in 2021, an increase of 78% over 2020.

According to Data Insight, in 2020, the Russian e-commerce market size was about 33 billion U.S. dollars, higher than the pre-epidemic forecast of 29 billion U.S. dollars. From 2019 to 2020, the Russian e-commerce market size increased by 44%, with more than 10 million new shoppers. Under the epidemic, the Russian e-commerce market size will further grow.

2. Ukraine’s e-commerce environment: China is Ukraine’s largest trading partner

Next, let's talk about Ukraine. China is now Ukraine's largest trading partner. According to customs data, the total trade volume between the two sides reached US$19.34 billion in 2021, of which Ukraine imported US$10.97 billion from China, a year-on-year increase of 31.9%, setting a new record.

Ukraine is an Eastern European country with a population of more than 42 million. Its e-commerce growth rate ranks second in Europe. According to foreign media statistics, from the beginning of 2019 to August 2021, the number of e-commerce sellers in Ukraine increased by 14%, the average income of online sellers also increased by 1.5 times, and the overall profit increased by 69%.

According to Euromonitor International data, in 2020, Ukraine's e-commerce turnover accounted for 8% of total retail sales, a year-on-year increase of 36%, ranking first in the growth rate of all Eastern European countries. Although the e-commerce market share is still not high, it is also in a state of rapid growth.

Ukrainians often buy clothing, electronics, electrical appliances, home and garden products, cosmetics and food online. In addition to domestic markets, online stores and price aggregators, Ukrainians also widely use foreign platforms (mainly from China, the EU and the United States). However, local consumers still prefer the local e-commerce platform Rozetka . Amazon and AliExpress also have a market, but their share is still relatively small.

Final Thoughts

At present, many Amazon sellers are worried that adverse effects such as a drop in orders will fall on themselves. From a practical point of view, the Russia-Ukraine conflict will not have a big impact on the order volume of Amazon sellers.

However, many people also believe that the international situation is closely related to every individual. At present, while doing the work at hand steadily, we will also make plans for the worst and prepare ourselves mentally in advance.

Cross-border e-commerce

Russian Logistics

Russia Ukraine