Russia’s brutal invasion of Ukraine has started another major international crisis, bringing further uncertainty, volatility and human misery to a world just starting to recover from the Covid-19 pandemic.
Alongside the heart-breaking scenes of suffering and destruction, Putin’s war and the resulting sanctions against Russia bring a new set of headaches for the air logistics sector, which has so brilliantly adapted and adjusted to the extreme challenges of the pandemic.
The resilience developed in the last two years may prove useful in tackling the fresh waves of capacity losses, changes and volatility, freight rate rises, longer flight times, plus an enormous spike in fuel costs, alongside dramatic changes in trade patterns, freight flows and business relationships. There’s set to be more losers than winners, and companies hit include Russian and international carriers and their partners. ABC, for example, is now unable to serve its primary Asia-Europe markets, and may soon struggle to source parts for its aircraft, while some other Russian airlines will see their aircraft leases terminated or have difficulty with international payments. Other unintended consequences include interruptions to supply chains dependent on Russian or Ukrainian products, withdrawal of companies and services from Russia – including freight and logistics – plus price rises in many commodities and products from food to wood.
The changes will see Russia and Russian businesses more or less excluded from most freight trade with Europe, the US and the democratic western alliance, along with the strengthening of Russia-China trade and relations. And if the conflict escalates or spreads further, then we will face unprecedented, unknown, and unimaginable further consequences.
The Ukraine crisis comes as the air freight sector has been making progress in a number of areas, not least in digitalisation initiatives already delivering productivity improvements and promising further gains – including from the digitalisation of payments (see page 18). And as highlighted on page 12, as more processes and functions are digitalised, integrating modules and systems is becoming ever easier thanks to APIs and the retreat of legacy systems – laying the foundation for new efficiencies through AI.
This year’s Outlook report includes some fascinating insights from selected senior leaders within 15 leading air freight organisations, even if the contributions came before the Russian invasion of Ukraine. One contribution reflects on the need for the air freight sector to rethink performance from both an economic and human perspective, giving more attention to factors such as well-being, commitment, and social value (page 61).
Similarly, tragedies like the war in Ukraine and other conflicts and disasters remind us that while business is important and valuable, nothing is as crucial as peace, health and respectful relationships with our neighbours – including those that hold different views.
