Russia Flight Bans Add New Knot To Tangled Supply Chains

There was only one number to call when you needed to move something very heavy, very big quickly around the world, says air cargo charter broker Dan Morgan-Evans. Ukraine’s Antonov Airlines’ calling card was the AN-225, the largest plane in the world, which could carry nearly the same weight of cargo as two Boeing 747s.

Codenamed Mriya, or “Dream” in Ukrainian, the football field-sized plane was the only aircraft that was large enough to haul massive items like wind turbine blades or oil rig parts and had its loyal fanbase, says Morgan-Evans, global cargo director of Air Charter Service. “It was the pinnacle of chartering, it was exciting and people would fly on it if they could,” he says. “Every time it landed there would be dozens, if not, hundreds of people on the airport perimeter taking photos.”

That dream ended abruptly when the AN-225 was destroyed in the Russian attack on its home airport outside Kyiv, Ukraine, last week. Airlines are now also waking up to the impact of sanctions that lock Russian planes out of Europe and North America and bar American and European carriers from flying the shortest route from Europe to Asia. This has disrupted a bustling trail over Siberia for planes hauling the electronics, pharmaceuticals and clothes churned out from factories in China to Europe.

“The pandemic caused real difficulty with the supply chain and we assumed things would get better this year for air freight but this has stuck another spoke in the wheel,” says Morgan-Evans.

The new routing would add about 6% to flight times, according to estimates from Flexport supply chain economist Chris Rogers. “This is a finely tuned machine that has a bit more sand in its gears than before,” says Rogers. “That doesn’t sound like very much but air freight networks were already under a lot of stress at what’s supposed to be a quiet time of the year.”

The shutdown has meant some carriers have decided for now it’s uneconomic to fly around Russia via India and the Middle East. Japan’s ANA suspended flights while Finnair and Japan Airlines have cut back on schedules. While Russian cargo fleets like Airbridgecargo, and its parent Volga-Dnepr Group, are effectively unable to fly some of the world’s busiest airports.

“Airbridgecargo was the second largest cargo provider at Frankfurt airport so there has been a reduction in the level of supply which will increase freight rate levels,” says Michael Wax, cofounder and CEO of Forto. “Rate levels are already at Q4 levels and slightly higher.”

Cargo space on airplanes was already a scarce commodity because passenger flights, which ship around half the world’s air freight, still have not recovered to pre-pandemic levels, and some key routes particularly into China and Japan, where quarantine rules still limit travel, only had a handful of flights available, says Moritz Claussen, cofounder and managing director of Cargo.one.

Taking the long route also meant aircraft needed to carry more fuel and less cargo. “You have less payload available because Japan, China and Korea are already long distance flights, and you need the fuel capacity,” says Claussen. “This means there is less capacity available in a market where cargo space is already at a premium.”

Cargo flights across the Atlantic and Pacific to the United States have not been impacted by the airspace bans for now but Wax warned that airlines could move planes and pilots to Asia-Europe routes to cover increased demand. “We might see freighters repurposed to trade lanes with better return on investment for the carriers,” says Wax.

The war in Ukraine has also impacted the niche but profitable corner of the air freight business where the AN-225 ruled—moving super heavy and bulky industrial items like wind turbine blades. Bloomberg reported that Boeing relied on Russian cargo line Volga-Dnepr to shuttle sections of 767 aircraft between factories in the Mriya’s smaller cousin, AN-124s. Antonov Airlines’s own fleet of AN-124 remain aloft – but keeping them there could be a struggle given that its home base Hostomel Airport has turned into a major battleground between Russian and Ukrainian forces.

The greatest impact of the war in Ukraine on aviation and supply chains might be the spike in fuel prices triggered by the conflict. The global oil benchmark Brent crude touched a nine-year high of $118 a barrel on March 5. “Oil for our business feeds into bunker fuel costs for shipping, jet kerosene for air flights, and feeds into diesel for truckers,” says Rogers.

Many companies are still taking stock of the situation which could increase already high air freight prices, says Mads Drejer, COO, of Scan Global Logistics. “Many companies will take one or two weeks to assess and see how long this will play out,” says Drejer of the Copenhagen, Denmark-based freight forwarder.

Morgan-Evans was also taking stock of the loss of the AN-225, which had a busy pandemic ferrying super-size loads of medical gloves, gowns and rapid Covid tests around the world. “It’s not something in our armory anymore and it’s very sad,” he says. “We have a strong relationship with the guys that run the aircraft and we were just hearing the horrific conditions that they are facing in Kyiv.”