Delivery specialist ParcelHero says freight services to Ukraine have all but stopped and many services to Russia have been suspended.
He warns that the costs of the conflict will impact UK businesses, even if they do not operate in Eastern Europe.
ParcelHero’s Head of Consumer Research, David Jinks MILT, says “Putin’s War”, as it is known in Europe, will definitely hurt both Russia and Ukraine economically. , but its impact is already being felt on UK businesses as well.
“The invasion had an immediate economic impact on Russia, which doubled its interest rate to 20% on Monday after the ruble fell 30%, before stabilizing at 20%. However, UK international companies large and small are also counting the cost.
“Most international parcel operators have suspended their services to Ukraine from February 24 and major couriers such as UPS, FedEx and TNT have also suspended their international services to Russia. Most couriers now return items already in transit to the sender where possible.
“Logistics companies such as DHL and DSV have all asked their Ukrainian employees to stay home with their families and follow the instructions of local authorities.
“Ukraine is an important air corridor for European air traffic and reroutings will lead to loss of capacity – hopefully in the short term.
“Goods shipments by sea are also impacted. There are no services in Ukraine’s key port of Odessa, and Ukraine says two foreign-owned commercial ships were shelled there by Russian forces. Surface shipments are re-routed via Romania, Lebanon and Greece.
“Container line Ocean Network Express (ONE) has now suspended container bookings to and from Russia, hours after Maersk announced it was considering doing the same.
“Most of the major Euro-Asian rail freight services (about 95%) do not pass through Ukraine. Direct freight trains enter Ukraine through its border with Poland, but these are largely wartime supplies.
“It is not just sales of physical goods to Russia that are affected. British, European and American companies operating electronic services in Russia are seeing their payments frozen after those countries removed some Russian banks from the Swift messaging network and froze Russian central bank assets. Bank cards issued by VTB Group, Sovcombank, Novikombank, Promsvyazbank and Otkritie no longer work for Russian customers trying to pay for things like Netflix subscriptions or access paid services from Apple and Google.
E-commerce has also been impacted. Etsy is waiving all fees owed by Ukrainian sellers, amounting to approximately $4 million, and eBay.com announced that it has suspended its Global Shipping Program service to Ukraine and Russia.
“Beyond the immediate logistical issues for deliveries, UK businesses are likely to see increased costs due to higher diesel and petrol prices. Even though the UK is nowhere near as dependent on Russia for oil and gas as the EU, rising demand is driving up prices everywhere. For example, diesel is now at 154.72p per litre, the RAC says.
“Food retailers will likely see an increase in prices. The Russian-Ukrainian plains were once called “the breadbasket of Europe”. The region exports about a quarter of the world’s wheat and half of its sunflower products, such as seeds and oil. Moreover, Ukraine sells a lot of corn to the world. Some analysts predict a doubling of world wheat prices.
“Ukraine has a very large heavy industry base and is one of the largest refiners of metal products in Eastern Europe. It is also well known for its production of high-tech goods and transportation products, such as aircraft.
“There are five industries in which the share of Russian exports to the EU is significant: textiles, pharmaceuticals, electrical equipment, machinery and transport equipment. Supply chains and costs could be impacted in all of these sectors.
British automakers such as Jaguar-Land Rover halted all deliveries to Russia, while Mini had to suspend production for five days due to the “current parts supply situation, now including the conflict in Ukraine”.
“How much could all this cost British businesses?” It’s too early to tell, but in the much smaller 2014 Ukraine conflict, a report by the Institute for International Economic Studies in Vienna said Germany lost around £2.51 billion. (3 billion euros), followed by Italy, which had lost around 1.17 billion pounds sterling (1.4 billion euros). France, Britain and Poland each lost around £0.67 billion (€0.8 billion). The current conflict is on a much larger scale and the economic sanctions imposed on Russia are much harsher, so expect these numbers to be just the tip of the iceberg.
“Like all other UK international courier service providers, ParcelHero has currently suspended booking services to Ukraine.”