Christian Roeloffs, Co-Founder and CEO of Container xChange, gives his views on how world trade could be affected by the Russia-Ukraine war.
The war in Ukraine has impacted Europe greatly. Firstly, containers are stuck in the terminals waiting for transhipments to Russia resulting in a huge pileup. Then there’s the impact on China- Europe rail: the northern corridor is still open, but volumes are massively reduced due to uncertainty in the market. That has pushed cargo towards sea freight and even in some cases air freight. Low-value cargo has suffered largely because high-value cargo has been pushed onto ocean transport.
On a more global scale, the rise in oil prices has been a major repercussion of the war. Also logistic players are unclear about the restrictions of doing business with many companies because there are second and third-order sanctions to consider.
China lockdowns
It's like a traffic jam. When people step on the brakes, it creates a significant bulk up in demand for freight services. This will be unleashed when the factories reopen. And when the demand is back, the carriers will again not have enough equipment in the right places. This will continue pushing the volatility in the market. The congestion transpacific will come back worse than before because a traffic jam cannot be cleared by stopping something violently and then hitting the accelerator. The traffic needs to flow at a constant speed.
The problem will continue because there are also labour union disputes in the US expected during May which always lead to a slow down at the West Coast ports.
Into the future?
We will need more resilient supply chains and that means less concentration on high volume routes ...
Photo: Christian Roeloffs, Container xChange.