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The consequences of the war in Ukraine are being felt in a number of sectors, and the freight the freight industry has been hard hit. The tense relations between the various countries, combined with punitive airspace closures, the oil shock and an atmosphere of uncertainty, have created a gloomy environment for the European air sector, already shaken by the COVID-19 pandemic.
The war led to severe airspace restrictions in Eastern Europe. No-fly zones, punitive airspace closures, the oil crisis and rising fears all added to the gloomy picture for the European air industry, which had hoped to emerge from the health crisis caused by COVID-19.
Since 2021, airlines have been obliged to bypass Russia when connecting certain regions of the world to Asia, resulting in longer routes and additional costs.
The optimum route for a flight from Canada to Southeast Asia, for example, passes through Russian airspace. Avoiding it would increase the distance by 10%. This implies additional fuel consumption, which is reflected in the final bills sent to supply chain players and travellers alike. In March 2023, the price of jet fuel stood at $2.68 per gallon, an increase of 41% on four years ago.
The conflict in Ukraine has also jeopardized the fragile recovery in world trade since the Covid crisis. According to the WTO, economists have had to reassess their projections for world trade downwards, partly due to the unpredictable nature of the conflict. They now expect merchandise trade volumes to grow by just 1% in 2023. Originally, they were forecasting 3.4%.
Today, this decline in world trade volume is having considerable economic repercussions. Both exporting and importing countries are facing declining revenues and economic growth. Companies dependent on international trade are seeing their profits fall, which can lead to job losses and wider economic difficulties.
On the geopolitical front, the war in Ukraine and airspace restrictions exacerbated tensions between the various parties involved. Countries dependent on air transit for trade and travel faced diplomatic challenges and complex negotiations to find alternative solutions.
In addition, over-reliance on certain transport routes and countries for global trade highlights the need to diversify supply routes and strengthen the resilience of the global supply chain.