War in Ukraine drives up already high freight costs for Japan

Russia’s invasion of Ukraine has disrupted shipping and air logistics networks, driving up freight costs – already high due to the COVID-19 pandemic – even further.

More and more European countries have restricted ship arrivals to their ports, while due to the war in Ukraine many flights have been cancelled, leading to skyrocketing freight costs – an increase which could in turn be reflected in the prices of everyday products.

At the Port of Tokyo, which has one of the largest cargo-handling capacities in the world, a series of delays in the arrival of cargo ships has hampered the rapid loading and unloading of goods, causing a headache for workers ports.

“If the delayed ships all arrive at the same time, we won’t be able to find a place to store the cargo, which will make it difficult to transfer it smoothly,” a port worker said.

The logistics industry was already experiencing a shortage of container ships due to the pandemic, and container freight rates hit record highs due to continued infections among port workers and other factors.

But the war against Ukraine has put additional pressure on the industry. Ocean Network Express Pte., a joint venture made up of three major shipping companies, including NYK Line, stopped shipping goods to and from Russia and Ukraine in late February.

The company said delivery has become difficult not only in ports along the Black Sea coast like Odessa, but also in geographically distant ports like Saint Petersburg.

“There are fears that many companies may need to redirect their ships to major ports (in various parts of Europe) which serve as cargo hubs,” a shipping industry official said.

Although there is not much freight shipped directly between Russia and Japan, there are fears that disruptions at major European ports could lead to further increases in freight rates.

The same goes for air freight. Airlines are scrambling to secure cargo space and competition for international cargo slots is heating up.

Many European countries have closed their airspace to Russian planes, and Russia has returned the favor.

The sanctions led to many cancellations of cargo flights around the world and also prompted major Japanese airlines – All Nippon Airways and Japan Airlines – to refrain from flying over Russia for safety reasons.

Takuma Matsuda, a professor at Takushoku University and an expert in international logistics, predicts that products dependent on air freight will be the first to be affected by the fact that airlines cannot fly over Russia.

An airline industry official said: “Freight rates between Japan and Europe have doubled since before the invasion, and the time it takes for cargo to arrive has also been extended by several days. “

Fresh food, clothing, auto parts and other goods from Europe may be blocked, driving up prices in Japan, they said.

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