Massive capacity reduction.
Fresh, airborne salmon is in high demand in overseas markets. Countries such as China, Japan, South Korea, Thailand, Malaysia and Indonesia are major buyers of European farmed salmon in East Asia, just as the United States is on the other side of the Atlantic. The war in Ukraine particularly hinders air freight of goods in transit between Europe and Asia.
In a note to its salmon customers, the freight company DB Schenker explains the challenges the air freight companies are experiencing after the outbreak of war in Ukraine.
“The air freight industry is primarily affected by reciprocal airspace bans between Russia and a number of other countries, which first came into force on Sunday 27 February. Since then, this has escalated almost daily. At the same time, we have seen that the airlines have largely been quick to adapt to the new conditions for current operations, even if it is at the expense of capacity. ”
DB Schenker sees in particular two negative effects of airspace bans:
«20 percent capacity reduction overnight:
– Corresponding reduction of 1,000 tonnes daily capacity between Europe and Northeast Asia. Both Russian and European companies are affected by this, and the reduction in capacity is increasing. DB Schenker has, of course, immediately stopped using Russian airlines and aircraft operated under Russian registration. Airlines such as AirBridgeCargo, Aeroflot, and Skygates are capacities that are no longer available in the market.
Longer flight time and reduced capacity:
– The airlines get on average +2 hours longer flight time per trip, due to the use of southern corridors outside Russian and Ukrainian airspace. This amounts to an average of 4 hours per round trip which means that in one week you lose at least one flight departure (4 hours * 7 days = 28 hours longer flight time on average/week).
– We see in particular that Japan is a market that is hardest hit due to approximately 4 hours longer flight time per trip. With significantly reduced capacity, a 40-50 percent capacity decline is now registered.
– Some types of passenger aircraft have to add an extra fuel stop on the road, which is both time-consuming and expensive, also on the manning side. Due to longer flight time, more jet fuel is needed, this is unfortunately at the expense of air freight capacity.”
At the same time, fuel prices are rising almost on a daily basis after the oil price shock:
“In addition, the sanctions against Russia mean that jetfuel prices are at their highest since 2008. The combination of unusually high jetfuel prices and reduced air cargo capacity per departure, means that we have seen record-high rate adjustments continuously in recent weeks, and we probably have more to look forward to,” writes DB Schenker.