Russia’s untimely invasion of Ukraine has created a potentially dangerous and turbulent situation for logistics. These disruptive circumstances are not only limited to the affected area but are also directly impacting other areas beyond the war zone’s boundaries, urging the nations to work on supply chain risk mitigation strategies.
Russian invasion into Ukraine is affecting the logistics sector primarily and creating havoc for the global logistics industry. The logistics industry is currently facing significant risks which include transportation modes such as air, rail, road, and marine freight and fuel services risks.
However, targeted strategies have been planned to cope up with the logistics disruptions and overcome the potential risks as mentioned above. Some of the sanctions implemented on Ukraine by Russia are making the situation only worse with each passing day. Logistics industry always is at the dying edge of the boat in such war circumstances. National leaders group themselves on a round table and develop different coping strategies in such situations; however, risk mitigation is the only strategy that really counts. Some potential risks are discussed below that can rip off various aspects of the global logistics industry.
Air Freight Risk:
Air freight risk will eventually result in increased cost and limited capacity. It will create no-fly areas due to which flight house will be increased, and so will the operating cost. The impact and likelihood of air freight risk is exceptionally high; therefore, an adequate mitigation strategy must be created to combat any large disruption.
Mitigation strategies for air freight risk:
- Extend the pricing contracts For the next seven to eight months.
- Implementation of index-based price managements should be made on immediate notice.
- Take core partners in confidence and work closely with them to mitigate the increased cost.
- Remove capacity if not needed in air transport.
Rail Freight Risk:
Rail freight services between Europe and Asia will face disruption. Pan-European rail freight services will also face considerable transportation disruption. The European continental rail network will also be disrupted in the areas outside Russian territory. The impact and likelihood of rail freight disruption will range from high to low.
Mitigation strategies for rail freight risk:
- Shift modes of transportation to air and water freight services.
- Utilize the rail linking rail between northern Kazakhstan and southern Turkey.
- Try using shorter routes for transportation.
Road Freight Risk:
The disruptions and affected areas of road freight will almost be the same as rail freight. Road freight disruptions will be seen in Eastern Europe and Pan-European territory. Due to the potential risk, routes will be shifted to alternate areas, eventually increasing the transit hours. Similarly, the areas outside the Russian region will be affected equally. The impact and likelihood of road freight disruption will range from low to high.
Mitigation strategies for road freight risk:
- Work closely with affected road carriers.
- Understand and learn the changes in routes and services.
- Find out whether your carrier of choice will apply a surcharge.
Logistics professionals should not lose their hopes but must prepare themselves for the worst as well. Some of the immediate actions mentioned below should be taken to combat disruption risks.
- Plan alternates for every sort of logistic risk.
- Prepare for the unexpected and the worse.
- Analyze risk assessments and implement strategies on logistics networks.
- Reduce the risk exposure and constrain the surface area.
- Enhance the transport planning route time.
- Re-evaluate network resilience and capacity.
- Prepare alternate sources of supply and transportation.
- Create emergency funding for incremental costs of increased fuel charges.