Russia-Ukraine Conflict

“Already, ocean freight rates are increasing 3 to 4X. Two years ago, container rates for shipments from Shanghai to Rotterdam were less than $2,000 – as the conflict unfolded, spot container rates climbed to $13,000. More recently, some freight forwarders showed rates at $54,000. Prices will continue to be volatile.” – Glenn Koepke, GM of Network Collaboration

“Sanctions are already beginning to bite, creating significant problems where ships are inspected or impounded.” – Jochum Reuter, GM of EMEA

“We’re predicting a ripple effect as delays in Eastern Europe start to cause issues in ports in China and the US, already under pressure from COVID-19, weather events and other factors.” – Jochum Reuter, GM of EMEA

“The difference in transit times for over-the-road shipments versus intermodal is significant and transitioning would require concerted supply/demand planning efforts. Therefore, there will have to be a sustained increase in fuel surcharges in order for a meaningful shift to intermodal shipments to be worthwhile.” – Ryan Closser, Director of Project Management, Network Collaboration

“Agility and resilience come with a cost. Today, I might single-source in China. Tomorrow, to be resilient, I should dual-source. Doing so is an added cost to a supply chain, but it ensures companies can endure any unexpected disruption.” – Raj Patel, VP of Industry Strategy, 3PLs

“In the face of uncertainty, I anticipate companies will scrutinize the number of SKUs they carry and consider rationalizing them to fewer products until supply and demand can stabilize.” – Raj Patel, VP of Industry Strategy, 3PLs

“Before COVID-19, a lot of CFOs were reluctant to take on high carrying costs. Now, especially in the midst of the Russia-Ukraine war, leaders have no choice because of the what-if scenario. They must also assess the network design of their supply chain: is it capable of handling a shift to more air freight? Are facilities optimally located based on consumer demand patterns? These are the types of conversations shippers are having with their 3PLs today.” – Raj Patel, VP of Industry Strategy, 3PLs

“Broadly speaking, the situation is creating a trickle down impact. Consumers first saw the impact on gas prices but now there’s more of a silent creep taking place as the costs of raw materials and shortages impact prices in unexpected areas. For example, when you consider all the products that contain wheat, grocery bills are going to be impacted and even restaurants and fast food eateries will start passing along their increased costs soon — if they’re not already.” – Mark Delaney, VP of Industry Strategy, Retail & CPG

“As shipments slow and costs rise, US consumers will continue to notice empty shelves and high prices.” – Glenn Koepke, GM of Network Collaboration

“Higher prices at the pump, higher prices for materials, higher prices for groceries that we’re all experiencing –– they will come back down. But it’s going to be slower ramping down than it was ramping up.” – Mark Delaney, VP of Industry Strategy, Retail & CPG

“The amount of oil used in the manufacturing process is massive. If oil prices rise drastically, it could have far-reaching effects on operating costs, which are likely to be passed on to consumers.” – Todd Simms, VP of Industry Strategy, Manufacturing

“There are wild fluctuations in the prices of commodities like fuel and food and we predict significant price increases as the conflict continues.” – Jochum Reuter, GM of EMEA

“Consumers will likely see price impacts in the next month. To what extent, it’s hard to predict. Just because actual expenses vary does not always mean that consumer pricing will, too. Some companies will take advantage of the situation to increase pricing because they can message that it’s due to global events, even though the cause could be something else.” – Glenn Koepke, GM of Network Collaboration

“Sanctions and border controls will increase the need for paperwork, approvals and create significant delays for suppliers. A conservative estimate would see delays increasing by 4 to 6X.” – Glenn Koepke, GM of Network Collaboration

“Based on numbers from TLP in Poland, Polish carriers are responsible for 30% of truckloads in Europe and over 100,000 truck drivers in those companies are Ukrainian. Around 30,000 of them have asked for leave so they can go back to Ukraine to fight or to take care of their families. Some companies have lost 80% of their drivers. This will have a huge impact on trucking across Europe.” – Jochum Reuter, GM of EMEA

“The difference in transit times for over-the-road shipments versus intermodal is significant and transitioning would require concerted supply/demand planning efforts. Therefore, there will have to be a sustained increase in fuel surcharges in order for a meaningful shift to intermodal shipments to be worthwhile.” – Ryan Closser, Director of Project Management, Network Collaboration

“Nearly a quarter of the world’s grain actually comes out of that area specifically, so think about the trickle-down effect that that could have on products and goods all the way down to the consumer level — things like bread.” – Mark Delaney, VP of Industry Strategy, Retail & CPG

“The pressure of passing on price increases became normal business practice with COVID-19 impacts – we’ll likely see similar pressures with the Ukraine-Russia war.” – Todd Simms, VP of Industry Strategy, Manufacturing

“Higher prices might not show up in shipping costs because customers have been conditioned to expect free delivery due to the Amazon effect. But while it may be hard to add those costs back, sellers can typically raise the prices of their products without much of a hit to demand. Even if the war in Ukraine resolves itself in the coming weeks, it could be months before those prices begin to normalize.” – Mark Delaney, VP of Industry Strategy, Retail & CPG

“It’s already a constrained market. If organizations don’t have a high level of maturity – if they’re not consciously competent, capable of making the right supply chain tradeoffs – then the knock-on effects of this conflict could be detrimental for some businesses. Especially those that are already stretched thin from the past two years.” – Todd Simms, VP of Industry Strategy, Manufacturing

“It’s possible that Western companies no longer shipping or selling into Russia will divert their products elsewhere, so shelves will fill up faster in the Americas and other regions. As of today, most of those goods are likely still sitting in Asia, waiting to hitch a ride elsewhere.” – Mark Delaney, VP of Industry Strategy, Retail & CPG

“Regulatory compliance or voluntarily sourcing materials from pro-Ukraine countries will increase supply chain complexities.” – Todd Simms, VP of Industry Strategy, Manufacturing

“Russia is a major producer of several metals, including aluminum and copper. Sanctions and a halting trade will impact inbound supply chains and potentially slow efforts to increase production of equipment like chassis and containers. At the same time, demand for critical shipping equipment is growing.” – Glenn Koepke, GM of Network Collaboration

“For carriers and 3PLs, rising costs will be contained to the spot market in the short-term, but they will go up as the market needs more capacity in an environment where there’s already a shortage due to other disruptions. Net effect: demand will outstrip supply.” – Raj Patel, VP of Industry Strategy, 3PLs

“Fuel variability isn’t typically protected by contracts, so companies will have rising costs, but contracted rates allow customers to lock in freight transportation rates.” – Glenn Koepke, GM of Network Collaboration