Global supply chains were beginning to recover after two years of difficulties due to the pandemic, when the war between Russia and Ukraine arrived.

This crisis in particular is bringing immediate consequences to ground-based freight networks that transport goods between Asia and Europe, an area in which, after a chaotic uncertainty in container shipping caused by COVID-19, turned to rail transport as an alternative for trade routes.

Railway Routes in Asia and Europe

In 2021, rail operators ran more than 1,200 freight trains per month between China and Europe, transporting almost 1.5 million containers. Many of these trade routes from China pass through Russia, Ukraine, and Belarus on their way to Western European destinations.

The risks for such containerized rail-freight are now prohibitively high, so traders are looking for alternative routes, at a time when the shipping industry is still besieged by port congestion, shipping and container shortages, leading to long delays and record-high freight rates.

What happens to China?

China’s trade with the world will be negatively affected as established trade flows and supply chains become increasingly disrupted.

In particular, the various Silk Road freight rail corridors, through Belarus and Poland, or Ukraine, or St. Petersburg and Finland, will be affected. There are more than 70 rail freight routes from China connecting to 174 cities in 23 countries in Europe, offering transit times of just 12-17 days, cutting sea freight transit times by several weeks.

Many of these routes are now completely impractical and unfeasible, resulting in goods becoming stranded en-route and inventory shortages in destination markets.

Is there any close solution?

Unfortunately, this is yet another massive disruption to today’s globalized supply chains, that is added to the pandemic crisis that started in 2020 and that will undoubtedly bring great consequences to the world’s economy.

There is huge uncertainty as to whether this crisis could end at the end of the month, whether it could drag on for years or, in the worst case, could trigger a direct military conflict between NATO and Russia.

Whatever the outcome, the situation will undoubtedly have a major logistical impact on global supply chains in the long run.

Source: https://www.brinknews.com/how-the-ukraine-crisis-is-disrupting-global-supply-chains/

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