Korean Air has completely suspended the operation of passenger and cargo aircraft to Moscow from the 5th. 6th, Korean Aircraft at Incheon International Airport (News 1)
Korean welding machine maker A was planning to load the products produced at its Vietnam plant on a ship in February and deliver them to a client company in St. Petersburg, Russia's second largest city, in early March. However, the operation of cargo vessels bound for Russia has been completely suspended, and the product is stuck in Amsterdam, the Netherlands, as a stopover. An official of Company A said, "Paying additional freight and storage costs will cause great damage, and it is an urgent situation that we will have to pay a penalty for delivery problems to the customer company." Logistics turmoil caused by Russia's invasion of Ukraine began in earnest, and the global supply network was driven shortly before the collapse. Not only large companies such as Samsung Electronics and Hyundai Motor Co., Ltd., which have production bases in Russia, which is the hub of the railway network connecting Asia and Europe, but also small and medium-sized export companies are suffering damage one after another. According to the logistics industry, the Trans-Siberian Railway (TSR) Moscow-Ukraine-Kyiv (Kyiv) route has been completely suspended from the end of February on the 6th. The Moscow-St. Petersburg route is operating normally, but new cargo has not been accepted since the beginning of March. Since the spread of the corona infection, the use of TSR by companies has increased explosively due to the effects of the shipping logistics turmoil. The TSR is divided into three routes: △ Moscow ~ Kiiu ~ Warsaw (Poland) △ Moscow ~ Minsk (Belarus) ~ Warsaw △ Moscow ~ St. Petersburg. Following Russia's invasion of Ukraine, the operation of the route via Kiiu was suspended, and domestic logistics companies are rushing to transship cargo to the route via Belarus. However, the United States and the European Union (EU) have also imposed sanctions on Belarus, a pro-Russian state, and faced the danger of suspending Belarus routes. In this case, all land logistics to Europe will be cut off. Ships entering and leaving the port of Odessa, Ukraine, the largest port on the Black Sea coast, were controlled, and all wheat exports were suspended. Global airlines such as Korean Air have stopped operating Russian routes one after another. Since the end of February, hundreds of telephone calls have been flooded into the customer department of a large general logistics company in Japan. It's a phone call from the owners asking if they can load cargo on the Trans-Siberian Railway (TSR), which runs through Russia. TSR is a route that is frequently used not only by major companies such as Samsung Electronics and LG Electronics, but also by small and medium-sized export companies to transfer cargo to Europe. Inquiries are also being made to HMM, the Korean representative pelagic shipping company. It is a phone call asking whether to interrupt the Far East route such as Russia and Vladivostok. HMM plans to soon participate in the move of the global shipping company, which has declared a "Russian boycott." After Russia's invasion of Ukraine, the logistics turmoil has worsened, and damage to South Korean exporters has continued. According to the Korea Trade Association on the 6th, 346 complaints were received in the week leading up to March 4. Inquiries about payment were the most common at 55.8%. Inquiries about the distribution and supply network also reached 31.8%. An official of the Trade Association said, "There are a number of small and medium-sized enterprises that have signed export contracts with local client companies but are not getting paid or sending products, and are complaining about damage." According to the Trade Association, Company B, which manufactures cassette stoves, initially planned to deliver the product to customers at the port of Odessa in Ukraine, but Turkey's cargo has been frozen due to the outbreak of the war. I'm looking for a new buyer from Turkey, but I don't have a local network and I have to pay a long-term storage fee. An official of Company B said, "I would rather throw the cargo into the sea." Similar cases are occurring one after another, and the government is constantly suing small and medium-sized enterprises for urgent support for logistics costs such as storage fees. There are many disputes between Korean companies that have expanded into Russia and export companies. Company C, a machine parts manufacturer in South Korea, received an official statement from a major domestic customer company that had expanded into the local market, saying, "Please give a penalty due to delivery problems." An official of Company C confessed, "We have to impose a penalty because we do not want to break the relationship with large customers." ● Deterioration The Korean industry is more concerned about the damage to the parts and raw material supply network due to the disruption of logistics than the damage caused by direct trade with Russia. This is because not only raw materials such as crude oil, naphtha and aluminum, which are Russia's main export items, but also intermediate goods such as locally produced automobile parts have been stalled. In particular, domestic companies are terrified that the suspension of TSR routes will not hinder logistics to one of the largest trading countries, the European Union (EU). According to the Korea Development Corporation, Russia was the country with the highest increase in transshipment flow compared to the same period of the previous year among the major trading countries of Busan Port in January this year. It increased by 58% year-on-year. The average annual growth rate after 20 will reach 35%. The number of regular Russian routes at Busan Port is 15, which has more than tripled from the previous year. This is because the sea freight rate soared due to the prolonged logistics turmoil, and the combined transportation market from Asia to Europe using TSR grew rapidly, and Russia emerged as a logistics hub. "If the war is prolonged, the combined transportation market from Busan Port to Vladivostok Port to TSR to Europe may collapse," said a person in the logistics industry. Damage caused by the successive blockages of Ukrainian base ports on the Black Sea coast, such as Odessa and Mykolaiv ports, has also become a reality. The operation of POSCO INTERNATIONAL's grain terminal at Mykolaiv Port has also been completely suspended. A company official said, "Logistics has been completely controlled and the terminal has stopped operating." Cancellations of Russian and European freight routes by global airlines are also occurring one after another. South Korean companies are worried that land and air logistics that pass through Russia will be hindered, causing sea freight rates that have already soared to rise further. The Shanghai Container Ship Fare Index (SCFI), which is a global container ship fare index, fell slightly from the record high of early January (5109.6) to 4746.98 on the 4th. However, there is also a view that cargo heading to Europe will be concentrated and a shipping logistics turmoil that surpasses last year may occur.
Kang Kyung Min