March 18, 2022
March 18, 2022
Contributor: David Gonzalez, Matthew Beckett and Brian Whitlock
Russia's invasion of Ukraine creates new and potential disruptions for logistics that stretch far beyond the geographic areas directly impacted.
In short:
Despite diplomatic efforts followed by severe sanctions, the Russian invasion of Ukraine continues to escalate. Logistics, as it always is, finds itself at the sharp end of globally significant events such as this. As leaders in the field come to terms with the near- and long-term consequences, risk mitigation is the only strategy that really counts. We believe that the potential risks detailed below could have detrimental effects on different aspects of the global logistics industry.
Read more: Resources for Executives and Their Teams Amid Russia’s Invasion of Ukraine
Risk |
Rationale |
Likelihood |
Impact |
Rates will increase. |
Creation of no-fly zones will extend flight times and increase operating costs. |
High |
High |
Capacity will be constrained. |
There will be a significant shift to air freight as other modes of transportation face disruption. |
High |
High |
Mitigation strategies:
Risk |
Rationale |
Likelihood |
Impact |
Freight services between Europe and Asia will face disruption. |
The rail infrastructure crosses Russia and Ukraine. |
High |
High |
Pan-European rail freight services will face disruption. |
Even outside of the areas directly impacted by Russia's invasion of Ukraine, the European continental rail network may be affected. |
Low |
Medium |
Mitigation strategies:
Read more: The Top Business Questions About the Russian Invasion of Ukraine
Risk |
Rationale |
Likelihood |
Impact |
Road freight services in Eastern Europe will face disruption. |
Routes will be diverted away from affected areas, leading to longer transit times. |
High |
High |
Pan-European road freight services will face disruption. |
Even outside of the areas directly impacted by Russia's invasion of Ukraine, the Pan-European freight network may be affected. |
Low |
High |
Mitigation strategies:
Risk |
Rationale |
Likelihood |
Impact |
Global ocean freight will face disruption. |
Extended lead times resulting from longer sailing times could lead to backlogs and congestion. |
Low |
Medium |
Some European short-sea services will face disruption. |
Services in and out of high-risk areas of Europe, like the Baltic and Black Seas, will face disruption. |
Medium to High |
Low |
Mitigation strategies:
Read more: 5 Key Cost Considerations as Oil and Other Input Prices Rise
Risk |
Rationale |
Likelihood |
Impact |
Fuel surcharges will increase for all modes of transport. |
Fossil fuel commodity prices will spike and continue to rise. |
High |
High |
Cyberattacks will increase and impact logistics service providers. |
Russia will use cyberattacks to bolster its offensive. |
High |
High |
Mitigation strategies:
The rapid escalation of the Russian invasion of Ukraine has exposed many companies’ lack of preparedness to deal with disruption. Be under no illusion: Disruption has become — and will remain — a constant that every logistics leader must accept and adapt to.
Read more: What's Ahead for Semiconductor Shortages
Logistics professionals can hope for the best, but they must absolutely prepare for the worst. These four immediate actions are essential to ease the pain of disruption:
David Gonzalez is a VP Analyst and KI Lead for Logistics Strategy and Operations based in the EMEA region. Matthew Beckett is an Australia-based Senior Director Analyst in Logistics and Supply Chain. Brian Whitlock is a Senior Director Research Analyst in Logistics and Fulfillment, and he works out of the U.S.
Recommended resources for Gartner clients*:
Responding to the Russian Invasion of Ukraine
Top Tips to Lead Logistics With Ambition During Disruptions
Ignition Guide to Conducting Scenario Planning for Your Logistics Function
Supply Chain Brief: Risks of the Russian Invasion of Ukraine Put Global Supply Chains on High Alert
*Note that some documents may not be available to all Gartner clients.