As tens of thousands of Russian troops continue to mass along the Ukrainian border, and with diplomatic talks between the U.S. and Russia yet to bear fruit, the threat of a Russian invasion within the next few weeks appears to be growing.

A Russian invasion of Ukraine has the potential to cause extensive and debilitating disruption across global supply chains, resulting in rising input costs to a heightened threat of cyber attacks.

Today thousands of U.S. and European companies do business with suppliers in Russia and Ukraine, which could be at risk during a prolonged military conflict. Analysis of global relationship data on the Interos platform reveals key findings:

-More than 1,100 U.S.-based firms and 1,300 European firms have at least one direct supplier in Russia.

-More than 400 firms in both the U.S. and Europe have tier-1 suppliers in Ukraine.

-Software and IT services account for around 12% of supplier relationships between U.S. and Russian/Ukrainian companies, compared with 9% for trading and distribution services and 6% for oil and gas. Steel and metal products are other common items purchased from the two countries.

While the proportion of U.S. and European supply chains that include tier-1 Russian or Ukrainian suppliers is relatively low, this figure increases significantly when indirect relationships with suppliers at tier 2 and tier 3 are included.

-More than 5,000 firms in both the U.S. and Europe have Russian or Ukrainian suppliers at tier 3.

-More than 1,000 firms in both the U.S. and Europe have tier-2 suppliers based in Ukraine, with around 1,200 dependent on suppliers at tier 3.

Supply chain and information security leaders in U.S. and European organizations should review their dependence on Russian and Ukrainian suppliers at multiple tiers as a key first step in their efforts to assess risk exposure in the region and ensure operational resilience.

In the event of a Russian invasion of Ukraine, there are four major areas where global supply chains could be negatively impacted:

1. Commodity prices and supply availability

2. Firm-level export controls and sanctions

3. Cyber security collateral damage

4. Wider geopolitical instability

Although many of these risks may not materialize and represent a worst-case scenario, executives should be thinking now about the potential impact of a Russia-Ukraine military conflict on their operations over the coming months. These same leaders need to ensure that appropriate contingency plans are in place for their most critical supply chains and riskiest suppliers in the region.

With proper analysis, planning, and execution through knowledgeable logistics companies, it is possible to mitigate significant risk and ensure operational resilience.

In response to ongoing demand for increased transport capacity, international freight forwarders have launched new services between Europe, the United States and Asia.

In 2021, after the French logistics provider GEODIS chartered its first vessel to alleviate container capacity shortage on its Asia-Europe routes, the company has launched its own-leased A330-300 full freighter aircraft under its brand name to upgrade its AirDirect services between Europe, the United States and Asia. Operating between Amsterdam, London, Chicago and Hong Kong, the aircraft also serves the China-Europe route for the peak season.

With the continued strain on air freight capacity, we wish to ensure a more sustainable supply of air cargo space for clients and the industry is investing in this first dedicated freighter.

The provision of self-controlled air freight services with own-leased aircraft pays off has also been proven by DACHSER USA, a subsidiary of the global logistics provider Dachser. Since starting its weekly trans-Atlantic freight service between Frankfurt and Chicago in 2020, it has grown with more than 85% of its U.S. customers utilizing this service between Europe and the United States more than once.

Proving to be such a dependable, efficient solution that this route has become a cornerstone in the global air freight services network and is becoming the sample for many other new routes.

Looking for more innovative freight solutions? Contact us today!

Our Industry is Constantly Evolving. Learn About the New Global Business Indicator (GBI)

U.S. Customs and Border Protection (CBP)  has introduced a pilot program for the new Global Business Indicator (GBI) initiative, which proposes replacing current manufacturer/shipper ID codes (MID) with a new ID system that provides the CBP with more transparency to identify the main legal entity and ownership, specific business and global locations, and supply chain roles and functions.

The pilot will have importers use the Data Universal Numbering System (DUNS), Global Location Number (GLN), and Legal Entity Identifier (LEI) to determine the optimal combination for the GBI. The GBI pilot program is expected to go live in the Spring of 2022. There won’t be mandatory reporting of GBI, but the pilot will be live and available for those who want to participate.

The reason behind the program is that the increased volume of import/export activity in the U.S. introduces an unacceptable level of risk. The CBP wants more information on cargo entering and exiting the U.S. to help identify high-risk cargo and make the whole system more efficient and transparent.

If you need more information about this new program, or any segment within shipping, logistics, warehousing, freight, or more, contact one of our experts who are currently standing by and available to help.