After many weeks of tension and threats, finally Russia opened fire on Ukrainian territory starting an open war. In addition to the serious consequences For the population, this military action has a very negative impact on the European economy in general and also in the eCommerce sector. Therefore, we have spoken with several specialists in logistics who told us what the current situation is and what measures they will take in the future, depending on how the events unfold.
The origin of the conflict
The bad relations between Ukraine and Russia have been dragging on since 2013when the then Ukrainian and pro-Russian president, Victor Yanukovych, encouraged an internal division between those who supported the neighboring country and those who were against the strong Russian influence in the country. From that moment, several protests took place that were increasingly violent and ended with the annexation of crimea by Russia and the occupation of the territory of Donbass.
Throughout the years, the conflict always remained latent. A few months ago, the President of Russia reignited the feud, claiming that Ukraine was repressing the Russian people residing in Ukraine and that if that situation did not change, he would initiate military action. The President of Ukraine, Volodymyr Zelensky, denied the accusations. Finally, on Thursday, February 24, Putin launched the first attacks.
The official version: “Protect people from the abuses and genocide they have been subjected to by the Ukrainian government for eight years.” The reading that can be done between the lines: Russia was losing weight in the Ukrainian territory, which began contacts with NATO to see the possibility of joining the military group in the near future.
The textile, travel and food sectors, the most affected
The direct consequences of the conflict translate into the rising oil and gas prices, which can affect the supply of products and accentuate the level of inflation throughout Europe. In addition, the possible restrictions and interruptions in communication routes would further harm the crisis in the freight transport sector and tensions in the logistics chain, after a year of multiple incidents in this field.
At the local level, in Spain there are about 10,000 very concerned companies because of the conflict that has just broken out. These are the companies that are engaged in the import or export of products with Russia. In total they are 2,388 million euros at risk for Spanish exports, of which more than 127.74 million correspond to clothing items and point.
On the other hand, the sector of capital goods, beverages and tobaccorepresent the 12% of exports from Spain to Russia. Our grain imports are also highly dependent on Ukraine: practically half of the maize we consume is imported from this country.
As for the travel industrythe increase in fuel price it will also imply an increase in the cost of airline tickets. This is not to mention the cancellation of flights to and from conflict-affected areas.
What’s more, Ukraine has an extensive gas pipeline network underground, -the largest gas transit infrastructure in the world- through which supplies gas to several European countries. A large part of that gas comes from Russia, which at the same time built two alternative routes that avoid passing through the neighboring country. The warlike conflict could translate into restrictions and rising gas prices for Europe, affecting the production and transport chains of eCommerce.
Spanish companies affected by the crisis: Inditex, Mango and Tendam closed their premises in Ukraine
The first moments of the Russian attack have already provoked the reaction of some of the Spanish companies present in Ukraine, among which are some of our large fashion chains. A) Yes Inditex decided to close all 82 stores that it has in Ukraine and fears for the future of another 527 physical premises that it has in Russia. “Inditex is following the situation very closely. The safety of the members of our staff and their families is our priority, and we are going to make the decisions appropriate to the events,” the company explained in a statement.
Another of the Spanish fashion multinationals, Mango, operates in Russia and Ukraine through a combined model of owned and franchised stores. In total, it has 142 outlets (14 in Ukraine and 128 in Russia) that could be affected.
The Tendam Group (former Cortefiel group) is another of the big affected, since it had been expanding its network in Ukraine, where it has 20 establishments (8 from its Springfield young fashion chain and 12 from Women’secret). In Russia it has 56 sales channels, 4 by franchise and 52 of its own.
Regarding online sales channels, the websites continue to functionalthough they will also look very harmed because of the shipping logistics limitations -which will delay and/or interrupt- and decrease in demand by the population affected by the war.
Glovo will provide support to its workers
oscar pierreco-founder and CEO of glovo, He sent an email to his workers and then shared it through the networks to make public the actions of the company: provide travel aid to Glovo workers to leave Ukraine, offer security training, advance salaries and provide accommodation to those who can move to neighboring countries.
This was announced on LinkedIn: «We launched Glovo in Ukraine in 2018. It is a market in which we have always felt very welcome. We have built a fantastic team there with a great human ethic and always eager to make a positive impact. Supporting our team, couriers and partners in Ukraine these days is our first priority. We share our plan with the team via the following email.”
UPS, DHL and Maersk discontinue their services: impact on logistics
being consulted by Marketing4ecommercefrom the company of one of the logistics giants worldwide as UPS, explained that “While we have always offered continuous service, our priority is safety. Therefore, we have suspended service to and from Ukraine until further notice.”
For its part, the company of global logistics DHL, replied that “Currently, our greatest concern is the safety of our employees in Ukraine, which is why we have advised all our employees to stay home with their families. Offices and operations have been closed until further notice.
Due to the closure of ukrainian airspace, our flight operations to and from Ukraine have been suspended and all flights that normally pass through Ukrainian airspace have been diverted. Therefore, we have temporarily suspended the acceptance of DHL shipments to and from Ukraine.
Regarding customers from Germany, we will continue to send letters and parcels to Ukraine as long as possible.. However, please understand that the situation may change at any time, even at short notice. We are in close contact with our customers and business partners to keep them informed of the dynamics of events.”
Finally, the international logistics conglomerate, Maerskannounced that will not make calls at any port of Ukraine, nor will it accept new orders to and from that country until further notice. At the moment, the activities that the company maintains in Russia continue their normal course.
The opinion of logistics experts
From Marketing4ecommerce we have sent a series of questions to different spokespersons of companies related to eCommerce logistics and these were their reflections on the conflict:
Carlos Zubialdeconsultant specialized in logistics 4.0 and transport B2B/B2C/eCommerce, creator of informacionlogistica.com, believes that “At the level of supply chains, Ukraine is not geographically in a ‘critical’ position, that is, supply chains are not stopped by the current situation. What if you have a very direct impact is on costs, the rise in all raw materials has a direct impact on all modes of transport. This increase in costs will be reflected directly in the cost of fuel for example, what will make the transport prices continue to rise, or at least that transport companies try to pass on this price increase to their customers.
Price increases can be significant for customers who have a fuel revision clause in their contracts, since these are always referenced to the data from the Ministry of Public Works. With regard to eCommerce, currently the service lines with Ukraine are completely suspended, the companies have serious difficulties to fly, and as is foreseeable, the demand will be frozen by the situation. In the case of Russia, at the moment it seems that everything is following a relatively normal course, the service could stop only if there are sanctions or prohibitions of flights with origin / destination Russia, which at the moment is not on the table, it seems » .
For its part, Noelia Lazarus, marketing manager of Packlink explains that «As of today we already see carriers stopping shipments to Ukraine/Russia; so, It is a very big impact for the sector. In terms of the supply chain, we believe that, as on other occasions when there have been problems due to atmospheric catastrophes, for example, the supply chain will be stopped due to lack of supply of raw materials and stock of materialsand this will affect trade, both electronic and conventional.
Energy prices are generally rising due to Europe’s dependence on Russian energy (mainly gas) and, as a result, fuel prices are rising, which translates into higher costs for carriers. Today it is not profitable for many carriers to provide their services, therefore, carriers with higher volume will maintain.
It’s a little early to say how this will affect the price increase in general, but I would say there will be a direct impact on the CPI of global markets«.
Russia will not participate in the next Mobile World Congress in Barcelona
In addition to the economic consequences, the conflict also translates into different measures of support and/or rejection of both Russia and Ukraine by different countries and institutions at a global level.
An example of this was the cancellation of the pavilion that Russia was going to occupy at the next Mobile World Congress, which will take place in Barcelona from February 28 to March 3, 2022. The decision was published on the web official, where it is explained that the GSMA, the organizer of the congress, condemns the invasion and understands that several governments will take more sanctions and repudiation measures against the Kremlin. “The MWC is a unifying event with the vision of bringing together the mobile ecosystem«, reads the statement, and tries to bring peace of mind to the attendees by clarifying that «the event security it is constantly reviewed and adjusted as new information emerges.”
This article is still in development. We will expand the information when new measures arise in the world of marketing and Spanish, European and global eCommerce.
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