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Russian ban on European goods and inflation in logistics costs

The Russian government has signaled an executive order banning European Union shipments from crossing borders into Russian territory. This step is expected to further increase logistics costs and hamper the remaining automotive trade. The ban has come into force since October second week, and applies to two-way transport, transit, and transport from or to a third country.

The restrictions have affected international cargo transport on Russian territory for transport companies from the Ukraine, the UK, EU, and Norway. It follows a petition to ban European trucks from Russian roads, filed in June by the Russian Association of International Road Carriers. EU Haulage trucks can no longer move across borders into Russian territory

Logistics costs

European carriers raised their rates on deliveries to and from Russia by almost 200% to up to 400%. Under the new conditions, the logistics costs are expected to drop, as pr the association. Logistics costs are expected to further rise because of the sanctions, as per the market experts. The new sanction is expected to significantly narrow down the already small circle of surviving carriers, leading to the emergence and consolidation of monopolies. A Russian source mentioned that the new sanctions are expected to raise both logistics costs and delivery times. Reloading cargoes at transit points also risks damage to the product, which is critical for automotive components supplies.

Russia’s decision to introduce the bans on European haulage are likely to do it more harm than good, as per the sources. It is likely to further inflate logistics costs on much-needed products.

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