Soaring oil prices, rising costs, trade disruptions, and widespread COVID‑19 outbreaks… How can the logistics industry break through in 2022?

Since On February 24, 2022, the first shots were fired, and the Russia-Ukraine conflict has now lasted for a month. This is the most significant geopolitical confrontation of the 21st century, with far-reaching implications for global politics and the economy.

At present, the Russia-Ukraine conflict is sending shockwaves across the globe, impacting logistics and transportation, cross-border e‑commerce, supply chains, inflation, and many other areas. Meanwhile, compounded by the ongoing pandemic, In 2022, the logistics industry faced mounting challenges.

Cross-border e-commerce disruption

From the perspective of economic size alone, Russia and Ukraine’s… Their shares of global GDP are relatively modest—one accounts for just 2% of the world total, while the other is even smaller, at only 0.2%. However, from the perspective of cross-border e‑commerce, as competition intensifies in Europe, the United States, and Southeast Asia, Eastern Europe has emerged as a new strategic stronghold for many Chinese sellers, with Russia and Ukraine among its most promising markets.

According to According to Data Insight, following the outbreak of the pandemic in 2020, Russia’s e‑commerce market surged by 44%, reaching US$33 billion, with online shoppers increasing by 10 million year over year—equivalent to 6% of the country’s population. In 2021, the Russian e‑commerce market expanded further to US$42.5 billion, and cross‑border shoppers’ average spending was twice that of 2020 and three times that of 2019. Most notably, Chinese sellers accounted for as much as 93% of these orders.

Turning to Ukraine, although e‑commerce currently accounts for a relatively small share, it is experiencing rapid growth. Following the 2020 pandemic, Ukraine’s e‑commerce penetration rate reached 8%, a 36% year‑on‑year increase compared with pre‑pandemic levels, making it the fastest‑growing e‑commerce market in Eastern Europe. From January 2019 to August 2021, the number of e‑commerce sellers in Ukraine grew by 14%, average revenues more than doubled, and overall profits rose by 69%, cementing Ukraine’s position as the leading e‑commerce growth performer in the region. Additionally, data show that in 2021, China was Ukraine’s largest import source, with imports totaling US$10.97 billion—up 31.9% year over year.

However, just as the e‑commerce sectors in both Russia and Ukraine were poised for robust growth, the outbreak of conflict brought everything to an abrupt halt. The war’s repercussions extend far beyond the two countries, delivering a devastating blow to global supply chains and trade. For Chinese sellers operating cross‑border e‑commerce in Eastern Europe, exports to that market have effectively come to a standstill in recent weeks.

A businessman who has long been involved in China–Ukraine trade said that in the past, he could sell within a week. 100,000 yuan—yet in the past two months, we’ve only managed to sell that much. Back then, orders would typically start rolling in right after the Lunar New Year, but now, a week into the market’s reopening, we haven’t secured a single order from Ukraine.

Another vendor at the Yiwu International Trade City also shared that Ukraine has consistently maintained strong demand for badminton rackets, and in previous years, customers would typically take their orders at this time. Around 100 cartons—now that figure has dropped to 20. Sellers are forced to lower prices slightly and trim their profit margins to maintain the balance between supply and demand.

Sea freight rates may double again.

In fact, even before the Russia-Ukraine conflict, global maritime capacity was already severely strained, with major ports experiencing severe congestion and international freight rates remaining stubbornly high. Now, as tensions between Russia and Ukraine have escalated—and with a sharp surge in international crude oil prices—the cost of shipping goods overseas has been pushed to yet another record high.

According to foreign media reports, globally, every month there are… More than 700 bulk carriers are en route to Russian and Ukrainian ports to deliver cargo. The outbreak of the Russia-Ukraine war is set to disrupt trade in the Black Sea region, with shipping companies facing heightened risks and surging freight rates. On February 24, major carriers including Maersk, Mediterranean Shipping Company, CMA CGM, and Hapag-Lloyd issued announcements stating that, effective immediately, they will no longer call at Ukrainian ports and will cease accepting new bookings for shipments to or from Ukraine.

Some foreign experts believe that if the Russia-Ukraine conflict continues to escalate, it could deliver another blow to global supply chains, driving up sea and air freight rates sharply. In particular, on routes from China to the United States, each… FEU freight rates could rise to two or three times their current level, jumping from $10,000 per 40-foot container to $30,000.

Maritime shipping is the lifeblood of global trade and the world economy. The “barometer” has long boasted numerous advantages, including low cost, broad coverage, and high transport capacity. The escalating Russia-Ukraine conflict has directly destabilized key maritime shipping lanes and prolonged port congestion, thereby exacerbating the global supply-chain crisis. Meanwhile, fuel represents one of the largest cost components for shipping routes; rising oil prices have triggered a ripple effect on marine fuel prices, inevitably driving up shipping costs and pushing freight rates higher.

No-fly zone Most routes are being rerouted.

Shortly after the outbreak of the Russia-Ukraine conflict, Ukrainian authorities announced the closure of their entire national airspace. At the same time, the United States and several European countries imposed airspace restrictions on Russia, prompting Moscow to respond by restricting flights from multiple countries from operating in Russian airspace.  

According to the International Air Transport Association An analysis report released on March 7 indicated that airspace closures imposed during the Russia-Ukraine conflict have had a severe impact on the aviation industry. The report noted that, due to these closures, flights have been forced to reroute or cancel, with routes between Asia and Europe and North America being among the hardest hit. According to available data, in 2021, air passenger revenues from Asia to North America and Europe accounted for 3% and 4.5%, respectively, of total international air passenger revenue.

In terms of freight, in the past… Over the past 12 months, air cargo between Europe and Asia accounted for 20.6% of global air cargo revenue, while air cargo between Asia and North America represented 26.7% of the same metric. Economic sanctions and airspace closures will result in capacity losses, further exacerbating the current capacity shortage.

In addition, the report indicates that, On March 4, aviation fuel prices surged to $141 per barrel, up 27% from the previous month. This means that if Western sanctions on Russia intensify, all airlines that have not hedged their fuel exposure will be directly affected. Consequently, airlines are highly likely to pass on rising fuel costs to passengers by raising ticket prices. With inflation already running high, higher fares could further dampen demand for air travel.

Chen Yunguang, head of the Chongqing Delivery Division of China Post, told reporters that the surge in fuel prices is plainly visible and will inevitably lead to a direct increase in costs for air logistics companies. Moreover, reciprocal flight bans and sanctions between rival parties have repeatedly resulted in route suspensions or detours, reducing the availability of belly‑hold capacity for cargo or driving up its price. Under this dual pressure, the impact on air freight is self‑evident.

Oil prices surge Corporate costs are under pressure.

If the pandemic has been a… for the logistics industry, “Black swan”—if that term applies, then the impact of the current Russia–Ukraine conflict is by no means less significant. On March 18, China implemented a new round of fuel price adjustments. Driven by a sharp rise in international crude oil prices, domestic benchmark gasoline and diesel prices were raised by RMB 750 and RMB 720 per ton, respectively. Following the increase, No. 92 gasoline now costs RMB 8.66 per liter, and No. 95 gasoline RMB 9.24 per liter. Based on an average household car fuel tank capacity of 50 liters, filling up with No. 92 gasoline will cost an additional RMB 30.5.

According to ZhiShi Consulting ( According to a report by the China Institute of Communications (CIC), in 2020 China’s road freight market ranked first globally, with a total value of RMB 6.2 trillion, accounting for over 70% of the country’s total freight volume. Meanwhile, the sharp rise in oil prices is clearly set to have a profound impact on the cost structure of China’s road freight sector. Liu Dacheng, Deputy Dean of the Internet Industry Research Institute at Tsinghua University and Director of its Logistics Industry Research Center, noted that, overall, fuel costs can account for as much as 30% of logistics enterprises’ operating expenses; any price increase—particularly for dedicated‑line services—could push operating costs up by around 12%.

According to reports, in general, fuel accounts for… in the transportation costs of express delivery services. Around 30%. If fuel prices rise by 15%, the transportation costs of express delivery companies are expected to increase by approximately 4.5%. In the financial reports of major publicly listed express delivery firms, rising fuel prices are almost invariably cited as one of the key risks.

Supply chain risks have once again come to the fore.

On January 14, 2022, the State Council Information Office released China’s full-year import and export statistics for 2021: China’s total value of goods trade reached RMB 39.1 trillion, up 21.4% from 2020. It is clear that, despite the pandemic, China’s trade has demonstrated robust resilience and strong supply-chain adaptability.

But even the most resilient supply chain cannot withstand repeated disruptions. “Turbulence”: The escalating Russia-Ukraine crisis has stretched global supply chains to their breaking point, leaving them at imminent risk of collapse.

Earlier, at a press conference held by the State Council Information Office, Minister of Commerce Wang Wentao stated: “This year, the pressure on foreign trade is immense, and the situation remains highly complex and severe. From the perspective of supply shocks, the supply of raw materials and bulk commodities has yet to return to normal, and these supply-chain bottlenecks are unlikely to ease in the near term. As for weakening expectations, issues such as container shortages and labor shortages continue to weigh on foreign‑trade enterprises, while raw-material prices and shipping costs remain at relatively high levels. Moreover, the profitability of many small and medium‑sized foreign‑trade firms is far from encouraging, which has dampened their confidence in taking on new orders.”

Professor Lin Jishuang, Director of the Institute of International Service Economy at Guangdong University of Foreign Studies, also pointed out that global supply chains remain under strain, with ocean freight rates between Europe and the United States staying persistently high and prices for certain raw materials remaining elevated. In particular, Since late February, geopolitical risks in Europe have surged, further driving up market risk and freight rates on European routes. This has also kept commodity prices elevated, adding to the production and transportation costs faced by foreign‑trade enterprises and putting significant pressure on their profit margins.

An industry expert stated that the Russia-Ukraine conflict has exacerbated disruptions in global supply chains, with routes such as the China–Europe Railway Express (heading to Eastern Europe) and maritime shipping all facing unpredictable risks. This has further strained an already beleaguered global supply chain—already under pressure from the pandemic—making logistics even more chaotic.

The epidemic is widespread and has numerous outbreak hotspots. Another variable is added.

Amid mounting global tensions and sharp increases in oil and shipping rates, the previously easing COVID‑19 situation across China has once again turned tense. Successive outbreaks in Beijing, Guangdong, Shanghai, Jilin, Fujian, Guangxi, Jiangsu, Shandong, and other regions have dealt a further blow to an already hard‑hit logistics sector. — When shippers are ready to dispatch goods, logistics companies find themselves under pandemic‑related restrictions; just as those companies are released from lockdown, the shippers themselves are placed under control again; and even after both parties are unshackled, frontline logistics workers are once more subject to restrictions… This is the reality facing many logistics firms amid the ongoing pandemic. Moreover, in many regions, beyond nucleic acid test results and health codes, only travel permits are accepted; some areas have gone so far as to impose strict village‑wide or road‑closure measures, barring vehicles from entering altogether. As a result, even leaving a small county town now often means risking being held up at checkpoints for ten hours or more.

According to Wind data, as of March 21, the national average daily value of the full-truckload freight traffic index for March rose 2.6% year on year, a sharp deceleration from the 6.2% growth recorded in January–February, indicating that the pandemic has had a noticeable impact on freight volumes. Among them, provinces such as Jilin and Hebei—where the epidemic has been particularly severe—experienced substantial year-on-year declines in their full-truckload freight traffic indices. The resurgence of COVID-19, coupled with soaring oil prices, has introduced significant uncertainty into the outlook for logistics companies.

Logistics companies are adopting a self-insurance model.

Faced with global supply-chain constraints, widespread and sporadic COVID-19 outbreaks, and steadily rising oil prices, many logistics companies have also adopted self‑rescue measures to safeguard their operations.

Shentong’s headquarters primarily does so by… The “Big Three” oil companies meet their diesel‑procurement needs through a large‑scale purchasing model: they establish fuel depots at major transshipment hubs nationwide, allowing their own trunk‑line transport vehicles to refuel at these facilities at prices more favorable than those in the retail market. ZTO Express has stepped up its acquisition of high‑capacity semi‑trailer trucks, expanding its proprietary fleet and implementing refined operational management to cut transportation costs. STO Express leverages information technology to lower logistics expenses, using digital tools to drive cost reductions and efficiency gains across multiple fronts—such as fuel‑price monitoring, intelligent refueling recommendations, ETC card optimization, and semi‑trailer‑truck pairing. Meanwhile, JD Logistics is deploying new‑energy vehicles and adopting multimodal transport solutions, pursuing yet another avenue for cost reduction.

Adverse factors such as supply-chain pressures and rising oil prices driving up logistics costs have become an undeniable reality. Since these challenges cannot be avoided, they must be addressed. At least judging from the measures currently being taken by Chinese logistics companies, smarter, more effective cost-reduction strategies are steadily maturing. While this round of oil-price hikes may cause short-term pain, in the long run it is also spurring firms to embrace necessary change.

We all thought the past two years would be tough, but looking back, we realize they may have been among the best years ahead.

With just three months of 2022 already behind us, it remains uncertain when the logistics industry will return to normal. Still, as long as we “stay alive,” there is hope.

Perhaps only through continuous refinement can China’s logistics enterprises achieve faster growth and ensure sustainable, long-term development.