The impact of the Ukraine conflict
We all see the terrible situation unfolding in Ukraine. From a humanitarian perspective, a truly immeasurable tragedy. Our hearts and minds go out to everybody affected by these devastating circumstances.
At Network4Cars, we decided to support the work of organizations that are responding to urgent humanitarian needs. As member of the Association of European Vehicle Logistics, we are supporting members who are providing humanitarian aid in Ukraine and neighboring countries. Additionally, we are also supporting World Central Kitchen, a not-for-profit non-governmental organization devoted to providing meals in wake of disasters.
Even more production shortages expected
The business impact of the Ukraine crisis comes on top of two years of COVID disruptions. Our clients, many of our partners and Network4Cars will surely be affected. The conflict has caused logistical and supply chain problems as well as parts shortages of critical vehicle components. Most notably, many automakers source wire harnesses from Ukraine. These problems add to an already strained supply chain as a result of the coronavirus pandemic and an ongoing shortage of semiconductor chips.
To put it in perspective; on March 16, S&P Global Mobility downgraded its global light vehicle production forecast for 2022 and 2023 by over 5 million units already. More information here.
Anticipated delivery delays on European routes
In the immediate term, we are confronted with logistic challenges on European transport routes.
For instance; the German transport sector is concerned about a driver shortage as a result of the conflict. Poland is very much reliant on Ukrainian lorry drivers to fill its jobs, and Germany in turn is reliant on many Polish drivers to fill the driver-vacancies, hence a chain reaction has been created. It is likely to affect many European countries. The BGL organization, which represents Germany's haulers, says that “transport processes could get out of balance relatively quickly" as a result of the situation. Trade and logistics entrepreneurs’ association Evofenedex warns of shortages among drivers and expects to feel the consequences on all routes. Most transporters expect delivery delays on all European routes.
In normal circumstances, Network4Cars would be able to deliver vehicles within 6-10 working days after payment. Due to current climate, we expect these lead-times to be negatively impacted. How exactly and ‘on-which-routes’ is difficult to gauge at this point. We will, however, do our utmost best to limit the effects it would pose to our clients and partners as much as possible. In event of significant delays, Network4Cars will always strive to communicate these delays proactively to our clients and partners as fast as feasible.
Fuel price fluctuations are hard to absorb for transporters
The revival of the market after a period of stringent lockdowns, has increased pressure on the market and has pushed prices already further up than what was anticipated. Now due to the Russia-Ukraine conflict, these prices are escalating to even higher levels. These unregulated and unforeseen increases are inevitably having an adverse impact on transport services and on our transport costs as well.
We are anticipating fuel surcharges from transporters, however at this moment in time (March ’22), it is Network4Car’s policy is to absorb the fluctuations in transport prices. We have always sold our vehicles on the basis of an all-inclusive-price, including delivery to locations in EU. This service is well appreciated by our clients and we would keep it in place for as long as possible. At the same time we are closely monitoring the current market conditions. Should transport costs become too unpredictable, we may need to revisit our position in the future. For now our service level remains unchanged. Our vehicles are on sale at a price that includes delivery within the EU.
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