Thread by @typesfast

Ukraine and Russia are major players in the air cargo market, and not just because their locations put them on the most direct flight routes from Asia to Europe. 🧵👇

Antonov is a Ukranian aircraft manufacturer, makers of the largest cargo airplane in the world, the Antonov An-225 and it's smaller but still huge cousin, the Antonov An-124. /1

The world's only An-225 was reportedly destroyed on the ground at Hostomel airport yesterday, a tragedy for aviation enthusiasts everywhere. /3
heraldscotland.com/news/19950717.…

In addition to being a beautiful bird, she was the best way to transport oversized objects like helicopters, fire trucks, turbines. /4

Side note: One of my life dreams was to charter her one day and @flexport got close during the mad rush to transport PPE to hospitals in 2020 but were told takes 30 crew 5 days to load her because the old plane doesn't use ULDs (air containers). We didn't have time to wait. /5

The An-124s are more plentiful and also huge--they are the world's largest cargo aircraft besides the 225. Their ability to transport oversized cargo is the reason they've lasted so long despite being much worse in cost and loading times than 747s and similar cargo planes. /6

The main Antonov facility for maintenance and spare parts is in Kyiv, and has at the very least been rendered non operational and likely will be destroyed if it hasn't already. /7

The Antonov fleet is old and requires constant maintenance and replacement of spare parts to keep it aloft. That maintenance has been rendered much more difficult now and spare parts impossible to acquire for the time being. /8

We are hearing that in addition to the world's only An-225, several An-124s were also destroyed in the conflict already. As of 2019 there were 26 An-124s in service worldwide, and they are pretty much the only air freight option for objects too big for 747s. /9

Flexport's research team is tracking down all the remaining An-124s in the world to determine their location and status but it seems only a matter of weeks before even the ones not in Ukraine presently are removed from service for maintenance / safety reasons. /10

The destruction / grounding of the world's Antonov fleet will render oversized project cargo shipping by air impossible, imposing major costs and delays on a huge range of industries, most notably the energy sector. /11

The problems for the air cargo industry will be worse than just the loss of the Antonov capacity however, which is mostly used for oversized shipments. /12

The air cargo industry has been suffering from an extreme lack of capacity since the start of the pandemic because 50% of the world's air freight flies in the belly of passenger planes which have been largely pulled off of long haul international routes. /13

Russia and Ukraine are both home to major cargo airlines. Volga Dnepr is a Russian company that owns several airlines including Air Bridge Cargo (Russian AOC) and Cargologic Air (UK AOC) among others. /14

It's possible that in the coming days we will see severe sanctions placed on Air Bridge and they will no longer be able to land in many countries around the world. They have a fleet of nineteen 747 cargo aircraft that will have an impact on global air freight capacity. /15

For context the world's largest cargo airline, Atlas Air, has a total of 53 747s in its fleet and there are only 300 in the world. /16

We have already seen an impact on Aeroflot (banned from UK airports and Delta cancelled their relationship effective immediately). It's highly likely these will spread to Volga-Dniper and it's sub brands. /16

At a time when air capacity is already extremely tight and cargo rates are already 3 times pre-pandemic levels, the removal of the Russian and Ukrainian capacity from the market will lead to further congestion and delays. /17

The loss of overflight abilities in the Russia air space will at the same time will also force all air carriers transiting from Asia to Europe to route around the vast Russian landmass. This will likely mean an extra stop in Dubai or Qatar, adding delays and extra costs. /18

Meanwhile the main air freight alternative, ocean freight, has become extremely slow and unreliable due to port congestion worldwide (a topic we've covered extensively here and on our blog). /19

And the Trans-Siberian railroad is not going to be an attractive alternative for obvious reasons. @flexport has already ceased accepting bookings on the rail, perhaps permanently. /20

All in all, an ugly situation for air cargo shippers of all kinds. Certainly given the scale of the tragedy unfolding in Ukraine this is a negligible issue, and yet just another example of the cascading second order effects that characterize global supply chains /21

Flexport continues to operate regular freighter services between Asia and Europe using a fleet of two 747s, and between Asia and the Us with two more. We also have leased small armada of passenger planes operating as freighters to provide extra capacity to the market. /22

Never a dull moment in our industry. @flexport is fortunate to have over $1.6B in net assets on our balance sheet to allow us to continue to play offense while protecting the interests of our customers, employees, and shareholders through the volatility, uncertainty, and chaos.

The reason we maintain such a fortress like balance sheet is simple: Planning for the unimaginable is a core part of how we operate.