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Managing the crisis while another one looms on the horizon

Managing the crisis while another one looms on the horizon

Blog: Corona impact on European logistics, update June 19, 2020

Three months into the Corona crisis in Europe, the scale of it is starting to show. After the initial shock due to subsequent lockdowns in Asia and Europe, we are currently seeing a demand-driven reduction in cargo volumes. How are companies supplying to the European market coping and what other challenges are ahead?

This is the tenth Corona update of HIDC (previous nine updates can be found here) on the continuity of European logistics.

Container volumes are lower but erratic
In the last update we already mentioned that the projected 30% volume decrease at the Port of Rotterdam seemed to become reality. This dashboard of Portbase, the Dutch Port Community System, gives more detailed insight in the weekly volumes compared to 2019. And it shows that the inbound and outbound container volume is quite erratic. Last week (wk 29) container volumes were indeed close to 30% less than last year, while there was a 22% increase in outbound volumes a week before.

Air France KLM Martinair launches collaborative platform for air cargo charters
Where ocean freight capacity is amply available, there is still pressure on the air cargo rates between the EU, Asia and North America. Gaps in the network, left by the cancellation of passenger flight and thus belly capacity, are currently filled by charter services, but not all shipments justify a full-freighter solution. Air France KLM Martinair Cargo have resolved this by developing a collaborative platform, where shippers can jointly participate in charter solutions to destinations the Air France KLM Group currently doesn’t serve. Once there is sufficient cargo to such a destination, the charter will be operated. The company dubbed the solution KICKCHARTER and claims it is an industry first. More information can be found on their website.

Shippers looking for solutions in other modalities
Some shippers that relied on air freight are now also looking at other modalities. Dutch produce exporters, the Port of Rotterdam and The Fresh Produce Center organised successful trial shipments of sweet peppers from the Netherlands to the United States – by sea rather than air. And the trial included a successful digital exchange of phytosanitary and freight documents, something all parties hope will remain, also in the post COVID-19 world. The story can be found on the Port of Rotterdam website.

We learned about another surprising modal shift from one of our members that was expecting a dozen trucks coming from China. Indeed, the demand of product from China to the EU is so high that air and rail cannot facilitate and forwarders are sending trucks on an adventurous 14 day journey from China to the Netherlands. The Belt and Road is getting congested as a result, reports, with severe hold-ups in Kazakhstan.

Next worry around the corner? No deal Brexit risk rises
While companies are dealing with the Corona crisis, an ‘old’ crisis has been reignited, with the UK declaring last week they will not seek an extension of the transition period after Brexit. If negotiations don’t result into an agreement for the future relationship, a no deal scenario looms in 6 months. As a result, HIDC is seeing a renewed interest of overseas companies, relocating stock and resources to cope with the likely supply chain disruptions between the UK and EU. Online retailer Monster Group was an early mover and is already reaping the benefits from its Venlo warehouse, as you can read here.

Holland International Distribution Council can help you find you ideal European supply chain set-up
Like we have assisted Monster Group, so can we help you. Our council consists of 300 logistics companies and specialists, the best in the business. Our supply chain solutions managers will help you decide what steps to take, in setting up your own distribution center or in selecting third party logistics service providers. We do that free of charge and without any obligations. We also have a great line-up of consultants, VAT and legal specialist and other professional services. For a comprehensive overview of what we can do for you we created this ‘menu’. We hope to serve you soon!

June 19th 2020

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