Corona impact on European logistics, update April 9, 2020
This fourth weekly update (previous three updates can be found here) on the continuity of European logistics focuses on expected changes in European supply chains. So far, the continuity of modalities has been largely unaffected by lockdowns and other distancing measures in European countries, but there are definitely challenges for supply chain managers. This article identifies challenges and provides guidance to continue servicing European clients.
Transit times increase and become unpredictable
Transit times for ocean shipments are becoming longer and increasingly unpredictable. According to Drewry, 20% of the sailings between Asia and Europe have been cancelled in April. The Port of Rotterdam expects 20-30% lower container volume for the same month. On top of that, the remaining services will most likely take longer as carriers steam slower and increasingly use the longer, more economical route around the African continent rather than through the Suez canal, saving them the hefty 400,000 Euro transit fee but adding 5 or 6 additional sailing days. Shippers should be aware of these longer lead times and plan accordingly. Also, it is good to have alternatives at hand, such as other carriers and routes.
A quicker alternative can be rail and air, for time-critical goods
To maintain timely supply to European markets, rail and air could be alternatives. All rail services between China and Europe are operational since the Wuhan-Duisburg connection came back online last week and China-Europe trains saw record figures in March with a total transported volume of 73,000 TEU. The other alternative for higher value and time critical product categories – air cargo – is facing rates 3 to 5 times higher than normal and very erratic availability. Airlines are adding freighter capacity (check our last update) to cope with the increased demand, but are faced with limitations on the ground resulting from social distancing measures that adds handling times. Amsterdam Airport Schiphol has relatively few issues and manages to handle a 40% increase of cargo only flights compared to last month. It is important for shippers and forwarders to book ahead to not get faced with last-minute price spikes.
European distribution mostly impeded by closed delivery locations
In the Netherlands, ports, ocean and inland terminals, cargo airports and distribution centers are at full capacity. The biggest challenge currently is the delivery to the locations of European clients. It is crucial to check ahead if and when delivery locations are open. There is sufficient road freight capacity in Europe and the first ‘green lane’ has been opened on the border between the Netherlands and Belgium guaranteeing free flow of truck traffic for the rest of the EU to follow. Internal borders in Central and Eastern Europe are still seeing waiting times.
Work with the right partners to ensure continuity in European supply chains
The Holland International Distribution Council consists of 300 logistics companies, ranging from 3rd party logistics companies to all types of services providers to the logistics industry, such as temporary workforce providers, legal providers, VAT/tax specialists and consultants. We are ready to connect supply and demand for logistic services in Europe. Please contact us for further information.
April 9th 2020