How will Corona change the European distribution system, part 2?

In the first part of our reflection on what may come after Corona for supply chains and the European distribution system on May 18, we established that global supply chains may become more regionalized and building buffers (or stock in strategic places) could be the trend. This update focuses on the status quo of Europe’s largest port, the Port of Rotterdam, the third largest cargo airport, Amsterdam Airport Schiphol, and Europe’s most desirable EDC location Venlo.

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

30% volume decrease in the Port of Rotterdam but sustainability projects will continue
The number of port calls remain stable, but the projection of a 30% total volume decrease in Q2 seems to be accurate, Port of Rotterdam CEO Allard Castelein says in Nieuwsblad Transport. He expects it will take some time before volumes are at their 2019 levels. To support the cluster, the port authority is allows postponed payments for some of its users. In the meantime, sustainability projects are continued. He expresses great optimism about Porthos, the CO2 transport and storage project using empty gas fields below the North Sea and a request for tenders is published for the automated container exchange route, or CER,  between the Rotterdam container terminals.

The Dutch customs authorities are scaling back up to their old levels in the next weeks. The temporary downscale was necessary to meet the COVID-19 guidelines.

Global air freight also loses 30%
The International Air Transport Association (IATA) released data for global air freight markets in April showing that demand dropped 27.7% compared to the same period in 2019 – the sharpest fall ever recorded. Still, there was insufficient capacity (42% less than in 2019) to meet demand as a result of the loss of belly cargo operations on passenger aircraft. Capacity is being added as passenger aircraft are being converted to carry only cargo. Luchtvaartnieuws reports that Air Canada started a Montreal – Amsterdam service from June 1st with converted passenger aircraft. KLM uses passenger aircraft for their belly capacity and stack cargo on the passenger seats.

European logistics hot spot Venlo keeps facilitating growth
Prologis has repeatedly declared Venlo to be “Europe’s most Desirable Logistics Location”. Located close to the border with Germany and directly connected by rail and barge to the ports of Rotterdam and Antwerp, Venlo keeps investing in infrastructure and talent. Construction has started on the largest inland rail terminal in Europe, capable of handling 600.00 TEU with the first phase expected be ready this year. The direct train connections with the main ports, Eastern and Southern Europe as well as China are a key selling point for shippers that are looking for sustainable and reliable transport solutions. The Corona crisis has put more emphasis on ‘buffering’ stock close to the market in strategic (low risk, well-connected) locations, which is the reason why there has been continuous interest from overseas companies looking to establish their DCs in the Venlo region.

Join our Webinar ‘Corona impact on the world wide supply chains and the EU distribution model’
High level speakers from the Port of Rotterdam, Amsterdam Airport Schiphol and logistics hotspot Venlo will reflect on the impact of the crisis on supply chain and European distribution. The webinar is free of charge and will take please on June 10, registration can be done here. They will reflect on the impact the corona virus has had thus far to their operations and the community and share their vision on how European distribution will change in the medium and long term.

Watch our recorded webinar: “European E-commerce Opportunities in the Time of Social Distancing”
If your interest lies specifically with e-commerce, our latest webinar can be re-watched online. On May 20, HIDC produced this well-received webinar together with the NFIA and InternetRetailing, the leading title for professionals in multichannel retail and ecommerce across the UK & Europe. The online audience was informed about opportunities and challenges in the European e-commerce market, pitfalls for US and UK brands, ramifications of COVID-19 in the European last mile and fulfilment models for various product categories.

The webinar can be re-watched and the slide deck downloaded. Both links can be found on our website.