Corona impact on European logistics, update May 8, 2020
European distribution in times of social distancing is now more about what can be done, rather than what cannot
For our latest update on the continuity of European logistics, it is time for a change of tone. We skipped a week as there weren’t many new developments to share. Which, in a sense, is good news. Now there is news, relatively good news for that matter. The Netherlands has just been given perspective on a phased exit, slowly but surely bringing most parts of the economy back online. The stores are open and soon food service and bars can welcome limited amounts of customers. It is one positive example in a re-opening Europe.
This is the seventh weekly Corona update of HIDC (previous five updates can be found here) on the continuity of European logistics.
Logistics continuity no longer an issue
In the first two months of the pandemic, continuity of logistics was a priority issue for governments, supply chain managers and infrastructure players such as ports, airport and terminals. A lot of work has gone into securing the continuous flow of products, both essential and non-essential. Most ports are functioning normally and border waiting times for truck traffic in most of Europe is minimal. Logistics continuity is no longer a primary issue; capacity is.
Air freight capacity continues to be constrained
The air cargo market is expected to see capacity issues for at least another 2 or 3 months, Lloyd’s Loading List reports. The demand for China-sourced personal protective equipment (PPE) will continue as lockdowns are gradually lifted and face masks will become more common in public places. Charters have been booked 3-4 weeks ahead and the use of passenger aircraft for cargo is only adding limited capacity. Rail and ocean cargo could be alternatives although rail from China is stretching capacity already and ocean sailings may take longer due to the Cape-route detour (instead of the costly Suez canal). It is crucial to get assistance from capable freight forwarders to secure capacity.
More stores to re-open, but online sales boom is here to stay
Two of the hardest hit sectors that came to a stand-still, automotive and brick-and-mortar retail, are gradually re-opening. Most automotive plants in Europe have resumed production, while stores in various EU countries are allowed to open under strict conditions. But will the consumer return? Since the start of the crisis, 21% of UK shoppers have bought online for the first time. In other words, it has giving online shopping an extra push and more consumers will be accustomed to it. Research by InternetRetailing shows that UK shoppers expect to continue their changed shopping habits after the corona crisis. Reports about an e-commerce ‘boom’ differ, depending on the country and product category but it is without a doubt the winning route to the consumer. Despite a record decline of the Eurozone economy, Dutch market leader bol.com grew a whopping 40% in the first quarter, while fashion platform Zalando expects 10-20% growth this year. Parcel carriers struggle to keep up with volume growth leading to delays and limitations. Distancing measures cause issues in some crowded fulfilment centers and have even caused closure of Amazon’s 6 fulfilment center in France.
There are many ways to reach European consumers in times of social distancing, but it requires notion of national differences, online trends and a consumer-centric fulfilment set-up to be successful.
Join our webinar about e-commerce and e-fulfilment opportunities in Europe in times of social distancing
To share more insights on the evolving online retail landscape in Europe and ways to fulfill online orders and satisfy the European consumer, Holland International Distribution Council has teamed up with InternetRetailing, the leading title for professionals in multichannel retail and ecommerce across the UK & Europe, to present a webinar on the “European E-commerce Opportunities in Times of Social Distancing”. This live online event will take place on May 20, at 8.30 PT / 11.30 ET / 16.30 UK / 17.30 CET and you can register through the event page.
In the meantime, if you have questions about fulfilment, logistics, taxes or anything else supply chain related, HIDC will continue to offer free advice and matchmaking services without any obligations. Please contact us out for any questions or queries.
May 8th 2020