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Logistics in Europe in relation to COVID-19. Please feel free to drop us a note

Source: OTM – Lennart Heip – 12/05/20note

ESC shares information on the Logistics situation in Europe due to COVID-19 and the actions they have taken towards the European Commission. If you have any concerns you would like to raise, issues to escalate to the EC, please feel free to drop us a note and we can take it up with ESC.

Executive summary:
The economy is slowly restarting in most countries in Europe. The concerns most mentioned are:

  • Lack of coordination within Europe;
  • Risk of MPC carriers going bankrupt;
  • Passenger rail pushing out rail freight again;
  • Inland Navigation continues to operate, but fears exist that some operators will not survive the crisis;
  • Fear for subsequent COVID-19 waves;
  • Air cargo capacity insufficient.

Detailed minutes:
Ongoing actions

Discussed also the possibility of evacuating containers to inland locations to prevent congestion as one of the measures for reopening the economy. The commission was willing to include this into their guidance on reopening the economy.

Trying to avoid transitioning directly from COVID-19 into Brexit because it seems almost impossible to negotiate a FTA during the pandemic.

CER = railways. Social distancing may increase the number of passenger trains running, limiting the room for cargo. The commission supports maintaining capacity for cargo on rail.
ELP = European Logistics Platform – the MEP was happy with the efforts to keep the borders open and worried on the restart.

France: lockdown easing is starting, new rules are being applied. Adjustments will be needed going forwards, based on indicators the French government is following, i.e. looking at COVID-19 cases.
Container volumes are still 30% lower, it will take time to return to normality. There are also risks for strikes. Air-transport: capacity is too low at this time, e.g. Electronics require more space than is available.
Rail-service was good during the crisis-weeks. Big question is whether freight trains will still get priority – the new planning for maintenance and restart of passenger rail may reduce the capacity. Inland navigation sees no big challenges, normal navigation times will resume. This will be driven by the pace of restart. Road transport will also depend on supply/demand balancing, which may impact prices in both directions. One of the major challenges will be how we can support sustainable transport solutions during and after the restart.
Q: the risk of strikes is general. For the maritime transport they are working on a charter to restart safely – this document is not ready. The safety-aspect may lead to strikes if the feeling is that safety is not guaranteed.

Netherlands: lockdown is easing slowly, timetable for coming months is shared. Schools are opening again this weeks. Masks are mandatory in public transport, but public transport is only open for essential workers. Working for home remains the norm, probably until September. Large events can only resume when there is a vaccine.
Air: flexibility in landing rights, with reduction of passenger flights, is only allowed if the additional freight flights have at least 50% medical equipment on board. Evofenedex will push on lifting this restriction. Ground handler surcharges should be charged to the airlines, not the shippers. Maritime: some concerns on financial stability of carriers, HL CEO mentioned this in an interview. If a major liner would collapse we will need contingency plans. On Shortsea also some issues. Ferries DFDS UK-Netherlands – reduction in passengers reduce also availability for cargo. Quarantine rules in the UK are confusing as they don’t seem to apply for ferry-passengers.
Rail and Inland Navigation are both available without significant delays. Some concerns on the impact of passenger trains restarting. Barge-rates have dropped significantly so they may go into receivership soon, which is a significant risk for the recovery.
Q: is the EC aware of the risk for 2nd or 3rd wave of COVID? The commission is aware but doesn’t really have well developed plans as no one knows how big the 2nd wave would be. They obviously will have more time and have more experience to prepare for subsequent waves. Differences between the different MSs are still significant, so a harmonized approach is difficult. ESC will keep stressing the need for this with the EC.

Spain: lockdown easing is following different phases, impacting the different regions differently. Phase 0 = 1 person in any shop, people are allowed to go out but staggered by age-groups, public transport is only allowed for going to work. All big cities are in phase 0. Other, smaller locations are in phase 1, where restaurants and pubs are open at 1/3rd of their capacity. Stakeholders are asked for input to restart the economy – some advice given related to e-commerce and commuting. Demand and supply are imbalanced, so a lot of empty kilometers. Maritime – concern is communication with the Islands, Balearic and Canaries, because although it is guaranteed, the schedules are changing continuously. Blank sailing is effecting Spanish ports, as well as financial stability. Shipping lines are changing their service-offers, limiting capacity and then issuing surcharges. Container shortage has not been an issue so far.

Opening intra-EU borders for passenger traffic may reduce the capacity for freight.
PPE transiting the EU is sometimes an issue. Some MS have national measures where they can confiscate PPE and disallow exports (like e.g. Germany). This has been discussed with DG TAXUD, but the MSs have this power now, so not a lot they can do.
Road prices are now going down again, air freight however are going up – at the start of the crisis the prices hiked, they have gone down in recent weeks but are still twice what they were before the crisis. This is caused by lack of capacity and an increase of operational costs. ESC is asking for more cooperation with airlines and more transparency for allocation of slots as there are no more flight schedules available – reached out to IATA for assistance. Working conditions for drivers are also still a concern.

GSA – no new information in the last weeks. Preparing a communication to share with GSA, hopefully prompting a reply. If there are any questions for the Asian or US Shippers’ associations, please share with ESC.

New council meetings: will combine all modes in a single meeting (1/2 day on June 16) and base on a survey that will go out later this week. Look at what needs to be updated in goals and objectives. This idea is endorsed.

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