One of the main come backs from the Coronavirus is how much China features in a lot of companies supply chains. China realised that in order to maintain its market competitiveness in the world it need to invest heavily in the transportation routes which moved all the products to and from China. Its solution was the China’s Belt and Road Initiative shorten to BRI announced to the world in 2013. BRI aims to link Western Europe and East Africa through a series of ocean shipping routes and overland roads and railways. According to the official website by 2019 had signed co-operation documents with 29 international organisations and 123 individual countries to promote this scheme.

Temburong Bridge
The list of projects completed and under construction dwarfs anything else being undertaken in the world at the moment. This includes the Temburong Bridge which recently completed in Brunei. This bridge which is now the longest in South East Asia at 30km in length links a previously isolated region to the country’s capital. It crosses water, marsh land and tropical rain forest. Reportedly constructed using methods to reduce the impact on the environment the bridge passed through. The region itself was previously economically and socially under developed. Building the bridge is to support new growth both in industry and social welfare. Once all the associated works are completed the bridge reduces the travel time to 30 minutes which is a quarter of the previous 2 hour travel time.

In Laos a new railway line is under construction as part of the BRI scheme. Laos is a landlock country, however with the new railway it aims to become a hub for move cargos in the region. The new railway runs from the Chinese border to Vientiane,Laos. It will be 414 km with almost half of its length being in tunnels. Now under construction it is expected to be open for traffic at the end of 2021. Providing a strategic link for China in this region.

The railways are key link for moving shipments faster both from China to Europe and returns. Germany who trades the most with China out of all the EU has several rail networks under development Leipzig-Shenyang, Duisburg-Chongqing, Hamburg-Zhengzhou, Hamburg-Harbin and Nuremberg-Chengdu. Currently there are rail services into Poland, Germany and Hungary using the existing railway networks. Currently that does mean changing wagons due to the gauge differences between European, Russian and Chinese railways. By 2019 over 14000 rail trips had been made between 50 Chinese cities and 15 European ones. A trial train service ran from Yiwu in China all the way to Stanford-le-Hope,Essex in the UK in 2017 and then a return service was run.  Chengdu, Sichuan province has moved over 4600 accumulative trips to Europe since it started operations in 2013. DHL has now started its own services from China to Hamburg and China to Nuess and aims to cut the transit time down to only 10 days on the fastest services.

There are concerns in the West especially from the US that this is all just giving a China a new way to exert its own military or political influence on countries who are recipients of Chinese investment and can not say no. The Chinese government counteract this by saying it is to serve the purpose of supporting mutual economic growth between these countries and China. The Chinese hope that it will lead to better openness with the additional benefit of both parties gaining a cultural understanding of one and another. The People’s Daily Online has written how

Local people in the country where the investment is happening often have mixed views with countries in Africa wondering if this is just colonisation by another name. It will no doubt be many years before the full impact of this massive investment can be properly assessed if it was overall good for the regions it effected. The Chinese government internal handling of the Coronavirus will also determine how confident western firms will be in continuing their own investment in China. It is so important that that the Chinese government issued a formal note to all enterprises involved in the initiative in February to resume work and production as quickly as possible any of the many major projects effect by the Coronavirus to avoid them being seriously delayed and impacting the role out of the scheme. However overall it does remain a very impressive endeavour.

This the next weekly update on the impact of Coronavirus on Logistics and Supply Chains. Some improving news with China officially appearing in control of the virus. This now means ports are operating more and more as usual. Safmarine and Maersk have now lifted any congestion surcharges for reefer containers to main Chinese ports. However in the rest of the world the virus is still increasing dramatically. As of today the Prime Minister Boris Johnson has declared he has the virus and is now self-isolating. The rest of the UK is in semi-lock down, with everybody apart from those in essential services asked to stay at home. All logistics operators are now classified as key workers in the Coronavirus government plan. This was welcomed generally by the freight industry as battle to keep supply chains working especially those in the food sector.

Most of the larger UK logistics firms have now put in place systems so their employee’s can work at home and continue to manage the day to day operations with just management a skeleton staff at companies offices. Companies which handle documentation such as POD’s are looking at ways of mitigating the issue of having to get signatures on paperwork to try and reduce the risk of the virus being transferred this way. Customers are being asked that to allow the driver to sign the paperwork on site. Ports in the UK remain fully operational as of Friday. However the coronavirus bill which was passed into law this week does give various government officials the powers to shutdown ports completely and have vessels diverted elsewhere. While at the moment there is no plans to do this, if it did happen to one of the larger ports than it would have a massive effect on the entire logistics industry.

Several planned strikes by critical logistic sector workers have been called off in light of the effects of the Coronavirus. This week the National Union of Port Workers who planned a strike in Lisbon has now been called off. This will ensure the port operations continue to run as smoothly as possible in this time of crisis.

Airfreight demand has increased dramatically on some routes with unprecedented demand for full air cargo charters. Though it is expected this may be short lived as now all of Europe and the USA going into shutdown which will reduce demand drastically. With this demand normally airfreight rates are soaring as the reduction in passenger traffic has meant large reductions in schedule flights and this in turn as resulted in a large decrease in bellyhold cargo space. A lot of airlines are cancelling long term contracts as a result of this as they have no capacity on some routes now suspended, which is leaving shippers chasing around for alternatives.

IATA estimates that airlines may risk loosing almost 252 Billion Dollars in revenues. Emirates Airlines initially had said it was cutting all services from the 25th March. Now they are going to operate a much reduced service on limited routes however this will mean a large capacity drop for the airline.

Several European transport firms have began to park up part of their fleet due to falling demand for non food products with factories across the region shutdown and supply chains come to a halt. Ferry companies operating between UK and the EU have decreased passenger services but some are now increasing freight services as there is a increased demand for perishable goods.

This is another article in the series showing how the logistics sector is reducing its impact on the environment in which it operates. In 2019 the UK government launched its Clean Maritime Plan. This plan lays out how the government would like to tackle the issues of vessel emissions operating in UK waters.  The plan makes clear though that this is not just entirely a government scheme and will require good co-operation between the government ,private maritime industry sector and the educational sector. The UK government believes it pro-active approach to this issue will both encourage innovation and create many opportunities within the country.

The Clean Maritime Plan anticipates that by 2050 there will be many zero emission vessels operating within the UK territorial waters. This will require a significant investment by many vessel operators.  The plan sees this being achieved in steps between now and 2050.

By the end of 2020 the government had intend to take several steps to lay the ground work to enable the Clean Maritime Plan to be able to succeed. These included:

  1. Establishing the Maritime Emissions Regulation Advisory Service (MERAS) to give all stakeholders a place where they will be able to get support on the working towards the Clean Maritime Plan. It is also hoped by having an established regulatory body it will make the UK attractive to all developers of zero emissions around the world and encourage them to register the vessels under the United Kingdom flag.
  2. Consult on the possibility of amend the Renewable Transport Fuel Obligation. This applies to suppliers who supply over a certain amount of fuel and have to ensure that a percentage of this comes from renewable sources.
  3. Review and implement appropriate action after the Call for Evidence on Domestic Shipping and the ECA consultation.
  4. Aim to cut 50% of GHG emissions from international shipping by 2050

The UK government aims to kick start the innovation by providing seed funding for the establishment of MarRI-Uk and launching a government grant scheme for clean air maritime research projects. Finally establish a clean maritime award program to promote leaders in this field which will hopefully raise the entire sectors profile both industry wide and in the general public eye.

The current Coronavirus outbreak within in the UK and the rest of the world is causing major disruption and the long term impact may well have implications on when and how the government will be able to carry this plan out. However it does show that environmental action is constantly being taken to improve the world’s environment despite some denying nothing is being done.

This is our weekly update on the effects of the Coronavirus and its impact on the logistics sector. The current status of the coronavirus is still very serious. The latest news from the Chinese is now they appear have the Coronavirus under control in China. The news is reporting new transmitted cases for the last two days. Logistics operations within the country are slowly return to normal with many restrictions outside of Wuhu being lifted and factories increasing production. However our agents are reporting a large drop off in export bookings which will no doubt continue to cause ripples through out international supply chains.

Unfortunately the rest of the world is still attempting to get the virus under control. More and more of Europe is restricting people’s movement, with borders being closed and people being asked to stay at home. Currently though freight is being allowed to move to try and reduce the impact on supply chains.  In the UK there are currently 3269 reported cases with 65 cases reported full recovered. It is expected this is to grow exponentially over the next few weeks until the various isolation measures take effect. From today all schools are closing for all pupils apart from those whose parents are working in jobs classed as essential. The one advantage of these containment issues will be reducing traffic on roads considerably. This is at least going to make essential deliveries to shops and other stores easier for transport operators.

Within the UK the government is looking at a series of measures to help move freight around the country. One of these measures is giving freight trains and their routings priority over passenger trains for the first time since the second world war. Normally this would not be possible as it would result in major disruption to passenger services. With passenger services being reduced from Monday, this will means the effect from the change in policy will be reduced making this a viable option. This should help central distribution centres being able to get more goods in and then have the ability to send goods out. The government has announce a temporary relaxation of vehicle driving hours for trucks delivering foods products, cleaning supplies and medical supplies. This again is to try and increase the frequency of deliveries to shops and other outlets.

The industry body, the Association of Pallet Networks, which represents the networks including Palletways and Palletforce have offered their combined distribution network to the government for the movement of  urgent medical goods. The association feels it is uniquely positioned to handle this any urgent distribution demands due to the large existing network of warehouses and trucks covering the country.

Multimodal 2020 has as most people would expect been cancelled and moved to November. If all the events currently being moved to this period do go ahead it is going to be one of the busiest periods, with people just going from event to event for several months. Finally while the government says it is serious for everyone, if you are normally heathy adult  if you catch the virus you would be expected to fully recover from it. There is plenty of food in the UK supply chain network, so panic buying is not required either.

 

The UK government is currently running an open consultation until April 2020 on the establishment of a number of Freeports in the UK after Brexit has happen. The government has seen the effect of Freeports in Jebel Ali and Shanghai and hopes that this can be repeated here, boosting trade,jobs and significantly private investment. One of the areas which has put its self forward is the humber region ports, consisting of Immingham, Grimsby and Hull which are operated by ABP. They are going to face stiff competition as every single port and inland terminal in the UK will be desperate to be awarded this status for the trade port. Southampton, London Gateway, Felixstowe and Liverpool are likely to be awarded the status by the amount of existing trade they already handle and having significant sway in the industry and government. If this does happen it then leaves a possible six other locations within the UK.

For the uninitiated a Freeport is a secure customs area either located at or nearby ports or based inland near a strategic resource which the Freeport can take advantage of. The Freeport is a place were business can be carried out within that countries borders but does not have to follow the normal customs rules. Usually goods which are imported into a Freeport are not subject to pay any import duties, taxes or import excise until they leave the Freeport area and officially enter the local domestic market. If the goods are re-exported nothing is payable. Often the customs declaration when import and exporting the goods is a more simplified version of the doing a full customs entry giving a cost saving in time and labour. This is not the main benefit however, with the ability to rework and manufacture goods within the zone. This means raw goods, or unassembled goods can be brought into the Freeport zone from various sources around the world without being tax. These goods can then be made into another product or assembled and then imported into the domestic market or re-exported to another market. In both cases the finished product can be declared as being from this country and may mean they attract an overall reduced level of duty than what their raw counterparts would have had, making the product final sale price much lower.

The UK government wants Freeports to appeal to the widest range of businesses so more than one industry sector can benefit. Taken directly from the consultation document put out by the government the objectives are:

  1. Establish Freeports as national hubs for global trade and investment across the UK
  2. Promote regeneration and Job Creation
  3. Create hotbeds for innovation

As the government wants to encourage the Freeports to get the businesses which operate in the area to regenerate the area  and view innovation as a positive rather than a negative they are going to have to solve the problem of who manages the Freeports. Which is one of the questions being asked in the consulting document. The issue is most of the larger companies who could manage these operations, are not only many years behind the current technology curve, they have very little interest in the requirements of SME businesses.  These larger operators have limited understanding and/or willingness to adopt new cutting edge methods which modern SME businesses often are adopting meaning they are forced to use archaic methods which may need employing very expensive and highly skilled employees or consultants. This alone would severely limit or stop any innovation.

All business who work in the supply chain should have a look at the consultation document. Responses can be made directly through the UK consultation portal. They also accept postal responses directly to the International Trade Department. The address is given in the consultation document. The portal web address is https://www.gov.uk/government/consultations/freeports-consultation

Environmentalism is always now a hot political topic and it made its presence in effecting the 2020 UK Budget given by the Chancellor of Exchequer on the 11th of March. This particular budget had several significant changes which is going to impact logistics and its operations. One of the significant ones is the scrapping of red diesel subsidies for all industry sectors apart from farmers and rail operators. This will mean that equipment such as gencon sets used for moving reefer containers from the port to their delivery place will now have to use standard diesel. It will also mean temperature controlled trailer operators will also have to now use standard diesel. This is going to have a significant effect on pricing logistics companies will have to charge. This may well lead to the replacement of these generators with battery packs. However before this happens there is the issue of getting suitable charging points installed lorry parks so they can be plugged in while drivers take their required breaks. Lorry drivers are not going to be able just to pull up to an ordinary car charging point and use that.

A possible negative for the environment from the budget was the freezing of  fuel duty for the 10th year running. While some environmentalist’s felt this should have increased to help encourage the take up of alternative fuels, as diesel usage is a major contributor to logistics impact on the environment it operates in. However the situation with the economy at this time makes it probably not an option to do anything with. Additionally the change in attitude towards the use of electric vehicles and the environment in general means that this has overall less impact that what it may have had if this had been twenty years ago. Big commercial fleet operators are already starting to run out fleets of electric delivery vehicles in towns and cities around the UK. It is very unlikely that the freeze on duty is going to reduce these plans. Particularly as companies are very concern on how their green credentials are perceived.

The government has announced it is planning to support the use of electric vehicles by pledging a £500 million investment scheme in rolling out a network of charging points for plug-in vehicles. These charging points will be suitable for use by electric light goods vehicles such as transit vans. This will encourage businesses to adopt their use knowing that they are not going to have to spend time trying to track down a charging point. A Rapid Charging Fund is also going to be established to help small businesses install charging points at workplaces.

The government is going to have further investment in improving air quality. This will probably result in additional investment in road junctions which are particularly prone to  congestion. The investment will result in better flowing traffic, and less idling engines sitting in traffic queues. A win for the environment in less emissions being produced and transport operators benefit in saving fuel and quicker movements.

Our weekly updates on the effects of the Coronavirus on logistics services and supply chains. The virus is continuing to have effect across the world. On Wednesday India pro-actively decided to cancel all tourist visa’s from Friday 13th March until the 15th April. This will mean a dramatic decline in the number of air passengers into and out of India. As a result expect airlines to cut back on the number of services they operate to the major cities. This is going to have a similar effect on airfreight as happened in China, with a big reduction in capacity. While India is not as big in the world as China is in company’s supply chains, this will still have an impact. While India has not put in any place movement restrictions internally for the moment, the flow of goods to and from the ports remains unaffected. However if the authorities are forced to take action then shippers should expect to face a similar situation to that what happened in China. The USA has now enacted a travel ban for all movement from EU countries apart from the UK and Ireland starting from this Friday. It is to early to speculate what kind of effect this will have on airfreight demand between these two regions.

Currently the total number of people infected in the UK stands on Friday at 590. However officials are speculating that the true figure may be higher than this.  More and more sporting events are being cancelled including the UK Football Premiership cancelling all matches now and the F1 Australia Grand Prix.   Panic buying is still taking place in some countries especially effecting toilet paper supplies. Of all things people fear the most about the Coronavirus, it is running out of toilet paper.

Ocean freight is continuing to feel the fallout from the China shutdown. Chinese ports are now back operating at levels pre the Chinese new year before the virus countermeasures had been put in place. However container yards are still very busy and as mentioned previously shipping lines still have blank sailings planned for the rest of March. Overall the supply of container equipment is proving very difficult for the shipping lines. Empty containers are not where the should be at, resulting in some locations having very low supplies. This is then having a knock on effect on other non-chinese services as shippers are unable to get the equipment they need. This means no loaded containers for the service which then sails only part full. Then at the destination port there is insufficient equipment available to reload and send back. The overall effect means that supply chains all around the world which are normally totally independent of China are being impacted because of the shutdown which occurred there.

UK hauliers which operate out of Felixstowe, London Gateway and Southampton are starting to feel the effects of the drop off from China as first blank sailings reduce the amount of vessels arriving. For a lot of road hauliers and rail operators this is going to result in a significant down turn and will be financially expensive. For any transport operator a lorry or locomotive not working is not making money and just incurring costs. This will be unfortunately be going on probably till the end of April once all the blank sailings have worked through. However disruption to supply chains in other countries may then have a further impact.

Additionally logistics are not yet facing the effects of the economic slowdown the Coronavirus may cause in the world’s economy. The full fallout is not likely to be seen until the second half of the year and may in the worse case scenario have the same effect on transport services as the actual virus. Overall the situation is very fluid. Peak infection rates have not yet been reached in many countries yet and so the effect on logistics and the supply chains which they support are going to continue to face disruption.

On Wednesday 11th March the new Chancellor of the Exchequer, Rishi Sunak, the man who controls the UK purse strings , gave his first budget. This sets out his plans for the UK’s coming financial year and beyond. Unusually for a conservative government it was very big spending one. In fact one of the biggest for any Conservative party budget in the past thirty years. While there was a considerable amount give to the NHS to assist with handling the Coronavirus, there was additionally some significant sums of money going into infrastructure projects which will directly impact the UK logistics sector.

The freezing of fuel duty once again will certainly be appreciated by road hauliers across the country, it is the changes to red diesel which is going to cause some concern in the transport industry. While the rail industry is excluded from the proposals, it is going to appear to have an impact on reefer operators as they will now have to use standard diesel and this is going to have large cost impact on operating these type of containers and trailers.

The money made available for fixing potholes which is problem which appears to be getting worse is a significant investment and will hopefully help get the issue under control. The vehicle operators will especially welcome this as they are constantly incurring repair costs due to the increased wear and tear caused by potholes. However it would be useful if the councils where able to make more effort in ensure that road contractors when the conduct road works,  put the road back in durable condition and not start falling apart after 6 months of traffic.

All the £600 billion infrastructure projects have not yet been announce. However probably the biggest will be the HS2 Railway Line which comes in at £100 billion at current costings. Once completed it should free up the congested southern section of the West Coast Mainline Railway and allow for more general freight services. The £27 billon of new roads mentioned is part of the the previously mentioned figure. Apparently this will included a new tunnel for the long discussed A303 near Stonehenge which will certainly help road hauliers in this region once completed. It will hopefully mean that the City of Lincoln will finally get its badly needed ring road completed. The council is awaiting approval for financing for the final section. Once completed it will have taken over 70 years from planning to completion. The irony is that the road will probably be operating at capacity almost straight away so the council will have to apply for further funds to increase capacity. Hauliers in the area will be no doubt be pleased when it is finally completed.  Trucks who go East to West and no longer have to trek around the busy northern half to get to the other side and going North to South no longer means passing through the city centre.

Our continuing articles on how the logistics industry is actively reducing its environmental impact. Despite some individuals and the media portraying that we are in climate emergency and no industry is attempting to help solve the problem this not an accurate picture.  One of the logistics organisations which has been leading environmental awareness is the International Maritime Organisation (IMO). Way back in 1988 they introduced new rules regarding the disposal of waste at Sea. As of 2019 there where over 150 Countries signed up to the MARPOL Annex V waste regulations. These regulations are constantly being reviewed and updated. There have been 12 amendments with the last one coming into force in March 2018.

The rules regarding waste disposal applies to all vessels both passenger and cargo who have a gross tonnage of 100 or more and/or those who carry more than 15 people at any one time. The rules also apply to any fixed or floating platform in a sea or ocean. Vessels are required to have a management plan which should cover the following:

All ports in countries signed up to the waste regulations have to provide suitable waste disposal facilities for all sea going vessels. Some ports are now providing separate bins to encourage recycling.  Going beyond the current regulations are ports in a many developed countries banning waste wash water being dumped into the ports waters and they have to be taken away for proper treatment. This helps to keep the local environment much healthier.

Possibly one of the greatest threats the environment faces is not a changing climate but the growing issue of micro plastics entering the environment and the human food chain. While discharging waste plastic directly into the ocean is banned under the current regulations. There is still a significant amounts of plastic entering the ocean through lost equipment and other accidently releases. Both macro plastics (for example, large plastic items such as plastic bags, water bottles and fishing gear) and micro plastics (small plastic particles generally under five millimetres in size) are now found everywhere in the marine environment and  is having a harmful effect on marine life and biodiversity, as well as negative impacts on human health.

Unfortunately while the situation is improving, lack of awareness of the issue has been shown in studies resulting in discharges of plastics continuing into the worlds oceans which should have been properly disposed of. In order try and tackle this significant environmental threat the follow actions have been proposed by the IMO:

It is surprising that there is no current regulation to report and recover cargo which has been lost over board. Lost containers often float just on the surface and present a significant risk of damage to other ocean going vessels if they collide with them.  Considering this a weekly event often through bad weather and rough seas it is often left to the vessel owners, charterers or insurance companies to clean up the lost goods and equipment. Depending on the costs involved in the incident only the more responsible shipping operators take an active roll despite it can be seen as a positive PR move. It is certainly one area the industry should improve, with the results benefiting both maritime wildlife and ocean vessel operators.

Image of Coronovirus

The Coronavirus is continuing to be the number one topic and how it is continuing to spread around the world,with country after country reporting new cases. In several countries panic buying has occurred resulting in supermarkets and wholesalers struggling to be able to restock shelves. This is despite there is currently no issue of food shortages in any developed country. It is the actual panic buying which is the cause of empty shelves in supermarkets. The financial stock markets are taking a considerable battering with all markets across the world overall down this week. The Dow Jones in New York has been experiencing the biggest point swings in its history. This is likely to continue for at least the next few weeks as investors continue to asses the fallout from the virus and how much of a slowdown it is going to cause to the world economy. In the UK Flybe is the first airline to go bust due to the Coronavirus. The airline was already facing serious financial issues and the sudden down turn in passengers was enough to push it into administration. Unfortunately as the virus continues to effect country after country, it will probably not be the last airline to fail.

Within the logistics industry things are beginning to very slowly return to normal in China. A lot of Chinese logistics offices are now fully staffed and able to process bookings. However container yards in most of the major ports are very full with both full containers and empty containers as there continue to be a backlog. Better news is the ports though are now operating fairly normally. Shanghai has reduced the number of health checks for lorries coming in and out of the city.  It though looking that shipping lines will have  cancelled around 25% of all Chinese sailings by the end of March. Most lines saying that even if the demand fully rebounds they will not be restoring the cancelled shipments as the vessels will be out of position.

As China at the moment slowly begins to return to normal, attention moves to the knock on effects on other ports around the world. Several of the major USA ports on the west coast expect a reduction in the next few weeks to create the worst quarterly drop in container through put since the 2007 financial crisis. Currently apart from Italy there are no movement restrictions on freight in the EU so vessels which arrive at a port are getting discharged without any issues and containers which are at the port for export are being loaded. While the virus is being contained and only a limited number of people are infected this situation is unlikely to change but is very fluid.

The one logistics sector which is still being hit hard is airfreight. With a lot of airlines cutting flights not just to China, but to other countries it is becoming a struggle for forwarders to locate an operational service and then once located actually be able to book space on it. A lot of supply chains are running short of components and while they may now finally have manufacturing restarted and containers moving to a sea port, for shipments to Europe there is still another 4-5weeks to get the goods finally delivered. All these buyers then are turning to airfreight, and if they cannot get the components shipped we are going to see a lot of USA and European manufactures are going to have to shutdown temporary which will have a further impact on the worlds economy.