For the transport and logistics sector, the corona crisis means a hefty drop in freight volumes and serious disruption of logistics flows. For 2020, a 6 per cent volume drop is not unlikely.
So says Albert Jan Swart, sector economist at ABN Amro. The corona virus means a sledgehammer blow to the economy. In 2020, the bank expects a contraction of 3.5 per cent. The degree of decline varies by sector. Leisure, retail, manufacturing and transport are particularly affected.
Outbreak in China
The transport sector was already affected by the corona crisis at the end of January, due to the outbreak in China. As most passenger flights to and from China were cancelled, air cargo was initially hit. Normally, about half of air cargo volumes are carried in the holds of passenger aircraft. At the same time, the shutdown of Chinese factories also reduced demand for air cargo capacity.
Ships were also not getting fully loaded as Chinese industry was virtually at a standstill. In addition, there were no drivers available to bring goods to the ports by truck and staff were not always available at the ports themselves to operate the transhipment terminals.
In China, meanwhile, some recovery is taking place. Air and sea freight rates are rising. In Europe, there is a shortage of containers and Dutch export companies are noticing this. Refrigerated containers in particular are in short supply, which have been stalled in Chinese ports due to logistical problems. ABN Amro expects it could take another one or two months before sufficient containers are available everywhere.
The effects of the problems in China have been well felt in the Netherlands since early March. The number of ships arriving at the port of Rotterdam from China has decreased by about 20 per cent. ABN AMRO expects that it will take until the end of April for cargo volumes from China to return to normal levels. Until then, substantially less cargo will enter the country, which will be detrimental to service providers in the port, road transport, inland shipping and rail, for example. Normally, two-thirds of goods from China are for transit. So coastal shipping (short sea) and distribution centres are also affected.
Europe: border controls and drop in demand
Logistics processes within Europe are now also seriously disrupted. Border controls within Europe cause long traffic jams and delays. European factories grind to a halt and the hospitality industry and many retail outlets are forced to close their doors. This leads to further demand shortages.
As the number of infections increases further and hospitals become overburdened, the bank says governments may take even stricter measures to reduce the number of infections. These will lead to an even more extensive shutdown of the economy and hence the entire transport sector. In both the first and second quarters, freight volumes are expected to decline sharply in almost all segments. The opposite is happening in a small number of segments: food transport, supermarket supplies and parcel delivery are currently working overtime.
Recovery in 2021
ABN Amro expects real recovery to be delayed until 2021. A 4 per cent growth rate is then expected. Until then, in the second half of this year, volumes will remain low. Although some recovery will occur when shops, restaurants, cafes and factories open their doors again.
