Fuel protests stifle freight movement in Europe

By Anthony Coia -- Logistics Management, 10/1/2000

I n Western Europe, protests over rising fuel prices reached a fever pitch last month, with much of the frustration being directed toward the national governments. Demonstrations in the United Kingdom, Belgium, France, and other countries were aimed at forcing governments to take action on fuel prices, and in particular on fuel-tax rates. The most vociferous protesters were motor carriers, which tend to be hit harder by rising fuel prices than the other modes are.

Compared with the United States, where taxes make up about 31 percent of the price of diesel fuel, European nations impose much higher fuel taxes. These range from 70 percent of the total price in Ireland to 86 percent in the United Kingdom. Although high tax rates that are intended to reduce congestion and improve air quality have been in place for decades, rising fuel prices have called particular attention to them in recent weeks. As a result, anger over fuel prices has led to protests that have tied up traffic and shut down manufacturing plants across Western Europe.

The protests' effects on logistics operations have varied from country to country. So far, problems in France have been manageable, reports David Fabry, regional head of ITS Fabry, a Maubeuge, France-based third-party logistics provider. There have been some intense protests, he says, "but the highways were not blocked, and overall logistics disruption was minimal." In mid-September, the French government capitulated to truckers' demands and agreed to institute a tax-rebate plan, placing pressure on other European governments to do the same.

In Germany, roads and ports were blocked for brief periods, but there was less disruption than in some neighboring countries. German carriers have fewer grounds for complaint than their counterparts in some other European nations: Fuel prices, though high at $2.66 per gallon, are much lower than in the United Kingdom, where fuel costs $4.28 per gallon. Nonetheless, the threat of supply chain interruptions prompted the shutdown of several factories in Germany, Belgium, and the United Kingdom.

The most noticeable effects on freight logistics were seen in the United Kingdom, ranging from blocked oil refineries to suspended operations at Honda's automobile plant in Swindon. Although truckers' blockades were eased by mid-September, the effects are expected to last for weeks.

This winter will be an expensive one for European shippers, predicts Basil Brentwood, North American director for Cargo Carriers Ltd., a White Plains, N.Y.-based freight forwarder that does business in Europe. "Fuel prices will likely continue to rise this winter, as will corresponding transportation costs," he says. This is causing shippers to rethink their logistics strategies, he adds. "For example, to move a container from the United Kingdom to Sweden normally takes about four days using a combination of truck and ferry transportation. Now, there would be more of an incentive to load the container aboard a vessel, because the fuel surcharge is only about $50 per container." Yet European shippers that choose the less costly route would be sacrificing logistics efficiency, he warns: In this example, the transit time would increase from four to 12 days.