Subscribe to our free, weekly email newsletter!


European Union: Meeting new logistics challenges

Freight traffic in Europe is steadily growing, and most of its ports, air carriers, and third party logistics providers are making investments in infrastructure and networks to cope with today’s new challenges and increase their safety and environmental standards.

September 01, 2011

It’s been an turbulent eight months for European carriers, service providers, and ports as they faced rising fuel prices, the aftermath of the Japanese earthquake and tsunami, political unrest in the Middle East and North Africa, the international debt crisis, and slower economic growth that overshadowed business developments across the region and the world.

Nevertheless, freight traffic in Europe is steadily growing, and most of the ports, air carriers, and freight forwarders are making investments in infrastructure and networks to cope with today’s new challenges and to increase their safety and environmental standards.

Logistics Management - September 2011 Issue - Brought to you by:

So, if you’re a U.S.-based logistics professional looking to establish or strengthen your logistics and transportation network across Europe, here’s a comprehensive update on the state of European logistics as well as the challenges carriers and service providers are currently facing on the roads, on the rails, on the water, in the ports, and in the air.

Air cargo: Still cloudy
According to International Air Transport Association (IATA) recent 2011 traffic results, the global air cargo volume dropped by 3.0 percent, while European air carriers reported a 1.3 percent decline compared to June 2010.

Europe’s two leading airlines certainly weren’t immune to these challenges. In its April-June 2011 quarterly report, the cargo unit of Europe’s largest carrier, Air France-KLM, posted an operating loss of 14 million euros ($20.2 million) due to the crisis in Japan and overcapacity on China departures. Revenues increased by 3.2 percent to 799 million euros ($1.15 billion) compared to the same period last year. During the year, the carrier has concentrated its Air France-KLM Cargo and Martinair Cargo’s Americas operations in Atlanta “under one roof” to streamline work and the flow of communication.

In the first half of 2011, Lufthansa Cargo posted an operating profit of 133 million euros ($191 million), falling by 7.6 percent compared to last year. The carrier’s revenue increased by 17.1 percent to 1.5 billion euros ($2.2 billion), while the cargo volume rose 14.8 percent to 953,000 metric tons.

The first half of 2011 saw a capacity increase that came mainly from the MD11 cargo aircraft reactivated following the crises, the 777 freighters delivered to Aerologic, a joint-venture with DHL Express, and Austrian Airlines’ capacity that has been integrated into Lufthansa’s system since July 2010. In conjunction with a 19.7 percent rise in capacity, the load factor dropped by 3.3 percentage points to 69.1 percent over last year.

Growth was particularly pronounced in the Americas, where tonnage climbed 19.5 percent compared to Europe where it rose 13.4 percent. “Lufthansa Cargo has harnessed the robust development of the global economy and sustained the growth momentum from the previous year,“ says Lufthansa Cargo Chairman and CEO Karl Ulrich Garnadt.

“We’ve made our network even more attractive with the addition of new destinations and invested to good purpose in the ongoing development of our products. We posted gains especially in the special services we offer customers to meet their specific needs,” says Garnadt.

Expanding its network and improving services, the carrier has also opened a new office in Houston to extend its charter service in the oil and gas industry. The company also made investments into additional transport capacity and IT. “Order placements for five new aircraft of the Boeing 777F type, the re-design of our cargo center in Frankfurt, and modernization of our IT landscape will be of crucial importance for the success of Lufthansa Cargo in the years ahead,” adds Garnadt.

Complaints about ETS
It seems that 2011 will continue to be a turbulent year for the aviation and air cargo industry. The introduction of the EU Emissions Trading Scheme (ETS), which forces airlines flying through EU airspace to join the ETS system and buy carbon credits from January 2012 on, has provoked international protest in the industry during the last months.

“The EU is not sovereign over the US or the rest of the world, and has no right to levy taxes outside of the EU,” says Tom Petri, chairman of the U.S. Aviation Subcommittee. Petri suggested working with the international civil aviation community through the UN International Civil Aviation Organization to seek a global solution.

European airlines also expressed concerns about ETS. Lufthansa CEO Christoph Franz, for example, fears a massive distortion of competition for European carriers and a shift of traffic via the Middle East. He estimates additional costs of 150 million to 350 million euros per year for his company to comply with the ETS system. IATA general director Giovanni Bisignani also calls for a global approach and warns against a “$1.5 billion cash grab that would do nothing to reduce emissions.”

EU Ports: Expansion time
The times of empty ports in Europe are finally over. Most of the ports have used the recession to make themselves more competitive, and their investments in infrastructure, IT, and networks are paying off—as results from the first half of 2011 clearly indicate.

Port of Antwerp: Europe’s second largest port, Antwerp handled 96 million metric tons of freight during the first six months of this year, representing an increase of 10.4 percent compared with the first half of 2010. Container cargo went up 3.4 percent from 51.3 million metric tons to 53 million metric tons. In terms of standard containers (20-foot equivalent units), the volume increased by 4.3 percent to 4.4 million TEU. Conventional/breakbulk cargo also showed a high growth rate of 16.9 percent, while bulk cargo rose by 21.5 percent and ro-ro increased 16.3 percent over the same period last year.

The deepening of the Western Scheldt has made the port easily accessible not only to ultra-large container ships of over 10,000 TEU but also to capesize vessels. These bulk carriers are too large to pass through the Panama and Suez canals and have to travel around the Cape of Good Hope or Cape Horn. The port has established the “dry bulk” workgroup, made up of various players in the port, to bring such large carriers to Antwerp and to boost its position as a leading hub for large-scale coal handling and conventional breakbulk. The arrival of the first capesize vessel, MG Courage, in July is a result of this joint initiative.

Port of Hamburg: Germany’s largest seaport showed strong growth in seaborne cargo throughput in the first half of this year. Hamburg handled 64 million metric tons of cargo, which is 9.4 percent more than during the first half of 2010.

With a growth rate of 17.4 percent, container traffic via Hamburg amounted to 4.4 million TEU in the first six months of this year. The biggest increase in Hamburg’s container trade was with the U.S. where the port reported an increase of 47.4 percent and was successful in winning back market shares in European-U.S. Atlantic container trade.

New liner services and Hamburg’s geographic position, which offers very short distances to the growth markets in Eastern Europe and Russia, are advantages responsible for this positive development. In August, the PAX container liner service changed from their former German port of call Bremerhaven to Hamburg. This liner service, operated by the shipping lines Hapag Lloyd, NYK, and OOCL, now offers fast Atlantic passages for U.S. and European shippers via Hamburg.

Investments in infrastructure and development of new IT services further improve the service of Northern Europe’s hub port, a main distribution center for trade with Germany, the Baltic Sea region, Eastern Europe, Austria, Switzerland, and Russia. The port also invested in a new electronic road traffic management system to inform truck drivers about the current traffic situation on the port roads.

In 2012, the port is also going to implement a new IT system to optimize its rail traffic network within the port area. With more than 220 cargo trains per day, Hamburg is Europe’s largest rail port.

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Company says the Cloud offering allows customers to respond more quickly to new business opportunities, without significant upfront cost and implementation times.

As e-commerce continues to take a bigger piece of the holiday package delivery pie, it stands to reason that companies need to be proactive and prepared in order to deliver premium service during the busiest time of year, which is rapidly approaching. And that is exactly what transportation giants UPS and FedEx are doing this year. How are they doing it exactly? The primary step they are taking is to up their numbers of seasonal staffers.

A recent hearing of the Subcommittee on Coast Guard and Maritime Transportation suggests that the U.S. Merchant Marine industry may be poised for a major comeback.

Spot market freight volumes for the month of August remained elevated compared to seasonal norms, according to data issued this week Portland, Oregon-based freight marketplace platform and information provider DAT.

Factors such as rising freight rates, shrinking capacity, an increased desire for global supply chain visibility, have all worked together to drive the need for instituting a culture of continuous improvement in logistics operations and transportation management systems (TMS). To meet today's complex logistics challenges, managers are stepping into a more streamlined, automated approach to transportation management in order to function at optimal levels both domestically and internationally. Read the latest special report.

Comments

Post a comment
Commenting is not available in this channel entry.