In the wake of the so-called European migrant crisis, there has been increasing talk of what the impact of any border controls would have on European logistics. Specifically, what would happen if any restrictions were put in place regarding ‘free movement’ in the Schengen area – a group of 26 countries where borders are supposed to be invisible frontiers with welcoming signs, not sources of supply chain inefficiency and delay.
What is the current state of affairs? Border checks are making a comeback. In September 2015, Germany introduced ‘temporary’ controls on its Austrian border, following record numbers of migrants through this particular gateway. Hours after Germany’s announcement, Austria, Slovakia and Netherlands said they too would tighten things up. Hungary has constructed fences on its Serbian, Slovenian and Croatian borders. In January 2016, Denmark and Sweden got in on the act – Sweden is now refusing entry to anyone without photo identification and slowed traffic over the Oresund crossing. The overall trend throughout Europe is clearly towards more control, not less.
With the problem not going away any time soon, how will controls impact the logistics sector? Road freight transport is an obvious casualty, delays imply higher driver wages and subsistence costs and poorer vehicle utilisation. The migrant crisis has made the profession less desirable still, not what it needs when already faced with a driver shortage, bound to result in higher wages. With margins typically razor thin in road freight, more company failures will ensue. More broadly, days could be added to certain supply chains, potentially resulting in missed deadlines, particularly disrupting production schedules reliant on just-in-time deliveries. The uncertainty alone would likely cause supply chain strategies to be adjusted, shippers may switch away from road freight for critical deliveries, perishable transports could be compromised.
Undoubtedly then, the problem is very real. However, it is very difficult to quantify. For European road freight, one possible method of assessing the scale of the issue is to look at the proportion of the sector likely to face disruption, using Eurostat volume data. At first glance, the figures are encouraging – in 2014, just 7.7% of all tonnage transported by Schengen area registered trucks went across borders. However, this vastly under-estimates the issue, the distance the tonnage has travelled should also at least be taken into account. In terms of tonne-kilometres, just over one third (36.5%) of Schengen traffic is across borders. And finally, it is worth noting that this figure includes transport of all goods. Transports of bulk goods likely boost the domestic proportion significantly. If it were possible to strip that out, or look at just palletised road freight for instance, the volume of traffic affected would likely be higher still.