Donald Trump’s announcement overnight (11-Mar) that the White House would move to impose some sort of travel ban on the European Union will have a dramatic impact on transatlantic airfreight.
His statement given on the 11 March on American television stated that “after consulting with our top government health professionals…we will be suspending all travel from Europe to the United States for the next thirty days. The new rules will go into effect on Friday at midnight. These restrictions will be adjusted subject to conditions on the ground. There will be exemptions for Americans who have undergone appropriate screenings and these prohibitions will not only apply to the tremendous amount of trade in cargo but various other things as we get approval. Anything coming from Europe to the United States is what we are discussing. These restrictions will not apply to the United Kingdom. At the same time, we are monitoring the situation in China and South Korea and as their situation improves we will re-evaluate the restrictions and warnings that are in place for a possible early opening.”
The critical sentence reading “these prohibitions will not only apply to the tremendous amount of trade in cargo” appears to be incorrect, with the Whitehouse clarifying later that there would not be a ban on freight.
Even assuming that this is the case, any ban on passenger traffic will inevitably have a catastrophic effect on the availability of belly-freight. It may be the case that, as Cathay Pacific in Asia is considering, airlines serving transatlantic routes may run freight-only services using passenger aircraft. If not, cargo traffic will become difficult even with a ban. It might be speculated that the air express carriers will be the few air operators capable of offering a service.
Perhaps one of the first sectors to be hit will be pharmaceutical and healthcare. Transatlantic traffic is important, linking the major research and production centres in the US, the UK and Switzerland.
The good news is that the White House seems to be considering lifting the restrictions on China and South Korea.
COVID-19 has now become a worldwide crisis both in terms of economics as well as epidemiologically. One of the problems for sectors trying to manage the issue is that it is a biological question and thus not really vulnerable to the economic and management tools normally used to forecast other types of crises. Therefore, it is difficult to know what the trajectory will be. For example, it could be erroneous to assume that the problem is short-lived or that the issue is close to being resolved in China.
The impact on logistics markets has been substantial with airfreight savaged and container shipping badly disrupted. Other segments of logistics are suffering less whilst areas such as chartered air freight are booming. It is unclear what the long-term implications will be, however it would be unwise to strongly assume that all will return to normal in a couple of weeks.
Source: Transport Intelligence, March 12, 2020
Author: Thomas Cullen
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)