Coronavirus triggers road freight rate hikes in Italy
Growing concerns in Europe about the spread of the new coronavirus is leading to a number of new barriers and issues for freight companies, including price rises for road freight services to and from Italy and challenges at national borders as various countries impose restrictions on the movement of people.
In its latest update on the impact of the coronavirus, DHL’s Resilience360 supply chain risk management platform has highlighted reports that some non-Italian trucking companies carrying goods from Italy to markets abroad “have charged 30% more than the usual freight rate, potentially increasing shippers’ transportation costs in case of limited alternatives”.
It did not elaborate further on the claims but did underline that the Greater Milan area, in the Lombardy region – the epicentre of the epidemic in Italy, which has so far killed close to 2,000 people and where the number of confirmed cases is now approaching 25,000 – is the country’s economic powerhouse, hosting hundreds of manufacturing and supplier businesses, almost half of them related to the automotive industry.
Containment measures announced by the Italian government last week and aimed at preventing anyone from moving in, out, or within the territory without a valid reason, are expected to remain in effect until at least 3 April.
“Truck and rail operations across Italy (to date) have not been impacted as the measures only apply to the movement of people, and not the movement of goods,” Resilience360 said. Truck drivers are thus exempted from the travel restrictions.
However, it warned that operational activities may still face disruption in the coming weeks due to labour shortages, obstacles to cargo movements, higher transportation costs, and a shortage of masks for workers.”
“Warehouse operations as well as intermodal operations, such as truck-air, ocean-truck and rail-truck combinations, are not expected to be disrupted, with ports and airports operating normally for the time being. However, some delivery and pick-up sites reportedly require truck drivers to wear masks to protect themselves and the people around them. A lack of masks supply could therefore occasionally lead to service disruptions.”
Resilience360 also noted that as the Italian government requires companies to comply with stricter health provisions, businesses may struggle to quickly implement such measures, in particular at factories or logistics sites which cannot easily set up safe distances between employees or revert to home office arrangements.
A business survey by Italian newspaper, Sole 24 Ore, showed that companies in the quarantined areas in northern Italy shut down pre-emptively on 8 March to implement the new requirements, with only about half being able to return to normal production on 9 March.
“As it remains unclear how efficiently the measures will be enforced, how quickly the special permits will be granted, and for what exact reasons they will be granted, this regulatory uncertainty makes it difficult for companies to plan operational schedules.
Business operations may be further disrupted due to employees being unable to come to work notably because of infection or self-quarantine efforts.
European supply chain warning
Meanwhile, European Commission president, Ursula von der Leyen, yesterday warned that EU countries imposing border checks were threatening supply chains and increasing the risks of shortages. The warning from Brussels came as Germany became the latest EU country to partially close its borders, halting crossings from France, Austria and Switzerland as of today in a bid to slow the spread of Covid-19, although freight movements will continue to be allowed.
To a backdrop of empty supermarket shelves in several member states, as shoppers stocked up on essential products, von der Leyen underlined that the EU’s internal market must keep flowing. “Thousands of bus and truck drivers are stranded at internal borders on parking lots, creating more health risks and disrupting our supply chains,” she said.
“If we do not take action now, shops will start facing difficulties in refilling their stocks of certain products coming from elsewhere in the single market.”
While the measures taken by Germany currently only apply to three countries, other neighbouring countries such as Poland, the Czech Republic and Denmark have also closed their borders or introduced severe restrictions, along with the Baltic states of Estonia, Lithuania and Latvia.
“In this moment of crisis, it is of utmost importance to keep our internal market going,” von der Leyen added.
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