Category: Logistics

As FreightWaves has been reporting, China has continued its slow incursion into foreign markets through logistics infrastructure. The Chinese have financed and produced upgrades of railways, highways, ports and pipelines all over the world as part of an international project that has already cost more than the Marshall Plan to rebuild Europe.

China’s Belt and Road Initiative is comprised of an Overland Silk Road and a Maritime Silk Road, which would terminate in several places throughout Southeast Asia and Europe. China touts the Belt and Road Initiative as a way to enhance and celebrate economic and cultural ties with the rest of the world. But a steadily increasing surge of critics views it as a thinly veiled attempt to exert military power and political clout.

Some Asian countries that once participated in the plan are now balking. Their leaders realize the potential of China’s sway in their region and some are not pleased with the outcomes. Instead of embracing Chinese investment they have been cancelling or downsizing projects and even expressing outright opposition to the whole enterprise.

For the most part, however, Europe has not expressed opposition to the idea. This is especially true of countries on the geopolitical-economic fringe that lag the powerhouses of western Europe. For instance, given the last decade of economic hardship, Greece’s leaders have been receptive to the idea of a Silk Road passing through the country’s borders. They see a potential generator of economic activity.

COSCO, China’s state-owned shipping company (and the world’s fourth-largest shipping company), has completed a 600 million euro deal to purchase the Port of Piraeus, Greece’s largest port.

Despite outcries of exploitative operational practices by the locals around Piraeus, Greek Prime Minister Kyriakos Mitsotakis and China’s President Xi Jinping have shaken hands to move forward on further projects in the futures. COSCO has owned a majority stake in the port since 2009. Under the ownership, management and expansion of the Chinese, the port is now the second largest in the Mediterranean.

Politically there has been a lack of consistency in the way the European Union regards China. While some countries have criticized China’s humanitarian offenses, others have remained silent. Europe has long been caught in the crossfire of the U.S.-China disagreement. European leaders have insisted they can continue to uphold their connection with the U.S. while benefiting from economic ties to China. Economic activity between Europe and China often surpasses a billion euros each day.

Within the past decade, Chinese companies have bought into more than a dozen ports around Europe, most recently in Spain, Belgium and Greece. These ports account for around 10% of Europe’s maritime shipping capacity. China is Europe’s largest importer and Europe’s second-largest export market.

But on top of trade is the potential for military interaction. Europe’s leaders insist that they will not tolerate Chinese military involvement in its ports as happened in Djibouti, Sri Lanka and Pakistan, where Chinese naval deployments are currently docked. But in 2015 a small Chinese fleet consisting of a destroyer, frigate and supply ship paid the Greek port of Piraeus a friendly visit.

There are concerns that these Chinese inroads to Europe will weaken global opposition to the way China is poised to reshape global norms about privacy, internet freedom and government. But China remains adamant that its inroads into Europe, and the greater Belt Initiative, are all about global connectivity.

Air France-KLM’s plans to acquire a one-third stake in rival Virgin Atlantic cratered just two weeks after the deal passed muster with the U.S. Department of Transportation (DOT) on Nov. 21 — the final antitrust hurdle facing the proposed joint venture.

The airlines claimed the decision not to proceed was mutual, but Virgin majority owner Richard Branson said he didn’t want to dilute his investment after meeting some competitive goals through the recent deal for Flybe. The European Commission (EC) green-lighted the transaction in February.

An extended joint venture partnership among Virgin, Delta Air Lines and Air France-KLM will still go ahead.

Being left at the altar is not the worst outcome for the Franco-Dutch carrier, which recently announced a wide-ranging and expensive five-year plan. That plan calls for increasing profit margins to 7-8% in the medium term, restoring dividends and conducting a major fleet overhaul.

While Virgin’s joint venture with Delta helped the carrier compete with the British Airways-American Airlines alliance in recent years, network and flight connections have remained limited, precipitating the move to take on another partner.

To counter British Airways’ clout in Europe, establish a strong trans-Atlantic alliance and compete against low-cost carriers in that market, Virgin agreed in principle on the joint venture with Air France-KLM in May 2017. The deal called for Branson to reduce his stake in the carrier by selling a 31% interest to Air France-KLM for £220 million ($290 million), leaving him with a 20% holding in the carrier that he founded in 1984.

In a Dec. 2 letter to employees, Branson said, “Back in 2008, when British Airways tried effectively to merge with American Airlines, we fought the merger on behalf of our airline and our customers’ interests, with the ‘No Way BA/AA’ campaign on the side of our planes. Surviving against British Airways on its own was a struggle. But against the combined might of BA/AA, it would have been an impossibility. When competition authorities did somehow wave through the BA/AA partnership, we looked for a strong alliance of our own.

“To get the deal done, we initially thought our family would need to reduce its shareholding in Virgin Atlantic. I was willing to do so, reluctantly, to guarantee the long-term success of Virgin Atlantic,” he added.

Branson’s decision to walk away from the Air France-KLM deal follows the purchase of U.K.-based regional airline Flybe for the fire-sale price of £2.2 million by a Virgin Atlantic-led consortium earlier this year. Flybe will feed the long-haul networks of Virgin and joint venture partner Delta at Heathrow and Manchester airports. Virgin has been struggling to feed long-haul flights from U.K. cities other than London.The carrier is being rebranded as Virgin Connect. Virgin previously attempted to crack the U.K. domestic market with a carrier branded as Little Red but closed the operation in 2015.

Delta holds a 49% stake in Virgin, having agreed to acquire it in December 2012 from Singapore Airlines (SIA) for $360 million.

Branson used the letter to employees to take another shot at U.K. regulators, urging ministers to “shake up the status quo at Heathrow.” He has repeatedly taken aim at the domination of takeoff and landing slots at the European hub by International Consolidated Airlines Group (IAG), parent of British Airways. IAG holds over 55% of all Heathrow’s slots, with no other airline holding more than 5% of the remaining slots. Rules governing the allocation of new slots are being reviewed by the government. Virgin warns slots should be allocated in a way that enables development of a second flag carrier with the necessary scale to compete effectively with IAG.

Virgin has been active in entering joint ventures with other carriers. In October, China Eastern announced its intention to enter into a joint venture with Virgin, Air France and KLM, providing more options between Europe and China. The carriers in the joint venture stand to profit from trade with China as the world’s second-largest market for pharmaceuticals and the fastest-emerging market for the sector. And China has ambitions to become a powerhouse in exporting generic medication.

Only radical policy changes will encourage European fleet operators to invest in non-diesel trucks, according to Europe’s leading truck manufacturers.

Gerrit Marx, Chairman of the European Automobile Manufacturers’ Association (ACEA), said that binding sales quotas for manufacturers would do nothing to encourage transport companies to purchase alternatively powered trucks.

“If we are to convince hauliers to make the switch to low- and zero-emission vehicles on a large-scale, Europe urgently needs to introduce a strong package of consistent and predictable policy measures,” he said.

“Creating real market demand for low- and zero-emission vehicles should now be the priority.”

Reforms needed urgently

ACEA called for the rapid roll-out of dedicated charging and refueling infrastructure for trucks which it claims is “completely absent” at present.

The organization also said policy reforms should include “meaningful incentives to make these vehicles a commercially viable and competitive choice for transport operators, thereby fostering fleet renewal.”

And it argued that the revision of the Eurovignette Directive should allow “for the differentiation of road use charges by CO₂ emissions.”

Emission reduction targets

The European Union (EU) adopted its first-ever CO₂ standards for heavy-duty vehicles earlier this year. They state that manufacturers must cut carbon dioxide emissions from new trucks on average by 15% from 2025 and by 30% from 2030, compared with 2019 levels.

ACEA said the new CO₂ targets would “oblige all manufacturers to focus on, and massively ramp up investments in, alternative powertrains.”

As well as chairing ACEA, Marx is also the president of CNH Industrial, which earlier this week launched a new range of electric and hydrogen trucks aimed at the European market. The trucks will be built by its subsidiary IVECO and powered by Arizona-based Nikola Motor Company.

The partners claim the new designs have the potential to reduce driver turnover rates.

An uphill haul in a diesel market

However, the latest fleet figures from ACEA illustrate the difficulty manufacturers such as IVECO will face when taking their new emissions-free models to market.

ACEA’s ‘Vehicles in Use – Europe 2019’ report found that at present 98.3% of all heavy- and medium- duty trucks above 3.5 tons on Europe’s roads run on diesel.

Electrically chargeable vehicles account for a negligible share of all trucks in circulation (0.01%, or one out of every 10,000 vehicles), while around 0.4% of all trucks in the EU run on natural gas.

“When we look at the total fleet of transport operators today, it is clear that the market will need to be completely turned around in an extremely short timeframe,” said Marx.

“In order to create a business environment where carbon-neutral solutions are the preferred option, all stakeholders will have to work together to transform the entire value chain of transport.”

According to ACEA’s new report, there are currently 6.6 million trucks on the EU’s roads. With more than 1.1 million trucks, Poland has the largest truck fleet in the EU, followed closely by Germany and Italy.

The report also found that the EU truck fleet is aging rapidly. Trucks are now on average 12.4 years old in the EU, compared to 11.7 years in 2013.

More FreightWaves and American Shipper articles by Mike

Rarely have container shipping lines played for such high stakes as they are right now. Not only are they attempting to pass on higher IMO 2020 low sulfur fuel bills, they are also in the final stages of agreeing to Asia-Europe annual contracts for next year.

Their success in negotiating both with shippers will go a long way toward deciding industry profitability next year, not least because Asia-Europe contract settlements will also set the stage for trans-Pacific liner-shipper contract negotiations in the second quarter of 2020.

As previously detailed in FreightWaves, a key element of the strategy deployed by container lines has been to boost Asia-Europe spot freight rates to improve bargaining positions with shippers. This has proven a relative success in recent weeks (see the SONAR Freightos Baltic Daily China-North Europe Index below) , aided by the successful implementation of Nov. 1 General Rates Increases and the removal of capacity in the shape of multiple blanked sailings and scrubber retrofits.

“They’re jacking up the short-term rates to try and get in a better position before locking in long-term rates,” explained Patrik Berglund, CEO of Xeneta, an Oslo-based ocean freight rate benchmarking and market analytics platform.

“The next three to four months will see massive volumes settling long-term rates before we move into the second quarter when trans-Pacific/U.S. volumes also will be settled,” Berglund said.

Capacity removal

Reducing slot supply has been the ‘go to’ tactic for lines looking to boost spot rates this year, so it was no surprise when Alphaliner reported earlier this week (Dec. 3) that the inactive container ship fleet had increased sharply across all main size segments to reach 225 ships capable of transporting 1.32 million twenty-foot equivalent units (TEU). As of Nov. 25, the ships accounted for 5.7% of the total fleet.

Shanghai-Rotterdam and Shanghai-Genoa spot rates are now 4% and 3% higher than a year earlier, respectively, according to Drewry. Even so, Berglund said European shippers were currently negotiating their rates from a position of strength compared to this time last year, not least due to the implementation of IMO 2020.

IMO 2020 is the game-changer

“IMO 2020 is the big thing on everyone’s lips,” he told FreightWaves TV’s ‘Port Report’ on Dec. 5.

“We see a major push to have floating bunker mechanisms inserted into long-term contracts for 2020 because of the uncertainty around IMO 2020 [fuel prices].”

He added, “But we’ve already seen some of the carriers have started to offer 12- and 24-month rates with no bunker fluctuations. That means two things to me. Either that they’re satisfied with current rate levels so they’re willing to take the risk. Or they’re concerned the rate level might drop so they’re trying to secure rates at current levels under contracts.”

Shippers should pay more?

Peter Sand, Chief Shipping analyst at BIMCO, said that while he expected freight rates would be decided by fundamental market balance, the entire cost of IMO 2020 fuels really should be passed on to end consumers of products shipped.

“But,” he added, “we have still to see the day when shippers care about lines’ profitability. Operators have worked hard to let shippers know that this is a cost to pass on. Time will soon tell whether that point have fully hit home.”

Sand also said, “No line can afford to shoulder the extra cost fully without sinking into loss-making territory.”

Back-haul leverage

Berglund expects supply and demand to be the deciding factor in the ‘who pays what’ debate over IMO 2020 costs. He thinks shippers with sizable back-haul Europe to Asia cargoes are particularly well-placed when negotiating bunker charges and contract prices with carriers.

“One of the biggest questions we have is how the front-/back-haul imbalance will make it difficult to spread any increased costs across carrier customer bases in a fair manner,” he said. “The ones on the back-haul, and particularly the ones with substantial volumes, have severe leverage when negotiating with the carriers and little incentive to split the bill with front haul shippers.”

Can lines hold firm on IMO 2020?

Neil Dekker, a senior analyst at Infospectrum, also identifies the mandatory use of low-sulfur IMO 2020 fuels for ships not fitted with abatement technology as a game changer for container markets next year. Nonetheless, he expects lines to hold a firm line on the imposition of IMO 2020 bunker surcharges.

“Lines that are not utilizing scrubbers will typically be paying higher prices for low sulfur fuel and will be looking to claim the costs back from shippers – this strategy is not new and liner operators have been preparing for it for some time,” he said.

Carriers do not have a strong track record when it comes to recovering costs for bunker price increases due to ‘all-in’ rate strategies. Historically, these strategies have made it more difficult for them to seek increased bunker fuel costs. However, Dekker expects this to change in 2020 due to the introduction of separate bunker surcharges.

“Lines are expected to take a hard line in enforcing these new bunker surcharges across all trade routes,” he added.

More FreightWaves and American Shipper articles by Mike

In a call this week, executives of freight forwarding giant DHL spoke on its observations of globalization based on DHL’s Global Connectedness Index (GCI) that monitors the flows of trade, capital, information and people across the world. John Pearson, the CEO of DHL Express, initiated the discussion by expressing globalization is “too big to fail” and that DHL’s primary motive was to connect people and improve lives through the expansion of trade that transcends borders. 

Though globalization has taken a battering over the last two years due to protectionist policies, trade wars, and fragmentation of trade along regional lines, Pearson was confident that a global recession was still out of sight. That said, forecasts have continued to downgrade trade growth over the last few weeks of 2019 and a better part of 2020.

“For every trade war that seems to exist, there’s still multilateral and bilateral trade agreements being written,” Pearson said. “In fact, some of the purchasing managers indexes (PMI) are starting to rebound a little bit in some cases, depending on which country and which region you look at the forecast. And so far the IMF is forecasting some rebound, moderate or otherwise, to be witnessed in 2020.”

Steven Altman, a senior research scholar at the NYU Stern School of Business and the lead author of the DHL GCI, spoke at length on the causes and impact of global connectedness that had visibly declined over the last year. He pointed out that though the index did fall, it only reversed part of the increase that had propelled its figures to a record high in 2017 – noting that the index was still close to its all-time high. 

The GCI is a good indicator of global connectedness health as it comprehensively measures how large international flows are relative to domestic activity (called depth) and how countries’ international flows are spread out globally around the world (called breadth). 

Export depth measures countries’ exports against domestic consumption and export breadth looks at the spread of countries’ exports to markets all around the world – if most of their exports go to just a few destinations or are spread out. Altman explained that this helps the DCI to account for internationalized activity and to track if they are truly global. 

Based on year-long data captured by DHL, it was apparent that capital investment shrunk in 2018, while trade, information and people flows had intensified compared to the year before. 

Cross-border trade as a proportion of the world’s economic output is below its pre-crisis peak. Though trade had seen a rising trend in 2017 and extended that run in 2018 even during the onset of the U.S.-China trade war, the trend has died down over 2019, witnessing shrinkage. “Trade volume is still expected to continue growing, but trade growth is not likely to keep up with the GDP growth over 2020,” said Altman. “Current forecasts imply a decline in the trade part of the index back to around its 2016 level by 2020.”

Capital flows – which have remained the most volatile part of GCI – are also below the pre-crisis peak. However, there are reasons to believe in capital flow recuperation. While both foreign direct investment and portfolio equity investment declined in 2018, data from the first half of 2019 suggests some stabilization, though a robust recovery is still out of reach. 

“According to data from the UN, the assets, sales and employment of multinational firms all grew in 2018. And there was also substantial growth in new green-field foreign investment and cross-border mergers and acquisitions. So while our capital flow measures were down last year, we do not see compelling evidence of a real retreat from corporate globalization,” said Altman. 

Information flows have seen a significant surge, which Altman explained to be the part of the index that has seen the most growth since its initiation in 2001. However, the rate of growth has been lower since 2015, registering 1% expansion annually, against 4% growth from 2001 to 2014. 

People flow continued to see growth across major indexes like tourism, international education and migration, with outbound tourism from emerging economies being the strongest driver of expanding flows of people across national borders. 

Altman also touched on the trade flow shift from a more global outlook to being constricted along regional lines, which could alter the balance from long haul to short haul trade. “Our conclusion was that we do not see robust evidence, at least not yet, of a shift from globalization to regionalization. If trade were becoming more regionalized, we would expect the average distance across which countries trade to become shorter,” he said. 

However, metrics that measure this shift show surprisingly different perspectives. Altman pointed out that this shift from long haul to short haul trade has been stable since 2012. “While there are shifts underway in geopolitics, economics and technology that could bring about a fracturing along regional lines, our analysis indicates that this remains just a possibility, rather than a historical fact,” said Altman. 

The underlying operating model of airfreight is broken and needs fixing if customers are to receive the premium service they pay for. That was the stark message heard by air cargo stakeholders attending an executive summit hosted by TIACA (The International Air Cargo Association) in Budapest at the end of last month.

Kai Domscheit, CEO of CHI Deutschland Cargo Handling, a leading handler at Frankfurt Airport, spent time undercover “in old ripped jeans, a T-shirt and a cap, sitting next to the driver pretending I’m a trainee” secretly asking suppliers about their shipment and handling processes.

His conclusion was the airfreight industry “lacks integrity,” is “afraid of honesty” and could reduce international shipment lead times from around 6.3 days to 5.3 days if all parties were serious about improving service levels.

“When I question why we’re doing something in a particular way, it comes to the same thing: ‘Well, we’ve been doing this for the last 30, 40, 50 years,’” he said.

Domscheit was not alone in his criticism of air cargo logistics. Tan Siang Tang, CEO of Oman Air Sats, called for more cooperation across the supply chain. “At the moment we’re all operating in silos,” he added.

Johnny Voet, VP for air services at Liege Airport, said, “When you talk cargo, processes are not clear, not known or don’t exist, and there’s a lack of transparency and communication.”

“Dinosaurs” must leave their silos

Voet said shippers now expect track and trace and multimodal options and better supply chain predictability and punctuality and predicted that only those airfreight companies able to meet such expectations would prosper.

Domscheit called for radical change, telling airfreight stakeholders they must embrace digitalization and demand improvements in work processes.

He said operators and handlers must “do the right thing when no one is watching,” claiming many were “dinosaurs” afraid of “transparent communication because it might hurt the underlying business model.”

Domscheit told TIACA delegates to go back to their organizations, spend time undercover and in one week, “you will be extremely frustrated. … You’ll be shattered by the intel.”

He added, “At Frankfurt, trying to get cargo from air to landside takes six to 14 hours. The report will show 30 minutes to two hours. This is the magic trick, the disconnect.

“The reports I get are fudged, it’s not honest,” Domscheit said.

How to speed up airfreight

Air cargo analysts contacted by FreightWaves in the aftermath of TIACA’s executive summit took a more nuanced view on how and where the airfreight sector can improve its operating model.

FreightWaves’ in-house air cargo market expert Jesse Cohen believes that speeding up air cargo shipment times is usually a matter of addressing issues on the ground, especially when it comes to trying to compete for cargo against integrators.

“Airplanes basically fly the same speed, so the difference for forwarders competing with integrators is getting their arms around the ground components and the timely information flows between multiple parties on the ground surrounding that,” he said.

“Today we are seeing greater adoption of technology solutions, business processes and data sharing by airport cargo stakeholders in various locations in Europe and North America.

“These show a lot of promise toward driving efficiency and eliminating wasted time in processing a shipment,” Cohen said.

Putting shippers first

Brandon Fried, executive director at the Airforwarders Association (AfA), believes that while speed is air cargo’s primary value proposition, meeting customer expectations is not only about transit times.

“This is why most forwarders offer a wide range of transportation options helping shippers select the right service for the budget and commitment at hand,” he said.

“For example, we all know that, generally, next-day delivery is more costly than more economical deferred transit. Speed is only one part of a more complex equation because shipper demands vary. 

“Also, regulatory requirements at the origin, transshipment points and destination can often impact transit time, varying widely depending upon the countries involved,” Fried said.

Learn from the integrators

Cathy Morrow Roberson, founder and head analyst at Logistics Trends & Insights, said airfreight could be speeded up if carriers worked better with supply chain partners — airports, shippers and road/rail transportation providers.

“The right service offerings, such as those the integrators offer, are another thing to consider. What does the final customer need?” she added.

“Provide options — not all customers will require same-day/next-day delivery,” Roberson said. “Understand customer needs.

“And, of course, price such services appropriately so that shippers and the carriers themselves benefit,” she continued.

“But first you’ll need to get all the players to cooperate.”

More FreightWaves and American Shipper articles by Mike

Officials at East Midlands Airport (EMA), which is second only to London Heathrow in terms of annual cargo volume among U.K. airports, announced that  preliminary talks are ongoing with counterparts at Chongqing Jiangbei International Airport in southwest China and Sichuan Province officials aimed at starting direct cargo flights between the two airports.

EMA has not yet pitched carriers to start China service, spokesman Ioan Reed-Aspley said. 

The airport is the U.K.’s largest dedicated air cargo operation, handling 368,000 tons of freight yearly valued at £11 billion ($14.5 billion), of which involves movements between non-European countries. The airport plans to triple freight volume to 1 million tons annually within the next 10 to 20 years. Chongqing Airport has capacity for 1.1 million tons of cargo.

EMA is expanding cargo capacity, adding apron space for freighter aircraft as it prepares for increased volumes driven by e-commerce. EMA officials also cite the airport’s location in Leicestershire, adjacent to major road networks, as an advantage for getting goods in — and out — of U.K. and European markets.

Major logistics specialists, including DHL, UPS, FedEx/TNT and U.K. Royal Mail, have operations at the airport. In 2020, further cargo growth at EMA is expected when UPS opens a new £114 million facility that will double the integrator’s capacity. EMA is the U.K. cargo hub for UPS. Online retail giant Amazon, which has a fulfillment center near EMA, operates several daily flights. Cargo carriers, including ASL Airlines, Cargolux, Etihad Cargo and Qatar Air Cargo, operate into EMA.

EMA recorded its highest-ever monthly cargo volume in October, despite a downturn in the overall airfreight market this year. Approximately 35,000 tons passed through the airport, eclipsing the previous record set in November 2018, when cargo operators handled slightly over 34,000 tons.

Sichuan is one of the largest Chinese provinces, with a population of 81 million people, 15 million more than the whole of the U.K. It is an economic corridor that connects the hinterland of southwestern China to south and central Asia. Sichuan Province has the largest consumer market in western China, providing export opportunities for U.K. and European shippers.

Airport officials point to the success of Manchester Airport, some 80 miles from EMA, as an indicator of potential cargo throughput that could emanate from a dedicated China service. Manchester is the third-busiest airport in the U.K., after Heathrow and London Gatwick. EMA and Manchester Airport share the same owner in Manchester Airport Holdings, the U.K.’s largest airport owner.

In the two years following the launch of service between Manchester and Beijing, the value of exports on the route grew 41% to £1.29 billion. The value of combined exports and imports from the northwest of England to China is now 7% higher than it was before direct flights were launched from Manchester (2018 vs. 2015). 

Manchester’s cargo operation is small in comparison to EMA’s operation. Manchester offers direct passenger flights to China but no dedicated freighter service. Exported goods from Manchester to China, which have been responsible for the largest year-on-year volume growth, include food and textiles.

Of the several pain points faced by truckers across Europe, safe truck parking has remained a ubiquitous issue that drivers constantly grapple with – reflected by a European Commission (EC) study, which points to unsafe parking spaces as the hotspot for cargo theft that exceeds € 8.2 billion annually. Road freight accounts for roughly 50% of all tonne-kilometers in Europe, making it the primary mover of the economy and helping garner the attention of the European Union (EU) over the truck parking issue.

In its study earlier this year, the EC vowed to establish a denser network of safe and secure truck parking areas (SSTPAs) and initiated the creation of a standard that can clearly outline security levels that would be needed to tackle the issue of cargo theft. This standard would be common across the industry, stipulate guidelines that ensure reliability, and provide comprehensive maps that provide the locations of SSTPAs in Europe. 

The Transported Asset Protection Association (TAPA) for the Europe, Middle East, and Africa (EMEA) region has announced its strong support for “all initiatives, standards and regulatory requirements” from the EC to address the safety and security of truckers and cargo, while also pushing for collaboration with its existing industry standard on safe truck parking.

The Parking Security Requirements (PSR) is an industry standard that TAPA developed a year ago, which includes a tiered certification program for parking place operators (PPOs) helping foster an increase in the number of secure parking spots within Europe. TAPA’s ever-expanding database currently accounts for around 5,000 safe truck parking spaces spread across 10 countries in the EMEA region. 

“We believe that the EU must work with the industry while creating its standard, as it’s for the industry, from the industry, and at the end of the day, paid for by the industry,” said Thorsten Neumann, the president and CEO of TAPA. “This is the reason why we say that if the EU is looking to create a standard on secure parking places, they need to accept existing standards.”

The TAPA asks for mutual recognition, as there have been instances in the past where standards created within the industry in silos failed to get wider adoption. However, TAPA’s PSR standard has found significant traction, with the stakeholders buying into its regulations and creating a tangible change within the industry. 

“At TAPA, we want to actively contribute and provide our expertise to the EU. It is important that the industry does everything possible to mitigate risks, while the EU and its politicians create the right awareness and mindset change to make that happen,” said Neumann. 

To develop its PSR standards, TAPA invited all the key stakeholders to the table with a goal to connect every segment of the supply chain – including shippers, freight forwarders, trucking businesses and insurance companies. Neumann explained that it is critical for supply chains at-large to understand where the risk was coming from, as risks are rarely stagnant and evolve over the years.

“Our biggest hope is that the EU accepts our industry standard from a mutual recognition point of view and links it to their own standard. From their press release, it is clear that they are looking at getting 20 certifications by 2020, while we have already reached that,” said Neumann. “Our goal now is to have 80 certifications, and so it is a no brainer that if the EU accepts our standard, they can double or even quadruple their own numbers.”

Customers of retailer Argos, which operates in the U.K. and Ireland, could face disappointment during the Christmas season after staff at one of the retailer’s distribution centers voted to strike in a long-running row over pay.

Argos is a major player in the retail sector with more than 883 retail shops, 29 million shop customers yearly and nearly 1 billion online visitors annually.

Yard and highway drivers employed by UPS at Argos’ flagship distribution center at Barton in Staffordshire, England, have scheduled a 15-day strike following a 10-month wage dispute, according to a Dec. 3 announcement from trade union Unite.

Unite said that 90% of union members at the site voted in favor of the strike action, which will start late on Dec. 17 and continue through the end of the year.

The union warned that without the on-site and over-the-road drivers to maneuver loads on and off the distribution center, work will effectively grind to a halt, causing severe disruption to Argos at its busiest time of the year.

UPS has pledged to put contingency plans in place to minimize disruption, but is hopeful the job action can be averted.

The Barton site is a critical hub in Argos’ national network and the location from which all high-end electrical items, including smartphones, laptops and televisions, are shipped to regional Argos distribution centers for delivery to stores.

“Unite has been waiting for an offer in response to our members’ pay claim since March. Drivers and shunters have been treated with contempt and have had enough,” Rick Coyle, the union’s regional officer, said in a statement.

“Our members only received an offer of a voucher scheme that was so devoid of details that it could not be put to a ballot. Our members do not want to cause disruption for Argos’ customers over the Christmas period, but they have been left with no choice but to strike.

“It is now up to UPS to ensure this dispute does not extend right across the busiest time of the year for Argos by tabling a sensible offer that our members can actually vote on,” Coyle said.

Separately, Unite called on logistics company Supply Chain Coordination Ltd. (SCCL), which supports Unipart and National Health Service (NHS) supply company, to take part in talks mediated by arbitration service Acas over pay for truck drivers earning an industry low £10.24 ($13.42) per hour.  

The drivers, who are employed nationwide by Unipart and drive HGV and 7.5-ton vehicles, deliver general equipment and supplies to NHS, which is wholly owned by the U.K. secretary of state for health and social care.

SCCL has been mandated to save the NHS £2.4 billion by 2022-23 by unifying health service procurement. Unite has warned, however, that this “must not result in a race to the bottom for drivers’ pay and conditions.” Drivers are seeking a pay increase in line with inflation as well as full sick pay benefits.

Talks between Unite, Unipart and SCCL broke down in late November, despite a deal close to being reached. Unite urged Unipart and SCCL to commit to negotiations mediated by Acas, stressing that it would far rather resolve the dispute than ballot members for industrial action.