Category: Logistics

What would happen to global trade if the European Union (EU) implemented some form of carbon pricing for ocean shipping and the International Maritime Organization (IMO) did not follow suit, or did so years later, leading to a permanent or temporary ‘Balkanization’ of carbon-emission regimes?

On Dec. 2, the new president of the European Commission, Usula von der Leyen, affirmed during a speech at the United Nations climate conference (COP25), “Ten days from now, the European Commission will present the European Green Deal.” She said that in March 2020, “we will propose the first-ever European Climate Law, [which] … will include extending emission trading to all relevant sectors … [including] transport.”

The possibility of unilateral carbon pricing was cited in the International Monetary Fund working paper, “Carbon Taxation for International Maritime Fuels: Assessing the Options,” published in September 2018. That paper pointed out that “the European Parliament has declared its intention to proceed with regional carbon pricing in the absence of a global agreement.”

On one hand, recent developments in the EU, the perennial sluggishness of IMO progress and the inherent hurdles to global consensus suggest that a “EU now, IMO later” scenario is conceivable.

On the other hand, that would only be possible if EU member states unanimously agreed — which is an enormous “if.”

Challenges to a global solution

The difficulty in obtaining global approval of a carbon tax or some other carbon-pricing system for marine emissions was highlighted by recent events at the IMO. During of the IMO’s Intersessional Working Group on Reduction of Greenhouse Gas (GHG) Emissions from Ships that concluded on Nov. 15, a proposal to limit ship speed to reduce carbon emissions was set aside in favor of target-based measures.

Numerous shipowners backed the slow-steaming proposal. That’s not surprising. Speed limits would significantly reduce their fleets’ GHG emissions while virtually guaranteeing that the cost of those reductions would be paid by charterers and cargo shippers. Slower speed reduces effective vessel supply and increases freight rates.

Prior to the IMO working group meeting, Ridgebury Tankers CEO Bob Burke predicted the negative outcome of the slow-steaming proposal while speaking on a panel at the Marine Money conference in New York on Nov. 13.

“Speed limits would cost the charterers money, meaning there will be a lot of pushback from them — I doubt there will be any traction, ” he said.

“When OPA ’90 [the law stemming from the Exxon Valdez spill] was being discussed, hydrostatic loading would have solved the problem immediately [versus the chosen transition to double hulls].” In hydrostatic loading, the cargo level is limited to assure that if the tank is breached, seawater flows in and oil doesn’t flow out. “That was categorically rejected by the oil companies because it would cost them money,” noted Burke.

That same pushback seems plausible if a global carbon pricing system is pursued. The IMF paper made the case for an international carbon tax. During the meeting of the Global Maritime Forum in late October, BW Group chairman Andreas Sohmen-Pao said, “To meet international shipping’s decarbonization challenge, the maritime industry needs a carbon levy. It is coming and we should shape it.”

During the Marine Money forum, DryShips CEO George Economou was asked about the prospects for a global carbon tax on shipping. He replied, “The problem is we can talk about it, but it’s the oil companies that will take the decision.

“Can you imagine if the oil companies said they would put aside 30% of their profit to develop something new [i.e., fund the development of low-carbon-emitting shipping solutions]? If you were an investor in an oil company would you like that? No. So I think they will resist it, and it’s not going to happen anytime soon.”

It is not just the oil companies. Most of the world’s largest corporate entities depend upon the cheap movement of goods across the oceans. In some cases, these entities are state-owned.

A country’s leadership could balk at implementing carbon levies on shipping if the added price jeopardized its imports, exports and economic growth. That creates a high hurdle to global consensus.

Challenges to a regional solution

The challenges to a non-global solution, such as an EU-only carbon-pricing system, were addressed in the World Bank working paper, “Regional Carbon Pricing for International Transport,” published in January 2018.

That paper noted that a regional levy would have to be implemented by the port state (not a flag state, i.e., the ship register) and would have to incorporate GHG emissions beyond the port state’s territorial waters. “The scope of port-state jurisdiction with regard to activities that take place beyond the state’s territorial waters is a debated issue,” said the paper.

Assuming the EU or any other regional body could win the legal jurisdictional argument, the next challenge is preventing shipping interests from gaming the system. If the carbon pricing applies to the time at sea between the arrival of the cargo and its departure from the previous port, shippers could increase the use of transshipment at a nearby hub to minimize the transport covered by the carbon pricing.

Another complication arises with exports of petroleum products and liquefied gas. Such cargoes are often traded multiple times while in transit. The final destination is often not known when the ship departs. If the EU had a carbon-pricing system, how would it determine the pricing for such a destination-flexible cargo, or prevent that cargo from being “sold” to an entity in a nearby port and then ultimately resold farther afield?

What the World Bank working paper does not address is the even greater obstacle to regional carbon pricing arising from basic shipping-market dynamics. If costs are passed along to cargo shippers, it would impact the price of EU imports and the competitiveness of EU exports versus other regions. If costs are borne by vessel interests, those vessel interests — which can sail anywhere in the world — would have less incentive to serve EU ports, meaning that costs would still ultimately be borne by EU importers and exporters due to scarcer vessel supply.

Political challenges to an EU-only solution

The whole question of whether an EU carbon regime for shipping could exist in the absence of a global regime may be based on the flawed premise. According to Pablo Rodas-Martini, senior associate of SQ Consult, a Dutch company specializing in climate change and carbon markets, “The possibility of a carbon tax imposed by the European Commission is very low — it’s almost impossible.”

Rodas-Martini told FreightWaves, “The reason is straightforward: According to the regulations of the EU, any new tax must be agreed by unanimity by all member states. Such a requirement makes it almost impossible to think that a carbon tax will be proposed for the shipping sector.

“The approval of the energy tax took about 12 years due to this requirement. In the leaked text on the green deal, it is mentioned that the new commission wants to ‘pursue efforts’ to scrap this unanimity rule but, well, we are still very far from that point.

“More than a carbon tax to the shipping industry, the European Commission and the European Parliament have mentioned in the past that shipping should also be included in the European Union Emission Trading System [EU ETS], in a similar way as the aviation sector was added a few years ago,” he continued.

“That EU ETS includes power plants and energy-intensive industries across the EU. However, in the case of aviation, only the intra-European flights have been added to the EU ETS. If shipping is added, it would be under similar conditions: only the intra-European cargo, which would leave most of the shipping operations outside the EU ETS, since in the case of shipping, the intra-European share is much lower than the intra-European share for the aviation sector.

“This issue — the relatively small share of intra-European cargo for shipping — will force the EU to put more pressure on the IMO, [to push the] IMO to implement a much more ambitious climate change strategy,” he concluded.

Proactive shipping industry efforts

To date, confusion over the IMO’s future course on carbon emissions has actually been a positive for shipowners’ profit prospects. Uncertainty has spurred fears about the obsolescence risk of newbuildings. This concern has drastically reduced new ship contracting, which limits future vessel supply and supports freight rates.

The industry is well aware that carbon-related consequences could turn negative. As a result, it is seeking to proactively address the issue through the Global Maritime Forum and via voluntary industry initiatives such as Getting to Zero Coalition and, on the ship-finance front, the Poseidon Principles.

As Eagle Bulk (NASDAQ: EGLE) CEO Gary Vogel explained at the Marine Money forum, “If you look back at ballast-water treatment and to some extent IMO 2020, we’ve hopefully learned that it’s very important to have a seat at the table. Particularly with ballast-water treatment, with all the misinformation and the starts and stops – that’s not helpful.

“If you look at decarbonization and how much bigger that is for the industry, whether it involves a carbon tax or other means, we know that we have to have a better outcome [than occurred with previous regulatory initiatives]. It’s about being there, having a voice at the table and making sure that we are on a better trajectory, because this is too big of an issue to bolt the wings on while we’re in mid-flight.” More FreightWaves/American Shipper articles by Greg Miller  

Good day,

Construction officially began to expand the Trans Mountain pipeline and nearly triple its capacity so more petroleum products can flow from western Canada’s oil sands to British Columbia.

Work on the physical pipeline itself officially began in Alberta on Dec. 3. The pipeline should be in the ground by Christmas, the Trans Mountain Corporation said,

The milestone brought cautious hope to western Canada’s beleaguered energy sector, whose low-density oil sands have been hit hard by the decline in global petroleum prices. 

Trans Mountain will be able to handle nearly 900,000 barrels per day once the project is finished – slated for 30 to 36 months. The additional capacity could allow for additional exports to Asia from the Port of Vancouver. 

Did you know?

Preliminary orders for new Class 8 trucks totaled 17,300 units in November – the worst showing for the month since 2015 and 39% below a year earlier. 

Quotable:

“It’s not about speed because we don’t want speed. What we’re looking for is power in order to pull water pipes, the garbage trailers. They’ll have twice the loads of a normal truck.”
– Adrián Esper Cárdenas, mayor of Ciudad Valles, Mexico, on his city’s recent order of 15 Tesla Cybertrucks. 

In other news:

Woman driver trainee sues carrier, alleging sexual harassment and abuse

A woman training to be a truck driver has sued New Prime Inc., seeking $11 million in damages, on allegations of sexual harassment and abuse. (Oregon Live)

Egyptian startup Trella acquires rival Trukto

Trella, an Egyptian freight marketplace startup, has acquired rival Truktol. (MENA Bytes) 

Sweden’s Volta to build electric truck prototypes in U.K.

Swedish startup Volta plans to build a prototype for its new electric truck in the United Kingdom with partner Prodrive. (Motoring Research)

Tevva to boosting production of electric truck

U.K.-based Tevva plans to boost the forthcoming production of its 12-ton electric truck in response to feedback at a recent trade show. (Motor Transport)

Dairy facility to cut truck emissions, transport costs

A forthcoming dairy facility in Alberta, Canada, will allow producers to reduce the volume of milk by half to reduce the costs and emissions from truck transport. (High River Online)

Final thoughts: 

The expansion of the Trans Mountain pipeline will require more than 600 miles of pipe. As a result, the project has offered a much-needed boost to trucking and oil services firms in western Canada, including Mullen Group.

The expansion has faced years of delays because of numerous legal challenges, primarily on environmental grounds. 

One group, Ecojustice, plans to take its case to Canada’s Supreme Court – setting the stage for a potential disruption to the project down the road. 

Hammer down everyone!

The new range of electric and hydrogen trucks produced by IVECO and Arizona-based Nikola Motor Company will be game changers for truck drivers and operators, according to Trevor Milton, Nikola’s CEO and Founder.

Speaking during the launch of the Nikola TRE, a zero-emission heavy-duty truck aimed at the European market and powered by Nikola’s proprietary hydrogen fuel cell and battery technology, Milton said Nikola’s technological prowess combined with IVECO’s manufacturing might was “unstoppable” and would transform European trucking.

“Nikola is coming into this market, into Europe, like a freight train,” he said.

“We’ve created a brand that drivers are going to be completely proud of and lining up to drive. Around the world you’ll see drivers waiting in line to drive these trucks, leaving companies [using] diesels to drive these trucks.

“Driver turnover rates will be lowered. But most importantly, the pride of owning this truck is going to be the greatest achievement of Nikola and IVECO. We’ll be sold out for many years.”

The Nikola TRE, which is based on the S-WAY truck design launched by IVECO in July, is the first fruit of Nikola’s joint venture agreement with IVECO. The agreement, signed in September, saw the latter’s parent company, CNH Industrial, take a $250 million stake in Nikola.

“Three months ago we finalized the paperwork with IVECO and in three months our teams – without sleeping – have pulled this [the Nikola TRE launch] off,” said Milton.

“Most OEMs [original equipment manufacturers] around the world would take three years to put a program like this together. Our teams were able to take the IVECO S-WAY chassis and completely revamp everything outside and inside to make it purely Nikola.”

Milton added, “We had unrestricted access from IVECO to do whatever we wanted with this which was incredible. We now have production lines ready to go that are built with the same chassis and supplier bases.”

The deal with IVECO gives Nikola, which was already building the zero-emission Nikola One and Nikola Two trucks for the U.S. market, access to IVECO’s global manufacturing and sales structure, helping it accelerate efforts to disrupt trucking by replacing fleets of diesel trucks with units powered by zero-emission hydrogen fuel cell and battery electric technology.

“We needed a partner,” admitted Milton. ”We needed a global OEM that had the ability to help us manufacture these trucks, has the assembly lines figured out, has tens of thousands of engineers on staff.  

“We did not want to duplicate that. I could not wait seven years to solve the emission crisis that we face right now. So we decided to partner with IVECO.”

He continued, “Rather than laying off tens of thousands of employees we are going to be hiring. This world is transforming – either you get behind it and create jobs, solve emissions and solve complex social problems or you hide behind your desk and lay off employees. 

“We have chosen to take the higher road, the road where we will build the most advanced truck the world has ever seen and we will build it for Europe. And we will build it for the U.S.”

The first units of the Nikola TRE will be delivered to European customers in its battery electric vehicle (BEV) format in 2021 with a fuel cell electric model (FCEV) scheduled for 2023.

“This truck will be offered in both variations,” said Milton. “We will tell a customer truly what’s best for them – we don’t care which way you go.”

IVECO and Nikola expect demand for zero-emission trucks to be aided by European Union (EU) legislation aimed at cutting carbon emissions. The launch of the Nikola TRE will also help IVECO meet the terms of new EU rules, which 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.

“We’re here to help the legislators,” said Milton.

“You can mandate zero emissions, it’s ready now, don’t let them lie to you. We’re ready to go on this. It’s time to replace these vehicles on the road.”

Mark Russel, Nikola Motor Company president, said the problem with many new alternative propulsion trucking solutions was that the fuel and vehicle were often not available simultaneously. By contrast, Nikola will take a “chicken AND egg” approach, rolling out hydrogen stations as trucks are sold.

The management of the companies believe that total coverage of Europe with hydrogen stations will only require around 70 installations, around one-tenth of the estimated number required to adequately cover North America.

Subject to support from EU legislators, hydrogen stations will be rolled out on key trucking routes from the center of Europe outward from 2022, with periphery countries such as the Iberian Peninsula, the U.K. and Scandinavia expected to be linked by 2026. Stations in eastern Europe will then be added from 2030.

More FreightWaves and American Shipper articles by Mike

After the yellow-jacket protests that rocked Paris last year, the city is again the centerstage of protests that will start on Dec. 5, as workers of the Régie Autonome des Transports Parisiens (RATP), will come together to strike against the existing French pension system that they believe needs reform. 

RATP runs the French capital’s public transport system, thereby crippling movement of people and goods across Paris when its workers walk out to protest. They will also be joined by employees of SNCF, the French state-owned railway, along with air traffic controllers, airport ground staff, and trucking carriers, effectively bringing the French economy to a standstill over the next few days. 

The French government and the RATP, in particular, have been scrambling to find alternatives and to sort out transport lines that will remain open despite the protests – courtesy of the very few workers who would continue to operate depleted transport systems. 

Just like with the yellow-jacket protests, this protest does not seem to have a particular date when it will die down, with opinions already differing on the length of the demonstrations. FreightWaves contacted French freight technology startup Everoad to discuss the impact of this national strike on the French freight economy. 

“By looking at the news and by listening to the unions, it is clear that no one knows how long this strike while last. Few say it will only be on Thursday and Friday, but some say it will last a couple of weeks. Either way, we have no idea how big of an impact – direct or indirect – it will have on the French economy,” said Maxime Legardez, the CEO of Everoad. 

The shutdown will impede air, rail and road networks across the country, with major transport operators canceling services en masse over the next few days. Rail transport provider Eurostar has announced that it will cancel 78 trains, which is expected to hit 50,000 passengers. 

Air operator EasyJet has issued a warning to its passengers to expect cancellations and delays, while British Airways has offered flexible booking options for people who were scheduled to fly between Dec. 5 and Dec. 7. 

Aside from being a massive inconvenience to commuters, it will wreak chaos on freight movement within France and also on routes connecting major cities in Belgium, Italy and Germany. 

“Based on what happened one year ago, we know that this strike will have a social and economic impact on France, as it hits on the mobility of people and goods,” said Legardez. “A significant percentage of goods in France are transported by rail. And with that out of the picture, people will over-solicit the road carriers to move their freight. This is a situation where there is a shortage of capacity in times of excess demand.”

Demand for capacity is usually high during the holiday season, as evidenced by the increase in consumer spending during December as they flock storefronts and order products online. The national strike at this critical juncture would mean businesses will have to work harder to find an alternative that helps them ship and deliver cargo on time. 

“The feasible option at this time is to ship goods by road. Digital freight forwarders like Everoad can make a difference by connecting these shippers to carriers who operate during this strike period,” said Legardez. With over 6,000 carriers and more than 300,000 trucks registered in its system, Everoad hopes to be a bridge during this crisis, connecting shippers within France and its neighbours via the highways. 

The Office of the U.S. Trade Representative (USTR) said France’s digital services tax (DST) discriminates against U.S. companies and is inconsistent with the “prevailing principles” of international tax policy.

President Trump reacted to the USTR investigation’s findings on Dec. 2 by proposing 100% tariffs on up to $2.4 billion in French product imports.

USTR, which conducted the investigation under Section 301 of the 1974 Trade Act, said the French digital services tax penalizes U.S. technology companies, such as Google, Apple, Facebook and Amazon.

“USTR’s decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies,” said U.S. Trade Representative Robert Lighthizer in a statement.

France’s digital services tax imposes a 3% levy on gross revenues generated from providing two categories of digital services, namely “digital interface” and “targeted advertising,” directed at consumers living in France.. The tax applies only to companies that generate more than 750 million euros ($830 million) globally and 25 million euros ($27.7 million) for services provided to French consumers. The tax applies retroactively, starting Jan. 1, 2019.

The USTR will issue a Federal Register notice explaining its reasons for finding the French digital services tax as “unreasonable, discriminatory, and burdens U.S. commerce” and will solicit public comments through Jan. 6 on its proposal to impose additional duties on up to 100% on certain French products. The list of French products subject to potential duties includes 63 tariff subheadings with an approximate trade value of $2.4 billion. 

The trade negotiator’s Section 301 committee will hold a public hearing in Washington, D.C., starting at 9:30 a.m. on Jan. 7 regarding its proposed actions against the French digital services tax.

USTR is also considering similar Section 301 investigation against digital services tax programs in Austria, Italy and Turkey.

“The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies, whether through digital services taxes or other efforts that target leading U.S. digital services companies,” Lighthizer said.

U.S. importers and exporters, meanwhile, are concerned about the impact of the proposed tariffs on French goods, such as wine, cheeses and handbags, and the possibility that France or the European Union will respond in kind with retaliatory tariffs on U.S. goods.

“The U.S. Chamber strongly opposes France’s DST, which discriminates against U.S. companies,” said Marjorie Chorlins, the chamber’s senior vice president for European affairs. “In our view, the path forward is for all parties to redouble efforts to devise a multilateral solution to the tax challenges posed by digitalization of the global economy in the negotiations now underway at the OECD.”

Brits head to the polls next week (Dec. 12) in a general election which should bring more clarity to the endless Brexit saga ahead of the U.K.’s scheduled departure from the European Union (EU) at the end of January. 

In an exclusive interview with FreightWaves, U.K.-based Andy Cliff, managing director of international logistics facilitation specialists Straightforward Consultancy, tells Mike King what shippers need to know about the multiple potential Brexit outcomes. And he explains how they can best prepare supply chains for any resultant shocks.

FW: Brexit was delayed again at the end of October until Jan. 31. But for shippers, has anything practically changed in how they organize shipments between the U.K. and the rest of the world since the original referendum in 2016?

It’s a good question Mike, and many companies based in the U.S. are thinking quite justifiably that something must have changed, especially with the amount of time that’s passed and the extensive negotiations that have been taking place ahead of the U.K.’s departure from the EU.

However, nothing has changed both in terms of logistics and Customs procedures for U.K. importers and exporters and they won’t change, until we [the U.K.] either leave the EU with a deal, or we opt for a so-called “hard-Brexit,” where the U.K. then becomes a third country and defaults to World Trade Organization (WTO) rules.

If we do leave with a deal, a transitionary period of 12 months will kick in where everything stays the same, and talks over the actual trading relationship will begin, although that transition period will most likely need to be extended given the size of the task!

FW: So, the big focus for shippers throughout this more than three-year process has been about how to prepare for a highly disruptive ‘hard’ or no-deal Brexit, and that is still possible Jan. 31?

Absolutely Mike, and this is why the U.K. Parliament became log-jammed in November – which then brought about the general election set for Dec. 12. We have had many discussions with U.K. companies [some with U.S. operations] on making sure that not only they are prepared, but that their freight providers are ready too, because in a hard-Brexit scenario, we will see the return of Customs borders between the U.K. and EU, and this will then require Customs declarations on both sides and all it entails.

When you break it down, there are three key areas to consider – are you ready, is your freight forwarder ready, and just as important, have you engaged with your EU customers to explain how their delivery times will be impacted, and to agree who will bear extra costs such as Customs duties.

Also, Incoterms will now come into sharp focus in this market, as in the past U.K. companies would often sell or buy on a “delivered price” and Incoterms were either vague or not even quoted in contracts. In October we compiled a Brexit checklist to assist U.K. companies with hard-Brexit preparations that is written in plain language and covers guidance for both U.K. importers and exporters that has been well-received.

FW: Previously FreightWaves has explored how and why Brexit will reshape Europe’s logistics landscape in the medium- and long-term. But more immediately, what does a no-deal Brexit mean for shippers outside of the EU – for example, in the U.S.?

Well, Mike, as I said earlier, many U.S. companies have a European headquarters in the U.K. that will then distribute their products around the whole of Europe. So if they currently operate in this way, then they will be affected. They will need to understand that delays in delivery or extra costs from the U.K. to the EU may need to be communicated to manufacturing and sales so they manufacture or ship earlier and potentially review their export pricing to help their U.K. operation retain margin.

FW: What should shippers in the U.S. be doing to prepare for a no-deal Brexit?

They need to be talking to their U.K. sites to satisfy themselves that their U.K. operation is prepared and their EU customers are clear on the terms and costs of future purchases, and also, most importantly, delivery times. This is an area we have come across several times, where the front-line shipping/logistics operation in the U.K. tells their senior management that they’re ready, but when you conduct an analysis of the basics, they just aren’t ready, and they haven’t covered all the bases I referred to earlier.

FW: What is the state of preparedness of U.K. shippers and their EU counterparts in your view?

To be honest, based on the companies we’ve talked with and met, we’ve been pretty concerned as they really haven’t found out enough from their freight forwarders about how the service they currently receive will change, both in cost or transit time, and there’s been little engagement with end-customers to communicate how they will continue to supply them, and at what cost and time frame.

From the EU side, where a U.K. company is buying product from, say Germany, these EU suppliers have come to the party quite late and you get the distinct impression that they are also getting vague assurances from their EU-based freight providers on how they will operate in a hard-Brexit scenario.

So, overall, we are very concerned about the state of readiness of both the logistics providers and U.K. exporters in particular. In the U.K. however, we do have special measures set in place by U.K. Customs to help U.K. importers through a hard-Brexit – so- called “Transitional Simplified Procedures” – but again, many companies have not applied for these procedures or, even if they have, they haven’t had the necessary dialogue with their freight forwarders to make it work from Day One.

FW: What can U.K. or EU shippers do now to prepare better for a no-deal Brexit?

Well, they really need to carry out an urgent review of the three areas I mentioned earlier, and only then will they know where the gaps are. Based on the dialogue we’ve had with freight forwarders, although they may have issued customer Brexit bulletins, they’re often overloaded with industry jargon and incomplete. We also don’t feel they’ve considered the whole sales transaction (from shipper dispatch to final customer delivery) and everything that will be affected as a result. For example, if you decide you will sell on Incoterms DAP, where the U.K. exporter pays for all freight costs to the door, excluding duties and brokerage, has your freight forwarder had any dialogue with your EU customer to set up Customs brokerage procedures and credit arrangements for costs of Customs entry, duties and taxes to ensure continuity of service? It’s unlikely.

FW: Aside from a no-deal Brexit, Boris Johnson’s government had already agreed to a deal with the EU. If after the general election that becomes law, what are the key takeaways of that deal that shippers should be aware of?

If Boris Johnson’s Conservative government wins the election on Dec. 12 with a clear majority, he should be able to get this new deal through Parliament, and then we enter the transitionary period, where everything remains as it is now.

It’s worth saying again, however, that many think the December 2020 timeframe is way too short to secure a U.K./EU trade deal, and if the U.K. had left with a deal on the original leave date of March 29, we would then have had 21 months to get this over the line.

In terms of takeaways, I would say that it would be unwise to assume that Boris Johnson will even win Dec. 12, so who knows where we will be when the latest leave date of 31 January 2020 comes around. I think there so many possibilities, that you’d need a crystal ball to work out all the permutations!

If we assume that Boris Johnson wins on December 12 with a clear majority, he will push his withdrawal agreement through Parliament and we will leave on Jan. 31, and the transition period kicks in along with the start of trade deal negotiations. The concern many have is that if the EU won’t play ball and give the U.K. a “free trade deal” akin to what we have today, he may then take us out with a hard Brexit on Dec. 31, 2020, or potentially even before that if things are going badly.

The other possibilities are endless. For example, a Labour government, or potentially a Labour/Liberal Democrat/SNP coalition, could see Brexit kicked down the road for many more months and the U.K. may not even leave at all! 

So, in our opinion, the best approach is to prepare for a hard-Brexit and avoid placing your supply chain and business at risk, it’s the only way to be sure. Then you can sleep at night!

More FreightWaves and American Shipper articles by Mike

European logistics service provider Vos Logistics announced that it will acquire 100% of the shares of SNEL Shared Logistics, which is based in Woerden, the Netherlands, to strengthen its presence in the Benelux region. 

SNEL Shared Logistics operates a 65,000-square meter warehouse (m2) in Woerden, and is favourably positioned to offer logistics services to businesses and consumers in the Randstad region – home to four major cities in the Netherlands – Amsterdam, Rotterdam, Den Hague and Utrecht. 

The Woerden warehouse is also near the port of Rotterdam, the largest seaport in Europe, making it a valuable acquisition for Vos Logistics to further its plans for expansion in the niche of fine-meshed distribution, warehousing and cross-docking of goods. In the time of ecommerce and rapidly evolving consumer expectations, the well-established SNEL Share Logistics network in the Randstad area gives Vos Logistics improved scope in order fulfilment for customers in the region.

“By scaling up and digitizing business processes, we are able to deliver faster throughout the Benelux, better integrate with customers’ systems and keep rising costs under control. In this way, we remain an attractive partner to work with,” said Ben Vos, the chief financial officer at Vos Logistics. 

In the recent past, both companies have shown significant commitment to sustainable logistics, and as a consolidated company, Vos Logistics looks to continue down the same path. 

Frank Verhoeven, the CEO of Vos Logistics, explained that it was the company’s prerogative to cater to the “growing demand for more efficient and sustainable mobility and logistics” that can be achieved by combining the freight volumes of both organizations to increase the overall occupancy rate of delivery vehicles. “This reduces CO₂ and nitrogen emissions, and enables us to respond in time to the energy transition for distribution in cities,” he said. 

That said, Vos Logistics is much larger than SNEL Shared Logistics, currently employing 2,560 people and having a fleet of 1,250 vehicles and 250,000-m2 of storage capacity spread over a network of 30 branches across Europe. Albeit smaller, SNEL Shared Logistics holds a denser network in the Randstad region, which can be leveraged by Vos Logistics to improve its efficiency. 

Peter de Vries, director of SNEL Shared Logistics, commented that his company’s takeover by Vos Logistics was a favourable move, bringing together the best of both worlds and helping both companies expand. He was also optimistic about the impact the merger would create for its employees, mentioning that this consolidation will provide an attractive perspective to workers and also help anticipate any looming scarcity in the labour market. 

In an internal letter to his employees, De Vries wrote that this was a decision taken after careful consideration of SNEL Shared Logistics’ interests and the scope of its continuity as a logistics business. De Vries explained that for the company to surge ahead in its transition towards electric transport and expand on its fine-meshed distribution network, it required a partner that had the resources to make it happen. 

Currently, the acquisition is pending approval from the Dutch Authority for Consumers and Markets (ACM). For Vos Logistics, this acquisition comes in quick succession to two other similar transactions. It acquired Dutch logistics companies Gebroeders Joosten in early 2018 and Gehlen Schols in November 2018. 

Maritime, air and overland trade routes into Europe are being piggybacked by criminal gangs deploying the latest digital supply chain technologies to help meet mushrooming demand for illegal drugs across the European Union (EU), according to a major new report examining the continent’s illicit drugs business.

The 2019 EU Drug Markets Report by the EU drugs agency (EMCDDA) and the European Union Agency for Law Enforcement Cooperation (Europol) raises concerns over “the greater diversification of maritime drug trafficking and the misuse of general aviation for criminal purposes.”

And it claims that “the use of post and parcel services to transport drugs is also expanding rapidly, following the rising trend of online shopping in Europe and the movement of larger volumes of goods.”

Europe’s burgeoning drugs market

According to the 2019 EU Drug Markets Report, Europeans are now spending at least 30 billion euros on drugs each year at the retail level, making the drug market a major source of income for organized crime groups in the EU.

Around two-fifths of this total (39%) is spent on cannabis, 31% on cocaine, 25% on heroin and 5% on amphetamines and MDMA. 

Globalization and enhanced transportation technology have been critical facilitators in the expansion of these drug markets by enabling cheaper, more efficient and safer – thanks to decreasing inspections – organized crime operations, and the movement of larger quantities of illicit drugs without disruption.

“Organized crime groups are quick to seize new opportunities for financial gain and are increasingly exploiting technological and logistical innovations to expand their activities across international borders,” said Dimitris Avramopoulos, European Commissioner for Migration, Home Affairs and Citizenship.

Drugs in a box

As reported in FreightWaves, there has been a rising number of drug seizures on container ships both in Europe and Asia, while mafia-style gangs are known to be targeting supply chain disruptions associated with Brexit.

The 2019 EU Drug Markets Report concludes the exploitation of maritime routes constitutes a growing threat.

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“More than 750 million 20-foot equivalent units are transported by sea every year, accounting for 90 % of the global cargo trade,” it notes. “Fewer than 2% of shipping containers globally are ever screened.

“Large container ports in Europe and other continents are being increasingly exploited by drug traffickers for bulk transportation.”

The postal challenge

The use of post and parcel services for drug trafficking to transport drugs has also expanded rapidly recently, prompting EU Member States, customs in particular, to increase their controls of postal hubs.

“The increasing trend for shopping online in Europe is associated with an increase in parcel deliveries, which are predicted to increase by 69% between 2017 and 2021,” notes the 2019 EU Drug Markets Report.

“This increase in delivery volumes makes systematic controls of all parcels challenging. This presents an opportunity for drug traffickers to expand their use of this medium for delivering drugs too.”

Digitizing the ‘inside job’

The key role played by information technology in controlling and managing traffic flows at air and sea ports is also proving to be a window of opportunity for organized crime.

“They may obtain such access either through the cooperation of staff or by hacking into relevant computer networks,” says the 2019 EU Drug Markets Report.

“Furthermore, looking forward, it is conceivable that entire logistical chains can be automated and thus vulnerable to exploitation.”

The report calls for police and policy makers to target “top-level organized crime groups active in the global drug market” and reduce “vulnerabilities” at external borders.

A wake-up call for policymakers

EMCDDA Director Alexis Goosdeel said the report was a wake-up call for policymakers to address the rapidly growing drug market, which was increasingly “global, joined-up and digitally enabled.”

Europol’s Executive Director Catherine De Bolle said Europol was seeing a clear increase in trafficking activity through its operational work and the intelligence contributions received from EU Member States.

“Law enforcement needs to tackle this development and that is why we are investing heavily in supporting drug-related investigations in Europe,” she said.

“Europol is targeting in particular top-level organized crime groups which are making a lot of money for themselves on the back of their many victims.”

More FreightWaves and American Shipper articles by Mike

The holiday season is upon us, which in times of ecommerce and highly discounted retail storefronts would mean heavily concerted logistics operations behind the curtains. The primary stakeholders in this movement of freight are the workers at ground zero – be it truckers, warehouse employees, or last-mile delivery workers. 

Workers within the logistics segment are often overworked and have little time to take off during their hectic schedules, which can take a toll on their bodies due to the constant physical strains they are under. This situation can be alleviated by teaching employees how to work ergonomically or by providing them with ergoskeletons that can relieve physical stress by taking away a part of the pressure of handling freight. Ergoskeletons are external devices that resemble body suits that can be worn by employees to assist with their work. 

French-based third-party logistics provider FM Logistic has introduced the Ergoskel, an ergoskeleton designed to assist warehouse employees to move parcels and help protect their bodies from strain.

“The Ergoskel is an ergoskeleton designed to help warehouse workers lift parcels weighing up to 55 pounds. It works by transferring the load from the upper body to the pelvic area. FM Logistic and the University of Technology of Compiègne (UTC) in France developed the Ergoskel with one goal in mind – reduce work-related risks of musculoskeletal disorders (MSDs) for warehouse pickers and packers,” said Samya Bellhari-Trahin, the ergonomist at FM Logistic. 

The genesis of Ergoskel was the need that FM Logistic saw to protect its employees, as it hired roughly 700 full-time warehouse workers every year in France alone. “One-third of our warehouse employees are pickers and packers. We tested six ergoskeletons available on the market. None of them proved completely adapted to our needs. So we opted to develop our own model together with the UTC,” said Bellhari-Trahin. 

The timeline of the development of the Ergoskel was by no means immediate. FM Logistic approached UTC in 2017, spending the first few weeks studying the movement and postures of pickers using motion capture technology. 

Once they had more information on how the human body worked, they designed a prototype that was tested in real work conditions across five different logistics sites in France. Bellhari-Trahin mentioned that the next step was to further improve on the device before considering a wider deployment. 

To date, a total of 51 employees have tried on the Ergoskel. “Overall, their feedback is encouraging. We have determined that the Ergoskel can reduce strain on the back and upper muscles by 70%,” said Bellhari-Trahin. 

However, equally of concern is the Ergoskel’s acceptance and its ease of use. FM Logistic queries its test employees on their freedom of movement, wearability and the general perception their peers have of the ergoskeleton. “The Ergoskel is reasonably light at 6.1 pounds and fits quickly. About 85% of the testers tell us they are able to keep their freedom of movement and 98% don’t mind what other colleagues might say about them using an ergoskeleton,” Bellhari-Trahin explained.

“At this stage, our focus is on completing the tests. We have identified several possible improvements based on employees’ feedback. We are working on a second prototype, which should be ready in 2020,” said Bellhari-Trahin. “At the same time, we now better know which users and work conditions could benefit the most from using our ergoskeleton. We are confident that more employees will have the opportunity to experience its benefits.”

Spanish road freight startup Ontruck has acquired digital freight forwarding platform Briver, in an attempt to consolidate its market position in the Spanish region of Cataluña. Ontruck is a marketplace that provides instant price quotes to shippers for delivering shipments within specific time windows desired by their end consumers. 

Ontruck is one amongst the new-age, on-demand delivery startups popping up in the rapidly growing European market that is worth €355.1 billion this year. Carriers use Ontruck’s smartphone application to accept or reject jobs. If they accept a shipment, they can check their whereabouts at nodal points via the application, receiving their payments after every successful delivery. 

On the shipper side of the equation, Ontruck’s precision logistics allows them to access instant price quotes, choose from an array of vehicle specifications, and pinpoint delivery schedules rather than leave them open-ended. 

Before its acquisition, Briver was a part of Wtransnet, a freight and vehicle exchange company based in Iberia, Spain. The company has a well-spread network of over 11,000 transportation companies across 33 countries, using Briver to seamlessly connect shippers and carriers by providing them real-time visibility into road freight movement. Carriers leverage the new-found visibility to significantly reduce the empty kilometres travelled, while shippers can tap into the system to track and trace freight.

“Briver offers many strengths as a digital road freight platform. Not only does it have a strong reputation and network offering a standout service in Cataluña, but it has succeeded in sustaining high margins and building out a large carrier database,” said Iñigo Juantegui, the CEO of Ontruck. 

As such, Cataluña draws about 10% of the road transportation business in Spain – a sizable share within a rapidly growing market. Juantegui explained that integrating a company like Briver into Ontruck helps the startup to bolster its presence in Spain as it holds a complementary client base. 

“In the weeks leading up to the holidays, demand for vehicles increases to over 40% kicking off with Black Friday in late November, all the way through to Christmas. The Briver acquisition will harness Ontruck’s capacity to meet the influx in demand of the Christmas rush by increasing the vehicles available for shipments by 20% in Cataluña,” said Juantegui. 

This scenario is providential for Ontruck, which is on track to triple its turnover from €9 million in 2018 to €27 million this year. The company currently services major brands like Pepsico, Codorniu, GBFoods, Mitsubishi, CHEP and Decathlon, collaborating with around 2,500 vehicles to pull off its precision logistics offering. Apart from perennially looking to increase the volume it ships, it also is doubling down on new clients such as Danone and P&G. 

With Briver’s integration, Ontruck expects to see a 15% growth in business volume for the company. Juantegui stated that Briver would continue to run independently from its parent company, but under a common leadership with no operational changes for clients from either of the brands. “Briver’s team will remain working for the company as if nothing changes. For the time being, they will continue working from their office in Terrassa, Barcelona,” he said. 

Ontruck will continue to expand its geographic footprint, having grown to two new markets – France and the Netherlands – this year. The startup is also looking to open in new cities in countries where it already has its operations running, while at the same time scaling up its service offerings, like booking international full truck loads (FTLs) and providing new ways to negotiate volumes.