Category: Technology

Ever since Beijing envisioned its Belt and Road Initiative (BRI) to make foreign markets more accessible to China and vice versa, it has been expanding its networks far west, including the European mainland. The Chinese juggernaut marches on, investing heavily in ports encircling the continent, partnering with East European countries to develop high-speed rail networks, and taking controlling positions in airports across the heart of Western Europe. 

The BRI can be viewed as a long-cherished Chinese dream of reviving the legendary Silk Road that connected China to the Eurasian empires 2,000 years ago, by creating logistics arteries connecting China to the entirety of the world.

Today, the eastern Chinese city of Yiwu announced a new freight train route to Belgium’s Liege, dispatching a train loaded with 82 standard containers of commodities that is expected to reach Liege roughly 20 days from now. Yiwu, which is one of the world’s largest small commodities markets, plans to operate this service twice a week. 

However, this is not the first freight train connection from Yiwu to Europe. Yiwu is already connected to London by rail – a freight train service that has run successfully between the two cities for over two years, carrying commodities like clothes, electronics and a variety of household items. Yiwu is also connected to Madrid via rail, which incidentally is the longest railway route in the world, moving through eight countries and nearly 13,000 kilometers (~8,100 miles). 

Though there have been several reports that point to underwhelming volumes being transported by rail between China and Europe, opening up new lines is expected to attract new businesses to take up rail freight as an alternative to maritime shipping. The direct train route to Liege will decrease delivery times by at least a day or two, while cutting travel times by nearly half of what it would have been if hauled by a maritime vessel.  

Once the containers land in Liege they will make their way to eHubs, owned and operated by China’s Alibaba’s logistics arm Cainiao Network, and other distribution networks. This freight train route is a joint undertaking between the city of Yiwu and Alibaba’s Electronic World Trade Platform (eWTP), with eWTP setting up a global innovation centre in Yiwu. 

The idea behind eWTP is to create a platform that promotes public-private cooperation and helps small- and medium-sized enterprises (SMEs) transcend national borders and participate in global value chains. eWTP looks to create industry standards, simplify customs regulations and lower tariffs for seamless cross-border trade movement.

That said, Alibaba’s interest in connecting Belgium to China goes beyond the freight rail network. The Cainiao Network is working with the Liege airport to build a smart logistics hub on its footprint, which will be ready to function by 2021. Alibaba has stuck by its mission to be a bridge between China and the world, with an aim to import $200 billion of goods from around the world into China over the next five years. 

Yiwu is a city in the Zhejiang province of China – colloquially called the Silicon Valley of China – and a major region for electronic goods production, making it vital for the province to be well connected to the outside world through different transport modes.

Yiwu is home to over 15,000 foreign companies hailing from over 100 countries and attracts over 400,000 foreigners every year who come to do business in the city. Yiwu accounts for 40% of cross-border volume hauled by the Cainiao Network, which is hardly surprising considering that its parent company Alibaba has its headquarters in Hangzhou, about 100 miles north of Yiwu. 

Maersk Line will only charge for the “extra cost of compliance” as the carrier introduces new IMO 2020 low-sulfur fuels in the coming months.

As reported by FreightWaves, shippers and forwarders have expressed dismay about the complexity of the charges being levied by some container lines as they phase in new low-sulfur bunker fuels ahead of the Jan. 1 International Maritime Organization deadline.

Shippers have also complained about a lack of transparency, suspecting that some container lines will use the introduction of the new fuels to bolster profits.

However, Silvia Ding, global head of ocean products for A.P. Møller – Maersk, told FreightWaves that while customers should expect to pay more due to the higher pricing of IMO 2020-compliant low-sulfur fuels, Maersk was only focused on recovering costs.

“Low-sulfur fuels are significantly more expensive,” she said. “As multiple industry reports have stated, being in a low-margin industry carriers cannot shoulder the cost alone; it must be passed on through the supply chain.”

Maersk will adjust its bunker adjustment factors (BAF) based on the price of low-sulfur fuels from Jan. 1 for long-term contracts of more than three months. For spot business and shorter contracts of less than three months, it is introducing on Dec. 1 an environmental fuel fee (EFF), a mechanism designed to recover the extra costs of the more expensive IMO 2020-compliant fuel.

 “Our efforts for long-term BAFs and short-term EFFs focus on recovering the extra cost of compliance and are based on principles of simplicity and predictability for our customers to be able to plan their supply chains,” said Ding.

Unless some form of emission abatement technology such as scrubbers has been installed on vessels, the new IMO regulations mandate that the sulfur content of fuel oil used by ships operating outside designated emission control areas must not exceed 0.5%, compared to 3.5% now.

Drewry Shipping Consultants now estimates box shipping lines will be faced with an additional $11 billion fuel bill next year due to the switch to low-sulfur fuel oil, although the recent drone attacks on Saudi oil facilities have muddied estimates by adding to oil price volatility.

Shipping bodies also believe there could be fuel shortages and discrepancies in standards.

Ding admitted the introduction of low-sulfur fuels could see some fuel supply issues in the early weeks of next year. “We see sufficient availability of compliant fuels; however, we expect increased instances where ports in some confined areas see a limited supply of 0.5 compliant fuels,” she added. 

“In such cases we would rely on more expensive 0.1 marine gas oil to get to the next port with 0.5% fuel oil availability. This adds cost and complexity and we expect it to happen more frequently in the transition period around 1 January 2020 than later in 2020 where supply and demand is expected to balance out,” Ding said.

The carrier has established joint initiatives with Vopak, Koole and PBF Logistics for 0.5% compliant fuel storage and processing facilities in Rotterdam in the Netherlands and New Jersey in the United States.

“The fuel manufacturing process allows Maersk to produce compatible low-sulfur fuels that complies with the IMO 2020 sulfur cap implementation, reducing the need to rely on 0.1% price-based gasoil and fuel oil outside the ECA zones,” said Ding. “This will be an important driver in ensuring stable, reliable services for Maersk’s customers during a potentially volatile period for global shipping.”

FreightWaves articles by Mike

Container shipping lines will attempt to pass on extra fuel costs due to the introduction of low-sulfur IMO 2020 fuels next year. If shippers prove unwilling to foot the bill, carriers will likely make major cuts to service levels, according to new analysis by Drewry Shipping Consultants.

The analyst estimates box shipping lines will be faced with an additional $11 billion fuel bill next year due to the switch to low-sulfur fuel oil, although the recent drone attacks on Saudi oil facilities have muddied estimates by adding to oil price volatility.

The degree of compensation that carriers receive from shippers will dictate the level of service disruption during 2020, believes Simon Heaney, senior manager of container research at Drewry and editor of the Container Forecaster.

“Our working assumption is that carriers will have more success in recovering that cost than previously, to the point that there will be no major disruption to supply,” he said.

However, as reported in FreightWaves, “bewildered” shippers and forwarders have expressed confusion over the timing and transparency of new charges now being introduced by container lines as they phase in low-sulfur fuels — and pass on higher costs to customers — ahead of the Jan. 1 mandatory implementation date set by the International Maritime Organization (IMO).

Shippers are also wary that container lines might hike the fuel component of freight to compensate for bearish spot rates.

“Most shippers accept that they will have to pay more but they rightly expect any increase to be justified with a credible and trusted mechanism — in other words, the ball is very much in the carriers’ court,” said Heaney.

If lines do fall short in recovering IMO 2020 fuel costs from customers by a significant margin, Drewry believes they will “dust off the decade-old playbook” that saw them through the global financial crisis of 2008-09. “There will be much less focus by carriers on service quality and more on cost cutting,” added Heaney.

“In that scenario, carriers will try to protect cash flows by restricting capacity as best they can, through a combination of measures, including further slow-steaming, more blank sailings and off-hiring of chartered vessels.”

There also could be a push by lines to fit scrubbers to avoid the premium pricing on low-sulfur fuel. Vessel demolition rates could accelerate too.

“If events follow this path, the supply-demand balance will look very different from our current forecast,” said Heaney. “The worst-case scenario, when most shipping lines cannot operate close to breakeven and some potentially face bankruptcy, would actually be a far quicker route to rebalancing the market than the current plodding track.

“It would take a very brave carrier to want such a turn of events, but for those that could be sure of coming through the other side, after some initial pain the rewards would be far greater.” Higher operational costs for lines come just as demand is turning bearish. Drewry said the “mood music” surrounding the container market had deteriorated further in the last three months. As a result, the analyst has downgraded its 2019 world container port throughput forecast to 2.6% in 2019, down from the previous 3.0% expectation.

Good day,

The Motley Fool has discovered last-mile logistics. The venerable stock-selection and opinion website had a podcast last week to break down the sector’s dynamics. Among the topics: Why robots probably aren’t coming for people’s jobs anytime soon; how Amazon.com Inc. changed expectations across the board; where drones and autonomous vehicles fit into the picture and where they don’t; just how much RFID can tell companies today; and what tech makers can do to offset the risk of “techlash.”

Did you know?:

Tractor-trailers account for 20% of all traffic on rural interstate highways, according to nonprofit group TRIP.

Quotable:

“Dear Twitter trolls: Yes … I’m an idiot, I can’t do, so I teach, and I don’t understand genius. It’s a tech/energy play. I get it. … Save your breath. Yes, he is a genius, Tesla has changed the world for the better (I believe this). And … Tesla doesn’t have the scale to compete in a well-run, low-margin business — auto.”

— Scott Galloway, a marketing professor at New York University, in a blog post on why Tesla will lose 80% of its value or will disappear. His comments were reported on the website Teslerati.

In other news:

Probing safety of Daimler’s sprinter vans

German authorities are probing suspected faulty software in the carmaker’s Mercedes-Benz Sprinter vans after a report in German media that 260,000 vehicles could be affected across Europe. (Bloomberg)

French port’s blockchain project boosts intermodal moves

Completion of a blockchain pilot scheme coordinated and in part financed by the Marseille Fos port authority has demonstrated blockchain’s scope for enhancing intermodal freight movements on the major French logistics axis Mediterranean-Rhone-Saone (MeRS) corridor. (Portstrategy)

Union organizing is an art form

Workers at the high-end art logistics company UOVO have announced their intention to organize with Teamsters union Local 814, the city’s union for professional movers and art handlers. (Hyperallergic)

Chinese robotics company launches Nanjing factory

Chinese robotics startup Geek+ in late September launched a “smart factory” in Nanjing. The facility, capable of producing more than 10,000 robots per year, employs industrial robots, its own AI algorithms, production logistics management system and other automated assembly programs. (TechinAsia)

Indian firm expands warehouse logistics footprint

Indian firm Embassy Industrial Parks will invest about $300 million over the next three years to develop 8 million square feet of logistics and warehousing projects, according to a company official. (Business-Standard)

Final Thoughts:

IMO 2020, the United Nations’ International Maritime Organization (IMO) regulation that enforces a sulphur cap on the fuels used by marine vehicles in order to reduce pollution, has long tentacles. According to an Oct. 7 report by logistics and real estate services firm JLL, ship lines will deploy larger vessels to offset higher operating costs because an increase in ship size does not translate into an equal increase in fuel consumption (i.e., one ship holding 20,000 twenty-foot equivalent container units (TEUs) won’t burn as much as two 10,000-TEU ships). This could lead to landside paralysis as ports struggle to process massive volumes from the larger vessels, according to JLL. Port complexes that have available land could use IMO 2020 to gain share from space-constrained ports, JLL said.

Hammer down, everyone!

In Madrid, a partnership between leading Spanish bank Banco Santander and blockchain certification startup Vottun will soon allow the city transport users to pay for their transit using a single unified digital payment system powered by blockchain. Vottun develops interoperable platforms over which blockchain applications can be built and made to interact with distinctly different public or private blockchain networks. 

The idea is to create an application that can be used by Madrid commuters to centrally access and pay for all different modes of public mobility available within the city. The use of blockchain here is justified as it helps bolster the security behind the payment platform through its decentralized ledger technology, with Vottun promising high levels of user data security in the application. 

This is part of an initiative called Madrid in Motion, which was begun by the Municipal Transport Company of Madrid (EMT) in an attempt to digitalize the city’s transit system and bring order to the myriad of transport companies that offer services under the EMT umbrella – including the metro, buses, taxis, e-scooters, bikes, and car rentals. Currently, all these mobility types have their own applications; users have to separately install and register themselves, making processes extremely redundant. 

Unifying the system will not just help make processes more seamless for an average commuter, but will also help the government gather tremendous amounts of data on commuter transit patterns. This can be channelled to create insights on transit corridors that are frequently congested, which can be used by the city planning authorities to improve sections that need added transit options. 

Vottun’s proposal on a unifying transport application won in a startup competition conducted by Madrid in Motion; it was chosen from among 300 such proposals. During its presentation, Vottun allowed attendees to test its product features like facial recognition and biometric payment gateways for EMT buses. 

“The user registration and validation system will be unique in all mobility services in Madrid because of the EMT app. This will facilitate the use of any mobility service to the citizen, and the payment in a simple and transparent way,” said Luis Carbajo, the CEO of Vottun. 

Before Madrid, there have been a few instances where public transport networks are leveraging the potential of blockchain to improve commuter interaction. Argentinian state public transport card SUBE was in the news earlier this year, when it announced a partnership with Bitex, a blockchain financial firm, for introducing the option of paying for services through bitcoin cryptocurrency. 

Though this is not necessarily innovation in itself, it is a decisive move towards greater understanding of the technology and to promote it across different avenues. SUBE cards are used by over seven million people in 37 locations in Argentina, to travel in trains, trams and buses. 

The Brazilian city of Fortaleza has also jumped onto the blockchain bandwagon, announcing that it will allow commuters to pay for bus tickets by bitcoin and other cryptocurrencies alongside conventional card payments. Users of the city transit app can pay through their smartphones through which they will get a QR code that they can scan as they get aboard a vehicle. 

The German police had a field day marshalling people around at the world’s largest beer festival Oktoberfest, mediating in nearly 2,000 altercations at the 16-day event. Held annually in the months of September and October in Munich, Germany, Oktoberfest witnesses 7 million people every year, who consume over 7.5 million litres (~2 million gallons) of beer. 

Though mild road skirmishes have always occurred in the area surrounding Oktoberfest, this year saw the entry of e-scooters that added to the complexity. Throughout the length of the event, e-scooters were stopped en masse by the police as people under the influence drove them recklessly. Of the 414 people who were caught driving intoxicated, 254 e-scooter riders lost their automobile driving licenses on the spot. 

Understanding the impact of e-scooters on such a large-scale event, the city of Munich had imposed several restrictions on the movement of e-scooters in the vicinity of Oktoberfest, setting up large no-ride and no-park zones around the festival grounds. 

“Many see e-scooters as toys and unfortunately too often they’re ridden while drunk. In order to avoid this and to not tempt anyone, we city administrators, police and also rental companies want to keep e-scooters far away from the Wiesn (Oktoberfest),” said Thomas Böhle, Munich city administrator in a statement. 

With this comment, Böhle had hit the bullseye on the primary issue plaguing the e-scooter segment – users looking at these vehicles as part of a harmless mobility system where the ‘fun’ element trumps road safety. 

Munich had legalized the use of e-scooters within city boundaries in June this year and has since then penalized over 400 users for driving drunk (not including the people caught at Oktoberfest). 

Most of the e-scooter usage and their associated accidents happen on weekends and after hours, as people zip ahead at high speed without worrying about oncoming traffic or pedestrians on the pavement. Though the e-scooter segment emerged as an alternative to high-emission personal automobiles, it is a justification that cannot be substantiated today. E-scooter usage points to people using it for fun, rather than as a means of transport that replaces their daily transit medium. 

The German Federal Environment Agency (UBA) studied the impact of e-scooters in reducing vehicle density on the streets, and concluded that there were not enough positive indicators that pointed to reducing carbon emissions. On the contrary, the study suggested that proliferation of e-scooters will only put more vehicles on the road, and will have a negligible impact on displacing existing high-emission automobiles. 

Cities like Paris and London have come down heavily on the e-scooter menace after thousands of such vehicles flocked their streets and overflowed pavements. This September, Paris banned e-scooters from ever riding on the sidewalk, with violators fined €135. In the U.K., e-scooters are technically illegal to ride, as the battery-powered vehicle is classified as a Personal Light Electric Vehicle (PLEV), making it unlawful to ride on pavements and the roads. 

For now, e-scooter company Bird is the only company that is allowed to run scooters in London, as it is available for hire only on its private enclosure in Stratford. All the vehicles are mandated to have license plates, and the riders are required to have insurance, driving licenses, and their helmets on before they take to the road. However, navigating through the myriad of city and national road laws with regard to taxes and licensing is nearly impossible, making all e-scooters on U.K. roads essentially illegal. 

Meanwhile, German politicians are criticizing the government for passing a law that allows the use of e-scooters on German roads, without contemplating the repercussions that followed. 

The Austrian capital Vienna has taken a sensible approach towards e-scooters, by restricting the number of vehicles and also having a check on the number of e-scooter businesses that operate within city boundaries. Companies like Bird have dedicated e-scooter supervisors who manage a fleet of 100 vehicles, making sure there are minimal disruptions to regular traffic. Users are also required to take a picture of where they park their scooters to make sure Bird maintains cognizance of all its vehicles.

Over the last couple of months, major container lines and alliance carriers have been blanking several of their headhauls from Asia to Europe, citing weak peak season demand. Since July 2019, seasonal rates have been consistently lower year-on-year with container prices in China to North Europe lanes moving lower; there was a 21% decline this month compared to October 2018. 

Container lines blank their headhauls because it helps them marginally stabilize the declining container spot rates. However, this would come at the expense of North America, as every vessel withdrawn from the European market will mean a lost backhaul voyage from North America. 

To a neutral observer, the shrinking of maritime capacity between Asia and Europe could be a marketing opportunity for the trans-European railway intermodal system that now boasts a connection to the industrious Chinese East Coast, made possible through Beijing’s One Belt One Road initiative. But unlike the way the U.S. leverages its extensive railroad network to move freight, Europe does no such thing, with its freight rail system lagging behind the U.S. by several decades. 

The reason for this chasm in rail freight growth is because of a fundamental difference in perspective. Europe never measured the effectiveness of its well-engineered railway system by the volume of freight it hauled, but by the number of passengers it could move. 

“As railroads are privatized in the U.S., we have constantly moved towards heavier axle loads over the last four decades. Our standard railroad cars can take 286,000 pounds. Every car has four axles, and thus every axle can roughly handle 71,500 pounds, which is equivalent to 32.5 metric tonnes. But in Europe, a typical axle load is only about 20-23 metric tonnes,” said Jim Blaze, a retired U.S. railroad veteran. 

Compounding problems is the permitted length of every freight train in Europe. For operational purposes, the total allowed length of a freight train in Europe is 700 meters (~2,300 feet) and the maximum length of a train including its locomotive and lengthening can be 750 meters (~2,460 feet). 

This is diminutive compared to the U.S. freight trains that average around 2,000 meters (6,600 feet). Freight train lengths exceeding 6,000 meters (~19,700 feet) can also be frequently sighted in the U.S., which are made possible by adding a few more locomotive units to the cars, either at the end or in between for additional power. 

“The 750-meter maximum train length in Europe is necessary for a system that depends on passenger transport rather than freight. Trains need the ability to brake rapidly when they are moving passengers, and it becomes difficult as the trains lengthen,” said Blaze. 

Another issue is the vertical height of cars. In the U.S., the vertical height limitation has been rewritten several times, with newly built cars now topping 23 feet from the rail. In Europe, the vertical car heights have remained at 15 to 16 feet, roughly 30% lower than the U.S. rail cars. 

“At 15 to 16 feet, European railroads cannot handle double stacks. If you go to a double stack-engineered freight car platform, you get an immediate 35-45% per container mile drop in your shipping costs on the railroad,” said Blaze. “Europe has been stuck with the same freight train size as they had after World War II. Meanwhile, maritime competitors have grown by orders of magnitude over the years.”

European railways had no incentive to take risks to re-engineer and spend billions of euros to increase clearances and rework tunnel heights for double-stacked railcars, because the European railway business model was about moving passengers and not freight – the opposite of how North America dealt with its railroad system. 

That said, Blaze pointed out to how commercial necessity has helped transform a Scandinavian railway line running within Norwegian and Swedish borders to carry around 30 metric tonnes on each axle load, unlike the regular 20 to 23 metric tonnes that is carried in the other parts of Europe. 

“This line runs from the port of Narvik, a Norwegian town north of the Arctic Circle, to the Swedish town of Kiruna, where iron ore is mined. It so happened that in 1998, the Swedish mine owner announced that it was very expensive to move its iron ore from Kiruna to Narvik and that it would be forced to shut down the mine if the cost per tonne mile was not brought down,” said Blaze. 

This set off massive renovations to the railway line, with Sweden strengthening the rail, fortifying the anchors that hold the track down, increasing rail lengths on curves and at crossovers. These improvements helped to make sure the rail cars could carry heavier loads. 

“Increasing the axle loads meant an increase of loads per car by 20%. Though it had to increase the track maintenance budget by roughly 20%, the railway had lower crew costs, lower engine costs and lower equipment costs because it was getting much better utilization of the equipment. This led to a 28-30% net increase in savings for the movement of the iron ore,” said Blaze. 

Going by this instance, it can be gathered that what was done in Scandinavia can be replicated by the German Deutsche Bahn or Swiss Rail. Europe failing to take an interest in bolstering its freight railway system eventually boils down to the lack of incentive. Respective countries run their share of Europe’s railway network and have not allowed the rail sector to be privatized like in North America. 

In essence, it is about time Europe addresses the elephant in the room. For the EU, the equation is simple – increase capital expenditures on its aging railway system and look to take  volume from a maritime market that looks particularly vulnerable today. 

London had its first taste of self-driving cars when autonomously driven Ford Mondeos made their way on the roads surrounding Stratford’s Queen Elizabeth Olympic Park earlier this week, albeit with safety drivers in the driver seats. The pilot test was conducted by U.K. startup Oxbotica and the Driven program, a consortium partially funded by the U.K. government. 

The Driven consortium is a £13.6 million program that was initiated to propel the U.K. to become one of the leading stakeholders in the self-driving segment. The 30-month program has stakeholders that include Transport for London (TfL), Oxford Robotics Institute, Axa XL, Nominet, Telefonica, TRL, RACE, Oxfordshire County Council and Oxbotica. The autonomous vehicle test in Stratford was successful in showing that Oxbotica’s systems were safe to navigate in an urban setting. 

The U.S. and China have been the hotspots of autonomous driving technology, with automakers and cash-rich mobility startups working at perfecting self-driving vehicles across urban environments. Companies like Waymo and Cruise Automation have been the pick of the lot, having completed thousands of miles of autonomous vehicle miles without human intervention and devoid of accidents. 

That said, autonomous driving technology is merely an umbrella term that includes several levels of automation and varying technological approaches to self-driving. For instance, Tesla fundamentally rejects the idea of using LiDAR – a sensor that uses light pulses to define the driving environment – saying it will use artificial intelligence-powered cameras, GPS and maps to better effect. Companies like Waymo, Cruise Automation and Uber swear by LiDAR, and consider it to be an integral part of their automation efforts.  

However, irrespective of the route to automation, a rudimentary need to build autonomous technology is data, which can be gathered both by simulating miles or by getting a car to drive on the road. Oxbotica, with its autonomous Ford Modeos, will now have real-life data to work with in order to perfect its technology. In the trial run, the Mondeos weaved through residential streets and traffic intersections in the Stratford East Village area, without the need for the safety drivers to take control. 

“The car is a bauble on top of the iceberg: underpinning that is a host of other things that need to happen, from cybersecurity to ensure we have constant, secure communication; insurers for product liability; and real-life risk assessment,” said Graeme Smith, program director at Driven. 

Smith’s careful optimism is justified, as the autonomous driving segment cannot hope to skip through regulatory hurdles without convincingly answering questions concerning security, ethics and liability. For instance, bolstering the system firewalls around autonomous driving software is critical, as the vehicle will be subject to frequent hacking attempts. The ethical dilemma surrounding accidents involving autonomous vehicles need adequate scrutiny, based on which regulations must be cemented in place. 

In the context of the economy at-large, autonomous driving technology can eventually end up replacing thousands of driver jobs. Paul Newman, founder and chief technology officer of Oxbotica, believes that though the technology will be replacing drivers, it will create avenues where new jobs will be created. “There is no doubt we’re not going to be sitting behind wheels in the future,” he said. “It is going to be a revolution but not a tragedy; more people will survive [on roads]; these vehicles will share their experiences and be even safer.” 

The driver shortage plaguing Europe’s northern freight markets has now spread southwards.

A new survey by the International Road Transport Union (IRU) has found that 20% of all positions remain unfilled in Spain, a situation the haulage lobbying organization said was causing “profound” logistics difficulties.

“In Spain, the acute shortage looks set to escalate in the coming years, with IRU’s figures showing demand for drivers is set to increase by 18% by 2020,” the IRU said in a statement. “Coupled with recruitment into the industry stalling, this means the driver shortage could reach 30% within one year if not addressed immediately.”

The Spanish shortages are reflected across Europe. The IRU told FreightWaves last month that driver shortages were a “real and growing threat” to the ability of the European logistics sector to meet the needs of shippers.

Polling of IRU members and associated organizations in Europe from October 2018 to January 2019 revealed a driver shortage of 21% across the freight transport sector.

The U.K.’s shortage of truckers is currently growing at a rate of 50 drivers per day, while in Germany the average driver’s age is now over 47, meaning that some 40% of truckers are expected to retire by 2027 when it is estimated there will be a total driver shortfall of around 185,000.

In Norway, trucking companies estimate their demand for drivers will increase by 12% this year. Combined with the 22% vacancy rate identified in 2018, this will increase the country’s shortage to around 35%.

“The situation in Spain is part of a wider trend we are seeing across Europe,” said Esther Visser, IRU’s Manager of Social Affairs. “There are simply not enough drivers to meet demand and the problem is accelerating rapidly as experienced, older professionals leave the industry and are not being replaced in large enough numbers.”

Visser continued, “This is one of the most urgent issues facing the road transport industry, which is a lifeblood of Spanish mobility and the economy. If we do not reverse the tide soon there will be knock-on effects on our capacity to move goods and people around the country, which will impact many millions of people, businesses and communities.”

The lack of women and young people entering the driving profession is a problem across Europe, and Spain is no exception – female drivers make up just 3% of the country’s commercial driver workforce, and young people aged 25 and under constitute just 5%. The average Spanish professional driver is now 46 years old and male.

IRU research shows that 79% of drivers across Europe believe the difficulty of attracting women to the profession is one of the top reasons for the driver shortage. Of those polled, 76% believe that a perception that the industry has poor working conditions is deterring large numbers from applying, while 77% think long periods away from home deter many from entering the profession.

“It is clear that the industry has a serious challenge when it comes to attracting women and young people – these two groups together make up the majority of the Spanish workforce and yet the clear minority within the road transport sector,” said Visser.

“Changing the perception of the industry among these groups should be a top priority if we are to reverse this trend. But doing so will require action from all stakeholders connected to the industry, including governments, local authorities, and social, industry and educational partners.”

To address these challenges in Spain and throughout Europe the IRU has launched a joint initiative with the European Shippers Council to develop common principles aimed at improving the treatment of drivers at delivery sites.

The IRU has also established an expert group to address driver training legislation and its effectiveness, which will report back later this month, while a Women in Transport Network has been set up to promote the sector to women.

FreightWaves articles by Mike

The introduction of new IMO 2020 low-sulfur fuels and blanked sailings will dominate container markets in the fourth quarter, according to one leading analyst.

As reported in FreightWaves, shippers and forwarders have expressed confusion over the timing and transparency of new charges now being introduced by container lines as they phase in low-sulfur fuels — and pass on higher costs to customers — ahead of the Jan. 1 mandatory implementation date set by the International Maritime Organization (IMO).

Shippers are also wary that container lines might hike the fuel component of freight to compensate for bearish spot rates.

The latest monthly report from Maritime Strategies International (MSI) argues that liner charges to customers as they introduce the more expensive low-sulfur fuels will define box shipping markets in the coming months, although MSI is skeptical of claims that expected fuel price increases in January will lead shippers to front-load cargoes.

“As January 2020 looms, there is anecdotal evidence that shippers will bear increased bunker components of freight once the industry switches to cleaner fuels,” said the report. “This is admittedly clearer on the trans-Pacific trade, where the prevalence of annual contract arrangements provides better visibility than on other trade lanes including Asia-Europe, where annual contracts are less extensively used by shippers and forwarders.”

After recent spot rates losses on the main east-west ocean trades, analysts are mostly in agreement that further rate weakness is likely, even though carriers are expected to blank more sailings in the coming weeks. Some capacity also will be withdrawn as carriers rush to fit vessels with scrubbers to avoid paying premiums for low-sulfur fuels.

“In the most recent Shanghai Containerized Freight Index assessment, Asia-North Europe spot rates fell to $593/TEU and Asia-Mediterranean rates to $742/TEU, leaving North Europe rates 19% lower than in 2018 and Mediterranean rates 3% lower,” said MSI. “Assessments by Platts and Freightos also point to a marked weakening in recent weeks.”

CMA CGM has now announced a $200 per TEU cut to its published Asia-North Europe rates from mid-October, with other carriers expected to also offer discounts.

Trans-Pacific spot rates also declined during September after a brief rally in late August. “Rates on both U.S. West Coast and U.S. East Coast trades sit 30-40% lower on an annual basis,” said MSI. “Carriers have responded with additional blanked sailings, with the 2M alliance partners the latest to cut capacity.”

As a result, MSI’s near-term outlook for spot rates on the major Asia-Europe and trans-Pacific trades “remains weak,” with the impact of significant blanked sailings deemed “a key variable in the next several months.”

In November MSI predicts average Asia-Europe spot rates of $700 per TEU, although an early lunar new year could lift rates toward the end of Q4.

On the trans-Pacific trade, the picture is more complex due to the “confusing array of different drivers,” including front-loading, new tariffs, old tariffs, seasonal patterns, inventory holdings and the lunar new year.

“Looking at the bigger picture, our view remains much the same,” said the analyst. “Volume growth at the end of 2019 will be negative and likely significantly so to the U.S. West Coast.

“In 2020 the previous year point of comparison for some products will become less challenging, although products targeted in the most recent tariff increases will be more expensive than one year earlier.

“The trans-Pacific’s troubles are here to stay for now.”

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