Brexit and Covid-19 Bring Significant Changes to Irish Supply Chains

Brexit and Covid-19 Bring Significant Changes to Irish Supply Chains

Written by Howard Knott

 

The modal mix and services map for sea and air services made available to traders based in the island of Ireland in the decade up to 2020 did not change significantly. As the economy and population grew, and both consumption of goods and services along with export volumes in all categories increased. Hauliers, forwarders, shipping lines and airlines responded by adding more capacity, mainly to existing services.

Towards the end of the decade the emerging driver of change was concern for damage to the environment and the requirement to reduce the atmospheric and waterborne pollution caused by freight transport. Notable steps in this area included the introduction of a low-sulphur emission regime covering all shipping in January 2020, the rapid move towards alternative fuels in trucks and vans, along with the electrification and considerable expansion of rail freight services. Also, in early 2020 the worldwide COVID-19 pandemic struck.

One dramatic effect for the freight transport sector was the overnight withdrawal of passenger aircraft services with their attendant belly-hold capacity for freight. (some 65% of airfreight had, up to then, been carried in such a fashion). Also significant was the switch to online shopping requiring greatly expanded home delivery services. While freight volumes initially dipped due mainly to factory closedowns in China and elsewhere in the Far East they have, since mid-summer 2020 recovered strongly. The COVID-19 effect has been dramatic for a wide range of service industries but was not substantial for regional container shipping operations, nor was it for ferry services where the vessels routinely carried significant freight volumes.

In terms of Intermodal route planning the chain of services and schedules chosen by cargo owners for existing traffics had not changed significantly during the decade to 2020, and the main issues arose only in connection with new products or destinations. There was an increasing interest in seeking out routes with lower emissions, but the route choice was very much driven by cost and speed considerations. During 2020 the actual COVID-19 led service disruptions along with the impending Brexit difficulties forced many companies to re-think their supply chain management. In many cases this has involved re-organizing their supply chain model away from “just in time” and overnight delivery models to one that allows for slightly longer transit time and use of IT systems to ensure that delivery requirements are met.

While some air carriers sought to address the cargo capacity issue by flying aircraft in “cargo-only” mode, a significant development was the commencement of a weekly call at Ringaskiddy Terminal in Cork Harbour of the ILS container service giving 10-day transit to the east coast US ports of Chester and Wilmington. Unlike the major US Ports these ports have not suffered from congestion and cargo delays. A significant volume of cargo that had previously been flown to the US was shifted by exporters to this service giving delivery time certainty and at a very much lower cost. This shift was to prove significant in undermining the notion that certain cargoes could only be shipped by air while the use of container shipping was confined to goods on which delivery time was not critical. This was to prove crucial when Brexit became a reality at the end of 2020.

The Brexit effect.

In the lead up to January 1^st, 2021 and the end of the Britain/EU Trade transition agreement, it became clear that continued use of the British Land-bridge whereby trucks destinated from Ireland to Continental Europe or travelling in the reverse direction, would typically use the Irish Sea shortsea and Dover Straits routes could incur significant delays undermining their reliability. It had been estimated that up to 180,000 trailers and drivers used this routing annually.

Several Ferry Service operators responded to the challenge of shipping what had been Landbridge traffic on routes running direct from Irish ports to continental ports.

• Brittany Ferries had already opened a Rosslare/Bilbao twice weekly route and now introduced a weekly Rosslare/Cherbourg rotation. They have also added further services linking Rosslare and Cork with St. Malo and with Roscoff.
• Stena Line put two substantial ferries onto their Rosslare/Cherbourg route giving six weekly rotations instead of the three previously operated by a smaller vessel, the Stena Horizon. That ship currently sails as the Line’s second ship on the Dublin-Holyhead route but on Saturday’s sails from Dublin to Cherbourg, further reducing capacity on the Holyhead route. Stena have also reduced the service frequency on their Rosslare-Fishguard service to one rotation daily.
• DFDS launched a six rotations weekly Rosslare/Dunkirk route in January 2021. This has now been increased to eight times weekly with an additional vessel being brought onto the service. That vessel, like the additional Stena vessel on their Rosslare/Cherbourg service, operates in unaccompanied trailer only mode with cabin accommodation being limited to twelve berths.
• Irish Ferries have added 1.5 rotations a week to their Dublin/Cherbourg schedule. Their Cruise Ferry B. Yeats now sails every other day from Dublin while, like Stena, the company has taken its second Dublin/Holyhead service vessel off that route at weekends to make an additional round trip to Cherbourg. The Company has now chartered an additional Cruise Ferry which will enable them to open a Dover/Calais service in June.
• CLdN have added capacity and frequencies to their Dublin/Benelux and Cork/Zeebrugge routes with the latter service now running twice weekly. The recently introduced once weekly Dublin/Oporto/Santander Con-Ro service has been replaced by a twice weekly Liverpool/Dublin/Santander service. Later in 2021, following the delivery of additional vessels, CLdN plans to restore the Oporto link.

On the Lo-Lo container service side, Eucon added an extra vessel to their schedule of Ireland/Benelux services, Containerships opened a weekly Dublin/Cork/Dunkirk/Rotterdam service, followed by the introduction of a Dublin/South Spain four vessel operation giving twice weekly calls to Dublin, Liverpool, and Cadiz and once weekly to Cartegena and Valencia. Samskip opened a weekly Dublin/Amsterdam link.

On airfreight the integrators including Fedex and DHL continue to operate nightly services linking Irish Airports with their European hubs, and, through there, serving their global networks.

On deep-sea container shipping the main COVID-19 effect has been cause significant delays in cargo handling through ports. This has arisen due to staff shortages at the terminals and the inland transport services linked to them due to illness, but also delays in consignees taking cargo into store due to lack of warehouse space. This has all led to vessels having to wait offshore for up to a week at many ports in their rotation and leaving schedules completely disrupted. Due to the very large volumes of products being made in Asia for delivery mainly to European and US markets it appears unlikely that the delays and container shortages will ease very soon.

Looking ahead.

There are clear indications in discussions with the exporting and the importing communities in Ireland, that traffic volumes using the direct routes to and from the Continent will continue to increase as the complexities and costs of trading with Great Britain impact more strongly with the enhancement of Border Controls. Whereas for many years British located Distribution Centres serviced the Irish marketplace for goods coming from Europe and further afield, that pattern is now likely to broken and the distribution function for the island of Ireland moved to non-British locations.

The move to unaccompanied trailer freight.

In January much of the traffic that had been shipping “Landbridge” moved to direct ferry services on a driver accompanied basis. Most of the ferries being used have substantial passenger cabin capacity which enables COVID-19 restrictions for drivers to be met as there is currently no other passenger demand. As time has gone on many of the Hauliers involved have moved to shipping the trailers unaccompanied and partnering with transport companies into and out of the destination ports. Operating in this way will drive down costs, while tracking and other IT systems will enable cargo to be fully monitored and temperature etc. adjustments to be made while en route.

Though connecting rail or barge services have been available for some time linking the Ports of Zeebrugge and Rotterdam with the European hinterland, enabling unaccompanied trailers to move closer to destination in an environmentally friendly way, such services have not yet been put into place at Dunkirk and Cherbourg. Work is, however, underway to open such services to a wide range of destinations, initially a Dunkirk/Sete link to enable trailers access the DFDS Mediterranean services, while the port of Cherbourg, in conjunction with Brittany Ferries, is planning a “Ferroutage” shuttle route taking trailers to Bayonne on the Spanish border.

A move to Lo-Lo container shipping services.

The successful switch made by a significant number of high value product exporters from airfreight to Lo-Lo on US destined cargo has prompted Companies to re-think their supply chains for traffic moving between Ireland and continental Europeans consider the Lo-Lo option. Though Lo-Lo door-to-door transit times may be up to two days longer than a “Landbridge” truck would have been, exporters have been adapting their systems to accommodate this. Important drivers of this change have included the GPS track, trace, and cargo management systems in use throughout the journey, security of cargo in the container, the availability of 20ft containers for smaller loads, Groupage services, the ability to use an increasing range rail or barge on-forwarding services and, of course, significantly lower costs.

The Asian Rail connection.

A further factor, which is not Brexit related, is the rapid development of container rail services linking terminals at, or close to, Continental Ports with Asian destinations. Many of these services are showing annual traffic growth of up to 50% with good schedule reliability and transit times significantly faster than shipping services linking Asia with Europe. Full container and less than containerload (LCL) shipping rates being charged on these services are dropping as the carriers achieve greater efficiencies, including developing substantial eastbound traffic flows. Meanwhile, the serious capacity shortages on the Ocean shipping routes from Asia have been pushing up rates to, in some cases, five times what they were before the pandemic hit.

The case for a door-to-door intermodal freight route planner.

The development and promotion of a multimodal freight route planner for traffic shipping on the EU East-West corridor was a key component of the EUEIP European ITS Platform East-West Corridor project. The planner developed with the firm Ecorys Intermodal Links met the brief, and developed a significant level of usage, particularly in connection with traffic moving between Continental Europe and Ireland. The IEA has played a key role in this development.

However, the EU EIP project is not nearing completion and funding for the development of the route planner is coming to an end. We are in discussions with several agencies about the development of a tailor-made planner suited to ongoing Irish needs. As plans are being made for the development of a number of projects to be funded by the EU within the upcoming CEF 2 call, this planner is likely secure support.

Other EU related developments.

The European commission is presently engaged in the re-development of the TEN-T, Trans European Network, and the Motorways of the Sea programmes. These revisions should enable greater support to be given to Ireland related projects aimed at meeting the needs for improving connectivity with other EU Member States. DG Move will host a webinar specifically hosted on this matter on April 22^nd.

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