This time of year will always see extreme weather effecting freight operations in some parts of the world, and these past few weeks have been no exception. There was of course devastating news of a deadly crash of an Atlas Air cargo plane which was travelling from Miami. The plane was contracted to deliver loads from Amazon.com, killing the three on board. At the time of writing the cause of the crash has not been released, however it does appear that despite the plane’s movements to avoid weather conditions in its last minutes, turbulence did not lead directly to the crash.
This wasn’t the only fatal airline incident in the last few months, as two crashes involving Ethiopian Airlines and Lion Air have led to the grounding of aircraft. Australia, China, the United Kingdom and the USA are among the countries who have grounded the affected model of Boeing 737 for the foreseeable future whilst investigations into the two crashes continue. The 737 MAX 8s have seen controversy before and were similarly grounded in 2013 due to electrical issues.
Whilst the two named crashes did not directly involve cargo-laden craft, the grounding of these planes could have a significant impact on the air cargo industry, particularly in the case of smaller airlines for which the 737 MAX 8 makes up to 10% of their fleet. Cargo payloads on the affected aircraft can total anything up to 5,000 lbs of freight in addition to their service as commercial passenger planes. The hold space of a Boeing is commonly used to carry smaller international mail items, and there are expected to be some delays to e-commerce customers whilst airlines and shippers scrabble to find other jets to fill.
Back home, it has been a particularly turbulent month for the UK industry, as we tick down to the original Brexit deadline of March 29th. It looks unlikely that this will now be the day Britain finally leaves the European Union, however. The value of the British Pound (£) has been similarly unstable as a result.
Things aren’t looking too bad in Scotland, as Transport Scotland have called on Network Rail to grow rail freight in the country. The Industry Growth Plan for Rail Freight was officially launched on March 15, pinpointing four areas for the freight industry to improve so it could meet growth targets. The plans include upgrades to services which will include increasing both speed and reliability. 50 of the 600 freight trains which run across the UK each day operate in the Scotland area. Another significant development would be the electrification of the Edinburgh suburban line which would allow freight-carrying services to bypass Edinburgh Waverly.
And that’s not all for our friends across the Northern border: Scottish Power has announced its own investment into the country’s offshore wind supply chain, complementing the government’s newly-launched Offshore Wind Sector Deal. The deal aims to boost both the productivity and competitiveness of the supply chain, along with supporting export opportunities and overcoming barriers to growth. Such significant investment will lead to huge opportunities for growth and employment in the region, with logistics operations included at all levels of the supply chain.
Further afield, the M&A market is buzzing with news of late. Whilst some of the momentum has since fizzled out – talks between DSV and Panalpina have been ongoing since January, all but stagnating with latest developments focusing on reviewing shareholder voting rights – there is still plenty of exciting consolidation. Rhenus has acquired the Toronto-based Rodair, to significantly increase their power in the North-American region. The Canadian company were earlier this year selected as one of Canada’s ‘Best Managed Companies’, boasting a turnover of $15 million (USD) annually. In an interesting development, the CEO of Deutsche Post AG, who are the parent company of DHL, has reported that the giant will not be moving into the acquisitions market any time soon. In an interview for Bloomberg News, Frank Appel stated that the company thinks it is “better” to focus on internal developments and look to grow organically.
As some companies look to scale up, there has been some more shocking shut-downs already this year. New England Motor Freight were one such affected company, and a key player in the Middle-America LTL market. The company had seen two years of consecutive losses and had been suffering from the global shortage of drivers. Despite some industry analyst’s claims that this closure was an anomaly rather than a foreshadowing of 2019 trends, there are many who disagree.
One suspected agency of the closure is Amazon.com Inc. There have long been aspersions that the e-commerce giant will cause issues for any LTL provider who won’t handle its freight. This rumour has been compounded by recent comments made by XPO Logistics’ Bradley Jacobs (CEO), who named an unidentified customer as slashing two-thirds of its business with the giant. The loss of custom has resulted in $600 million losses in revenue for XPO over the remainder of the year. Although neither XPO nor Amazon would confirm the name of the customer, industry experts have suggested that only Amazon could be responsible for the level of business described, leaving other haulage operators wary of their future in the wake of the in-house Amazon Logistics evolution.
Sarah O’Connell, Senior Editor, FORWARDER magazine