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14


Issue 7 2020 - Freight Business Journal


Weathering an unseasonal storm


Spain and Portugal have had a summer like no other – and for all the wrong reasons. But while the Covid crisis may have reduced tourism to a trickle, trade in the Iberian Peninsula has stayed surprisingly resilient.


///IBERIA


Spain and Portugal economies feel the pain


Spain has felt the pain of the corona crisis more than most other EU countries, medically and economically, with Bloomburg putting the country’s drop in output at a record 18.5%, the sharpest fall reported so far in Europe. The European Commission


was also predicting in its Summer 2020 Economic Forecast


that the country’s


economy would contract by 10.9% in 2020 - a larger fall than even the 9.4% predicted in its Spring forecast. It is also well north of the 6.25% fall predicted for Germany, one of the Eurozone economies that has come out best in the crisis. Spain was one of the earliest –


and most severely hit countries. It is also highly dependent on international tourism, which has been largely been at a standstill throughout the lockdown. Bloomburg adds that the Spanish economy was also particularly affected by the crisis because of the relatively small size of its companies,


which leaves them more vulnerable and less capable of effectively responding to economic shocks. It says that business associations expect tens of thousands of small and medium-sized companies to go bankrupt before the end of the year. Bloomburg


adds that the


hardest-hit sectors were retail, transport, restaurants and bars, which together plunged by 40.4%. Focus Economics said that


the travel and tourism industry will “reel” due to the collapse in visitor numbers. Ominously, it added that there was “a heightened risk of permanent damage in the all-important sector”. Focus Economics’ own


panel of experts foresees the economy shrinking 11.5% in 2020, before growing 7.1% in 2021. It says that both private consumption and fixed investment plummeted, while exports collapsed by roughly a third. Unemployment


also


Portugal fared rather better than its neighbour,


with Euractiv


putting its economic shrinkage at no more than 7% in 2020. While also heavily dependent on tourism, the government has put in place an economic and financial stability programme. While not on the scale of


Spain‘s malaise, the 6.9% predicted fall would be the “biggest contraction registered in recent decades”, it said. Focus Economics put


Portugal’s fall in GDP at 8.9% in 2020, before climbing 5.8% in 2021. It’s all in sharp contrast


spiked to a two-year high, which still did not fully reflect the blow to the labour market since over two million workers had been put on temporary furlough or had simply dropped out of the labour force.


Portugal fares better Medically, Portugal suffered


less from the virus than Spain but its export-oriented economy and reliance on tourism for nearly 15% of GDP inevitably led to heavy losses, says Euractiv. The number of overnight by


stays foreign tourists


in Portugal dropped by a whopping 98.3% to just 71,000 in April from the previous year, according to official data. The unemployment rate,


which had been falling as Portugal slowly recovered from the debt crisis, could go back up to around 9.6% this year and 8.7% in 2021. Exports are also expected


to fall, dropping 15.4% this year and 8.4% in 2021 due to the pandemic, according to the government. However, what goes down


to


Euractiv’s pre-Covid forecasts, saw 2.2% growth year-on-year in 2019.


must come up – eventually - and Portugal’s economy is expected to return to growth in 2021, with the country’s gross domestic product expanding 4.3%, Euractiv predicts.


Air charterer lives in interesting times


Staff at Air Cargo Service have had very little rest during recent months. Spain was one of the fi rst countries in Europe to be hit by the Corona crisis and the airfreight industry was in the front line of the rush to get PPE into the country. And when there is heavy demand for capacity on scheduled carriers – coupled, as it was in this case, by the near disappearance of much of that space – shippers turn to charter brokers like ACS in the frantic search for planes. Chief executive of ACS’s


Madrid offi ce, James Fitzgerald, snatching a brief few minutes from his hectic schedule to talk to FBJ in mid-September, said: “We have three people in the offi ce here, and they have worked stopped non-stop for three months. I’m massively proud of what they have achieved, playing a key role in getting much needed product into the country.” It’s certainly been an unusual


year for ACS. The number of fl ights in March was down sharply as automotive and project freight dried up during the crisis but the tonnage handled into


Spain and Portugal massively increased – almost all of it PPE, says Fitzgerald. In fact, he recalls, “about 40% of all PPE charters into Spain were our aircraſt . We have long term contracts and we were able to bring our infl uence to bear on the big carriers to give us availability, so we still able to fi nd main deck capacity, as well as on passenger aircraſt put into service as freighters.” ACS’s share of the smaller


Portuguese market was proportionately even greater. It wasn’t easy, though. The


fragmentation of capacity and the pressing into service of passenger aircraſt to carry cargo – on the seats and in the cabin as well as the bellyhold – meant that shipments had to be split up and reconciled aſt erwards. Handling problems and shortage of capacity at Chinese airports meant it was oſt en touch and go whether an aircraſt could be loaded or not. In Spain itself, many handling


agents were forced to furlough their staff , in the face of a sharp downturn regular


in activity, 15 >>


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