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Issue 7 2020 - FBJ Ireland


and that’s where c o ns tr ain ts


on cold storage and air freight capacity become concerns,” he explains. Another important question is


how quickly deals will be signed for contract manufacturing in different regions “so we won’t be overly dependent on supply chains stretched over lengthy


distances for distribution. Based on existing information, we will also see regional distribution of vaccines taking place, meaning that next to air, we will also focus on road freight cooler capacity.” To mitigate risks, tracking-and-


tracing and Internet of Things technology will play an important part. “It


is vital that we ensure product security throughout the


entire supply chain. Not only in terms of establishing and using validated temperature-controlled transport and storage solutions, but also in terms of managing risks such as theſt,” says ten Kate. During the Covid crisis, Agility


Ireland managed the transport of 100 million face masks, which involved chartering 20 commercial aircraſt


for flights


to Dublin on behalf of the HSE, Ireland’s national health service and 20 40HC containers to the US. When the Irish government asked for support, celebrities and multinationals stepped in to cover the cost of medical supplies, and Agility was called upon for its technical knowledge and on-the- ground handling. Upcoming Covid vaccine


Passenger demand in Ireland has fallen dramatically since the lock down in early March, reports said says Ian McCool, managing director of Dublin-based Irish general sales agent International Airline Marketing (IAM). Most carriers had dramatically


reduced or suspended flights into and out of Ireland by early April. The US closed its borders to non US nationals in late March and many other countries remain closed to non-nationals. But in the face of it all, some


carriers kept services going. Aer Lingus retained daily flights from Dublin to Chicago O’Hare and New York JFK. Qatar Airways held on to a Dublin flight to its Doha hub throughout the lockdown, despite substantially reducing its global schedules. By late April many carriers


had reinstated capacity as the demand for inbound PPE ramped up. Aer Lingus were operating up to five Airbus A330s


per day from Peking, mainly for cargo and with few or no passengers. Air Canada, American Airlines


and Etihad also introduced regular cargo-only and passenger flights into the market and this continued through the summer. American Airlines also operated a number of cargo only charter flights through April and May. However,


the scale of


the reduction in capacity is illustrated by the reduction from the 52 wide bodied planes ex- Dublin per week operated by IAM’s carriers in summer to just 15 a week in summer 2020 was had up to 15 wide bodies per day. “The market is changing by


the week as rates fluctuate and demand changes,” says McCool. “It is very unlikely that there will be a substantial increase in long haul passenger travel in the near future; thus the cargo contribution and yields have to


remain high in both directions, to keep the aircraſt flying. Many of our partner carriers operating ex-Heathrow,


Luxembourg,


Amsterdam, Frankfurt and Ostend have seen a dramatic increase in traffic ex-Ireland as the direct upliſt there remains limited.” He adds that the total


air


export market from Ireland was down by up 50% in April and May, but capacity was reduced over 90% and while both capacity and demand grew gradually


over the summer


months, it is still below 2019 levels. Although some global markets are back close to 2019 levels, overall export volume remains lower than 2019. It is not yet known if Ireland will benefit from any planned movement of the Covid vaccine. However, says McCool:


“There


are a number of companies manufacturing products such as anti-inflammatory and


anti-viral drugs such as Gilead and Regeneron. These are playing a big part in reducing the hospitalisation times of many serious case of Covid 19 infection.” A number of Irish and multinational companies have


demand, along with


///IRELAND changes


anticipated from Brexit, will likely require additional capacity, such as dedicated resources, quality and compliance, and infrastructure for safety stockpiles, adds ten Kate. “Next to the normal freight market, we see that the PPE and vaccine supply chain will become an integral part of the ‘new normal.’ More PPE is shiſting


changed manufacturing lines from medical or other machinery lines to the manufacture of respiratory equipment for global markets. These products are being shipped daily to hospitals throughout the world. However: “As Ireland is


to ocean now, and outbound locations are shiſting from China to other locations in Southeast Asia, Dubai and locally, but there are still concerns that PPE could be competing with vaccines for airfreight capacity in some cases. Once


vaccines become more


common and available, like flu shots, the situation will normalise again.”


home to 24 of the leading pharmaceutical and bio tech companies in the world, the chances are very high that Ireland will be part of the chain for the for final global distribution of a vaccine, at some stage of the battle.”


Calm before the storm for Dachser


“We came out of the blocks very quickly in January,” recalls Hickey. “Everything was developing as expected and we were feeling quite pleased with how things were going.” And then, of course, the Covid


crisis hit in March. “It’s been mind- blowingly difficult. I’ve been in transport for 40 years and I’ve never seen anything like this,” Hickey declares. Much business disappeared virtually overnight as the country quickly locked down, with just essential shops and petrol stations staying open. However,


for Dachser there


was a mitigating factor in that, as Ireland’s only road network able to handle dangerous goods, a lot of the material it moved – raw materials for the pharma industry or water treatment chemicals - were essential goods and traffic continued to flow. “That meant we did not have


to pull back any of our freight lanes and Dachser remained committed to its customers. We did have to move people off site, which meant that we lost a bit of productivity and everything was a bit more difficult. But we managed,” Hickey explains. Aſter a few weeks, the situation


eased, to the extent that Dachser’s July traffic was on budget and August actually ahead, mirroring the experience of most of the Dachser network in Europe. The company won another significant new piece of export business. It does though remain to


be seen what effect the Irish government’s re-imposition of a higher, level 3, lockdown in early October will have, although the measures do allow most of the economy to carry on working. Physical sales calls of course


cannot be carried on in the normal way and the process has had to be adapted to use online conferencing tools. Possibly another sign of the


changed times is the greatly increased number of tenders from potential customers that the Dachser team is currently working on.


believes


All in all, though, Hickey that Dachser


Ireland


“will be in a very good position for 2021.” The Covid crisis has however


distracted people from another event, one that until early this year dominated all conversations – Brexit. Dascher is though heavily focussed on the issue and has had a Brexit taskforce working on the issue for the past 2½ years. While Covid did take Brexit


off the table for a few months, interest has lately revived, says Hickey: “We’re now getting four or five calls a day from customers.” While Dachser Ireland has


always had a small number of shipments to non-EU countries such as Switzerland or Norway, it is setting up its own in-house customs department


to cope


with the expected upsurge in clearances.


Eight people have


already been recruited and the department should be up to around 16-20 by December. Indeed, Dachser’s customs


department has already notched up a major success as it has been contracted by a large retailer to handle all


its


import declarations. This will be a significant revenue scheme for Dachser although, as Hickey says, it is also a pointer to the huge cost of Brexit to the Irish economy as a whole – probably tens of millions of Euros. Irish


companies have also had a steep learning curve to surmount, such as understanding concepts like the power of attorney, tariff codes and so on. Dachser Ireland’s


management is planning for two potential Brexit outcomes. Firstly, if the Irish backstop is honoured by the UK government, Northern Ireland will in effect remain part of the EU customs union and there will be free movement on the island of Ireland, with a customs border in the Irish Sea. That is the outcome that


Hickey and his colleagues are hoping for, but the alternative outcome – which would be a “horror story”, he says – is that the UK fails to negotiate a trade agreement with the EU, that it ends up trading with the EU on WTO terms, the Irish backstop is not honoured and that there is a hard border between Ireland and Northern Ireland. Trade with the UK, which


accounts for 40% of Dachser Ireland’s business, would take the biggest hit, of course. Dachser Ireland would


however continue to use the UK landbridge to reach markets in the EU. While there has been talk of increasing the number of direct sailings between Ireland and Continental Europe, capacity is currently limited and even if unlimited funds were available to increase services, the sheer length of the crossing to the Continent would make it unfeasible. Given that the voyage from Ireland to France is at least five times as long as from Holyhead to Dublin, around five times as many ships would be needed to provide the same capacity.


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