U.S. Travel Ban and Its Impact on the Logistics Sector
US President Donald Trump suspended all travel from and to Europe on 13 March, and many European logistics providers wonder whether cargo will be affected.
What Trump Said about Cargo
Initially President Trump announced that the restrictions also apply to cargo shipped from Europe to the United States. He then tweeted to say that the suspension does not apply to freight and trade and only to people. He also clarified that the free flow of goods between the EU and U.S. is an economic priority. His initial comment that cargo falls under the travel ban caused anxiety and confusion among foreign officials and business lobbyists. Such a ban on transatlantic commerce could deal a big blow on the global economy.
It still remains unclear how cargo planes and ships coming from Europe will be treated once they call or land in the U.S. Some experts point to the fact that cargo from China was not affected during the coronavirus outbreak that started in Wuhan. Others remind that Washington already made steps toward limiting the volume of European imports. The new travel ban may make it more difficult to reach a compromise.
How Will the Travel Ban Affect Air Freight?
The 30-day suspension of travel from Europe could have a serious impact on the shipment of commodities. This is because large volumes of air freight are shipped on passenger planes. The reduced demand for travel to the U.S. will drive shipping rates up.
Air carriers already suffer huge losses as they cancelled thousands of passenger flights and are flying at reduced capacity. Flights have been cancelled because of travel restrictions to countries such as China and Italy as well as reduced demand.
According to WorldACD, major cargo data provider, over 60 percent of air cargo between the U.S. and Europe is shipped on passenger planes. Cargo includes small shipments such as electronic items as well as medical supplies, pharmaceuticals, and e-commerce. Given the large volumes of airfreight, the suspension of travel will result in a significant drop of capacity.
According to industry group Airforwarders’ director Brandon Fried, airlines are forced to cancel flights because of a significant reduction in traffic between the U.S. and Europe. Essential cargo is also shipped on passenger flights, however, and freight forwarders depend on air traffic, Mr. Fried said. Passenger flights carry shipments of all kinds, from machine parts and electronics to medical equipment, tissue samples, organs, and pharmaceuticals.
The new travel ban restricts travel from a total of 26 countries, the only exceptions being Ireland and the U.K. In 2019, airlines performed some 200,000 flights between EU Member States and the U.S., equal to about 550 flights a day. In view of the complex situation, the International Air Transport Association warned governments that they should prepare for the economic impact associated with such restrictive measures. Restrictions are said to have a serious and immediate impact on production capacity, driving market rates up.