This content is relevant for:Transport and Logistics / Coronavirus / E-Commerce
While other transport sectors around the world have been dramatically impacted by the global coronavirus pandemic, operators in the logistics sector have enjoyed a boom year. Deutsche Post DHL earnings before interest and taxes (EBIT) rose to a record EUR 4.8 billion in 2020. Group revenue grew by five percent to EUR 66.8 billion during the crisis, with Deutsche Post DHL benefiting significantly from the rapid growth in e-commerce activity. A dramatic upsurge in container business has similarly seen shipping company Hapag-Lloyd increase its pre-tax profits by 60 percent to EUR 1.3 billion. Lufthansa’s air cargo division is also flying in profit, partly due to the reduction in airfreight transportation on regular passenger aircraft.
China was the only major economy in the world to record growth last year, with gross domestic product up 2.3 percent compared to 2019. According to the Beijing customs authority, exports increased by over 18 percent year-on-year in December, with imports also rising by 6.5 percent in the same month. The country’s strong economic showing is creating a cautious mood of optimism among European exporters keen to benefit from the Asian trade giant’s recovery from the Covid-19 crisis. At the end of December, China and the European Union also concluded in principle the negotiations for an agreement to improve market access and ensure competitive conditions for EU investors in China.
These developments and the boom in rail transport to and from China created by the Covid-19 pandemic provide further reason for optimism in logistics. In 2020, more than 12 thousand trains – carrying goods with a value of USD 50 billion – ran the New Silk Road rail route between China and Europe. Rail freight has taken market share away from the ocean-going vessel sector, which leads Asia-Europe trade in terms of volume. According to Eurostat, rail freight between Europe and China accounted for 1.4 million tons and 0.9 million tons in imports and exports respectively. The main route of the new Silk Road connects northeast China via Xi'an and Beijing and the south of the country via Chongqing with Europe and the central ports of Duisburg and Lodz in Poland. According to DB Cargo, the route – which sees protective masks, car parts, electronics and coolants currently roll through Siberia – should break the half-million container unit mark by the middle of the decade. The increase over the past year is part of a longer trend that has been accelerated by the coronavirus pandemic.
A dramatic reduction in air transport capacities caused by the loss of regular passenger flights, less sea freight capacity from east to west, increased complexities of border crossings and Covid-19 rules in overland transportation provide an even greater window of opportunity for rail freight from China.
Germany’s domestic logistics sector has also benefited from increased demand created during the coronavirus year. Germany’s e-commerce market generated goods sales of more than EUR 83 billion in 2020 – equivalent to a 14.6 percent increase compared to the previous year according to a study published by the German Federal Association of E-Commerce and Mail-Order Trade (bevh). Domestic parcel services in Germany handled a record volume of around 775 courier, express and parcel (CEP) shipments during the Christmas 2020 season of November and December. The B2C parcel shipment sector proved to the main driver, with 15 million more shipments – up to 435 million – in 2020 compared to the same period in the previous year. The shift away from stationary trade to direct shipping – created by Covid-19 lockdown restrictions – has been a significant contributing factor to this upsurge in demand, which is creating new opportunities for logistics and third-party logistics providers.
Companies interested in expanding to Germany can contact the Germany Trade & Invest team for more information about opportunities in the country’s thriving logistics sector.