COVID-19: Conclusions for German transport policy – Scientists support Ministry of Transport

Journal of Open ENLoCC, the European Network of Logistics Competence Centers
Issue 2020-1, Article 03

These days, the German Federal Ministry for Transport and Telecommunications has released a report “Conclusions for future transport policy based on lessons learned from the COVID-19 pandemic and its management”. The “Board of Academic Advisers to the Federal Minister of Transport and Digital Infrastructure” wrote the study. The board is a body of about 20 renowned transport and logistics professors from Germany and Switzerland, and it regularly presents the ministry with its expertise.

Right in the beginning, the board states: “It will not be possible to completely address or even solve the aforementioned issues in this brief opinion. Instead, some thematic fields considered to be particularly important for transport policy by the Board of Academic Advisers will be highlighted.” Whatever provisional, the European Review of Regional Logistics publishes an excerpt of the findings.

Freight transport and logistics

Initially, the lockdown in China caused a stopping of delivery chains from the Far East to Europa. This phenomenon became more widespread and intensified with every other country that closed its borders and ordered a lockdown. [ … ] Freight transport and logistics were at the same time affected by a supply and demand shock.

A typical characteristic of freight transport and logistics is the exposed position of delicate process chains in all modes of transport; in addition to road and rail freight transport, this also concerns air cargo transport, inland navigation, short sea shipping as well as the related terminals and warehouses. { … ] International freight transport and logistics systems have to be re-evaluated regarding their vulnerability against external interferences and their level of supply security.

Another severe long-term problem becomes apparent as the measures taken against the pandemic are maintained: the continuing and massive collapses of demand in many sectors. Freight transport and logistics serve a derivative demand and provide reserve capacities for a planned level of demand. For months, these capacities have been massively underexploited, in some cases by 40-50% and more. [ … ]

Competitive situation in the transport sector

The COVID-19 pandemic and the resulting restrictions of social life have far-reaching economic effects that, in themselves, entail drastic economic policy measures. Not all sectors and companies are affected in the same way; in particular company-specific recovery measures are not competitively neutral.

The Board of Academic Advisers is concerned that important providers of transport services could disappear from the market, leading to the diminishing of entire modes of transport. [ … ]

One or more research projects should focus on creating an overall picture of the economic and competitive effects of the crisis and the economic policy measures on the transport sector. What bankruptcies, mergers and shifts in market shares have taken place? Have new players entered the market? Have platforms (apps) gained increasing acceptance? What were the impacts of the temporary border closures?

Particular account should be taken of market segments where there is some degree of competition but where it tends to be endangered, or could in fact be endangered, namely, aviation, rail freight transport, local public transport as well as intermodal long-distance passenger transport (railways, long-distance coaches, aeroplanes, ride sharing). Furthermore, market segments with many family-run microenterprises (HGVs, inland navigation vessels, taxis), whose existence may be particularly threatened, should be monitored, too.

Looking ahead: crisis resilience in the transport sector

For freight transport, the following research fields should be analysed:

Flow of goods perspective

Do we need new storage, deployment and stockpiling strategies (scope, timeframe, location) for defined product groups that take into account the risk of breakdowns? How can we identify and dimension logistics nodes and freight transport nodes as crisis-relevant hubs in freight transport systems? How can we even better protect “critical infrastructures” whose failure or disruption would result in sustained supply shortages, major disturbances of public safety or other serious consequences?

Organizational perspective

[ … ] Among other things, appropriate governance structures and control processes for collaborative schemes, also taking into account regional competitors, and communications arrangements of private sector freight transport and logistics operators in crisis situations have to be identified. Research activities should finally cover the new economic-financial instruments of supply chain finance, which can ensure the prevention, mitigation and management of crisis situations.

Decision-making policy perspective

The general question arises how to shape the structure and control of political decision processes as well as the decision-making powers in breakdown situations. This has to take into account the typical tensions between federal state and federal regulation on the one hand and the freedom of action of businesses on the other hand. It also touches on the tension between government interventions in the sense of the obligation to provide public services and negotiated market solutions in the business sphere. Research should address the potential and shaping of obligatory crisis management systems in freight transport and logistics systems as precautionary instruments for the safety of staff but also for the maintenance of supply security.

Digitalization perspective

As a condition for efficient freight transport and agile logistics, resilient as well as clear communication and decision-making processes are essential. For this purpose, research on digital platform organizations for demand-oriented freight distribution, automation of the data provision through digital communication sensors as well as AI-based pattern recognition for the prevention of bullwhip effects in supply chains using demand chain management and data analytics should be carried out. This should result in digitalization-oriented research projects to initiate, assist and support a digital test bed for crisis management in freight transport and logistics.