Throughout the year in road freight logistics, trucks are being moved from one region to the other, as demand fluctuates depending on the seasonality in certain sectors. While it happens yearly, whether it would be the pre-Christmas shopping craze or the harvest season, demand for road freight exhibits spikes on certain months known as peak seasons.
For example, in Europe, in addition to the November-December shopping boom, there are harvest-related peaks. Shipping fresh fruit or vegetables from Spain, including grapes and in turn, wine, in late-autumn or moving freshly caught fish from Norway in late-spring and early-summer, to pinpoint a few examples, can be very profitable for carriers who transport these goods.
When it comes to the food and agricultural raw material industry, Europe’s (and the world’s) supply chains rely on relatively stable weather and mild temperatures in most crucial agricultural production zones. As climate change intensifies so do extreme weather events, which impact agricultural patterns and productivity, causing strain on the whole agricultural economy and food systems, and in turn, presenting the logistics sector with new challenges.
Weather impact on Europe’s harvests
As world leaders met in Egypt for the UN Climate Conference (COP 27) this November, the impact of climate related extreme weather events could not be more apparent. In 2021, Western Europe saw its worst flooding since records began and 2022 has seen record global temperatures, fires across Southern Europe and severe drought conditions. In fact, this summer, certain parts of Europe experienced the worst drought for 500 years.
The severe weather conditions have resulted in some sectors not only expecting low harvests but also having to adjust their harvesting seasons. For example, for Spanish grape growers, the extremely dry summer conditions have forced an early harvest – many had to begin harvesting in August instead of mid-September. According to the Ti, Upply, and IRU report, known as European Road Freight Rate Development Benchmark, “this caused greater than usual demand for Spanish road freight in Q3 but will also result in less than usual demand in Q4”.
Another of Spain’s top exports – olive oil sector also suffered from severe summer weather. Olive oil production in the industry’s main region Andalusia is expected to be roughly half of its five years average this harvest season, which starts in August and continues through to November. “We can expect the industry to demand a significantly smaller than usual volume of road freight, resulting in more than usual levels of free supply in the winter season thus easing price pressure on Spanish road freight rates,” the report explains.
Weather impact on other logistics sectors
As a result of the droughts this summer, water levels on some of the main European rivers dropped extremely low, reducing river freight capacity significantly across the continent and pushing demand onto road freight, which increased rates on some routes. For example, Q3 rates in Germany were pushed up by low levels on the Rhine, the country’s major trade artery that connects German manufacturers to the sea.
The record low water levels limited the capacity of ships on some parts of the Rhine River to a quarter of their usual freight, World Economic Forum reports. As a result, cargo ships were prevented from sailing fully loaded and operators had to impose surcharges. This came at a time when the Rhine and other rivers, such as the Danube, are needed to move high volumes of coal and gas to prevent energy shortages.
River freight is not the only sector being impacted by severe weather. The heatwave across areas of the UK resulted in part of rail transportation being cancelled and those trains that could run had to reduce speed. Once again, this led to increased pressure on road freight, as Kennedy’s Law reports.
The extreme heat damaged some road surfaces which had a knock-on effect on carriers transporting goods to destinations within strict delivery times. Not to mention that the heat also impacted temperature-controlled transport and storage, necessary for fresh produce deliveries, as equipment struggled to handle temperatures in the high thirties.
Why climate change poses a substantial risk to the logistics sector is that it is a long-term problem, expected to worsen in the coming years if no considerable action is taken to curb emissions. “A changing climate and the greater frequency and/or severity of hazards may increase disruptions in supply chains that interrupt production, raise costs, hurt corporate revenues, and lead to higher prices or shortages for consumers,” writes a report by the McKinsey Global Institute.
Other issues impacting Europe’s harvests
Europe’s producing sector has not been exempt from the negative influence of rising costs and inflation as well as the energy crisis resulting from the war in Ukraine. For instance, some of Europe’s apple producers’ greatest concerns in 2022 have been reduced production due to severe weather conditions and the price of energy. This summer’s heat has affected the size of apples, meaning a percentage of the fruit cannot be used, resulting in a lower volume of apple harvest than previously anticipated. Smaller harvests, in turn, are likely to translate into higher prices for consumers.
„Basically, the increase in energy and material costs, that is to say, packaging, cardboard, wood… All of this without forgetting that at times we are experiencing supply problems. But above all, the greatest concern lies in how to pass on these costs, because the producers work with very tight profit margins,” Alex Creixell, the Manager of Girona Fruits Costa Brava, explained to FruitToday on what the greatest concerns in the apple production market this year are.
According to Freshfel Europe, the European Fresh Produce Association, fresh produce businesses are „at risk of serious economic hardship, and even bankruptcy” due to the high energy prices combined with other rising prices of production inputs, services, and logistics. The fresh produce sector already operates within very tight margins and soaring energy prices add significant economic pressure on operators.
Energy is required for different purposes throughout the fresh fruit and vegetable production and distribution supply chain. For instance, outdoor production requires electricity for proper irrigation, indoor production requires temperature management and appropriate lightning. Various facilities, from packaging and storage to ripening, need to have certain levels of cooling and temperature-controlled atmosphere. Finally, logistics and transportation also come into the equation.
“The supply of fresh produce may decrease as growers go out of business, or leave products unharvested as they cannot store them. Production in glasshouses may be shortened to limit heating or lighting. Furthermore, lack of proper temperature control puts plants at risk of going dormant, decreasing harvest yields. All of this might impact a supply which is additionally increasingly impacted by climate change,” explained Philippe Binard, Freshfel Europe General Delegate, voicing the sector’s energy concerns to decision makers.
Fresh goods production requires flexibility
Today’s worldwide production of fruits and vegetables amounts to around 2 billion tonnes. As we have already established, the fruit and vegetable production process fluctuate according to weather conditions. And with weather changes, the capacity of production varies significantly, demanding more flexibility and adaptation in terms of road fleet. To plan ahead, fruit and vegetable producers need to not only secure special requirements for transport but also have in mind the changes in cargo volume and loading places.
“It is very important to have flexibility and capacity in terms of the fleet to pick up the cargo despite the changes in time and place. For instance, sometimes we receive an order update on the day of the loading, so we have to react instantly and adapt to the dynamic situations, not only different loading places but also timewise. With our refrigerators fleet, having an average age of just 2 years old, we easily accommodate changed plans and still deliver fresh and tasty fruits on time,” explains Sandra Senulienė, Head of Key Account Management at Girteka.
Photo credits @ Matt Buck/ Flickr