The slowdown of the global economy and the disruption of supply chains is causing economic challenges unthinkable a short time ago. Germany’s logistics sector shows its flexibility.
Airfreight capacities are being expanded
Especially hard hit by the corona crisis is the airline industry. In a move similar to that of other European airlines, the Lufthansa Group has cut its capacity by more than 90 percent and parked around 700 of its 760 plus fleet. Yet despite the current almost non-existent demand for air travel, the airline’s cargo division is flourishing and further expanding its airfreight capacity between Europe and Asia by adding over 50 flights to and from China.
On the ground, the situation is not so drastic. Nonetheless, according to the German Federal Ministry of Transport, freight traffic on German rail and road has fallen by almost 20 percent since the order to restrict social contact and close non-essential business operations in Germany came into effect on March 16.
Corona driving up parcel volumes
The majority of online retailers are also suffering from the effects of Covid-19. E-commerce sales were almost 20 percent below the previous year’s level in March according to the Federal Association of E-Commerce and Mail Order Business (BEVH). Most notably, March saw a drastic slump in online retail sales of books, electronic & telecommunication goods and clothing – down 14 percent, 21 percent and 35 percent respectively. In contrast, online demand in March for medicines boomed (88 percent increase); as did food orders (55 percent plus increase) and drugstore goods (almost 30 percent increase).
According to Deutsche Post, an average of 5.2 million parcels are normally delivered daily. Deutsche Post currently transports more than eight million parcels and packages per day – a volume similar to the pre-Christmas period. Because of the current high volume, Deutsche Post has proposed a temporary introduction of operations on Sundays.
Increased demand for storage space
Considering this surge, it’s not surprising that the corona crisis is also causing an increased demand for storage space in Germany. “For very high-demand products such as food or sanitary items, there is currently a very strong demand for additional space in the vicinity of production facilities or distribution centers with short term rentals of up to one year,” according to Frank Weber, Head of Industrial Agency JLL Germany. With the market favoring flexibility from all sides, owners do not want to remodel or modify existing rentals for the short term. “What matters most at the moment is speed,” states Weber. A current DVZ survey in the logistics real estate sector confirms this assessment, noting that food retailers and the medical sector in particular are desperately looking for storage space in the corona crisis for three to six months.