The reports, entitled Focus on Sectors 2020 and developed by the Department of Business, Enterprise and Innovation, cover a range of areas including, transport, logistics, construction and retail.
Commenting on the reports the Minister for Further and Higher Education, Research, Simon Harris said: “Covid-19 continues to wreak havoc on society and the economy. The full extent of the impact of the pandemic on global and national economies continues to unfold and it is still too early to fully assess the medium-to long-term implications of COVID-19. These reports give us an insight into the issues being faced by different sections of society. The Government’s wide-ranging suite of supports totalling almost €20 billion will be of most assistance to the most heavily impacted sectors and support businesses in those sectors to resume activity while operating under the constraints demanded by public health requirements. My Department also has a role in helping businesses to adapt to the changing market, to help people retrain and upskill in areas of critical need. The July stimulus was the first step in assisting people but we will continue to help businesses grow and become sustainable in this Covid world.”
Excerpts from the Report
Impact of COVID-19 in the Transport & Logistics Sectors
- While passenger and freight transport is largely carried out in separate vehicles, about 50% of global airfreight is carried in the belly hold of passenger aircraft, and significant volumes of RoRo freight in and out of Ireland is on carried so called RoPax ferries. COVID-19 has had a bigger impact on combined passenger/freight transport because passenger numbers by both air and sea have been decimated. The current mobility and activity restrictions around the world are likely to result in a strong reduction of global freight transport volumes in 2020 of more than one third. Overall, freight transport, measured in tonne-kilometres, is projected to be 36% below the level foreseen without COVID-19 for this year.
- The first half of 2020 could see a 25% reduction in shipping, with a 10% annual fall in 2020.
- Freight transport within cities can expect to be hit significantly less hard than national and international goods transport. Updated projections see urban freight activity at 8% below the estimate that did not yet reflect any impact from COVID-19 due to the growth of online shopping.
- More generally, all supply chains are being affected by the need to ensure additional health and safety measures for all participants in the supply chain (which affect costs and time).
- Maritime passenger movements are down 95% and freight volumes down by approximately 40%.
- In response to a near collapse in ferry passenger numbers, Government approved the temporary designation of five strategic maritime routes as PSO routes for a period of up to three months and at a cost of up to €15m.
- Every enterprise in the aviation value chain, with the sole exception of dedicated cargo operators, have seen severe depletion of business and are facing various degrees of financial challenge.
- There are significant impacts too on the wider aviation value chain with airports, airlines and their suppliers all having to down-size and reduce their workforce. Public transport revenues have been severely impacted with consequent pressures on PSO funding.
- Shrinkage in the overall volume of goods moving across Europe and wider has placed businesses or cash flow problems, due to overall drop in freight volumes and closure of end chain businesses may see some hau-19 pandemic has also been reported by the Irish Road Haulage Association (IRHA) and there have been similar reports across Europe. As sectors begin to re-open both here and across Europe, the demand for goods should begin to rebound toward more traditional levels.
- In Europe, air traffic movements fell to 10% of comparable traffic last year but is now recovering around Europe as travel restrictions are being removed.
- Passenger air traffic in Ireland fell to around 1% of what might be expected but the return to normal operations will take longer in the Irish market as travel restrictions remain under review. This will continue to impact air cargo capacity as much of Ireland’s air cargo is carried in the belly-hold of passenger aircraft.
- Despite this, air cargo supply lines have remained robust throughout the crisis, but escalated costs are being reported across the sector.
- All of the major providers of aviation services spanning airlines and airports have begun the process of implementing downsizing measures of at least 20-25% of the workforce.
- Aer Lingus announced on 19 June that it has formally notified the Department of Employment Affairs and Social Protection regarding proposed collective redundancies at the airline. It is understood that 500 redundancies are being sought. Ryanair has also cut its workforce at its Irish HQ by 240 employees and CityJet is currently in examinership with 400 jobs at risk.
Issues, Opportunities and Challenges for the Sector
- The prolonged disruption of Ireland’s air connectivity with the rest of the world could impact on our competitiveness in the FDI sector due to uncertainty around the robustness of our supply chain and the demand for both freight and passengers cannot continue indefinitely. It is unclear for how long this reduction in demand can be sustained by the marine and maritime sector without an impact on overall service levels. The maritime links is dependent over time on a return to passenger numbers.
- Where air services are suspended, re-activation is not automatic as restrictions are lifted. Developing services to particular markets particularly long-haul is a long-term investment and some of these hard-won routes may be lost for some time.
- The international transport sector makes investment decisions based on a long-term view – where financial risks associated with substantial capital costs are spread over time based on projections around the socio-economic context in which they operate. In the context of wider economic uncertainties for the sector, the current lack of clarity as to when Ireland will be in a position to facilitate a return to overseas travel presents a significant challenge for the sector.
- The prospects for the transport sector will be determined by the pace of, and extent to which, economic and social activity returns as well as by the supports necessary to sustain it.
- There has been growth in the e-commerce driven logistics and delivery industry. Companies in Ireland have increased headcount during the pandemic. Some elements of the sector are doing very well due to changed consumer buying behaviours.
- Supply chains may come under additional pressure in the event of a hard Brexit and additional supports may be required for the transport/logistics sector including customs facilitation and PSOs.
The sectoral reports are available to view at Focus on Sectors 2020