TRANSPORTATION

The transportation sector has been one of the hardest hit by the Covid-19 pandemic due to containment measures imposed by governments to curb the spread of the virus. Across countries, stay-at-home orders and the shutdown of ports, airports and train stations have taken a huge toll on the sector, although the sustainable functioning of transportation was key to maintaining a sound flow of goods and services. Global road (and rail) transport activity was almost 50% below the 2019 average and commercial flight activity 75% below 2019 by last July, before it started rebounding, albeit in a very subdued way. Even if road (freight) transport has been ensuring the supply of essential goods as well as a vast range of materials upon which consumers depend, that is not enough to offer a brighter outlook for the sector yet. Transportation businesses of all sizes have been hit by the pandemic and this unprecedented situation has resulted in the rapid deterioration of the liquidity and profitability of most companies, especially private SMEs, in the industry. The worst is for air transport which is grappling with a huge debt burden after a terrible FY 2020 in terms of profitability. Transportation by rail suffered a lot, too, last year but is expected to be back to a global pace of +6% at the horizon of 2025 on the basis of the economic momentum across APAC and North America, which account for 40% and 25% of the market, respectively.  

Maritime transport consists of the shipment of cargo and people (passengers) by sea, canals and other waterways. It accounts for 90% of global trade and is the main artery of international supply chains. The pandemic resulted in delayed ships, supply shortages and bottlenecks across supply chains along with a rise in inflationary pressures. However, as the APAC region has come back to its pre-crisis manufacturing level and North America wants its inventories of goods to be replenished, shipping companies have succeeded in passing on significant price increases to customers, especially transpacific container ones. All in all, it is clearly air transport that has been suffering the most from lockdowns, curfews or quarantines. While striving for bail outs once if not twice, airlines have scaled back their activity at the same time, resulting in significant layoffs. The goal is to curb their cash burn rate as much as possible since the emergence of new Covid-19 variants could offset the effects of massive vaccination campaigns across developed countries. From that point of view, the implementation of a global vaccine passport as a key to reopening all borders might not be enough in the middle run.