Global pandemics and transport systems in an age of disruptions

The Coronavirus is the most recent in a list of global pandemics – and it is the most impactful. The human and economic costs of Covid-19  go far beyond those of Sars, the Swine flu or Ebola. Its immediate impact on transport activity has been nothing short of dramatic. Will it also change human mobility and freight transport in the long run?

By Francisco Furtado

Arriving passengers are tested for Coronavirus symptoms at Bologna airport in Italy | Source: Shutterstock

It is still early in the cycle of this global pandemic and care needs to be taken not to draw rash conclusions. But some of the striking effects of the Coronavirus on transport and related sectors are evident.

Air travel demand decreased for the first time in a decade from mid-February, according to estimates by IATA, the global association of airlines. In the Asia-Pacific region, air travel is forecast to fall by 8.2% in 2020 compared to 2019. Worldwide, the sector will shrink by 0.6%.

The bulk of this reduction is associated with the domestic Chinese aviation market, which is set to contract by USD 12.8 billion in 2020. Foreign airlines reduced capacity for flights to and from China by 80%, and Chinese airlines by 40%, according to ICAO, the UN aviation body.

More container ship tonnage is idle now than during the global financial crisis. Port operators in China say that volumes for container shipping were 20 to 40% less than last year. On the land side, warehouses and factories are unable to receive or send goods as imposed quarantine exacerbates the existing shortage of truck drivers.

Cancelled and postponed

Supply chain disruptions have led to factory closures and the shutting down of assembly lines – from Hyundai in South Korea to JCB in the United Kingdom – mainly because of the cessation of activity in China and the lack of components sourced from there.

Tourism is another highly visible victim of the Coronavirus. Up to 90% of tourism-related bookings for March are cancelled in some parts of Italy. Preliminary estimates for France point to a 30 to 40% drop in the number of tourists compared to what would be expected for this time of the year. The practically complete absence of Chinese tourists in Europe since the outbreak of Covid-19 points to lost revenue in the order of EUR 1 billion per month.

Rail passengers wearing face masks in Bangkok, Thailand | Source: Shutterstock

The cancellation and postponement of events worldwide has hit big-ticket meetings from the Mobile World Congress in Barcelona, the Paris and Milan Fashion Weeks, or the US-ASEAN summit in Las Vegas. The cancellation of the Berlin Tourism Fair ITB, scheduled for early March, meant 160 000 expected visitors did not travel, use their hotel rooms, or visit the German capital’ s restaurants. Where organisers maintain events, attendance drops dramatically as big employers like Amazon take steps to limit staff travel.

Will things get worse?

Much of this activity should pick up towards the end of the year. To what extent that probable resurgence can make up for the first-quarter plunge is an open question. Some of the above figures, for instance for the aviation sector, were published before the virus reached Europe and other regions outside China. So while they take into account the impact on China, the effects of the global spread of Covid-19 are not yet included. Worse may be to come.

The economic impact was most vividly reflected on the stock markets. The week of 24-28 February was the worst week for stocks since the 2008 crisis. Covid-19 could shave 0.5 percentage points to 1.5% of GDP growth in 2020 compared to previous estimates according to the OECD’s Interim Economic Outlook published on 2 March. In a more severe “downside scenario” global economic growth would halve.

Unlike 2019, NO2 levels in Wuhan did not rise after Chinese New Year | Source: NASA

Nasa images show the dramatic extent to which transport activity and industrial production came to a grinding halt across China – not just in Wuhan province – as drastic anti-virus measures were put in place. The levels of nitrogen dioxide (NO2) in the air were 10 to 30% lower in January and February 2020 than the average of the same period for 2005-19. Such a dramatic drop across such a vast area has never been registered before – an indication to how much drastically reducing transport and industrial activity can impact emissions.

Figure 2. Pollutants in early January 2020 across eastern and central China compared to mid-February

Pollutants across eastern and central China in early January and mid-February 2020 | Source: NASA

Are telework and virtual meetings the new normal?

The contraction of transport activity is twofold: Right now, restrictions on travel and voluntary cancellations of trips compound the impact of reduced economic activity that is beginning to be seen. Later, when transport activity resumes towards the second half of 2020 – which is not a given – the bounce back to compensate for the earlier stoppage might lead to congestion on certain nodes of the transport networks, with increased costs and travel times as a result.

Most likely, Covid-19 will also have more long-term effects on transport systems and the demand for their services. Widespread cancellations of business trips and global events could drive the wider adoption of remote meetings and virtual conferences. Rather than an exception, virtual attendance might become a standard practice or even the norm. Improved digital connectivity and changing corporate cultures could work in the same direction.

The same is true for teleworking. The cost to organisations of having staff members in quarantine to contain the spread of Covid-19, is being considerably softened where those concerned can telework. The likely effect is that this form of work will become more widely accepted, reinforcing an already existent trend.

Will virtual meetings become the new normal?

A boost for re-shoring and resilience?

The tendency for nations to trade relatively more with countries of the same region than with the rest of the world is another trend this health crisis could reinforce. The disruption caused to supply chains by events on the other side of the world highlights security, safety and strategic concerns associated with off-shoring industrial production. The 2008 crisis triggered a rise in protectionism and the regionalisation of trade. In recent years, shutdowns of factories resulted in shortages of components “Made in China”, resulting in a push for the diversification of supply sources, including re-shoring.

A third relevant issue for which the pandemic could become a turbo-charger is resilience. The interest in strengthening transport networks’ ability to absorb shocks, deal with slumps and peaks, or to adapt to shifting trade flows was originally stimulated by extreme climate events, such as the 2004 Indian Ocean earthquake and tsunami. The rise of global trade disputes in recent years further nourished it.

Resilient transport networks feature different transport modes that can be used alternatively, they offer multiple route options to circumvent stoppages, and possess built-in flexibility –  for instance to easily mobilise resources to deal with activity peaks and repurpose them for other needs during slumps. More resilience reduces the costs of shocks to the system and increase safety and security of supply – but it also comes with a price tag.

There is still a great degree of uncertainty about this pandemic’s long-term legacy with regard to the mobility of people and the transport of goods. What emerges more and more as the situation evolves is that it could be significant and long-lasting.


Francisco Furtado is an Analyst and Modeller at the International Transport Forum. He is currently working on a project on Decarbonising Transport in Emerging Economies.


Read more about disruptions to the transport system in the ITF Transport Outlook 2019

My year of train-bragging

In 2019, ITF shipping expert Olaf Merk decided to live up to his own recommendations on cutting transport CO2. So for all his professional trips, he tried to avoid air travel and use the train instead. Did he manage, and what did he learn?

By Olaf Merk

For many years I was a frequent flyer, with an average of 35 trips annually. Then three things happened: Greta showed how to walk the talk; I had an accident that made it impossible for me to take a plane for four months; and Paris suffered a record heat wave that once again illustrated the urgency.

It was time to live up to my own recommendations. As a transport expert, I have been advocating drastic reductions of transport CO2 for a long time.  Now I decided I would no longer take the plane for travels within Europe.  And so, of the 17 international trips I took for my work in 2019 (of which 16 were within Europe), I made 13 by train.

What did I learn from this?

Welcome to your comfort zone

The first lesson: taking the train instead of a plane is not that hard. Expect more space and more freedom to move around. Some trains also have very pleasant dining cars. On a more metaphysical level, train travel offers the feeling to be connected to the countries that you cross. You are actually travelling, not just being moved from one place to another.

Of course, a train ride often takes longer. To get from Paris to Copenhagen took me 15 hours, and 11 hours to Rome. The links could be faster – astonishingly, relatively few European capitals are directly connected by rail connections.  

And there are quite a lot of weak links: taking the train to Copenhagen meant in practice taking three different trains, a ferry and a bus. It would have taken me two full days to get to Tallinn by train and bus from Paris, so I decided to fly instead. My excuses for the other non-train trips also somehow illustrate the vulnerabilities of train travel: a national strike and flooded rail tracks in southern France.

Travel longer, lose less time

Trains take longer, but I did not have to waste time going shuttling to and from airports. For obvious reasons most airports are located outside most cities, far from where you need to be, whereas train stations almost always lead directly to city centres. No need either to factor in time to work my way through gigantic airport shopping centres.

Changing trains is also less time-consuming than changing plane, too – not to mention that trains (usually) don’t require queuing at the security check or for boarding. Of course a ten-hour train journey wears me down. But, on balance, I find it is less stressful than air travel. The prospect of spending more than a working day travelling – even if you can actually work more effectively during train travel than during flights – makes you think twice whether you really need to make this trip, or whether tele-conferencing would not be a better option.

The price is not right

Lesson number three is that the price is not right. The main drawback of train travel is that it is often more expensive than travelling by plane. There are some noticeable counter-examples, but not enough. And as an employee, I am obliged to pick the most economical travel option – and in that logic, train travel involves extra costs that the organisation I work for needs to avoid. The same is the case for many other organisations.

I paid the difference in price between the train ticket and what an airline would have charged me. But I fear we cannot depend on the altruism of frequent flyers to see a massive shift to rail.

Bragging is contagious

The nicest part of train bragging is that it is contagious. There is a whole online community of co-braggers that are more than happy to support their peers. And so your example might well inspire others. I was excited when a German executive told me about his own shift to train travel a few months after I had shared with him my own conversion. All these small behavioural changes are starting to become visible at the macro-level: in countries like Sweden and Germany, air travel volumes in 2019 were down.

Yet, not everyone was equally enthusiastic: I also encountered sceptics when I outed myself. Some denied that planes have bigger carbon footprint than trains. Just to get this out of the way: in almost all circumstances, train travel is less carbon intensive than air travel. In the parts of Europe where trains are still dirty, they can be electrified; and electricity is becoming quickly cleaner in Europe. This in contrast to aviation: there are no immediate solutions to reduce aviation emissions except reduced demand. The most direct option that frequent flyers have to limit their carbon footprint is to fly less and shift to rail travel.

Picking up speed

What is my personal conclusion? Employers should encourage staff to travel less, and if they have to travel, travel by train. The costs of greenhouse gas emissions should be taken into account in the price comparison of travel modes, not as an afterthought via a carbon offset from a separate budget. Ideally, it should also cover other climate change impacts, such as radiative forcing, high for aviation. Employers should also make sure that flights for work reasons won’t be counted towards personal frequent flyer cards, which will incentivise their staff to fly more.

Train operators can also do better. More attention to customer service rather than on stacking as many people as possible in a train will make train journeys more attractive. They can improve service in train stations for frequent travellers; maybe develop a pan-European frequent rail traveller programme. There is huge potential in better integration of rail services with airports and aviation networks, too. Some airlines have started to realise this.

Competition among railway operators also helps, as do governments committed to a modal shift towards rail. They should accelerate the upgrading of missing links: I found Hamburg-Copenhagen, Lyon-Turin and railway connections to the Baltic states a pain. In parallel to investing in high-speed rail, governments should close loop-holes that keep the price of flying so low – aviation fuel, for instance, is not taxed at all.

If I can take the train most of the time, I guess almost everyone else can. After one year of bragging I know one thing for certain: The train with destination “low-emission transport” has left the station. For now, its pace is accelerating but still too slow. Together we can turn it into a high-speed train.

Subsidies in Aviation: The elusive flight towards fair competition

aviationby Alain Lumbroso

Subsidies in aviation are almost as old as air transport itself. Most if not all countries at one point or another have provided public funding to some parts of their aviation value chains, be it air carriers, airports or air navigation services such as air traffic control.

This year, much attention has been focused on three Gulf carriers. Their strong growth and increasing market share, especially between Europe and points east and south, has generated concern from competitors that they are being unjustly subsidised and thus distorting the marketplace. Is this a legitimate concern or simply old-fashioned protectionism?

Although each side makes an eloquent case in the ongoing debate, some arguments do not pass muster. For example, while operating in a labour union-free environment can certainly reduce costs, it is by no means a subsidy. Airports the world over receive generous public subsidies which are passed on to their customers, the airlines. Although airlines who hub at a subsidised airport benefit most from the subsidy, it’s tenuous to affirm that a specific airline gets a subsidy and not others. Likewise, benefits accorded under US bankruptcy laws to any company that places itself under its protection should not be considered a subsidy, nor should provisions in competition law that permit the issuance of anti-trust immunity to help companies perform better together. A key point to remember here is that sovereign jurisdictions have the right to set their own labour, fiscal, bankruptcy and competition policies and legislation and, of course, as they vary country by country, they will confer comparative advantages or disadvantages to companies operating in those countries.

As accusations fly back and forth, it’s worth considering what actually constitutes a legal subsidy in aviation. Or what constitutes a balanced and fair competitive landscape, often referred to as a “level playing field”. Or fair competition for that matter. Unfortunately, none of these terms are actually defined for aviation, and simply adopting a commonly-accepted definition from other sectors may be an effective intellectual shortcut but has no basis in law.

What constitutes an acceptable subsidy is clearly defined for other industries. For example, the General Agreement on Trade and Tariffs defines what a subsidy is for the international trade of goods, but it is mute on what constitutes a subsidy in air transport, or any other service for that matter. The General Agreement on Trade of Services has so far failed to define what constitutes a subsidy and, in any case, specifically excludes air transport services from the agreement. Thus, reasonable people can disagree on what constitutes fair competition, especially when no competition law is broken.

The Chicago Convention of 1944, the key legal foundation of international aviation, speaks of equality of opportunity but not equality of outcomes. In that respect, operating in a low cost, low-taxation, non-unionised environment is opened to all airlines operating in the Gulf, with the local carrier benefiting the most simply because it has a higher concentration of flights there. The Chicago Convention only makes a single mention of subsidies, in Article 54i, where it tasks the International Civil Aviation Organisation (ICAO) Council to collect and publish information about public subsidies in aviation but fails to put an obligation on countries to report them or to set any kind of boundaries as to which type of subsidies are permitted and which are not.

While much focus has been on monetary subsidies, one cannot discount the impact of public policies and how they can favour domestic carriers. A prime example of this is how nearly all countries in the world outlaw cabotage, meaning that the domestic market is reserved for domestic carriers only, or, in the EU, that the intra-EU market is reserved for EU carriers. This can be a significant advantage for US, EU, Chinese, Japanese and Canadian air carriers, while remaining meaningless for carriers from smaller countries. A second example is how a number of countries negotiate air services agreements in a way to try and favour their home carriers rather than simply improving connectivity for travellers and shippers. Defending the interest of national carriers can arguably be a reasonable policy goal, but such a policy does have a very positive value for home carriers which does not show up in any accounting balance sheet.

Finally, one should note that most countries inject some sort of public funding into international aviation and that there exists no law, convention or treaty that forbids it or sets boundaries for country interventions, with the exception of the EU which has a legal framework for State-Aid of the air transport sector but applies only unilaterally to EU member countries, airlines and airports. While much of the attention has been on two countries and three carriers, most if not all countries have a rich history of public financing of the air transport value chain which continues to this day. Applying the remedies suggested by the Partnership for an Open and Fair Skies to all countries who have financially supported in some way their air transport industry, including the US, would significantly dampen efforts to liberalise global aviation and curtail the benefits that come from operating in an open and free market. And even when all public funding has ceased, the stock of subsidies has enabled the creation of the same global carriers and global hubs who are today calling for an end to subsidies in order to restore fair competition to the air transport industry.

So what could be done? Three things:

  1. In the absence of a clear legal framework defining acceptable and unacceptable behaviour, the first step is somewhat obvious: defining rules of conduct of what actually constitutes fair competition. Most likely through the auspices of the ICAO, countries must first define what is an acceptable and an unacceptable subsidy, a concept that right now is left wide-open to the interpretation of parties with a vested interest.
  1. Countries should agree on a mandatory, transparent and uniform reporting system for public subsidies that would inject some much needed transparency to the issue and avoid the volleys of accusations and counter-accusations we have witnessed this year.
  1. A binding arbitration process, preferably through ICAO, will need to be put in place and permit one country to file a complaint against another. Arbitration could lead to a monetary penalty paid by the country who granted unfair subsidies to the country whose carriers suffered from unfair competition. This monetary penalty would avoid the present situation where perceived wrongdoing is punished through traffic rights restrictions, in effect imposing a quota on the international trade of service, the most harmful of outcomes.

About the author
Alain Lumbroso is the aviation expert of the International Transport Forum (ITF). The International Transport Forum at the OECD is an intergovernmental organisation with 57 member countries. It acts as a policy think tank and organises an Annual Summit of transport ministers. The ITF is the only global body with a mandate for all transport modes.

Useful links

ITF work on air transport

ITF Discussion Paper: What do we mean by a level playing field in aviation?

ITF Research Report: Liberalisation of Air Transport. Summary: Policy Insights and Recommendations

ITF Country-Specific Policy Analysis: Air Service Agreement Liberalisation and Airline Alliance