“To achieve the possible, we must attempt the impossible again and again.”
 (Hermann Hesse).

Back in the 15th century, Leonardo da Vinci thought out what was considered impossible. He drew up plans for flying machines, automata and robots – things that turned into reality only centuries later.

Is there a willingness in today’s Europe to think out the impossible once again to create new possibilities? The necessity certainly exists as crises, wars and catastrophes call for more creative thinking to help solve complex problems. Corporate intellectual property, international networks of think tanks, knowledge pools using data bases and digital platforms, and if-then functional processes on a meta level are just some of the buzzwords that spring to mind.

What happens if the risk landscape changes in a snap or new risks seem to appear out of nowhere? 

The steps insurers then take are best explained by looking at the recent cyber insurance examples. The pandemic boosted digitisation and in turn, changed the cyber risk landscape. In response, prices skyrocketed, capacities were reduced, levels of excess increased, risk dialogues became even more laborious and new demands were made. Some businesses received no offer at all for their cyber insurance, and some insurers publicly questioned the future of the product. Many reacted in an almost panic-stricken manner.

Would such radical measures also have been taken if there were no pandemic? We doubt it. Cyber risks were on the rise even before the pandemic and were treated as an accumulation risk.

EU: New Horizons

“Horizon Europe 22 – 27“ is the European Innovation Council’s ambitious EU programme to strengthen science and technology through research funding, aiming at a competitive position on the world market while taking climate protection into account. Some 95 billion EUR have been earmarked for this EU-wide research and innovation programme.

Given the necessity to rethink the future – also in light of environmental protection – and better safeguard it against new crises, this is a drop in the ocean. To name a reference value: Europe’s NATO countries have budgeted about 400 billion EUR for military expenditure. Looking at the “Horizon Europe” expenditure, every EU citizen contributes an amount of about 59 cents every day.

However, to develop real sustainable solutions in research and innovation, a tenfold investment would be required. A paradigm shift would mark the first step, starting with primary school children as they will be the main decision makers in thirty years. They should be motivated not to wait for outside help, but to take action themselves.

What is called for are more playful methods of school education to convey problem-solving skills, the promotion of tax-deductible university and non-university research, and our will to elect politicians who are willing to make unpopular decisions and who demonstrate a broad horizon. When it comes to constructively meeting challenges, many parts of our society are helpless. A recent tweet read “Who hates this government as much as I do?” – many commented that their hate was even greater. Only a few replied by saying something like “Go into politics and show us that you can do better”.

Supply chain disruptions

All over the world, uncertainty prevails. Disruptions of local supply chains in 2015 have cost Europe about 50 billion EUR. Since then, economic turbulences due to trade restrictions and protectionism, driven, among other things, by increasing geopolitical instability – such as Russia’s despicable war with Ukraine as well as its impact – the climate crisis, the COVID-19 pandemic as well as strikes in the transport sector as a result of inflation, have been exacerbated and will surely cost many times more each year than back in 2015.

The impact of just one factor becomes visible by looking at soaring container freight rates since the pandemic: These rates have, at times, increased tenfold. Reasons being a global container shortage and disruptions in subsequent shipping caused by temporary port closures in China, to name an example. Given the sustained high container freight rates, we may notice a shift in the flow of goods. Those goods that were cheaply produced in China, yet were subject to costly transport, could perhaps be produced in Europe and cost less in the end – provided the required raw materials and resources are readily available. A polluting transport of goods en route to their finishing processes could be reduced at the same time.

Disrupted supply chains also have a negative impact on JIT deliveries, ensuing in production downtimes and financial losses. Some businesses have responded by reactivating vacant storage facilities or building new ones to ensure they have an adequate supply of raw materials at hand for processing.

Technologies of the future

Action must be taken in the face of these turbulences while exploiting every possibility provided by available instruments: RPA, IOT, analytics and digital collaboration. Managers must keep their fingers on the pulse of time and implement the next steps in line with current digital and technological developments, including blockchains and other open sources, smart logistics and Physical Internet, drones, connected cars as well as self-driving vehicles, e.g. van and straddle carriers used in port areas. Today’s key decision makers will have to deal with the transport technologies of the future, such as platooning or hyperloops, and follow in the footsteps of Leonardo da Vinci.

Transcontinental infrastructure networks

China and many other states as well as institutional investors have poured large sums of money into the New Silk Road – on land (Silk Road Economic Belt) and sea (Maritime Silk Road) – enabling the establishment of new intercontinental trade and infrastructure networks between China and other Asian countries, Africa and Europe. Once completed, the project will have an impact on more than half of the world’s population and about 40% of global trade.

The speed with which the project has moved forward over the last 10 years since its start is best demonstrated by a small-scale example in land transport, a much smaller portion of the New Silk Road: in 2013 some 80 container trains from China Railway Express Co. used it en route to Europe, in 2020 this number grew to 12,400.
China also invests heavily in European infrastructure, especially in ports in the South, Piraeus or Triest. Travelling times to these ports are shorter than to those situated along the North Sea. Given recent geopolitical upheavals – and looking at the situation with Russia and resultant traffic and transport complications – warnings are increasingly raised against an over-dependency on China. There is also criticism being levelled against the fact that countries and communities receiving financial support may fall into a debt trap. The EU is also troubled by bilateral agreements between China and European countries. This could accelerate a split within the EU.

What could be more appropriate for the EU than to redirect the focus on itself? In the medium and long term, nearshoring instead of offshoring could be a solution. Despite differing views on various issues in individual countries, Europe has some undeniable advantages over other states and other continents: less cultural and work ethical differences, easier ways of collaborations due to geographical proximity, hardly any differences in time zones, shorter travel distances, etc.

With Trans-European Networks (TEN) to accelerate developments and shape the European domestic markets, the EU significantly contributes to economic and social solidarity. Streamlining the infrastructure of transport systems through the Trans-European Transport Network (TEN-T) as well as the energy and telecommunication sectors are its key drivers.

TEN-T aims at implementing and developing a Europe-wide network of railway lines, roads, inland waterways, maritime shipping routes, ports, airports and railroad terminals and improve their environmental compatibility. The ultimate objective is to close gaps, remove bottlenecks and technical barriers, as well as to strengthen social, economic and territorial cohesion in the EU.  In light of the global political (and economic) landscape, pushing forward with efficient, well connected and environmentally friendly infrastructure in terms of TEN will be key for competitiveness, growth, job creation and the wealth of EU countries. It will also help make the EU less dependent on countries that trample on human rights, employ other value systems in terms of business ethics, and ignore environmental protection. In turn, this also means not to move forward with globalisation at all costs but to ensure healthy economic growth and stability in Europe.

3D printing – a game changer?

3D printing could become a gamechanger. It is already used for medical protheses, toys, shoes, clothing as well as for cars and even for houses recently. 3D printing is a fascinating technology for large automotive companies as they manufacture cars in large quantities. Car bodies and individual parts can already be produced through 3D printing. The recently launched Mercedes Vision EQXX is an electric vehicle that features numerous 3D printed parts – with obvious advantages: if raw materials are readily available, prefabricated parts no longer need to be transported over great distances, making them more environmentally friendly while costs are saved and production times shortened.

In summary: The rapidly changing geopolitical situation, the climate crisis, the COVID-19 pandemic and many other factors have made it necessary to rethink the world, and Europe. New technologies are partially both cause and result of these rapid changes that are taking place and will still take place.

Securing new risks // Protection from new risks

Whereas some existing risks will take a backseat, new and unknown risks will arise often unexpectedly. Protection against these risks will be the key to ensuring the economic survival of many businesses. There is only one good solution: collaborate with an insurance broker who thinks ahead and thinks the impossible: GrECo – matter of trust!

Otmar Tuma

Advisor Transportation & Logistics

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