Thursday, July 04, 2024

Ports Call for U.S. to Delay 25% Tariff on Chinese Manufactured STS Cranes

America’s port community is pushing back on a plan by the Biden Administration to impose a 25 percent tariff on Chinese manufactured port cranes coming into the United States. It is the latest step in a politically charged issue that began over a year ago with accusations that the Chinese cranes were spying on American ports and could be controlled from overseas.

The Biden administration in February launched an initiative to increase port security in response to the accusations of spying and the near total monopoly of the market by Shanghai Zhenhau Heavy Industries (ZPMC) which claims 80 percent of the worldwide market for large container cranes. In the latest step, the U.S. Trade Representative Ambassador Katherine Tai announced plans to raise the tariff on ship-to-shore cranes to 25 percent effective August 1. It was part of a larger widescale range of tariff increases proposed for everything from electric cars to semiconductors, steel, battery and solar equipment, and on to medical gloves and synergies.

The American Association of Port Authorities released its response letter provided during the commentary period for the tariffs emphasizing the potential danger and negative financial impact since there are no domestic alternatives available. They highlight that despite the administration’s efforts to reshore crane manufacturing it will be years before a competitor will be available.

Cary Davis, AAPA’s president and CEO asserts the tariff “will not meet its stated objective.” The association points to the potential for negative outcomes highlighting the harm to port efficiency and capacity, strained supply chains, increased consumer prices, and a weakened U.S. economy.

At least seven U.S. ports they said currently have 35 STS cranes on order from Chinese manufacturers. All these orders were signed before the tariff was announced. AAPA calculates that the tariff will cost the ports an additional $131 million in new and unexpected costs. AAPA is collecting data on anticipated future purchases and reports it has already learned of plans to buy at least 61 additional STS cranes.

AAPA is calling on the U.S. Trade Representative to delay the implementation of the increased tariff at least until a domestic manufacturer is able to provide an alternative. They warn ports could be forced to cut back on their investments if they have to pay the tariff.

To aid with the development of the industry, AAPA reports it launched a survey of ports and terminal operators. They are working to compile data on the plans for crane investments over the next five and 10 years. The data they said will help manufacturers to determine the opportunities in the market.

Charleston Takes Steps to Clear Backlog by Pausing Construction

After reports of persistent backlogs and congestion at the Port of Charleston, port officials highlight they are taking steps to reduce the frustrations. The goal is to temporarily pause the current construction at the container terminal to clear the backlog before proceeding.

SC Ports says it has been working through a ship backlog, following a two-day software issue in May and ongoing berth impacts at the Wando Welch Terminal related to toe wall construction along the wharf to maintain a 54-foot berth depth. After the port reopened from the shutdown due to the software problem as many as 20 ships were waiting. At the end of May, 10 days after a two-day shutdown due to a software problem, there were a dozen or more containerships still waiting offshore as the port continued to work through its backlog while also servicing incoming vessels. By late June, the backlog was down to seven ships.

Contributing to the challenges, in March construction began on the toe wall at the Welch terminal. They are installing steel sheets along the wharf. For most of the spring, the terminal was able to accommodate three ships, but as the project progressed, they closed one of the three berths causing longer wait times for vessels.

Beginning July 3, SC Ports will pause work on the toe wall project to open all three berths at the Wando Welch Terminal. They reported that the backlog had been reduced to three ships at anchor but now they want to clear the wait so that the port can handle ships as they arrive.

The pause will last for two weeks until July 14 by which time they expect to handle ships as they arrive. When the work resumes, they expect an average 48-hour wait. This will continue until the late fall when they expect all three berths will reopen. The construction project is slated to run till March 2025, but the latest phases will not impact the berths.

Port of Chancay Creates New Competition in Latin America

The Cosco Shipping-owned Port of Chancay is nearly completed (Ministerio de Transportes y Comunicaciones) — The Chinese-owned Port of Chancay is nearly completed (Ministerio de Transportes y Comunicaciones)

According to Peru's Ministry of Transport and Communications (MTC), the construction of the new Port of Chancay is 80 percent complete and will be inaugurated in November, likely in the presence of Chinese President Xi Jinping. The launch of the Port of Chancay will strengthen Peru's maritime infrastructure on the Pacific coast, allowing transshipment of cargo to Chile, Colombia, Ecuador and Panama.

The main advantage of this new infrastructure will be the reduction of time and costs of the current maritime trade on the Pacific Coast, where, for the first time, Ultra Large Container ships with a capacity of 18,000 TEU will be able to dock. The transfer time of containers between Peru and China will be reduced from 35 to 23 days, which means a reduction in transportation costs of 30 percent. This cost reduction will be used by other countries such as Brazil, Uruguay, Paraguay and Bolivia to import and export their products. The Port of Chancay will allow companies to send cargo in these ships directly to China, instead of using smaller ships, which today must first go to Mexico or California, as is currently the case. The Lima Chamber of Commerce (CCL) projects that in the first phase, the Port of Chancay will handle between 30 and 40 percent of the national cargo destined for China and Southeast Asia.

Alongside the seaport, Peru’s Ministry of Economy and Finance has long been working on the creation of a Special Economic Zone (SEZ) with the aim of attracting large manufacturers. The goods from this zone will be distributed from Chancay to other Latin American countries. With the port of Chancay, Peru will have a strong impact at regional level, starting with Chile, Ecuador, Colombia and even Brazil, if it manages to integrate with the industrial zone in the inland city of Manaus.

The economic impact will be greatest for Chile, because Peru will be able to receive Post Panamaxes and Ultra Large Container Vessels (ULCVs), which do not have practical operational possibilities in other ports in the region. Chilean ports are too small for these larger, more efficient vessels, and as a consequence will become less competitive in trade with Asian markets.

As the inauguration date approaches, questions have arisen as to whether the construction of the Port of Chancay, where 60% of the shares belong to Cosco Shipping, is a project that brings only benefits to Latin America. Last week, the Peruvian ambassador Alfredo Ferrero presented American investors with an option to build the mega-port of Corio, a proposed site located in the coastal region of Arequipa, which requires an investment of $7 billion. The intention in soliciting American investment is to balance Chinese interests in the region – though the United States could also invest in a mega-port in Chile rather than in Peru.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

Port officials highlight other interim steps including a flexibility to handle vessels at either Wando Welch or the North Charleston Terminal. Last week, they also reported the port and the International Longshore Union agreed to a framework for the future staffing of the port which will permit operations at the new Hugh K. Leatherman Terminal. The new terminal has largely been idle since it was completed due to the labor issues. Currently, only the MSC Michigan VII, the vessel that made the high speed exit from Charleston, is detained at the terminal while carriers have declined to dock at the terminal until the labor issues were resolved.

The port also highlights the flexibility of the carriers and new programs such as a virtual queue and flexible start times all designed to improve fluidity and reduce vessel waits.

Nigeria Seizes Massive Cache of Weapons Smuggled in Container from Turkey

arms seizure — Nigerian customs showing off the weapons seized at Port Harcourt's Onne Container Terminal (Nigerian Customs)

Customs officials in Nigeria seized a large cache of sophisticated illicit weapons hidden in a shipping container that originated from Turkey. One of the largest seizures in the history of Port Harcourt, it comes as the West Africa nation is grappling with rising crime fueled by illegal arms trade.

Though the authorities did not reveal the identity of the ship that transported the 40 feet container, they said it was of interest following a tip from intelligence organizations fighting transnational crimes. Customs was able to follow the container’s as it moved across the continents until its arrival at Onne Port, which accounts for over 65 percent of Nigeria’s seaports export cargo.

Despite the importer paying $2.7 million duty for the container and trying to smuggle it out of the port through a private bonded terminal, officials managed to impound it on June 21. They conducted a search of the container finding the weapons hidden among other items like doors, furniture, plumbing fittings, and leather bags.

The Nigeria Customs Service put the chase on display on July 1 at the port. They reported seizing 844 guns including both rifles and shotguns as well as 112,500 rounds of ammunition.

“In connection with this, we have three suspects in our custody,” said Bashir Adewale Adeniyi, Comptroller-General of Customs. “Furthermore, a thorough investigation is ongoing to ensure all those involved face the full wrath of the law.”

The seizure at Port Harcourt Area II Command, Onne, is the latest in a growing series of confiscations as Africa’s most populous nation continues to grapple with the illegal arms trade. Earlier this year, in mid-March, Customs seized arms and weapons during a routine inspection of imported goods in Lagos while in January, Nigeria’s National Drug Law Enforcement Agency intercepted another shipment of arms in Lagos, along with 1,274 parcels of cocaine and other drugs.

Research by non-profit organizations like the Institute for Security Studies (ISS) show that Nigeria’s seaports and waterways have become hotspots for illicit firearms trade that is controlled by corrupt security personnel and businessmen. Between 2010 and 2017, a total of 21.5 million weapons and ammunition were shipped into Nigeria. The illegal weapons are reported going to kidnappers, armed robbers, petroleum pipeline vandals, urban militias, ethnic militias, and cultists, with data showing that in 2020, Nigeria had an estimated 6.2 million arms in the hands of civilians.

A March ISS study highlights that firearm importers and traffickers use different strategies and concealment methods to smuggle firearms through seaports. The primary method is falsification of import papers and merchandise declarations.

HHLA Opens Hydrogen Test Field in the Port of Hamburg

[By: Hamburger Hafen und Logistik AG]

Hamburger Hafen und Logistik AG (HHLA) opened the first test field for hydrogen-powered port logistics as well as the corresponding hydrogen refuelling station in the Port of Hamburg today. The test field at the Container Terminal Tollerort (CTT) is another milestone on the path to decarbonising logistics. Together with its partner companies from the Clean Port & Logistics cluster, HHLA is testing the reliability of hydrogen to supply heavy goods vehicles during operations.

Angela Titzrath, Chief Executive Officer of HHLA, opened the test field today together with Dr. Melanie Leonhard, Senator for Economy and Innovation of the Free and Hanseatic City of Hamburg, Christian Maaß, Director of Heat, Hydrogen & Efficiency in the Federal Ministry for Economic Affairs and Climate Action, Antje Roß, Manager Port Networks and Applications, NOW GmbH and Dr. Lucien Robroek, President of Technology Solutions Division of Hyster-Yale Materials Handling, by successfully filling a hydrogen-powered tractor unit.

Angela Titzrath, CEO of HHLA: “We’re pleased to open the first test field for hydrogen-powered port logistics today. It enables us to test future technologies, gather valuable data and evaluate the results. In this way, we are shaping the sustainable future of logistics and continuing to invest in innovative technologies. We are sharing our findings with companies facing similar challenges in order to develop climate-friendly transport solutions together. Our objective is clear: We want to decarbonise the logistics sector and achieve our target of climate-neutral operations throughout the Group by 2040.”

Dr. Volker Wissing, Federal Minister for Digital and Transport: “With Clean Port & Logistics, a lighthouse project for the use of hydrogen in port logistics has been created at the Port of Hamburg. From forklift trucks to tractor units and trucks - the hydrogen infrastructure we are funding here is paving the way for climate-friendly logistics on site. I hope that the hydrogen test field will have a strong signalling effect thanks to the commitment of the port players. This is the only way we will succeed in making logistics in Germany climate-friendly.”

Dr. Melanie Leonhard, Senator for Economy and Innovation: “The opening is an important step for the Port of Hamburg. In future, it will enable the use of hydrogen-powered heavy goods vehicles at the terminals and beyond. The potential for the Port of Hamburg and the logistics sector is significant - for example, trucks that regularly come to the Port of Hamburg can also benefit from such an infrastructure in the future. The test field helps us to gain important experience in this area. HHLA and its partners are thus continuing to drive forward the transformation and decarbonization of handling and transport processes.”

Dr. Lucien Robroek, President of Technology Solutions Division at Hyster-Yale Materials Handling: “Hyster is a pioneer in the development of electric heavy-duty trucks including container handling vehicles powered by Nuvera® fuel cells. We are excited to be working with HHLA to uncover new possibilities and learnings as we begin testing the Hyster® hydrogen fuel cell-powered terminal tractor in a live port application. We continue to collaborate with forward thinking operations that are keen to explore new solutions as part of their journey towards both sustainability and efficiency.”

With the opening of the test field and inauguration of the hydrogen refuelling station, the required infrastructure is now ready to speed up the transition to emissions-free heavy goods logistics and port operations, and to drive forward the decarbonisation of logistics. Equipment such as straddle carriers, empty container stackers, forklift trucks, reach stackers, tractor units and trucks can be efficiently filled to 350 bar with green hydrogen. The refuelling station will be open to the public and thus also offers other companies the opportunity to test climate-friendly transport solutions. The check-in at the terminal requires registration in the passify app. You can find more information here.

Since 2022 HHLA has been working together with more than 40 partner companies from around the world in the Clean Port & Logistics cluster. The common goal is to develop solutions to bring hydrogen-powered heavy goods vehicles and terminal equipment to market quickly as well as to put in place the measures necessary for their use. The concepts developed by the working groups for operation, safety, maintenance, refuelling and supply are tested and optimised in practical operation in the test field at CTT. The first trials have been conducted at the refuelling station with equipment from Hyster-Yale, VWG Oldenburg and CMB.TECH’s hydrogen truck over the past few weeks. Their collaboration in CPL helps the companies on the way to decarbonising their processes and making meaningful, climate-friendly investments as they compile the necessary information and practical experience.

The cluster as well as the refuelling station received funding of approximately three million euros from the Federal Ministry for Digital and Transport as part of a national innovation programme for hydrogen and fuel cell technology. The funding guidelines are coordinated by NOW GmbH and implemented by Project Management Jülich (PTJ).

As part of the “Balanced Logistics” sustainability strategy, HHLA is aiming to become climate-neutral throughout the Group by 2040. To achieve this, HHLA has been relying on the electrification of its processes and equipment across Europe for many years. Hydrogen could make a significant contribution to the further decarbonisation of logistics. In addition to using hydrogen for its heavy goods equipment, HHLA is also active in the field of import and distribution. With its extensive European network of seaport terminals and intermodal connections, HHLA is very well equipped to take advantage of the opportunities in hydrogen import and transportation.

The products and services herein described in this press release are not endorsed by The Maritime Executive.

First Floating Import Terminal with a Hydrogen Cracker Planned for Germany

hydrogen import terminal — Barge with a cracker integrated will be the first floating hydrogen terminal (Deutsche ReGas)

Plans for the first floating terminal to handle the importation of hydrogen were announced as part of an effort to supply the alternative fuel to Germany’s industrial base. Deutsche ReGas and Hoegh-LNG, both of which helped Germany rapidly develop its LNG import terminals to replace Russian supplies, are teaming up to develop the new hydrogen facility.

The companies have signed an agreement in principle to realize the “H2-Import-Terminal Lubmin.” The terminal will be the world’s first floating import terminal for the industrial-scale conversion of green ammonia to green hydrogen. They expect the terminal to be in operation from early 2026.

“Our H2-Import-Terminal Lubmin is a key building block for decarbonization of the industrial regions of eastern and southern Germany,” said Ingo Wagner, managing director of Deutsche ReGas. The H2-Import-Terminal Lubmin strengthens Mecklenburg-Western Pomerania's position as a green energy powerhouse. We are excited about this next step in our cooperation with Höegh LNG."

The transportation of hydrogen and important will facility using a carrier. Ammonia is viewed as the best carrier but it requires technology to split out the hydrogen. Hoegh LNG reports it has developed a green ammonia cracker technology that will be embedded into the barge. It will serve as an industrial pilot for the conversion and decarbonization of FSRU’s in Germany.

“By adapting existing marine infrastructure elements with our innovative cracking solution, we can provide access to cost-competitive hydrogen within the next few years,” said Erik Nyheim, CEO of Hoegh LNG. He predicts that importing hydrogen from global producers overseas is key to achieving industrial decarbonization.

Deutsche ReGas will provide the on-shore terminal infrastructure and the overall coordination of the entire project, including permitting and the marketing of the import capacities at the terminal. The companies highlights that the expertise, technology, and infrastructure elements are already existing, after the development of the LNG terminals using floating storage vessels from Hoegh.

The terminals were developed and opened in late 2022 and early 2023 using vessels chartered from Hoegh and others. Deutsche ReGas became the only privately financed LNG-terminal operator in Germany in 2023. The company first positioned a vessel in Lubmin using a shuttle tanker approach due to the small size of the port. The operation was later relocated to Mukran.

The cracker technology will produce around 30,000 tons of hydrogen per year. The companies plan to feed into the hydrogen core network via the existing feed-in point at the Deutsche ReGas Terminal in the port of Lubmin.

Germany’s industrial heartland is viewed as one of the early users of hydrogen as an alternative fuel. The area is viewed as one of the challenging industries to convert from foil fuels and reduce emissions. The goal is to use this project to provide a model for global decarbonization.

ideo: Massive Fire at Lürssen Yard Destroys Building Hall and Luxury Yacht

Lurssen fire — Fire destroyed the building hall and a luxury yacht under construction (German TV/YourTube)

Germany’s Lürssen shipyard, builder of large, luxury yachts, was struck by a fire early on Tuesday, July 2, at its yard in Schacht-Audorf alongside the Kiel Canal. The large building hall and a superyacht inside have been destroyed but firefighters were able to contain the fire at the Rendsburg facility.

The fire department reports it received a call of a fire at 9:20 a.m. local time approximately 20 minutes after workers in the hall saw smoke and determined there was “a smoldering fire.” Unconfirmed reports are saying the fire began on the luxury yacht. The yachting trade is suggesting that the vessel is the Honolulu, a 246-foot vessel valued at $250 million being built for a Saudi Arabian billionaire. Yesterday on social media Lürssen posted a picture of a chrome-covered yacht in a dry dock but it is unclear if this is the vessel at this yard.

Witnesses told the local media that there were several explosions in the yard and the fire spread quickly. Lürssen reports evacuation procedures were followed for the approximately 100 employees all told to leave the yard. Smoke from the fire was blowing over the city causing at least 30 residents to be evacuated from their homes.

Operations on the Kiel Canal were briefly stopped while fireboats responded to the scene. The canal was able to maintain its operations as the smoke was blowing in the other direction. The fireboats remained at the shipyard helping to fight the inferno.

The fire department reports over 300 personnel reported to the scene along with two evacuation helicopters and multiple ambulances. One person was taken to a hospital to be treated for smoke inhalation while local reports said as many as 24 others were being checked onsite for exposure to the smoke.

Firefighters were attempting to enter the hall but reported temperatures were reaching 1000 degrees inside forcing them to attempt to control the fire from outside. By mid-morning the roof and some of the exterior walls of the building hall had collapsed. The hall measures over 320 feet (100 meters) in length and stands nearly 100 feet (30 meters).

As of later in the afternoon, the fire crews said it had been fully contained but they expected to be on site into the night and possibly till Wednesday fighting the remaining fire. The site is expected to smolder for days.

Lürssen shipyard Rendsburg which was hit by the fire today (Lürssen file photo)

Lürssen issued a brief statement saying that there were no major injuries and thanking the fast actions of the fire crews. They emphasized the cause of the fire was unknown at this time.

The shipyard is part of the Lürssen group which dates to 1875. They operate multiple locations in Germany with reports saying this yard was focused on large ship construction and undertakes some repair work. Workers at the yard told the local media they were concerned for their jobs as a key portion of the yard appeared to be destroyed.

"No Coffee For You!"

(Article originally published in May/June 2024 edition.)

That morning “cup o’ joe” may fall victim to the E.U.’s new supply chain laws.

The supply chain is the globalized miracle that makes our civilization possible.

So why not regulate it? You know, to make it even better.

The Supply Chain Care Act became law in Germany on January 1, 2023. It had a grand idea: German companies would investigate all of their suppliers and ensure that none of them were engaging in behavior that was contrary to human rights.

In practical terms, this meant creating a “risk management department,” issuing a corporate “declaration on respecting human rights,” implementing a “complaint process” and, of course, generating and archiving lots of records and documents.

Who doesn’t love a problem that can be solved with managers, rules and procedures?

Fast forward to March 15, 2024: Wonderful news! The world is free of human rights abuses, and the global supply chain is a wholesome place where the highest standards are upheld. All thanks to a German law that everybody complained would – oh, wait.

Sorry, I wandered off in a parallel universe.

March 15, 2024 is the date on which the European Union passed its own Supply Chain Act, which the 27 Member States now have two years to implement. This E.U. law overcame Germany's objections in the European Commission, whose delegation, amusingly, argued that it would burden corporations with too much bureaucracy.

So where do we stand now?

Unintended Consequences

The new E.U. Supply Chain Act is flanked by the E.U. Deforestation in Supply Chains Regulation (EUDR), which enters into force on December 31, 2024. It stipulates that agricultural products must come from areas “free of deforestation.”

The World Wildlife Fund praised the EUDR as being a “quantum leap” in aggressiveness. Companies failing to comply can expect significant fines assessed against their global revenue. Palm oil, meat and soy imports are at stake. Even car makers, who use leather for the seats of their vehicles, are affected. The E.U. is widening its regulatory net and drawing in virtually every sector of the economy, using the supply chain as the pressure point.

The biggest impact, it appears, will be on something millions of Europeans rely on every day so they can get through the stacks of paperwork waiting for them at the office.

That would be coffee.

The German Coffee Association, an industry and trade lobby, warned that coffee “shortages in the German and European market” are anticipated, and that “the prices for any coffee that is still available will increase significantly.” Why? Only 20 percent of coffee farmers globally are compliant with the EUDR, which means that, as far as E.U. coffee roasters are concerned, 80 percent of the global coffee supply will be off-limits.

The German Federal Ministry for Nutrition and Agriculture admitted that “in the coffee trading sector, obstacles still remain which prevent complete implementation by the end of the transition period.”

The clock is ticking for your morning cappuccino.

There are other obstacles as well. Workers on coffee plantations earn little. Fairtrade Deutschland noted that “adequate pay” and “sufficient income have been recognized as a human right” under the new E.U. Supply Chain Act though the law is silent on what that entails. Further, when coffee beans are picked, they must be washed. The water used for this is now required to be treated and disposed of in a manner that the E.U. deems environmentally friendly rather than, say, dumped into a nearby river.

In addition, when the coffee is transported to Europe to be roasted, it must be carried on ships that provide their sailors with fair working conditions. Presumably, that means compliance with the Maritime Labor Convention although currently, as far as plantation workers are concerned, guidance on the specific standard is sparse and hard to find.

The entire supply chain is affected by the E.U. Supply Chain Act including “prior and subsequent steps in the value chain,” according to logistics major DHL. Production, transport and disposal are all implicated.

Dr. Stefan Brandis, spokesperson for the German foundation Menschen für Menschen, asserted in an interview with German logistics newsmagazine Logistik Heute that the E.U.’s attitude has a “subtle colonial overtone” given that, for example, Ethiopian farmers with only sporadic access to electricity must now muddle through entering data for European product-origin tracing systems. Small farmers “would, ultimately, be locked out of the market, since big players can establish traceability much more easily when harvesting coffee from large plantations.”

Impact on Shipping

Shipping, too, is part of the “value chain.” Any time products subject to the E.U. Supply Chain Act are loaded or offloaded, “traceability” will follow the shipowner.

If a European shipping company loads cargo in a North African port, will it verify that stevedores pay their employees enough? What about harbormasters who ask for bribes? Whose job is it to root out forgeries? “Equality before the law,” another standard the E.U. Supply Chain Act is supposed to uphold, means such abuse can’t be tolerated.

To be fair, this is not the first paperwork hurdle that ocean shipping has overcome. As in the past, issuance of documents which verify whatever is demanded of the issuer will likely suddenly increase. Nobody wants to lose a customer. If the document has the correct stamps and signatures on it, isn’t that enough for any hardworking Brussels bureaucrat?

But this legislation only has limited power in contending against reality. The world can be changed, it’s true, but doing so requires a lot of ground-pounding. A decree from the E.U. will not give relief to Nigerian child laborers or bind the hands of corrupt port officials.

The wheels of commerce will grind on. Consumers may feel better because of the illusion that the products they’re buying are now compliant with the new regulatory regime, but those who are, in fact, a part of the “value chain” will undoubtedly know better.

What’s more likely, after all? That there won’t be coffee on German supermarket shelves or that a few official-looking documents will be penned that quietly resolve this crisis?

Who’s Affected?

Are you curious if all of this applies to you? Don’t worry, it’s easy to figure out. If you’re a company with 250 or more employees and do 40 million euros of revenue in the E.U., then you must comply. Or if you’re a company outside the E.U. with 150 million euros of revenue of which 40 million is from the E.U. Or if you’re a small or medium-sized enterprise but you do business with one of the aforementioned companies – because, after all, even the weakest link in the “value chain” has got to help work toward a better world.

Still not sure? Fear not, one of your employees can call the Whistleblower Hotline that you, or the company that’s bigger than you, was required to set up. Or one of your other business partners up or down the supply chain can call. Given the high level of trust that exists in global shipping, I’m sure this would never be abused or used as leverage.

What about the EUDR? The E.U. helpfully supplies a clear answer: “There is no threshold volume or value of a relevant commodity or relevant product, including within processed products, below which the Regulation would not apply.” It applies to everybody.

Making the World a Better Place

All sarcasm aside, who wouldn’t want the world to be a better place? According to the Brookings Institution, 10 percent of the global population lived in poverty in 2015, down from 36 percent in 1990. We’re headed in the right direction.

Will the E.U. Supply Chain Act, the EUDR and the German Supply Chain Care Act get us to the promised land faster? Hang on – I’ll let you know once I’ve finished filling out these forms.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

Study: Blue Hydrogen's Emissions Could be Doubled By Upstream Gas Leaks

The future site of BP's hydrogen production hub in Teesside, UK, which will include Britain's largest blue H2 plant (BP file image)

A new study from climate consultancy Carbon Tracker suggests that the CO2 emissions from natural gas-based "blue" hydrogen could be up to two times higher than expected - not because of the underlying carbon capture technology, but because of upstream emissions, which may be outside of the H2 producer's control.

Methane is released in varying amounts during the extraction, processing and transport of natural gas. It is a potent greenhouse gas, far more conducive to warming than carbon. Upstream methane leakage affects the lifecycle GHG profile of every user downstream. That includes producers of blue hydrogen, which is gray hydrogen (made from natural gas) coupled with carbon capture to abate the production plant's exhaust.

Blue hydrogen is among the most commonly-discussed alternative fuels for the green transition, since it can be produced from an abundant gas feedstock using familiar technology. The advent of a blue hydrogen industry could spur new long-term demand for natural gas, extending the runway for this fossil fuel and giving it a new lease on life in a "green" economy.

However, the study suggests that "[blue hydrogen] projects can be considered low-carbon only if, on top of achieving high-carbon capture rates, they can guarantee to utilize natural gas with low upstream emissions." Factoring in these upstream emissions, Carbon Tracker looked at the unintended consequences of boosting blue hydrogen production and creating new demand for natural gas, particularly for projects in the UK and Europe.

As gas reserves decline in the North Sea, Britain is increasingly reliant on imported American LNG. This means that if blue hydrogen ramps up in the UK, it would create more demand for natural gas extracted in the United States and shipped across the Atlantic. Given the comparatively high methane leakage rate of the U.S. natural gas industry, hydrogen made in Britain from American LNG would have a high lifecycle GHG profile, simply because of the practices of U.S. natural gas producers. American LNG's upstream emissions intensity is 10-15 times greater than UK pipeline gas, depending upon the source.

"Even with the best technology, blue hydrogen from imported LNG could emit up to 2.5 times more than the UK’s low carbon hydrogen standard," Carbon Tracker found. "Green hydrogen, produced from renewable electricity, remains the only truly low-emission pathway."

To resolve this "significant regulatory blind spot" for blue hydrogen, Carbon Tracker urged the adoption of strong standards for emissions monitoring, reporting and verification (MRV) for the upstream natural gas industry. "The current self-reporting framework is not working and there is a large gap between reported and measured emissions," the consultancy warned.

It also called for UK and EU policymakers to support only carbon-capture projects that "deliver permanent emissions reductions on the whole supply chain," on a lifecycle basis. This would exclude projects with high upstream emissions and would require blue H2 producers to guarantee that their feedstock suppliers would have low rates of methane leakage.

"If conditions for low-carbon blue hydrogen and gas-CCS cannot be met, a stronger focus should be placed on green hydrogen from renewable sources and alternative flexibility technologies, such as long-duration energy storage, pumped hydro and green hydrogen turbines," the consultancy advised.

Germany Blocks MAN’s Sale of Gas Turbine Business to China

Citing national security concerns, Germany plans to block the proposed sale of MAN Energy Solutions’ gas turbine business to a subsidiary of China’s state-owned shipbuilding company CSSC. MAN had announced the deal in June 2023 saying that the product area was no longer central to the company’s growth and divesting of the business was in keeping with the strategy to focus on offering for decarbonization.

MAN produced and serviced gas turbines of up to 8 MW in size with applications as mechanical drives or for power generation. The engines are also used in offshore applications. The shipping sector filtered with gas turbines as an early step to reduce emissions and improve efficiency. However, the engines proved costly in the maritime sector. For example, cruise lines including Cunard and Princess Cruises added gas turbines as adjuncts to the diesel motors on ships built in the early 2000s. Princess later removed them from at least one ship while Cunard stopped using them to reduce fuel costs. Royal Caribbean International and Celebrity Cruises also installed GE’s gas turbines on ships built around the same time.

The acquisition called for the unit including production centers in Germany and Switzerland, R&D, service and sales, and all related businesses to be acquired by Longjiang Guanghan, an affiliate of China Shipbuilding Industry Corporation and a subsidiary of China State Shipbuilding Corporation (CSSC). The company is a provider of small and medium-sized gas turbines in a 5 to 50 MW range as well as other combustion technologies. MAN was providing a five-year guarantee for the production sites in Oberhausen, Germany, and Zurich, Switzerland.

MAN Energy Solutions had already taken the decision prior to 2023 to separate from the gas turbine product area and called the acquisition and means of providing for the future development of the gas turbine series. They said it would also preserve approximately 100 jobs associated with the unit.

The company launched a business strategy plan in 2020 that calls for the transformation of the business into a solutions provider for sustainable energy. Acquired in 2011 by Volkswagen AG, MAN has been working to enhance its business performance. In December 2020, Volkswagen committed to maintaining its position for at least four more years as part of union contract negotiations.

Germany’s Economy Minister Robert Habeck announced the decision to reject the acquisition deal citing national security concerns. Last September Germany had said it would be taking a close look at the planned sale of the assets to China. Unconfirmed media reports cited close ties between Longjiang and the Chinese military. Under German law the government has the right to review and approve deals where assets are being sold outside the European Union. In 2022/2023, the government used the same powers to force a reduction of the size of the investment COSCO planned to make in a Hamburg container terminal.

Reuters is reporting that MAN is expected to wind down gas turbine development and product after today’s decision.

German Offshore Wind Farm Selects China’s Most Powerful 18MW Wind Turbines

A new offshore wind farm planned for the German North Sea signed a preferred supplier agreement reserving the world’s largest wind turbines with a rating of 18.5 MW, which could make it the first to employ the massive equipment. News of the selection however has been met with resistance from the industry and today the German government said it plans to review the supply agreement.

Luxcara, an asset manager based in Germany, reported it signed an agreement with China’s Ming Yang Smart Energy as the preferred supplier for 16 wind turbines with a rated capacity of up to 18.5 MW. The plan calls for the turbines to be installed in 2028 at the Waterkant site. Luxcarta won the right to build the wind farm in the German government’s August 2023 auction. Waterkant would be located approximately 55 miles from Borkum in the North Sea.

They reported the wind turbines were selected from an international tender and after extensive due diligence. Ming Yang committed to using renewable energy in the manufacture of the turbines and that relevant electrical components for the turbines would be sourced from European suppliers.

“The Waterkant team thoroughly examined the turbine offers received in response to an international tender launched in late 2023,” the company wrote in its announcement. “Besides technological, financial, contractual and environmental aspects, the decision for Ming Yang was also based on an extensive due diligence exercise, covering the supply chain, ESG compliance aligned with the EU taxonomy and cyber security supported by independent experts from international advisors DNV and KPMG.”

The European wind industry lobby responded to the news criticizing the deal noting it gives China access to the German and EU infrastructure. They cited dangers of unfair competition building on an April 2024 announcement that the European Commission was planning to review the market for possible “distortions” from Chinese competition.

Germany’s economy minister told Reuters that they would look “very closely” at the supply agreement. He also cited the need for fair competition. He made the statements on the same day it was announced that Germany would block a deal to sell MAN’s gas turbine business to a subsidiary of China’s state shipbuilder. It is part of the growing anxiety over China’s aggressive competition and efforts to make inroads into the West.

Chinese wind turbine manufacturers are anxious to gain opportunities in the European market. Luxcara highlights by selecting the largest turbines available it is maximizing the production from the site and expediting Germany’s energy transition. They said it would help to create competition in the industry but that control would remain with an independent German company.

Ming Yang announced its plans for a turbine able to generate between 18 and 20 MW in 2023. They said it was evolving from the current platform for 14 to 16 MW with a lightweight design with an integrated drivetrain and employing large carbon-fiber blades with high-performance airfoils. They said it will be suited for medium to high wind regions and can sustain typhoons.

The turbines planned for Waterkant would have a rotor diameter of 260 meters (853 feet). The company says the site will be able to generate electricity for approximately 400,000 homes.

Two other Chinese manufacturers, CSSC Haizhuang and Dongfang, have also announced 18 MW turbines. Both companies installed prototypes earlier this year at their test sites. GE Verona had announced plans for a competing offering but recently shelved its efforts saying it would focus on the 15 MW turbines which will be the workhorse of the industry.

DOF Buys Maersk Supply Service for $1.1B and Maersk Spins-Off Wind Business

DOF offshore — DOF will acquire the offshore business to become the largest provider in the energy sector (DOF file photo)

Norway’s DOF Group will pay approximately $1.1 billion to acquire Maersk Supply Service further consolidating the offshore service sector focusing on the oil and gas sector. The deal comes just a year after A.P. Moller-Maersk sold the company to A.P. Moller Holding and is a further step in the restructuring of the industry.

Under the terms of the agreement, DOF will pay $577 million in cash and issue new shares to A.P. Moller Holdings which will become a 25 percent owner of the combined company. Maersk Supply Service will undergo a further restructuring separating its offshore wind installation business and its assets in Brazil with DOF buying the company and 22 vessels, consisting of eight high-specification CSV vessels, 13 high-specification AHTS vessels, and one cable layer. After completing the deal, DOF Group’s total fleet will be 65 owned vessels and a total of 78 offshore/subsea vessels.

They highlight that the deal will create one of the largest oil service companies listed on the Oslo Stock Exchange with an estimated market capitalization of $2.3 billion. According to the companies, the combined company to be known as DOF will provide a comprehensive offering and be a major integrated service provider for the energy industry.

DOF CEO Mons Aase highlights the combined company will have the largest fleet of CSVs and high-end AHTS vessels. He said it will enhance the customer experience through increased scale, global reach, and industry-leading services.

The two businesses' operations are said to be strategically and geographically complimentary. They expect the combination will spur further growth opportunities. The transaction is subject to standard approvals and is expected to close during the fourth quarter of 2024.

“This long-term solution for Maersk Supply Service’s OSV activities together with DOF Group is founded on our shared values and unwavering commitment to safety and efficiency of our operations. The combination of our talented employees, modern fleet and geographical spread will create a leading offshore service provider characterized by unique scale and a wide range of product and service offerings across key markets for the benefit of our customers,” said Christian Ingerslev, CEO of Maersk Supply Service.

Under the terms of the agreement with DOF, the offshore wind sector has been carved out from Maersk Supply Service. In March 2024, Maersk Supply Services announced it would partner with Louisiana-based Edison Chouest Offshore for the offshore wind business. Maersk has a large wind installation vessel currently under construction at Seatrium due in 2025 and with Edison Chouest, they plan to develop a feeder supply network to move materials from shore to the installation vessel.

A.P. Moller Holding reported today the launch of a new company Maersk Offshore Wind which takes the operations for the offshore wind business from Maersk Supply Service. The installation vessel is expected in mid-2025 and is under contract to provide services to the Empire Wind project in New York being developed by Equinor.

Maersk Supply Service was launched in 1967 as the first Scandinavian offshore company and focused on the oil and gas sector. A.P. Moller-Maersk sold the company in March 2023 to its parent company, the family investment company, as the final step for the shipping line to exit the energy sector. However, with the prolonged downturn in the offshore energy sectors, Maersk Supply Service continued to reorganize including launching into the offshore wind sector and ordering a wind installation vessel. In 2023 it also exited its operations in Australia and the Pacific to focus on the wind sector and offshore energy.

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