It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Thursday, January 25, 2024
Quebec environmental group seeks court injunction against EV giant Northvolt
BNN Bloomberg
A Quebec environmental group is in court today against Swedish manufacturer Northvolt, arguing that work on its future electric vehicle battery plant was allowed to begin without proper analysis of the impact on the area's biodiversity.
The Centre québécois du droit de l’environnement began presenting its case in Quebec Superior Court, where it's seeking two injunctions to suspend work on the site of the future $7-billion facility southeast of Montreal.
The group's lawyer presented a number of documents, including one that she described as an assessment from a government biologist who said the information provided by Northvolt was insufficient to evaluate the impact on wildlife on the site.
Lawyer Jessica Leblanc says it was "unreasonable" for the province's Environment Department to have authorized Northvolt to begin work on the site because it didn't have enough information on the environmental impacts.
She said the authorization was also given on the condition that Northvolt propose a compensation plan to mitigate the impacts of the biodiversity loss, but that it was given three years to do so.
The company started felling trees on its 170-hectare site, which straddles the municipalities of McMasterville and St-Basile-le-Grand, but stopped late last week after the injunction request was filed by the environmental group and three citizens.
This report by The Canadian Press was first published Jan. 24, 2024.
Union warns of new 72-hour Metro Vancouver bus strike if deal isn't reached next week
The Canadian Press
The union representing transit supervisors for Coast Mountain Bus Company says it will launch a new 72-hour strike stopping Metro Vancouver buses from operating if a tentative deal isn't reached by next week.
The warning comes after the B.C. government appointed a special mediator in a bid to end the dispute that prompted a two-day shutdown of bus services that ended this morning.
CUPE Local 4500 says in a statement that it welcomes the appointment of Vince Ready, but if a tentative agreement on a new contract for about 180 supervisors isn't reached by 12:01 a.m. on Feb. 3, they will withdraw services for three days.
It also says that if the Labour Relations Board allows it, picketing will be expanded to SkyTrain stations.
The union says this would effectively shut down buses, the SeaBus, and all SkyTrain services.
A different union that represents SkyTrain workers has previously said its members wouldn't cross pickets.
This report by The Canadian Press was first published Jan. 24, 2024.
Transport Canada Gears Up to Remove Derelict Vessels
Hundreds of abandoned vessels in Canadian waters are becoming a threat to the environment, health, safety and coastal economies, according to Transport Canada, and the government is now taking action to deal with the problem. The agency has committed US$1.1 million to remove 34 abandoned vessels in British Columbia waters.
Transport Canada announced that the funds will be channeled to private firms, which will assess, remove and dispose of the abandoned and wrecked vessels as part of measures aimed at protecting its coasts and waterways. The abandoned boats targeted for removal include recreational and small commercial fishing vessels. B.C. is the epicenter of the problem and has by far the largest number of abandoned vessels.
The government says that apart from being an eyesore, the vessels have negative economic and environmental impacts. They can pollute the marine ecosystem, damage infrastructure, interfere with navigation and pose a safety risk.
“This investment into the Abandoned Boats Program will help further reduce the number of legacy problem vessels in Canadian waters. Every vessel removed is another step towards protecting and nurturing the delicate marine environment, which is one of our main priorities under the Oceans Protection Plan,” said Diane Lebouthillier, Minister of Fisheries, Oceans and the Canadian Coast Guard.
Canada's Oceans Protection Plan makes vessel abandonment illegal, but the country is recording a significant increase in the problem. Since 2017, funding has been approved for the removal of 223 boats, but this will only make a dent in the problem. The Canadian Coast Guard's inventory of wrecked, abandoned or hazardous vessels show the country’s waters are littered with about 1,500 abandoned vessels.
Since the passage of the Wrecked, Abandoned or Hazardous Vessels Act in 2019, individuals and firms found guilty of abandoning vessels face stiff penalties. Last year, the owner of the sunken Spirit of Kelowna located in Shuswap Lake, British Columbia, was slapped with a US$19,800 fine for failing to comply with the law.
Crowley reports it has accepted delivery of the first fully electric tugboat built in the United States. The vessel which was called a “game changer” by San Diego port officials when it was ordered in 2021 will now complete final demonstration trials and be transported to California when it is expected to enter service in the spring.
Named eWolf, the vessel was built in a collaboration involving Crowley, which will own and operate the vessel, along with federal, state, and local government partners. The vessel was designed by Crowley and uses ABB’s integrated electrical propulsion system. The tug was constructed by Master Boat Builders at its shipyard in Coden, Alabama with on-site construction management by Crowley Engineering Services.
Croley highlighted when the vessel was ordered in July 2021 that it would feature a design that allows it to operate fully electric with full performance capabilities and zero emissions. The eWolf has six megawatt-hours of energy storage, enough for the vessel to operate for a full day. For backup and longer transits, it has two generators on board. It is expected to reduce NOx emissions by 178 tons and CO2 emissions by 3,100 metric tons during its first 10 years of service. It replaces a conventional tug that consumes more than 30,000 gallons of diesel fuel each year.
eWolf is 82 feet long with 70 tons of bollard pull. It also employs ABB’s artificial intelligence technology to increase safety and has a unique 360-degree visibility capability. The vessel began sea trials late last year.
"The eWolf demonstrates where the maritime industry can go, in terms of both innovation and sustainability, with solid partnerships between owners, designers, suppliers, and shipyards," said Garrett Rice, president of Master Boat Builders. "We are proud to have partnered with Crowley in the construction of the eWolf and look forward to seeing her at work in San Diego very soon."
Crowley reports work is also underway to complete the microgrid shoreside charging station at the Port of San Diego to support the vessel’s operations.
The new tug joins the growing trend of using batteries and electric propulsion for harbor craft and inland shipping. Last year, Kirby Inland Marine commissioned the first inland towing vessel in the U.S. which is a plug-in hybrid electric inland towing vessel. New Zealand, Canada, and China have deployed electric tugs and Turkish shipyards have begun their construction for multiple customers. The Port of Antwerp-Bruges reported last October that it had ordered a vessel that was likely to become Europe’s first all-electric tugboat.
Japanese Order First Mid-Sized Ammonia-Fueled Ammonia Carrier
Japanese project signed construction contracts for a medium-sized ammonia dual-fuel ammonia carrier
A Japanese consortium of companies working on a project sponsored by the government to develop ammonia shipping reports it has reached the point where it can now begin to build one of the first ammonia-fueled ammonia carriers in the world. The group, which includes NYK, Japan Engine, IHI Power Systems, and Nihon Shipyard, reports it signed construction contacts last month for a vessel which they expect to complete by November 2026.
The new vessel is being reported as “the world’s first ammonia-fueled medium gas carrier.” It will have a transportation capacity of 40,000 cbm of ammonia fuel and be powered by an ammonia dual-fuel two-stroke engine produced by Japan Engine. The goal is to achieve a 95 percent combustion rate on the ammonia fuel mix. In addition, IHI will provide the auxiliary ammonia-fuel auxiliary engine with a mixed combustion rate of 80 percent or higher. The vessel will be built by Japan Marine United Corporation at its Ariake Shipyard.
The consortium was launched in October 2021 as part of a program sponsored by Japan’s New Energy and Industrial Technology Development Organization (NEDO) with ClassNK joining to provide the risk assessments. The effort developed a prototype that overcame the key challenges associated with ammonia and received an Approval in Principle in September 2022. After further research and development, they have agreed to proceed with the construction of the ship, which they believe will contribute to the practical application of ammonia-fueled ships.
They highlight key challenges including the need to manage the toxicity and reduce risk for the crew and the ship. The design they said must prevent leakage from the pipes and tanks. Also, because ammonia is a flame retardant, they have to achieve stable combustion. The vessel also has to treat the potential of nitrous oxide (N2O) emissions which may be generated during ammonia combustion and are a more potent greenhouse gas than CO2.
The effort has already reached key milestones including IHI Power Systems achieved the first stable combustion for ammonia fuel at an 80 percent co-firing rate in a four-stroke engine. The design of the vessel will optimize the hull for ammonia transport. NYK engineers have been consulting to provide proposals on the safety measures for the ship.
They expect that the project as one of the first for ammonia-fueled ammonia carriers will contribute to understanding and knowledge as well as help to shape the regulatory environment. They note that the International Maritime Organization is still studying potential rules for ammonia as there are no international rules in place today for ammonia as a fuel. They note that the consortium has already proposed draft safety requirements and expects to contribute to international rule-making.
The next steps in the project include detailed studies for the vessel’s construction. They will also produce an operating manual for the ship.
The Japanese effort is in addition to programs underway in South Korea. The three major shipyards have each recently begun accepting orders for large ammonia carriers. They anticipate that these vessels will transition to ammonia-fueled propulsion as the technology and regulatory environment is completed.
Japan highlights the critical nature of developing the ammonia value chain. They anticipate a strong demand for transportation capabilities as ammonia emerges as a fuel. They also anticipate that it will be used for co-firing of thermal power plants and as a hydrogen carrier.
Rising to the Challenges of CO2 Shipping
CO2 carrier concept developed by MOL and Petronas (illustration MOL / Petronas)
Somewhat paradoxically, CO2 will be required to help decarbonize the shipping industry, and that CO2 must often be shipped around the world. From ship design to containment systems, we must view these vessels as part of the wider supply chain says Sean McLaughlin, Strategy Consultant at design and engineering consultancy Houlder.
While CO2 has been transported by sea for nearly fifty years, we will soon see a fast-growing demand to move larger volumes of CO2 in order to support efforts to decarbonize shipping and heavy industry. Forecasts for growth in demand for CO2 shipping are largely based on the expanding network of sequestration routes for CO2 captured from industry.
There is also a potential new demand from within the maritime industry. Captured or biogenic CO2 is needed to produce some net-zero emission e-fuels – specifically e-methanol and e-methane (e-LNG). This will be sourced from a combination of carbon captured from land-based industry and from capture equipment onboard ships. In addition, there is an expectation that significant quantities of CO2 will be captured directly from the air.
Changing CO2 carrier designs
The growth in reuse opportunities is expected to give rise to new routes and potentially different CO2 carrier designs. Shipowners cannot rely on a repeat of previous designs that fail to recognise the number of variables for key areas such as cargo containment.
It is not just those who plan to build dedicated CO2 carriers that need to be aware of the challenges. As onboard carbon capture becomes more commonplace, almost every ocean-going ship type has the potential to become a CO2 carrier and will need to contain the captured carbon onboard.
CO2 purity
One of the key challenges when it comes to CO2 shipping is that not all CO2 is the same. CO2 purity is primarily dictated by the method of its capture and the source of the CO2 – for example exhaust gases or an industrial or chemical process.
It’s not just a percentage game, as the nature of the impurity is often as relevant as its quantity. The level and type of impurity will have implications for the sizing and type of the onboard containment, the liquefaction plant and it is even relevant to the sequestration processes. This will impact on both CAPEX and OPEX decisions.
Carbon capture technologiess
There are several types of carbon capture technology with a large number of companies developing equipment that can be installed onboard. Even though carbon capture itself is not a new activity, it has historically been done as part of an industrial process, and capturing CO2 from an exhaust gas stream has only been a focus for the last ten to fifteen years. The challenges of capture in a marine environment have only been tackled in more recent years. The shipping industry must engage with carbon capture technology providers if the challenge of moving this process onboard is to be overcome. It’s also of equal importance that the industry understands the challenges of the whole logistics chain if the opportunities of onboard capture and bulk LCO2 transport are to be grasped.
Misconceptions or misunderstandings could result in significant over-specification of storage tanks or liquefaction plants resulting in unnecessary CAPEX or constraints on the vessel's operations. There is also the potential of a ‘baked-in’ OPEX problem resulting from significant and potentially unnecessary increases in non-revenue earning cargo weight and energy consumption in the associated containment plant.
The macro view
Zooming out, we must also remember that it is not enough to simply capture CO2 – we must effectively sequester or reuse it to reduce greenhouse gas emissions. This requires alignment between the ship and onshore infrastructure. CO2 shipping (as a primary cargo or as a consequence of onboard capture) is a clear example of how we must view the ship as part of the whole logistics chain, rather than in isolation.
We cannot expect coordinated end-to-end CO2 supply chains to “just happen” either – proactive cross-industry collaboration is seen as vital. This was one of the key findings of the Houlder Navigator decarbonization whitepaper developed one year ago by interviewing shipowners who own or operate vessels in various segments.
Rising to the challenges of the decarbonization transition means embracing new paradigms and ways of operating, rather than the gradual evolution that shipping has previously been used to. Being bold, challenging assumptions and avoiding being stifled by traditional ways of working are all highly relevant when developing new CO2 supply chains and rising to the challenges of CO2 shipping. If we take this onboard, the nascent onboard capture and CO2 shipping sectors present exciting opportunities.
Sean McLaughlin is a strategy consultant with Houlder.
Indonesia Struggles to Implement Illegal-Fishing Rules
Indonesian authorities intentionally sinking foreign-flag fishing vessels during the administration of Fisheries Minister Susi Pudjiastuti (Indonesian Ministry of Fisheries file image)
Seven years after ratifying the Port State Measures Agreement (PSMA), Indonesia has just four compliant fishing ports. It is facing challenges implementing the agreement at these ports, as well as in raising the number of compliant ports, according to the government.
The PSMA helps countries take measures in their fishing ports to prevent illegal, unreported and unregulated (IUU) catch from entering supply chains. Ports can inspect foreign fishing vessels and deny entry or services to vessels involved in IUU fishing.
So far, 68 countries have ratified the agreement. Indonesia ratfied it in 2016.
There’s no official data from the Indonesian government on economic losses resulting from IUU fishing. However, Rokhmin Dahuri, former marine and fisheries minister and current advisor to the government, told a meeting in September 2020 that he believes it averages one million tonnes per year, or US$3 billion.
The four ports compliant with the PSMA comprise three ocean fishing ports – Nizam Zachman in Jakarta, Bungus in Padang, Bitung in North Sulawesi – as well as Benoa, a regular port in Bali that also services tuna vessels. These were selected by the government because they are accessible to foreign reefer ships, which have a draft exceeding nine meters.
The fisheries ministry has acknowledged operational challenges with implementing the PSMA at these ports.
Tri Aris Wibowo, fisheries port director at the ministry, said a lack of officers working in the ports and inadequate port facilities, such as a lack of deep berths, were key challenges in complying with the PSMA.
Three other ports are under consideration for PSMA implementation: Marunda in Jakarta, Tanjung Perak in Surabaya, and Tanjung Wangi in Banyuwangi. While not considered ocean fishing ports, these can all accommodate foreign vessels with nine-metre drafts.
However, there is a debate about the focus of the PSMA implementation, with some arguing it should target all of the country’s 578 fishing ports. Most of these are in the west of the country and serve far fewer, and smaller, ships than the ocean fishing ports.
Sri Yanti, acting director of marine and fisheries affairs at the national development ministry, said “eastern Indonesia is still limited” in terms of the development of its fishing port infrastructure.
Ports in the west tend to be better equipped with the necessary infrastructure and resources to manage larger foreign vessels and enforce the PSMA.
“We are limited in human resources, facilities, and port conditions are still below requirements. That’s our challenge,” said Sri Yanti.
To implement the PSMA, Indonesia had to ensure it had the right legal and regulatory framework in place, and to develop its institutional capacity to carry out inspections and monitor compliance. Minimum port service standards encompass elements such as speed in document checking and inspection accuracy.
Zulficar Mochtar, CEO of Ocean Solutions Indonesia (OSI), an NGO, noted that Benoa port has been inspecting foreign-flagged ships on issues like crew changes and fuel consumption, which can indicate involvement in unreported fishing.
The overall number of ports ready for PSMA implementation in Indonesia remains small when compared to countries like Thailand, which has at least 23 PSMA-compliant ports.
Mochtar says the PSMA plays a vital role, similar to border control, for foreign vessels, encompassing checks on purpose of visit, documents, travel tracking, and IUU fishing history.
He highlighted the national and global challenge of insufficient data in addressing IUU fishing. Global data sharing on IUU is needed among all ports, he stressed, while advocating for more comprehensive monitoring of the movement of fishing vessels worldwide.
Weak data, Mochtar argued, is undermining the effectiveness of policies and strategies. Data for boats, production, fishers, and productivity are still limited, he said.
“It is easy to monitor, inspect and block through the PSMA mechanism. But, if there is no traffic data and indications from those violators, it will be hard to implement.”
He said that challenges for the PSMA include the sharing of vessel records, which can indicate IUU violations, implementing the protocol and standards of the PSMA, and capacity building. “Without these three, PSMA will not be optimal,” he said.
Moh Abdi Suhufan, the national coordinator of Destructive Fishing Watch (DFW) Indonesia, an NGO focusing on sustainable fisheries issues, underscored the need for integrated monitoring and law enforcement under the PSMA.
In addition to deterring illegal fishing, he stressed the importance of ensuring that crews on ships transiting or landing in the PSMA-compliant ports are not subject to forced labor or human trafficking. Currently, there is a lack of mechanisms and tools to monitor crews in PSMA ports in Indonesia, said Suhufan.
Ari Syamsudin is a freelance journalist based in Jakarta, Indonesia.
This article appears courtesy of China Dialogue Ocean and may be found in its original form here.
WAR IS ECOCIDE
Video: Ukrainian Drones Hit Russian Refinery at Port of Tuapse
Just days after a suspected drone strike disabled an LNG terminal at Ust-Luga, Russia, Ukrainian forces hit a Russian refinery at the Black Sea port of Tuapse. The port is hundreds of miles behind the front lines, and the attack reflects the efficacy of Ukraine's new long-range suicide drones.
Bystander video showed a column of flame and smoke ascending from the center of the complex, near a distillation column. The fire was extinguished within hours, local officials said. The extent of the damage and its effects on refinery operations are not yet known.
Russian media outlets have also released bystander videos of what appears to be a drone aircraft buzzing towards the refinery complex before impact, confirming Ukrainian claims.
The Rosneft-owned refinery is part of a vast tank farm complex extending inland from the seaport, and it is the only Russian facility of its kind on the Black Sea coast. No impacts on the waterside infrastructure or the storage tanks were reported.
The effects on global energy markets appear to be slight. According to TankerTrackers.com, Tuapse only exports about 100,000 barrels per day of petroleum - a relatively small fraction of total Russian output, which is measured in millions of barrels per day.
In addition to the attacks at Ust-Luga and Tuapse, petroleum facilities have also been hit recently in St. Petersburg, Tambov and Bryansk. The string of attacks may be intended to blunt a widely-anticipated new Russian offensive.
A dredger has gone down at its berth at the port of Mykolaiv, Ukraine, spilling petroleum into the harbor. Environmental monitoring is under way, according to local authorities.
Ukraine's State Environmental Inspectorate reports that the dredger Ginger went down at the port of Mykolaiv on January 15. The cause was not reported, but photos and water quality sampling showed evidence of worsening pollution from the wreck. As of January 19, petroleum concentration in the water was about 15 times normal limits.
The inspectorate has called for pollution-abatement measures. So far, a cleanup has not begun; the sunken vessel joins a long list of other recovery projects in the war-torn country.
Ginger was a 1966-built hopper dredger of 1,700 dwt in size. It was also known as the Severodvinskiy, and was recently owned by a Canada-based firm.
Ukraine May Have Sunk Another Russian Warship
Ukraine has used one-way attack drones to target Russian warships (SBU file image)
A Ukrainian partisan group reports that Ukraine's Navy sank a small Russian warship in December, without acknowledgement from either Moscow or Kyiv.
Satellite imagery appears to confirm that a small surface combatant or patrol boat has sunk alongside a pier in Sevastopol's inner harbor.
Based on images taken before the sinking, the vessel appears to measure 180 feet long and has gray topsides. This would be consistent with a Project 1241 Molniya missile corvette (NATO reporting name Tarantul), of which several are in service in the Black Sea Fleet.
Open-source analysts and Ukrainian media have identified the vessel as a Project 205P patrol boat (NATO reporting name Stenka), a much smaller patrol vessel with a similar Soviet name.
The timing of the satellite imagery suggests that the vessel sank in December. Ukrainian media outlets have reported it as a likely hit from a drone-boat strike a few weeks back; Russia has not acknowledged the loss, and the Ukrainian military does not always claim responsibility for successful attacks.
Though challenged by equipment shortages on the battlefield ashore, Ukraine has had considerable success attacking Russia's Black Sea Fleet, both in port and under way. Among many other strikes, in September it destroyed a Kilo-class submarine and a tank landing ship in Sevastopol, then hit the fleet headquarters building with a cruise missile. In October it hit a patrol ship off the coast of Sevastopol; in November it destroyed two small landing ships and a brand new corvette; and in December it destroyed another landing ship, setting off large secondary explosions. In its highest-profile attack, in 2022 Ukraine sank the fleet's flagship, the cruiser Moskva.
Red Sea Crisis is Disrupting the Electric-Car Industry
The Tesla Berlin-Brandenburg plant (Michael Wolf Penig / CC BY SA 3.0)
Automotive giants Tesla and Volvo have announced pauses to the production of their electric vehicles (EVs) in Europe. Electric vehicles are seeing record sales and demand worldwide, but a lack of parts means that factories cannot sustain their production.
The reasons for this are complex. Parts are taking longer to deliver as attacks by Houthi rebels force ships to avoid the Red Sea. And there are also issues around the monopoly that Chinese factories hold on many EV components, including crucial lithium batteries.
These factors have made it harder (and more expensive) to move parts across the globe to support EV production in Europe.
Modern global supply chains are tightly orchestrated. Moving goods to factories (and away from them to customers) is heavily demand-driven. Forecasting this demand has become a huge industry, valued at over US$27 billion.
But even with all this intelligence, political tensions, pandemics and even stuck ships can turn this industry on its head overnight. This is particularly the case where the supply side is constrained, as it is with EV batteries from China.
In 2021, a container ship called the Ever Given ran aground in the Suez Canal, blocking this vital shipping route from the Far East to Europe for the best part of a week. The blockage prevented goods from passing through the canal, so had the knock-on effect of raising container shipping prices.
Even though the Suez Canal has been open for two years, the recent attacks on commercial ships in the Red Sea have caused shipping companies to divert their ships to less direct routes – adding significant costs and time.
What does this mean for consumers and the planet? And are there ways for EV manufacturers to circumvent these risks?
Supply chains are fickle things
If manufacturers cannot produce due to shortages, then factories that make a single product such as Tesla’s gigafactory near Berlin (which produces the best-selling Model Y SUV) have one option – to idle the lines. Hourly-paid workers are sent home and where possible, salaried staff will continue in other roles such as safety checking and testing.
Tesla and Volvo have other factories and other product lines that can keep running. But even finished vehicles traveling from plants in China for sale in Europe are affected by the need to avoid the Red Sea. Vehicle manufacturer, Geely, which also produces Volvo vehicles in China, has warned of delays to European consumers expecting their new cars in early 2024.
Delays are not the only issue associated with shipping parts and vehicles around Africa to avoid the Red Sea. The 3,000 extra miles traveled by ships means they burn more fuel – a lot more fuel.
Peter Sand, a shipping analyst at ocean and air freight analytics platform, Xeneta, has estimated conservatively that each ship taking this route produces 2,700 extra tons of CO?. If the international shipping industry were a country, it would already be among the world’s top carbon-emitting nations. And greenhouse gas emissions from ships are projected to increase by up to 50% by 2050.
EVs are undoubtedly better for the environment than their combustion engine counterparts. However, when supply is constrained, buyers often have little choice but to delay making the switch. Sales figures from 2023 show that private buyers still did not purchase as many EVs in the historically buoyant month of September as they did in the year before due to uncertainty in the market.
Fleet demand remains strong. But the market can only grow as fast as manufacturers can make cars. And pausing production is not going to help the transition.
Can manufacturers square this circle?
Clearly, these pinch points in the global supply chain have huge repercussions for manufacturers and consumers. Tesla’s factory in Germany is tight-lipped about actual production figures, but reports claim it makes around 4,000 units per week. Each car makes around US$8,000 profit, so this shut down could, in raw terms, lead to a loss of US$64 million in profit.
How do they prevent this? Supply chains do have some element of elasticity, but supply chain managers are always keen to reduce the potential of something known as the “bullwhip effect”. This is where marked differences in order quantities lead to even more shortages down the line. Managing expectations and reassuring buyers will thus help to smooth any issues with supply.
Making supply chains more resilient is also a huge area of research. Rerouting ships to prevent lost components is an example of this concept being put into practice.
If the parts were lost to rebel forces or pirates by taking the Red Sea route, then the revenue loss would be even larger. So although diverting routes is worse for the planet and arguably bad press, it would seem to be the lesser of two evils.
Multinational automotive manufacturer Stellantis has announced that it is instead bypassing the Red Sea by air-freighting parts to its EU factories. But, while this is faster than shipping parts around Africa, it’s not good for either CO? emissions or cost.
Stellantis is relying on airfreight to cope with temporary supply disruptions. Summit Art Creations/Shutterstock
Keeping the global economy running
To reduce the disruptive potential of geopolitical tensions, Tesla and other automakers are attempting to produce their product closer to the consumer. The strategy is to put factories on each continent or geographical area where their products are sold.
However, as China still produces many of the core EV parts, manufacturers will have to invest heavily in their suppliers and put them closer to their factories.
Ultimately, this will require investment in skills and more factories. But with dropping profit margins, Chinese manufacturing dominance and inflationary pressures, it will continue to be a headache to implement.
Tom Stacey is a Senior Lecturer in Operations and Supply Chain Management at Anglia Ruskin University.
Ttwo years after the invasion of Ukraine prompted a big shakeup in Europe's energy supplies, the evolving security situation in the Red Sea is reshaping trade flows once again.
According to tanker trade tracker Kepler, multiple EU-bound tankers are rerouting around the southern tip of Africa in order to avoid the risk of Houthi attacks off Yemen.
“European countries are seen as complicit in the Israel-Hamas war. They would rather go around the Cape of Good Hope versus taking a chance through the Red Sea," he told CNBC.
Since tankers move slowly, this increases the delivery timetable for oil flows from the Middle East to Europe by a matter of weeks, and increases the time required for the return journey by just as much. This reduces tanker availability, increases delivery cost, and makes other suppliers in the Atlantic basin more competitive (for some commodities).
European customers are turning to American and Brazilian refiners to source diesel more often, according to CNBC, and reducing dependence on longtime suppliers located east of Suez.
The disruption is a new wrinkle for commodity traders and refiners serving the EU market. Until 2022, Europe sourced 20 percent of its oil from Russia, along with much of its imported diesel. EU governments decided to phase out those supplies after the invasion of Ukraine, sending a signal of opposition and forcing Russian producers to find new markets. To substitute those lost Russian barrels, Europe turned to other suppliers in the Mideast and (for refined products) India. With access to the Red Sea now less certain, these suppliers are less accessible and affordable, forcing another adjustment in EU sourcing.
China and Russia Get a Free Pass Through Houthis' Red Sea Blockade
Houthi servicemembers on patrol in the Red Sea (Houthi Military Media file image)
The elevated security risk in the Red Sea has been bad news for almost every shipowner, but some parties may end up benefiting - or at minimum, may be able to continue their business as usual.
American and Israeli shipping interests are at risk of attack, but Houthi leaders have explicitly said that Russian and Chinese vessels will be guaranteed safe passage. “Our goal is to raise the economic costs for [Israel],” Houthi spokesman Muhammad al-Buheiti told Izvestia last week. “As for all other countries, including Russia and China, their shipping in the region is not threatened."
Chinese shipping interests appear to be aware of this exception. Many China-linked ships have been broadcasting "All Chinese" or "Chinese Ship" as their AIS "destination" during transits through the Red Sea. Likewise, some ships with Russian cargoes have been broadcasting some variant of "Vessel No Contact Israel."
The proportion of Chinese shipping in Red Sea container traffic has been rising dramatically, according to Lloyd's List, though total container traffic has plummeted). One brand new Chinese carrier even appears to specialize in Red Sea transits. Recently-launched Sea Legend Shipping operates a fleet of seven Panamax boxships that run between China and Turkey, calling at ports in the Gulf of Aden and the Red Sea on the way out and back. It even calls periodically in Yemen (Aden) and serves the Houthi-controlled port of Hodeidah through a transshipment connection. (Lloyd's List first identified Sea Legend's niche service.)
Sea Legend has benefited from naval escort protection from China's PLA Navy, the company says - a relatively rare advantage. The PLA Navy has been conspicuously absent from the allied policing operation off Yemen, though it has warships in the area and a large base in nearby Djibouti. Sea Legend's site highlights that in "the style of a great country, flying the five-star red flag, the Chinese navy escorts" its vessels. It also lists the scheduled transit times for PLA-protected convoys.
The Red Sea-Suez route is by far the fastest option for ocean freight between the Far East and the Mediterranean. The alternative is a trip around the southern tip of Africa, which adds about 10 days onto a typical container ship voyage, raising cost and imposing delays on customers. Vessels that can continue to use the Suez Canal may have a competitive advantage relative to their peers.
The comparative safety for Russian and Chinese vessels may have political roots. Russia's government has railed against the UK-U.S. security operation in the Red Sea and against the Israeli operation in Gaza; both of these positions align with the Houthis' demands. The Russian Foreign Ministry has called the anti-Houthi naval mission "a violation of Article 2 of the UN Charter" and a risk to regional stability.
For its part, China has called for a ceasefire in Gaza and an Israeli-Palestinian peace conference, aligning with Houthi demands. It also has a close relationship with the Houthis' Iranian sponsors, according to the White House. “China has influence over Tehran, and they have the ability to have conversations with Iranian leaders [about the Houthis] that we can’t," National Security Council spokesman John Kirby told Politico on Tuesday.
