Latest supply chain news: Black Sea disruption, new EU fuel standards and Canadian port strikes

Mon 31 Jul 2023
Posted by: Phillip Adnett
Trade News

odessa

In the latest of the IOE&IT Daily Update’s supply chain round-ups we look at electric vehicles, strikes, shipping in the Black Sea and new EU standards for maritime fuels.

Black Sea shipping

After Russia’s withdrawal from the Black Sea Grain Initiative last week, commercial shipping faces an uncertain future in the region.

Both Moscow and Kiev announced that any ships sailing to enemy-controlled ports would be treated as hostile, although legal experts noted that this was illegal under international law.

Lloyd’s List reports that ships entering the Black Sea are being contacted immediately by Russian authorities and questioned as to their intentions, with several crews reportedly concerned for their safety.

IMF chief economist Pierre-Olivier Gourinchas warned that his organisation was estimating a 10% to 15% increase in grain prices as a result of the withdrawal.

NATO said that it had stepped up patrols and monitoring of the situation, adding that it welcomed Turkey’s efforts to “revitalise” the grain deal. Egyptian president Abdel Fattah al-Sisi urged Moscow to rejoin the deal on Friday, putting pressure on Russian president Vladmir Putin as he looks to shore up diplomatic support across Africa and the Middle East.

FuelEU

The European Commission signed off on its FuelEU maritime initiative last week (26 July).

The package is part of the EU’s ‘Fit for 55’ package, unveiled two years ago, that calls for a reduction of carbon emissions of 55% by 2030 and carbon neutrality by 2050.

The rules include:

  • Measures to ensure that fuels used by the shipping industry will see their greenhouse gas intensity slowly decrease over time, by 2% in 2025 to as much as 80% by 2050
  • Incentives to encourage the uptake of renewable fuels
  • Requirements for passenger and container ships to use on-shore power supply while dockside

Further, funds raised by the scheme will be funnelled back into supporting maritime decarbonisation. The new rules are expected to take effect from 1 January 2025.

Raquel Sánchez Jiménez, Spain’s transport minister, said the new law would provide “legal certainty for ship operators and fuel producers and help kick-start the large-scale production of sustainable maritime fuels”.

Maritime Executive notes that FuelEU’s environmental ambitions stand in contrast to recently announced actions of the International Maritime Organization (IMO). The IMO’s own plan, set out earlier in July, was criticised for being “vague” and “weak” by environmental groups.

Canadian port strikes

Dock workers on Canada’s west coast called off industrial action after leaders tentatively agreed to a new deal with port management.

The on-again, off-again strikes saw direct intervention from Canadian prime minister Justin Trudeau and Canadian courts, as well as billions of dollars of goods backed up in British Colombian ports.

Barry Eidlin, McGill University associate professor of sociology, told CBC that unrest may be on the horizon again, as the decision needed ratification from members across the province. The deal brokered was reportedly on very similar terms to an agreement rejected by leaders a few days earlier, which Edlin said gave the impression of it being “rammed through”.

Freight journalist Lori Ann LaRocco wrote that the strikes affected more than just Canadian trade flows, with vessels re-routed and goods delayed up to a month.

UPS agrees deal with Teamsters

Another tentative agreement with workers, this time featuring members from the package carrier UPS, was reached last week.

The Guardian reported that the Teamsters union announced on Tuesday (25 July) that a deal had been reached. Members of the collective bargaining committee endorsed the decision, but any agreement still needs approval from the membership.

Local representatives are expected to review the deal in late July, with a full membership vote expected between 3 and 22 August.

NBC reported that most details had already been agreed to before the crunch talks took place last week. If a deal had not been reached by 1 August, 340,000 UPS employees would have launched the largest single-employer strike in US history, threatening global supply chains.

EV fire

Another deadly fire on board a ship carrying electric vehicles has prompted calls for a re-think of how such cars are shipped.

The Fremantle Highway, a vessel transporting over 500 electric vehicles, remains ablaze off the Dutch coast, with multiple attempts at extinguishing the fire reportedly failing. The fire caused the death of one crew member and injuries to several others among the 21-person roster, all of whom were Indian nationals.

Reuters reports that an IMO spokesman said the maritime body plans to re-evaluate regulations surrounding the transport of electric vehicles, which remain combustible due to overheating of the batteries used for power.

However, multiple experts told the Loadstar that the current methods of carrying the vehicles inside box shipping containers remains unsatisfactory, with some suggesting that this made the problem worse.

GCaptain notes that the Fremantle Highway is the latest of a series of fires involving the transport of electric vehicles, with other incidents including the sinkings of the Felicity Ace in 2022 and the Grande America in 2019, as well as blazes aboard the Grande Costa D’Avorio earlier this year and the Höegh Xiamen in 2020.

The fires resulted in fatalities and casualties among crew members and rescuers, including the deaths of two Italian firefighters aboard the Grande Costa D’Avorio.