Month: October 2019

Fiat Chrysler Automobiles (FCA) and PSA Group-owned Peugeot have just announced a $48 billion merger, creating the fourth-largest carmaker in the world. 

The joint press release acknowledged “a new era in sustainable mobility” and the subsequent need for industry leaders to make “bold and decisive moves.”

While this merger may appear to focus on product development, Jessica Caldwell, Edmunds’ executive director of industry analysis, thinks it suggests more about funding research on electric and autonomous vehicles.  

“The electrified, autonomous future everyone is waiting for just isn’t feasible without automakers merging and forming strategic alliances to share research and development costs,” she said. “This is a smart move by both Fiat Chrysler and PSA to ensure their companies continue to be viable and relevant as the industry evolves.”

Executive leadership of this new company will be in the hands of Carlos Tavares, former CEO of PSA, for a five-year term. John Elkann, Fiat board chair, will be the chair of the new company. The company will keep its Fiat Chrysler headquarters in the Netherlands, but also have a North American office in Detroit, Michigan. 

“This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity,” said Tavares. “I’m pleased with the work already done with [Mike Manley, CEO of FCA] and will be very happy to work with him to build a great company together.”

Together, the companies will have 410,000 employees and a shared annual revenue of $190 billion. Last year, the companies sold 8.7 million vehicles, putting them ahead of General Motors. 

This merger comes several months after Fiat Chrysler proposed a 50-50 merger with its French rival Renault, but that fell through when French government representatives asked for the vote to be postponed. The French government owns 15% of Renault. 

The FCA and PSA merger doesn’t come without its own set of issues. Factory workers for Vauxhall, also owned by PSA, are concerned about whether they’ll keep their jobs. The Unite union has been seeking an appointment with PSA leadership on the workers’ behalf. 

Global automobile sales have also been down, which cause concerns about an impending recession. But stricter emissions regulations in China and Europe have motivated automobile companies to invest in electric and autonomous technologies that have the potential to shift traditional industry models. 

The often-maligned former president
George W. Bush was known for statements of simplicity. But love him or hate
him, Bush was profoundly correct when in Stockton, California in 2002 he told
the crowd of farmers and ranchers he was speaking to, “I’m thrilled to be here
in the breadbasket of America, because it gives me a chance to remind our
fellow citizens that we have an advantage here in America. We can feed
ourselves.” He was derided mercilessly by the media for that statement, but
some countries don’t see the joke. One of those countries is China.

Despite the importance of U.S. food
production on a worldwide scale, the agrarian-based economy of America’s past
is history. Several economic revolutions later, agriculture accounts for a mere
1% of U.S. gross domestic product. However, as a bargaining chip on the world
stage, U.S. agriculture far outweighs its low percentage of domestic economic
activity.

Throughout the ongoing trade dispute
with China, pundits have criticized American negotiators for concentrating on
low value products. But to governments that cannot feed their populations, the
value of U.S. agricultural production is much higher. Well over half of U.S.
agriculture is exported to other nations around the world, and the largest
recipient of our foodstuffs is China. A country of almost 1.4 billion people, China
cannot feed itself. 

China is currently experiencing a
pork shortage as African Swine Fever ravishes its pig population, doubling the
price of “the other white meat.” Pork is the most frequently consumed meat in
China, and a staple in millions of Chinese homes. This unfortunate
epidemic is the perfect opportunity for American farmers and agricultural
haulers in heavy hog production states like Illinois, Iowa, Minnesota and North
Carolina to retake their market share, which has previously accounted for 14%
of pork in Chinese supermarkets.

And it is not only pork that
American agricultural producers and carriers can expect to profit from this
year. China is expected to import almost 3.4 million tons of rice – some of it
from the U.S., which is a huge opportunity for American farmers and
transporters. And of course another highly popular food in China is soybeans,
which are used in everything from processed foods to tofu to swine feed. Though
the recent trade war and swine flu has impacted soybean imports from U.S.
growers, China still imported 6.51 million tons in July 2019 according to the U.S.
Department of Agriculture.

But the importance of American agriculture
is not just about the tonnage of soybeans sent to China. For instance, the
United States ships large amounts of corn to Mexico, a country with which the U.S.
has a totally different type of relationship than it does with China. The U.S.
has used corn as a major negotiation tool with Mexico and has used a comparable
strategy around the world in every type of negotiation, from embargoes of rogue
regimes to humanitarian aid to Africa. 

So while some are worried about the
lack of product to haul out of West Coast ports if the trade war does ramp up,
it is important to remember that there will always be activity in hauling the nation’s
agricultural production. After all, while popular sentiment may portray China
as a looming economic giant that threatens to dethrone the U.S., it’s good to remember
which nation can feed itself and which cannot. 

Europe’s leading truck manufacturers might have already been fined over $4 billion for historic price fixing, but further claims look likely.

Manufacturers DAF, Daimler/Mercedes, Iveco, MAN, Scania and Volvo/Renault were found guilty of violating European Union competition rules by the European Commission (EC) in 2016 and 2017 and fined €3.8 billion ($4.2 billion).

The Commission found that over
a 14-year period, senior managers at the manufacturers fixed truck prices,
agreed the cost that truck buyers should be charged for emissions technologies
and delayed the introduction of more fuel-efficient emissions technologies.

A number of class action claims are currently underway against truck manufacturers as a result of the EC’s findings and one of them, launched by the United Kingdom’s (U.K.) Road Haulage Association (RHA), made serious headway this week.

The RHA is seeking compensation on behalf of thousands of hauliers who suffered financially as a result of what it calls the “cartel action” of truck manufacturers. It won the first round of its legal action earlier this week when the U.K’s Competition Appeal Tribunal (CAT) ruled that the RHA is fit to proceed with its collective claim.

 “This is a very important milestone in what may prove to
be a lengthy journey to recover compensation rightfully owed to truck
operators,” said Richard Burnett, CEO of the RHA.

 “The RHA is delighted that the Tribunal has recognized the
ability of the RHA as a ‘well-established trade association’ to bring this
collective claim, while at the same time rejecting outright attempts by the
truck manufacturers to stifle the RHA’s claim at the outset.

“We are fully committed to seeing this process through to the end
and it is a real achievement to have had such a clear victory at this early
stage in the proceedings.”

The RHA’s proposed collective claim, which it has estimated could total more than $6 billion, covers all trucks over six tons of any make. It relates not only to trucks purchased or leased in the United Kingdom, but also to trucks purchased or leased in other European countries, provided the operator belongs to a group of companies that purchased or leased trucks registered in the United Kingdom.

“The RHA is claiming for trucks sold both during the cartel
period – 1997 to 2011 – and afterwards to the present
day. The claim also covers new and second-hand trucks,” said a statement.

UK Trucks Claim (UKTC) is also seeking to bring a collective
claim on behalf of truck operators.

The second part of the RHA’s collective proceedings order
application is now expected to be heard by the CAT around October 2020 with a
judgement expected a few months later.

“The RHA expects the claim to run for several years but is confident that compensation will be awarded in due course,” said a statement.

No response was forthcoming from MAN, DAF or Iveco at the time this article was published.

More articles by Mike

Everoad, the French-based road freight digitalization startup, has announced a strategic partnership with French mass-retailer Groupe Casino to help the retail major in its efforts to digitalize its supply chain. Spanning four years, the contract is worth a total of €100 million, making it one of the largest supply chain digitalization contracts awarded to a logistics startup in Europe. 

“We are a digital freight forwarder. We are competing with classical 3PLs [third-party logistics providers] and 4PLs [fourth-party logistics providers] from the industry and are managing transport for our customers who want to ship goods in Europe by working with companies that own carriers across Europe,” said Maxime Legardez, the CEO and founder of Everoad. 

Legardez explained that Everoad owed its existence to the challenges the European freight transport market witnesses – in the context of excessive fragmentation, logistical inefficiency and incumbent players who refuse to reinvent themselves. 

In its initial days, the startup engaged with small- and medium-sized enterprise businesses to help with their shipping needs. More than 80% of its business today is derived from companies that have over €1 billion in annual turnover. 

“Everoad provides its shippers better visibility into their supply chain by giving them multiple dashboards. There they can follow up on every single load, check on waiting times at pickup and delivery, and even enjoy price predictability on their loads,” said Legardez. “We help them save a lot on their shipping costs. All the companies that have worked with us have realized at least a one-digit percentage of savings by the end of the year of association.”

With Groupe Casino’s expansive supply chain, Everoad sees a great deal of potential. The startup plans to deploy its machine learning algorithms to the retailer’s digitalization infrastructure, improving visibility into transport capacity, gaining track-and-trace functionalities, and unlocking dynamic pricing possibilities. The company believes that this will help Group Casino to have an eagle-eye view over its operations, which translates to better real-time control of its supply chain. 

Everoad currently digs deep into the European road freight scene, working with roughly 5,000 carriers that jointly represent over 300,000 trucks. “We are really focussing on carriers that have one to 20 trucks, because we believe that is where we can add the maximum value. These carriers are the ones that need support because they aren’t invited to tenders that major players like Unilever or Procter & Gamble put out. We are really happy to be the partner of such smaller carriers,” said Legardez. 

Apart from running a digital freight marketplace, Everoad has also built out an elaborate ecosystem that caters exclusively to trucking fleets and drivers. The startup has partnered with French financial institution La Banque Postale to provide invoice factoring, and with truck manufacturer DAF and Bridgestone to sell trucks and tires at discounted prices on its platform. 

For Legardez, the now-announced partnership with Groupe Casino does not come as a surprise, as it is an extension of the startup’s successful collaboration with the retailer over the last year. 

“For us, the aim is to accelerate and be the leader of freight movement in Europe. Apart from reducing transport costs by digitalization, we also optimize the number of empty kilometres, give companies access to dedicated analytics tools that can help them better monitor their supply chain,” said Legardez. “Today, about 60-70% of our loads are fully automated, which means that there will be no human intervention from the minute the shipper publishes a load to the minute the carriers upload their invoice on the platform.”

Everoad’s partnership with Groupe Casino is vital for the startup’s continued growth within the European market. This can be confirmed by the company’s goal of hitting €1 billion in annual turnover by 2023 – an effort that would need immense growth, both in terms of freight volume and geographic footprint.

Maersk is teaming up with big shippers to test a new marine fuel made from plant fibers that aims to mitigate ocean freight’s contribution to climate change.

The Copenhagen-based company said the pilot project will include automotive logistics company Wallenius Wilhelmsen, Copenhagen University, BMW Group, H&M Group, Levi Strauss & Co. and Marks & Spencer.

Together they plan to study the use of a blend of ethanol and lignin called LEO. Lignin is a plant fiber and a byproduct of ethanol production and pulp and paper mills. It is often incinerated to produce steam and electricity.

Copenhagen University is running the laboratory-scale development of this potential marine fuel. Testing the fuel on actual vessel engines could begin in the second quarter of 2020, according to Maersk.

“Shipping requires bespoke low-carbon fuel solutions which can make the leap from the laboratory to the global shipping fleet,” said Maersk Chief Operating Officer Soren Toft. “Initiatives such as the LEO Coalition are an important catalyst in this process.” 

The testing of LEO comes on the heels of a study from Maersk and Lloyd’s Register that said biomass-based alcohols are among the most promising alternatives to crude-oil-based marine fuels.

The largest emitter of greenhouse gases in container shipping, Maersk has been actively testing alternative fuels. In June, Maersk trialed carbon-neutral shipping on a vessel powered by a cooking oil-heavy fuel mixture.

Helena Helmersson, Chief Operating Officer of H&M Group, which was part of the June biofuel trial, said the fast fashion retailer is “committed to reduce our impact in every aspect of our value chain, including how our products are shipped to consumers around the world.”

Maersk is also part of the Dutch Sustainable Growth Coalition (DSGC), a consortium of multinationals including Shell, Unilever, Philips and Heineken that are promoting the use of biofuels in shipping.

“Our customers’ ambitions on sustainability are increasing rapidly, and we applaud this development. Clearly, LEO would be a great step forward for supply chain sustainability, and it has the potential to be a viable solution for today’s fleet, and not just a future vision,” said Craig Jasienski, Wallenius Wilhelmsen Chief Executive Officer.

Much like the road freight industry in the U.S., its European counterpart suffers from similar issues with fragmentation and low visibility into logistics operations, brought about by the lack of digitalization across large swathes of the market. 

Through its customs regulations, the European Union has done away with the need for border customs by enabling uniform regulations across its member nations, there are a significant number of languages and work cultures that European supply chains need to contend with, putting a strain on movement in an industry that runs heavily on interpersonal relationships between stakeholders. 

InstaFreight, a Berlin-based digital freight forwarding company, is ushering in greater efficiency within the European logistics ecosystem by connecting shippers and carriers on a digital platform. The company acts as an actual freight forwarder by finding the right carrier without multiple subcontracting.

“We are not a freight exchange platform but rather the contractual party, much like a classical forwarding company. What we do differently is that we use our technical and digital expertise to improve everything related to freight transport,” said Philipp Ortwein, Co-Founder and Managing Director of InstaFreight. 

InstaFreight aggregates over 10,000 carriers on its platform, making it easy for shippers to stick to InstaFreight for their capacity needs – however large they may be. “The first thing we did was to consolidate supply and demand, and then proceeded to make sure everything is digitalized for the shipper,” said Ortwein. “For instance, our pricing algorithm lets shippers get their price quotes digitally within seconds. We have a detailed understanding of which carrier drives on which lanes and of the equipment they have available. This enables us to quickly find the suitable carrier.”

The pricing algorithm constantly learns from data points and helps the company recover smarter while guaranteeing fair prices based on daily conditions. Once the quote is accepted, InstaFreight’s carrier matching tool suggest carriers based on their experience in the lane and the availability of suitable equipment from which a suitable carrier is selected. 

InstaFreight also provides shippers with a track-and-trace solution, allowing them to locate their freight in real-time as it moves to its destination. The startup has also built a control tower solution that is accessible by shippers who move high freight volumes. This solution helps shippers coordinate several transports on an all-in-one interface, eliminating the need for them to call up individual dispatchers to know their freight whereabouts. Shippers can not only use this and other functions via the web-based interface but also via an API.

“We have several data sources to get the track-and-trace information. The primary one though is the on-board telematics system,” said Ortwein. “We use the location-based data off the GPS on the truck to calculate the estimated time of arrival and inform shippers proactively.”

Other sources for track-and-trace are data gleaned from InstaFreight’s application and through personal communication with the registered dispatchers. 

InstaFreight considers traditional freight forwarders such as DHL, Kuehne & Nagel and DB Schenker to be their competitors in the market, but does better through the digitalization layer it offers to its customers. The company currently has over 2,000 active customers on its platform, with them citing access to new capacity, end-to-end transparency and hassle-free transport handling to be the primary reasons for using InstaFreight. 

The
CMA CGM Group is expanding its logistics footprint by investing in Wing, an
urban e-commerce logistics operator.

The container shipping giant,
which is headquartered in France, has “taken a position” in Wing for an
undisclosed sum via its investment fund, CMA CGM Ventures.

“At the same time, CEVA
Logistics, a subsidiary of CMA CGM that joined the Group this year, entered
into an ambitious industrial and commercial partnership with Wing,” reported
the liner and logistics major.

“The two companies will thus
implement cross-selling initiatives and CEVA Logistics will make space
available to Wing in its warehouses.”

CMA CGM refused to disclose the
size of the investment or shareholding in Wing when approached by FreightWaves.

The French carrier claimed the deal was “a concrete illustration” of the synergies between CMA CGM and CEVA, the third-party logistics (3PL) services provider purchased in April that some analysts believe is putting pressure on CMA CGM’s liquidity and adding to its already high debt levels.

CEVA was ranked 13^th among global 3PLs by revenue in 2018, according to Armstrong
& Associates.

CMA CGM said it would support the
development of Wing “by forging with it an ambitious financial, industrial and
commercial partnership,” adding that the investment in Wing would benefit both
Wing and CEVA customers.

“This merger will enable the two
companies to offer their respective customers innovative new services with high
added value in the field of urban logistics,” said the statement. “

Wing, founded in 2015, currently
provides urban supply chain solutions to more than 300 e-retailers in leading
cities in France by helping them optimize their e-commerce logistics.

“With just a few clicks from an
online platform, Wing customers see a courier show up to pick up orders sold on
the internet,” said a CMA CGM statement. “These are then deposited in a
logistics warehouse where they are packaged and shipped. In less than 48 hours,
orders are delivered to the end customer.”

Nicolas Sartini, CEO of CEVA
Logistics, said the purchase would help realize the digital innovation strategy
of Rodolphe Saadé, chairman and chief executive officer of the CMA CGM Group.

“The Group also confirms its
willingness to offer its customers ever more innovative services throughout the
logistics chain,” he added.

Jean-Baptiste Maillant, Founder and President of Wing, said CMA CGM’s involvement would help Wing develop its long-term vision. “Their very strong development in logistics provides us with important synergies to offer a complete and innovative service to our respective customers,” he added.

More articles by Mike

An object’s
center of gravity is a matter of physics. In matters of business, by contrast,
there are man-made centers of gravity. These are governed by the desire to make
money or, at least, to avoid losing money. Logistics is the study of the
constraints of time, physical space and location that arise when moving
freight/people/information from origin to destination. Interestingly, those
logistical constraints can be matters of physics too. In particular, transportation
costs can make or break a sales transaction.

This is
especially true when the buyer and the seller are some physical distance apart
with challenging terrain and/or bodies of water in-between. The terrain and/or
bodies of water will determine the nature of the infrastructure available to
for-hire carriers. The buyer-seller transaction is possible if a carrier is
available to move the item across the available infrastructure. But the
transaction is not possible if the cost of carriage, when added to the item’s
sale price, is simply too high for the buyer. This may be due to lack of
competition in the for-hire carrier market or to the physical constraints of
the distances involved given the current state of technology.

Logistical constraints
need to be managed in order to control the costs of doing business. Centers of
gravity exert the force of attraction. When market conditions change by a large
enough magnitude, business activities will be attracted to a new center. Only
an equal and opposite force can fight this gravitational pull. What happens
when these centers of gravity change and what does it take to maintain current
ones in the face of such change?

Consider the
current U.S.-China trade war. The United States has chosen to fight this war primarily
with import tariffs. As a result, all U.S. supply chain managers who deal with the
inbound flow of China’s tariff-targeted imports know that the landed cost of these
items will be higher. It is not just the tariff-adjusted sale price of the item
that is higher, but also the cost of customs compliance.

Some supply
chain managers have already adjusted away from China, choosing instead to
source from nearby Taiwan, Vietnam and/or South Korea. On the export side, U.S.
food and agricultural products are good cases in point. From a peak of $25
billion in 2014, China-bound exports fell to about $9 billion this year. The
slide accelerated beginning in 2017 when the first serious talk of a trade war
began. U.S. tariffs on China were met by countervailing tariffs by China on U.S.
food and agricultural exports.

In a similar
fashion to outbound China supply chains the inbound China supply chains of food
have been shifting away from the United States to other countries in this
hemisphere such as Canada for wheat and lobster, and Brazil for soybeans.

The effect
of this shift can be seen sharply at the Port of Oakland, since about half of its
export volume is in agricultural products. With its proximity to California’s
farm sector it is an important exit point to Asia’s food markets. The port has
seen a rise in shipments to Taiwan, Vietnam, South Korea and Japan as U.S. farmers
sought to avoid China’s tariffs on their products.

A consequential
shift in the center of gravity might occur should enough manufacturers of low-cost
consumer goods move beyond the Far East into countries like India and
Bangladesh. If these countries replace the Far East as the manufacturing center
of gravity, it is possible that some transport routes might avoid the Malacca
Strait heading to U.S. West Coast ports and use the Suez Canal and the
Mediterranean Sea heading to U.S. East Coast ports. If the new pool of low wage
workers is to be found in and around India this possibility must be considered.
In fact, A.T. Kearney’s report this year on U.S. trade policy and reshoring
noted that the move of manufacturers from China toward India has been in motion
long before the current trade war.    

Ted Stevens
Anchorage International Airport (ANC) is another logistical center of gravity.
In this case it is a gateway to the United States for outbound Asia air cargo.
About 80% of this traffic lands at the airport for refueling. Why should that
be when these air cargo planes are quite capable of overflying Anchorage? It
comes down to what ANC’s management team calls keeping their airport “sticky.”

Anchorage
has both geographic and operational advantages that are unique along the “great
circle” between Asia and the lower 48 states. Great circles are the shortest
distance between two points on a sphere. Geographically, Anchorage is just
about the distance (i.e., 4,400-4,800 nautical miles) a fully loaded jumbo or
wide-body U.S.-bound air cargo plane can go from, say, Hong Kong. So, if the
intent is to fill the planes in Asia with more revenue-earning cargo and less
cost-inducing fuel, it makes sense to land and refuel in Anchorage. It also
helps that ANC works hard to keep its landing fees and fuel charges very low by
industry standards. ANC is centrally located at 9.5 hours flying time to 90% of
the industrialized world. This makes it an excellent air cargo trans-shipping
point.

This operational advantage is accentuated by ANC’s innovative air cargo transfer program. Belly-to-belly transfer of U.S.-bound cargo between a foreign air carrier’s planes or between those of two different foreign air carriers is illegal at any other airport in the continental U.S. In fact, ANC’s management team has had to work hard to convince skeptical Asia-based carriers that this quasi-cabotage activity is quite legal.

What makes
it hard to believe at first is why the United States would offer such a
unilateral trade benefit to countries like China and Japan. Basically, Alaskans
can thank the advocacy of the late Sen. Ted Stevens when he wrote this unique operation
into a re-appropriation bill for the Federal Aviation Administration (FAA) back
in the mid-1990s. At ANC, airport managers know that their air carrier customers
can literally fly away, so they must be imaginative to maintain the airport’s
center of gravity against other U.S. and Canadian airports looking to attract
Asia-U.S. traffic.

Strategy is
typically informed by some vision of the future. The further into the future the
more the uncertainty. But uncertainty needs to be confronted and not avoided by
simply limiting mission statements and strategies to five- to 10-year
timeframes. Sticking with Alaska and thinking ahead over the next few decades,
consider the fact that the Arctic is steadily warming and its ice cap is
melting. Therefore, imagine the day when the Northwest Passage between the
Beaufort Sea and Baffin Bay becomes navigable to deep draft ocean vessels on a
year-round basis. Centers of gravity for ocean freight may well change. In this
scenario, ports along the Aleutian Islands archipelago (e.g., Adak and Dutch
Harbor) may become strategically important as bulk and container trans-shipping
points. Ocean vessels heading along the “great circle” between Asia and U.S.
West Coast ports could stop at such a port and switch cargo with vessels
traveling routes between Asia and Europe via the Northwest Passage.   

Singapore’s
importance in trade began in the early 19^th century when the British
East India Company established it as a port of call in the spice trade. It has
worked hard to maintain its center of gravity in container trans-shipping. The strategic
question for the future is “will global climate change give Alaska a new place
in the sun?” Who knows – one day a port out in the lonely Aleutians just might
become the “Singapore of the North.”

The
European Union (EU) has agreed to a Brexit extension of three more months
rather than see the United Kingdom plunge out of the bloc with no deal on
October 31.

After a meeting of European ambassadors, Donald Tusk, president of
the European Council, announced 27 EU member nations had agreed to Prime
Minister Boris Johnson’s request for an extension.

“The EU27 has agreed that it will accept the U.K.’s request for a new flextension until January 31, 2020,” he tweeted. “The decision is expected to be formalized through a written procedure.” 

The latest extension removes the immediate threat of a no-deal Brexit on the scheduled October 31 departure date, an outcome the freight industry expected would cause supply chain chaos across northern Europe.

The
extension until January 31 announced this morning (October 28) includes an
option for the U.K. to leave the EU earlier if Parliament approves the
withdrawal agreement Johnson agreed to with the EU earlier this month.

Under the Johnson agreement, the whole of the U.K. will leave the EU customs union, enabling the U.K. to agree to trade with other countries in the future. A customs border between Northern Ireland and the Republic of Ireland will be established legally, but in practice goods crossing this border will not be checked. Rather, a customs border will be established between Great Britain and the island of Ireland.

Johnson pledges undone

Johnson
had previously pledged the U.K. would Brexit on October 31, “no ifs, no buts …
do or die”. He is now widely expected to join opposition parties to push for a
December general election to break the Parliamentary impasse that blocked his
deal last week.

While Britain’s political deadlock continues, U.K. transport
bodies have welcomed the decision by the EU to extend contingency measures to
help reduce air and road supply chain disruption in the event of a no deal
Brexit, an outcome that remains possible despite the extension announced today.

The road haulage contingency measure, which was due to expire on
December 31, 2019, is now valid until the end of July 2020, while the aviation
access contingency has been extended from March 2020 to October 24 2020. 

“The extension of the No Deal contingency access is welcome news
for logistics companies currently preparing for Brexit and is something which
FTA [the Freight Transport Association] has been lobbying for on behalf of its
members,” said Sarah Laouadi, FTA’s European Policy Manager.

“Both agreements will allow some degree of continuity, but it is clear that permanent solutions should be reached to enable businesses to plan efficiently for long-term business stability and avoid yet another cliff edge.”

Brexit labor shortages

As previously reported in FreightWaves, while political machinations continue in the U.K., shippers are already relocating distribution and storage capacity to continental Europe in expectation that Britain’s eventual exit from the EU will reshape Europe’s logistics landscape.

As well as losing business to rivals overseas, U.K. logistics
companies are also struggling with labor shortages as the number of EU
nationals immigrating to the U.K. for work plummets.

In a new publication titled FTA’s Logistics Skills Report 2019, the
FTA notes that
declining EU net migration has
contributed to a 43% rise in job vacancies in the transport and storage
industry over the past 24 months.

“The logistics sector is facing serious challenges in the recruitment and retention of labor: 59,000 HGV drivers alone are urgently needed to keep just to keep operations afloat,” said Sally Gilson, Head of Skills Campaigns at FTA.

“Businesses
within the logistics sector are reliant on access to EU workers to help fill
job vacancies; these workers currently constitute 13% of the entire logistics
workforce.”

According to the report, the number of EU nationals moving to the
U.K. for work is now more than 50% lower than its peak period between June
2015-June 2016.

“With the Government now investigating an Australian Points Based
System, the focus for future immigration is still focused on higher skilled
workers,” said Gilson.

“FTA is urging Government to build its future immigration policy
on what the U.K. economy needs to remain functional – not arbitrary academic
levels and minimum salary requirements.”

 More FreightWaves articles by Mike

Maersk said its goal of carbon-free shipping will be best reached with new types of marine fuels based on alcohol, renewable natural gas and ammonia. It is urging refiners and fuel producers to start research into how these fuels can be produced at scale to reduce the shipping industry’s contribution to greenhouse gas emissions.

The world’s largest shipping fleet by size, Maersk is also the largest producer of greenhouse gases in container shipping. The company’s total carbon dioxide emissions reached 39.165 million tonnes last year, up 9% from a year earlier, according to Maersk’s 2018 corporate social responsibility report. 

Total fuel use rose 16% from a year earlier due to having a larger fleet and more operating days for its vessels.

But the Copenhagen-based company has reduced carbon emissions 41% relative to its 2008 baseline and is “10% ahead of the industry average” in reducing greenhouse gas emissions. By 2030, it plans to cut carbon emissions by 60% relative to 2008 levels. 

Maersk has also set the goal of zero carbon dioxide emissions by 2050. The International Maritime Organization is tasking container shipping overall with cutting emissions by half relative to 2008. Shipping is responsible for up to 3% of the world’s greenhouse gas emissions, Maersk said. 

Carbon emissions are becoming a more important issue across ocean freight’s customer base. Kuehne + Nagel, the largest ocean freight forwarder in the world, said it will offer a less-than-container load service in 2020 that will be carbon neutral. By 2030, Kuehne + Nagel expects that its asset-based partners in ocean, air, and land transportation will also be carbon neutral.      

In a study done with ship registry Lloyd’s Register, Maersk said the “best-positioned fuels for research and development into net-zero fuels for shipping are alcohol, biomethane and ammonia.” 

Maersk Chief Operating Officer Soren Toft said, “These three are the right places to start. Consequently, we will spend 80% of our focus on this working hypothesis and will keep the remaining 20% to look at other options.”

Each of the fuels presents different opportunities and challenges. Alcohols, both ethanol and methanol, are easily handled and can be created from renewable resources such as biomass or renewable hydrogen. 

Methanol is already being used by some ships as a fuel. Yet it also requires retrofitting ships with larger fuel tanks since alcohol fuels are less energy-dense than regular marine fuel. 

Natural gas from renewable resources such as biomass also offers an additional pathway to carbon-free shipping. But the marine fuel industry needs to ensure against “methane slip,” the emission of unburned methane, which is a major source of greenhouse gas emissions.

Ammonia can be produced from renewable electricity and its energy conversion rate is higher than that of other renewable fuels. But ammonia is highly toxic, making it more difficult for crews to handle.

As current marine engine technology can handle these fuels, Toft said “the main challenge is not at sea but on land” as the marine fuel industry must “produce and distribute sustainable energy sources on a global scale.”

“We need to have a commercially viable carbon neutral vessel in service 11 years from now,” Toft said.