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Supply chains across the globe are bound to remain trapped between economics, politics and the environment shortly. The extent of regionalization or nearshoring is yet to be determined. Who will be the winner, and who will be left out in this increasingly competitive environment?
Logistics experts then discuss the potential and challenges facing global supply chains in 2023. There is no doubt that a variety of elements are involved. Numerous shippers and companies in the logistics and transportation industry are currently under intense pressure.
The reason for this is a range of ongoing issues, such as the pandemic, massive rises in the cost of energy, huge fluctuations in demand and supply of transport capacity, delays in port transhipment and bottlenecks in back-country transportation. In addition, many countries have seen double-digit inflation.
The Russian war on Ukraine impacts the flow of goods. Meanwhile, disruptions to distribution chains as well as the dependence of the West on imports, continue to increase the discussion on relationships with China. In addition, there is the environmental issue and the need to figure out how to cut down on CO2 emissions and manage the costs of doing this.
During these unprecedented challenges, industrial and commercial businesses are analyzing their supply chains and looking for ways to improve their operations and solutions. One option is to shift back to warehousing more efficiently to achieve more stability in the availability of products of all types, which has not always run efficiently in recent months. However, the economy is no immediate alternative for international trade and production.
As we continue to move forward, it is evident that global supply chains will not just require innovative risk management strategies and enhanced climate-friendly practices. According to experts from the German Freight Forwarding and Logistics Association (DSLV), One thing is for certain the future is to consider every carbon reduction to consideration and harness the potential of climate change in a step-by-step manner wherever feasible and feasible.
“We will require fewer resources and reduce emissions through modern technology and efficient technological processes. Switching to low-emission transportation forms, motors or fuel, is the most effective method to increase sustainability in the transport industry and logistical processes,” say DSLV experts.
Freight rates remain high.
The strategy of just-in-time deliveries, which has been used for a lengthy period, will often not be assured in all locations. Consignors with high volumes have the advantage of market power, allowing them to pressure port terminals, shipowners and transport businesses to adhere to just-in-time delivery dates.
Along with delays in deliveries worldwide, the massive increases in freight prices caused problems for shippers in the past year. Consignors hope that costs for freight will slowly decrease to pre-pandemic levels.
But, Rolf Habben Jansen Hapag Lloyd’s CEO, Hapag Lloyd, pointed out in a press conference held online that the substantial rise in fuel prices will result in shipping companies having to be faced with freight rates that range from 20-30 per cent greater than what they were two to three years before. He believes that shipowners will face challenges in planning for the long term all over the world and will have to rely more heavily on periodic adjustments to rates and services.
The major seaports, like Rotterdam the largest port in Europe and the largest port in Europe, will react to rising costs by implementing moderate price increases that range from 2.5 per cent to 3 per cent, as per Siemons Boudewijn, COO of Port of Rotterdam Authority. The other ports also are likely to implement price hikes for 2023.
The gradual adoption of CO2 tax within the EU Shipping in the maritime sector accounts for about 3 per cent of the world’s CO2 emissions, according to the report released in October 2017 by the International Council on Clean Transportation (ICCT). Around 60,000 larger merchant vessels, as well as 6000 container ships, are operating across the world’s oceans.
In October 2022, the International Chamber of Shipping (ICS) set its target to achieve climate-neutral shipping in 2050. In 2018, the International Maritime Organization (IMO) has already set the goal of reducing emissions by 2050 to at least 50 per cent lower than the year 2008. The EU plans to cut CO2 emissions and impose taxes on shipping before.
Within the EU Emission trading system (EU ETS) framework, A CO2 tax for vessels of more than 5,000 gross tons (GT) and over will be implemented in the EU in three phases from 2024 until 2026. Certain shipping firms, including MSC and MSC, have informed customers about cost increases shortly. The shipping industry has estimated additional costs to be between $192-$202 for a standard 40-foot container along the northern Europe-U.S. East Coast Route.
The experts at DSLV say that it is crucial to ensure that introducing a CO2 tax within the EU region doesn’t result in any disadvantages in competition. The same competitive conditions for international shipping are crucial to the global market. In the view of shipowners and shippers, the IMO should establish global regulations promptly.
At the time, the advanced alternatives to shipping fuels were in the early stages. The production, distribution and commercialization of alternative renewable fuels and the expansion of shore-side power sources for inland and sea ports are crucial actions to cut greenhouse emissions in the transition to carbon-neutral shipping.
Green Shipping
Shipping lines are increasingly using modern vessels that have significantly improved standards for environmental protection in addition to advanced propulsion systems and eco-friendly fuels. It’s not a secret that the demand for climate-friendly transportation chains is growing.
One of the largest carriers in the world, companies like Maersk provide their customers with specific “green shipping offers.” EcoDelivery is one example. It uses climate-neutral fuels. They include, for instance, organic waste, vegetable fats, and fats from food industries. The CO2 saved is used as part of the carbon accounting of shippers, and the total amount of 3% of the total volume of cargo Maersk carried was shipped using climate-neutral fuels in the third quarter of 2022.
The EcoDelivery charge for a 40-foot container used in important trade zones, like trans-Pacific, Far East and trans-Pacific, was about $200-$300 per container in 2022. If you can convert it to some of the 30,000 T-shirts and 6,000-8,000 pairs of footwear that could fit inside a box at $0.007 per T-shirt, that’s not an enormous cost per product.
Consignors’ interest in EcoDelivery is growing steadily in the opinion of the shipping firm. According to Maersk, customers using EcoDelivery comprise H&M, Electrolux, Lenovo and the Danish fashion brand Bestseller.
The shipping firm recently ordered 19 container ships powered by green methanol, a climate-neutral fuel. Between June 2023 and 2025, a feeder ship, as well as 18 container ships that have slots between 16,000 and 17,000 TEU, are to go into use with Maersk.
The company is also moving towards a climate-neutral land-based approach. It is currently building or leasing warehouses with very low emissions and is using electric vehicles in the terminals it owns. Currently, 300 electric-powered trucks are operating predominantly within the United States, and an additional 140 e-trucks are placed on order.
More LNG Terminals Are Opening In Europe
The Russian conflict of aggression against Ukraine impacts Europe’s security in the supply of energy. In addition, locating new gas supply nations and developing LNG terminals is an important goal. Today, 41 LNG terminals in various European countries have a total capability of 241 billion cubic meters, which is enough to supply about 40 per cent of Europe’s natural-gas demand. There are another 32 LNG terminals under construction in Europe.
Stationary LNG terminals are being planned for four German ports. Each will handle approximately thirteen billion cubic meters of gas annually. When they are completed, four floating LNG terminals will operate from the beginning of 2023. As much as 22.5 milliard cubic metres of LNG annually will be transported through these terminals in all four German ports along the North and Baltic Sea coasts.
In 2022, before December, there were no LNG terminals in Germany which could be utilized for the discharge of LNG tankers. Before that, only a small amount of liquefied natural gas had been shipped by truck to other European ports, such as Rotterdam and Antwerp, which have been operating LNG terminals for years.
It is expected that the German LNG terminals, currently under construction, will later in the future time be integrated into the infrastructure that will allow for the import of hydrogen to achieve zero carbon emissions. Sources of low-CO2 energy, including pure hydrogen and hydrogen derivatives like ammonia, will be brought into the country.
Wilhelmshaven will be an “energy hub” for green energy along the German North Sea coast. It planned to construct an electrolysis facility to produce hydrogen gas and an ammonia cracker which will convert ammonia produced in a climate-friendly manner into hydrogen.
Olaf Lies, Lower Saxony’s Minister of Economic Affairs, Transport, Building and Digitalization Recently, Olaf Lies, Lower Saxony’s Minister of Economic Affairs, said: “The new LNG terminal is a significant step toward secure energy supply. The decision to pick Wilhelmshaven as the location to receive LNG exports is the best. The existing port infrastructure, as well as the favourable conditions, have made the project successful.”
Europe’s largest plant for green hydrogen is scheduled to be constructed in Maasvlakte 2. It is located in the Port of Rotterdam. Shell has taken the final decision regarding the investment for this plant, and it will be called Holland Hydrogen 1 and is scheduled to start operation in 2025.
The hydrogen produced will fuel Shell Energy and Chemicals Park Rotterdam. It will also reduce the carbon footprint of the production process of fuels such as gasoline, diesel, and jet fuel. When heavy-duty trucks come to market, and refuelling infrastructures increase, renewable hydrogen sources could be directed towards helping to reduce carbon emissions in transportation on commercial roads.
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The Largest & Biggest Logistic Industry In The World