EU | UK news digest. 5 June
The green race: a new measure of success
By now, it is no surprise that sustainable initiatives are on the list of major priorities for development for many logistics companies. The shift in the paradigm is coming from the customers of transport companies themselves since they are becoming more and more interested in working with the businesses standing for transparency, traceability, and a “green” mindset. It seems like environmental agenda is gradually becoming as equally important factor for customers in choosing the type of transport solutions, as price, quality and transit time. Among the key players driving the trend are Heineken, Phillips, Unilever, DSM, and FrieslandCampina. Having understood where the wind of change blows, the shipping lobby has gotten inspired by the rail sector. Gasunie and port authorities of Rotterdam, Amsterdam, Groningen, and North Sea Port have conducted a study that has shown that to set up a hydrogen exchange in HyXchange, hydrogen certification and an index for price transparency would be a necessity to trade the renewable fuel. Certification of green, low-carbon, and imported hydrogen is needed to pipe a greater volume of hydrogen from a wide range of sources. HyXchange plans to test the first trading products in pilots and simulations, which will further involve the market. Earlier this week, the CEO of AP Moller – Maersk has proposed a carbon tax on ship fuel, motivating his decision by the current necessity to create a range of alternative fuel at scale. One of the best ways is to invest in R&D fund to achieve those goals, and, ultimately, the zero-carbon future. MSC has baked this proposal and joined an industry call to action with UN IMO member states to support the proposal for an R&D that would help catalyze new technologies.
Not only sustainable objectives have been set. This Thursday (3, June) The European Transport Ministers adopted two important setsof Council Conclusions on EU rail and the EU Strategy on Sustainable and Smart Mobility. The strategy aims to double rail freight and to triple high-speed rail passenger transport by 2050. Conclusions touch upon issues of key importance to the development of the sector: the impact of COVID on EU mobility and railways, the need for supporting rail Research & Innovation, the role of modal shift, the importance of TEN-T and rail freight corridors. This event follows the launch of the first trains between Rotterdam and Pordenone in northern Italy by Hupac. The issue between Samskip and Hector Rail has also been resolved. The first trains departed successfully with trailers via Denmark after all partners implemented the modified procedures for safe trailer transport by rail respecting the criteria from the Danish authorities in their rail supply chain. However, according to many industry players, the new measures are considered too strict since the transportation of trailers by rail is already safe, and the incidents on the Great Belt Bridge are an exception. In turn, the Russian manufacturer of freight cars, United Wagon, has obtained approval to operate two of its wagons on the European railway network. The future for The Istanbul-Tehran-Islamabad train project seems less bright in the context of several main problems. The first one concerns a lack of volumes due to political issues in the regions to be crossed. Apart from the lack of transparency between the parties, the sanctions imposed by the U.S. prevent the governments from providing a letter of credit and insurance for transiting cargo through Iran.
The railway industry is trying to indulge in optimization as much as it can. One of the primary objectives includes a further study on the possibility of using three locomotives to run a longer train. The Distributed Power System (DPS) is an initiative that can turn this plan into reality. It allows the use of three locomotives to run a single train, and in the long-term, such development could lead to the use of 1,500 meter-long trains. The first tests proved to be quite successful. The initiative can potentially revolutionize the entire industry.
Despite being destructive on its own, the current crisis has revealed such significant problem as a shortage of skilled drivers. The situation is expected to get worse with the increase in penury by over a quarter on 2020 levels in almost all of the 23 countries included in a recent global survey of road transport firms at a higher rate - by 150% in Spain, 175% in Mexico and 192% in Turkey. For the UK, the adjustment has become more complicated due to the downturn in the trade with the EU. The companies require drivers and workers who can come up with efficient solutions to identify the problems and address them as efficiently as possible.
Continued market uncertainties and extended public holidays have contributed to a 4% drop in global air cargo demand. On the US-Europe lane, there has been a steady decline in the weekly rate since the 2021 high of $2.13 in the week ending 23 March, with the May average down 5% on April. Shippers are also continuing to struggle with the high ocean rates. However, there is hope that, although air cargo rates remain extremely elevated, the addition of capacity in the form of China Airlines and Cathay Pacific flights returning after quarantine restrictions, may have contributed to Asia-US and Europe prices declining by 10% or more on some lanes.
The Evergreen's issue regarding its speed keeps unfolding. On Friday (June, 4) the UK P&I Club disputed claims made earlier by the Suez Canal Authority that the ship’s captain was to blame for the accident that led to the 400 m ship blocking the waterway for six days in March. However, AIS playbacks of the incident do show the ship, traveling in very blustery conditions above standard speed for transits, which is difficult to deny.
