Maersk and Hapag-Lloyd announce ETS surcharge standards, the impact of Detroit auto workers' strike expands丨Foreign Trade News Express

Maersk and Hapag-Lloyd announce ETS surcharge standards

 

 

European shipping companies began to understand thatEuropean Union (EU) carbon emissions regulations due to take effect in January next year will increase shipping costs.The Emissions Trading System (ETS) is an EU initiative to force the decarbonization of its transport sector by introducing a market mechanism for pricing carbon dioxide.

 

The calculation of ETS carbon emissions per TEU is based on the methodology developed by the Clean Cargo Working Group and the market price of EU allowances (EUA). The carbon emissions calculation for voyages in European waters will be multiplied by the market price of EUA, which is obtained from the ICEDEU3 index and averaged over three months to enable carriers to calculate and implement the ETS surcharge per TEU.

 

 

 

The scheme will be phased in, with 40% of greenhouse gas emissions to be paid by September 2025, but covering the period from January 1, 2024. By 2026, carriers will pay 70% of 2025 emissions, and from 2027, carriers will have to pay for 100% of emissions generated in 2026 and beyond.

 

However, Maersk Line and Hapag-Lloyd each issued guidance last week, but there were huge differences between the two major shipping companies in the expected level of additional costs.There remains considerable uncertainty about the level of carbon emissions trading surcharges that may be added to shippers’ bills.

 

Hapag-Lloyd estimates that a container shipped from Asia to Northern Europe will incur an ETS surcharge of €12 per TEU and a reefer container will incur a surcharge of €31, while Maersk suggests thatThe same voyage will cost customers an extra €70 per TEU and €105 per reefer.

 

Hapag-Lloyd’s customer advisory said its figures were “intended to help customers envisage potential supply chain impacts in 2024” but added: “These figures should be used as a guide as the ETS surcharges, including their calculation methodology and estimated prices are estimates and are subject to change.”

 

 

 

Maersk also said it expected EUA levels to fluctuate due to supply and demand fluctuations, but added:The compliance costs are expected to be high and will increase over time as the implementation is phased in. It will come in the form of a separate surcharge known as an emissions surcharge.Applicable to all bookings for voyages subject to the EU Emissions Trading Scheme.”

 

However, the two carriers also revealed that shippers using their green fuel schemes – Maersk’s ECO Delivery and Hapag-Lloyd’s Ship Green – which blend fossil fuels with biofuels and thus reduce greenhouse gas emissions, will not be affected by the ETS surcharge.

 

this month,Amazon has signed an “ECO Delivery” agreement with Maersk to ship 20,000 40-foot containers using green biofuels this year and next.

 

 

US auto workers strike, impact expands

 

 

On September 27, local time, the United Auto Workers (UAW)'s strike against the Detroit Big Three automakers entered its 13th day. There is no sign of a break in the standoff between 146,000 American auto workers and the Big Three automakers. What's worse, thousands of auto workers have joined the strike, causing the scale of the strike to continue to expand.

 

Affected by the strike, everyone from car manufacturers to consumers, as well as auto parts suppliers and auto chip suppliers will likely be affected.

 

 

 

According to CCTV News, on September 22 local time, Shawn Fain, president of the United Auto Workers (UAW), said that the strike of the union's workers will expand to the entire United States, and a new batch of striking workers will strike at 38 locations in 20 states across the country.

 

In his speech, Fein introduced that since the union had made some progress in negotiations with Ford, while negotiations with the two automakers GM and Stellantis were still at a standstill, the strike would be expanded to all parts distribution centers of GM and Stellantis, involving 38 distribution centers of the two automakers in 20 states across the United States.

 

Robert Gulyas, vice president of global automotive and industrial at Crane Worldwide Logistics, noted that the initial strike had little impact on the supply chain.

 

But he warned,If the strike intensifies, warehouses and cargo yards will scramble for space to store unusable parts, he said, adding that in the event of a full shutdown, such facilities would quickly fill up.

 

“The second phase of a general strike would see cargo movements halted and suppliers’ production facilities idled, while finished cars would pile up at factories and containers would pile up at ports.”

 

 

 

Gulyas said that Tier 1 auto suppliers were busy discussing various scenarios ahead of the strike, considering where to place parts and what spare capacity was available. According to most estimates, Tier 2 and Tier 3 suppliers would be the worst affected by a major strike. According to one observer, even a limited strike would be disastrous for these suppliers because of their razor-thin margins.

 

At the same time, Gulyas pointed out that the impact of the strike will not be alleviated immediately with the end of the strike.

 

“Once the strike is over we will see huge demand for urgent freight and it will take time to restart production. There will be shortages of commodities and people will need to charter ships,” he said.

 

It is understood that the UAW officially launched a strike against the three major American automakers in the early morning of September 15th local time. The reason is that the contracts between the American auto workers and the three automakers expired on September 14th. The union demanded that the auto companies increase wages, pensions, medical care, unemployment and other benefits to cope with the cost of living crisis brought about by high inflation in the United States, but the two sides failed to reach an agreement before the contract expired.

 

But Tesla CEO Musk warned that if the UAW's demands were met, the three major automakers would soon face bankruptcy.

 

 

 

Musk posted on social media: "A 40% pay raise and a 32 hour work week will undoubtedly push GM, Ford and Chrysler into the fast lane of bankruptcy."

 

Today, auto markets across the U.S. have yet to feel the effects of the strike — analysts sayIt may be a few weeks before we see a serious shortage of new cars.However, if the prospect of a prolonged strike triggers panic buying, prices could rise more quickly.

 

The U.S. auto industry is concentrated in the Midwest.The auto industry accounts for about 3% of the U.S. gross domestic product (GDP), and Detroit automakers account for about half of the total U.S. auto market.

 

Anderson Economic Group calculated thatIf the strike against the three companies lasts 10 days, the losses will be nearly $1 billion.During the 40-day United Auto Workers (UAW) strike in 2019, GM lost $3.6 billion.

 

 

 

UK port announces job cuts

 

The Port of Liverpool has entered into redundancy consultations with staff at its box terminals, its operator has announced, following a “sustained and significant deterioration” in container volumes.

 

British port operator Peel Ports will cut jobs at its Port of Liverpool, with the number of layoffs possibly reaching 125, following talks with union representatives.

 

There are currently 850 dock workers in the port.The layoff rate is as high as 15%.

 

 

 

Ian Cressy, port director for Liverpool's container division, said: "This is something we have been struggling with for several months and it is the last thing anyone at the port wants to have to deal with."

 

“We deeply regret the impact this will have on our employees, but the continued and severe deterioration in the global container market compels us to act,” he added.

 

Although the Port of Liverpool is not as famous as the Port of Felixstowe, the Port of London and other ports, it also has a long history. It is the main port in the west of England and the busiest Atlantic gateway in the UK.

 

Hit by the double blow of declining domestic demand and Brexit, the container throughput of major ports in the UK reached 9.68 million TEUs in 2022, down 7.5% from 2019.

 

 

Of the four major container ports, only Southampton Port has achieved an increase in cargo volume compared to three years ago, while container throughput at British ports fell again by 12% in the first half of this year.

 

Currently, Liverpool has only two ocean routes, one of which is a vessel sharing agreement route jointly operated by COSCO, Hapag-Lloyd, Mediterranean Shipping Company and Orient Overseas Container Line. The route deploys five ships with an average capacity of 4,500 teu.

 

According to the latest container trade statistics (CTS) data as of July this year, the volume of westbound transatlantic head-leg trade this year has decreased by nearly 500,000 teu compared with last year, a decrease of 14%. Double-digit year-on-year declines have occurred almost every month this year.

 

 

 

Some freight trucks and railway lines in Mexico have stopped operating!

 

 

 

Ferromex, Mexico's largest private railway freight company, announced on the 19th that due to a large number of illegal immigrants trying to "hitch a ride on trains" to reach the Mexico-US border in recent days, the company was forced to suspend freight transportation to northern Mexico.

 

The number of illegal immigrants trying to reach the United States has increased dramatically recently; according to CNN, more than 8,600 immigrants crossed the border in the past 24 hours. Officials from both countries have been working to control the situation to prevent illegal immigrants from boarding trucks bound for the United States. According to reports, more and more families with children are trying to reach the United States through Mexico. At the same time, the number of illegal immigrants trying to "hitchhike" along the railway lines in Mexico has also reached an unprecedented level.

 

 

 

Mexican authorities are working with U.S. Customs and Border Protection (CBP) and Ferromex, Mexico's largest rail operator.

 

Ferromex suspended 60 train lines last week, essentially halting service to the U.S. border, citing a half-dozen accidents and deaths involving migrants. The company said it would not resume service on routes where there was a risk of more such accidents.

 

The rail outage is costing Ferromex up to 40 million pesos ($2.32 million) a day, the company's management said. Other operators have also been affected. Union Pacific announced last week that 2,000 rail cars were stranded at the Eagle Pass, Texas, crossing after the mayor declared a state of emergency. Amtrak also announced a ban on cargo shipped to Eagle Pass.

 

 

Mexico's railway association warned that border disruptions would also affect domestic supply chains, affecting agricultural product transportation, construction materials, auto production and general cargo distribution.

 

Authorities appear to share that concern. On Friday, Mexico’s Foreign Ministry urged the U.S. government not to take “unilateral measures” that would complicate trade.

 

 

 

Source: Shipping.com, One Shipping, Today's Shipping, etc.

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