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Supply chain; a year in review

Dec 19, 2023 | , , , , , , , , , , , , , , , , , , , ,

2023 was supposed to be the year that global supply chains bounced back from pandemic lockdowns and factory shutdowns, trade wars, tariffs and war in Europe, but now container shipping is disrupted by attacks in the Red Sea and restrictions on the Panama Canal.

The COVID pandemic and its aftermath, with supply-side fluctuations, shipping delays and port congestion created a logistics storm so brutal that many wondered if supply chains would ever recover.

The dramatic increase in consumer spending during the pandemic that left shippers scrambling for air, road and sea space, quickly fell away at the beginning of the year as consumers faced potential recession and a cost of living crisis.

That fall in demand provided the breathing space for carriers and ports to resolve their capacity and performance issues, clear backlogs and reposition equipment effectively, with markets reverting to pre-pandemic levels in terms of capacity and pricing.

The uncertainties surrounding tariffs, trade wars and geopolitical tensions remain, but there has been no significant move away from China, though we are seeing some diversification of sourcing, with Vietnam and Bangladesh - among other origins - increasingly popular.

While container shipping demand fell away the global shortage of RoRo capacity for finished vehicle shipments led to some car manufacturers to acquire their own vessel assets, while others looked to our containerised shipping solutions, for cheaper sea freight movement and certainty of service.

On the air freight front, having joined the Air France, KLM, Martinair Cargo Sustainable Aviation Fuel (SAF) programme in 2022, we were extremely pleased to support their second sustainable flight challenge in the summer, which was followed a few months later by the first transatlantic SAF-powered crossing, accelerating the transition to a more sustainable airline industry.

Metro’s road freight division has grown significantly in 2023, with more team members joining our UK Birmingham HQ and new support operations located close by manufacturing hubs in Desford and Wythenshawe.

Under new leadership the road freight team have increased European FTL/LTL capability, adding more lanes and expanded our groupage offering, alongside the increasingly popular European Distribution (EU/DDP) solutions. 

As the UK deferred post-Brexit food checks for the 5th time, to avoid adding to food inflation, the EU expanded its Emissions Trading System to the container shipping sector, in a move that will cost carriers, and by extension shippers, $Billions from the start of 2024.

In a move that took the market by surprise (but shouldn’t have) the European Commission announced that it would not renew the container shipping sector’s Consortia Block Exemption to operating alliances in 2024.

Despite the initial panic, it is likely that the EC’s decision will have little real impact, particularly as the Maersk and MSC 2M alliance was already ending, with the others likely to reorganise into new structures.

With 2024 just weeks away, scheduled Trans-Pacific and Asia to North Europe container shipping capacity was up 30% and 10%, raising fears of a massive blank sailing program to try and support rates, but now, with the Suez Canal transit suspended and Panama Canal disruption, we may see increased rates and delays, with air freight’s popularity rising.

We are hopeful that the US and coalition navies can restore maritime security quickly, because the prolonged re-routing of vessels away from the Suez Canal, via the Cape of Good Hope will increase transit times and costs, with a massive reduction in available capacity and a return to equipment imbalances.

Whatever challenges 2024 may bring, you can rest assured that we will keep you informed and protected, because we always have your back covered.

KLM Boeing 787 10 Dreamliner

Supporting sustainable fuel for air and sea freight

Dec 6, 2023 | , , , ,

As we move into our second year of Sustainable Aviation Fuel (SAF) investment, with Air France, KLM, Martinair, it is great to see the successful transatlantic flight, greater SAF availability and increasing options for green sea freight transport.

The first transatlantic flight by a large passenger plane powered only by SAF landed in the US last week, demonstrating our belief that a greener way of flying freight is possible and that SAF as the most effective tool to help bring net emissions down to zero.

The doubling of SAF biofuel production in 2023 was encouraging as is the expected tripling of production expected in 2024.

However, demand for SAF is not the issue, because every drop produced has been bought and used, it is unlocking supply to meet demand that is the challenge which needs to be solved.

As a portion of renewable fuel production SAF will reach 6% in 2024 and aviation needs between 25% and 30% of renewable fuel production capacity for SAF, so we are on the trajectory needed to reach net zero carbon emissions by 2050. 

There have also been big green steps in container shipping, with carriers investing in energy efficiency for new vessels, while retrofitting their existing fleet for efficiency. 

Shipping lines have been embracing biofuel in the form of methane, methanol or fuel oils, because they promise a convenient way to reduce carbon emissions due to their ability to be mixed with similar versions of fossil fuels and used to power existing engines. 

This is an extremely attractive decarbonisation solution for shipowners as it reduces the need for investment for other decarbonisation options, such as the retrofitting dual-fuel capability. 

As with air, one of the biggest issues facing biofuels in sea freight is supply, with about 5,000 biofuel production facilities worldwide currently, with production of advanced biofuels at 11 Mtoe in 2023 and expected to rise to 23 Mtoe per annum by 2026. 

Whilst this represents strong growth, it still falls short of the volume of biofuels that shipping would need in order to make a big impact on decarbonisation efforts, though many in the industry feel shipping should be prioritised for biofuel supply over other sectors.  

A win for shippers 

Despite the challenge facing biofuel rollout to the shipping sector, there are biofuel solutions available for shippers committed to reducing their emissions.

Shipping lines will bunker biofuel upon the request of customers, allowing them to achieve their emission reduction targets, by paying the difference in fuel cost.

While biofuel is not currently available at all ports, it is possible to offer CO2 savings to customers along any trade lane and route as biofuel is bunkered and used across shipping alliances networks.

In reality shipping biofuel solutions will currently only be practical for the very largest shippers, with Nestlé announcing an agreement today with Maersk and CMA CGM to move 100% of their cargo with biofuel, which will reduces CO2 emissions by 80%

Metro has been carbon-neutral for several years and is committed to extending this zero-emission strategy as far down customers’ supply chains as possible, which is why we welcome the shipping lines efforts and are the first forwarder to invest in the Air France KLM Martinair Cargo SAF programme.

Metro is measuring and monitoring the emissions of every shipment, by every mode, for all of our customers, with offsetting alternatives, so they can work towards carbon neutrality in their global supply chain. 

Our MVT ECO module has reported over 100,000 shipments, with a total CO2 equivalent of more than 300,000 tonnes in 2023.

The MVT ECO module is available free-of-charge to customers on their MVT dashboard. To request a demo or discuss your requirements, please EMAIL Ian Powell.

Fagradalsfjall

Nature and demand pushing up airfreight rates

Nov 22, 2023 |

Airfreight spot rates continued to rise last week as weather conditions, volcanic activity and wars put capacity under pressure, with fears of a major eruption in Iceland growing - possibly within days.

With the airfreight sector preparing to benefit from a potential reduction in ocean shipping reliability next year, as the container shipping lines grapple with antitrust rule changes, current airfreight indexes show airfreight rates stabilising and rising on some routes, driven by demand and nature’s operating challenges.

The global Baltic Air Freight Index was up almost 5% last week compared with the previous seven days, with the increases led by China. 

According to the Baltic Index, prices out of Hong Kong increased by 11.5%, with outbound Shanghai spot rates increasing by 5.3%, and the massive demand to Europe recording a 25% increase on the Freightos air index.

Trans-Pacific rates from both Hong Kong and Shanghai to the US also increased and are now some way above where they were a year ago, driven largely by some big moves out of China.

Trans-Atlantic rates increased 9% last week to their highest level since June, marking a gradual 21% climb since early October, possibly on improved holiday season demand.

Airfreight rates have also been impacted in recent weeks by heavy snowfall in Anchorage which resulted in cancellations and price inflation, while ash clouds from Russia’s Klyuchevskoy Volcano forced flights from the US, China, Japan and South Korea to route further south, resulting in longer flight times and refuelling stops.

In 2010 European flights were suspended due to ash clouds from the Eyjafjallajцkull volcano eruption in Iceland and concerns are growing that the likelihood of another eruption in Iceland is high, possibly within just days, after more than 20,000 earthquakes struck the country’s southwest since late October.

However, any eruption of the Fagradalsfjall volcano would take place under very different circumstances to 2010, which significantly lower the chances of similar flight chaos. 

In the past three years, three eruptions have taken place in the same area, with no impact on air travel, and the European Aviation Safety Agency (EASA) is also better prepared for a major volcanic ash event. 

"In the event of an eruption and development of an ash cloud, the agency will work with other aviation actors to assess the impact for aviation and make recommendations accordingly" a statement on the EASA's website reads. 

At this time all flights are operating normally and no carrier has any plans to review.

While the Icelandic situation may not be as dire as 2010, ‘natural events’ are unpredictable, which may disrupt flights and there is a definite tightening in the market on many routes, which means it is critical that pending airfreight shipments are scheduled at the earliest opportunity, to secure space and the best available rate.

We have solutions for every critical shipment, with extremely competitive rates and really interesting service and route combinations. 

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.

KLM Boeing 787 10 Dreamliner

Government committed to SAF

Nov 8, 2023 | ,

As part of the UK’s net zero commitment the government is supporting a variety of technology, fuel and market-based measures to address aviation emissions, with particular commitment to sustainable aviation fuel (SAF).

The government recognise sustainable aviation fuel (SAF) as crucial to efforts to decarbonise, and they want the UK to be a global leader in its development, production and use. 

In 2023 the government launched their £165m Advanced Fuels Fund to support the development of commercial scale SAF plants within the UK.

In March, the UK Government announced a significant package of SAF developments:
- Publication of the second SAF mandate consultation
- Outlined the scheme that will seek to generate demand for SAF
- Provided an incentive to SAF producers
- Launched a further round of the Advanced Fuels Fund, with a further £55.8m to support UK SAF projects through to construction

£113m has been co-invested by government and industry to support hydrogen and battery electric flight zero emission technologies through the Aerospace Technology Institute (ATI) programme, in addition to £4.2m of funding for the Zero Emission Flight Infrastructure (ZEFI) Project.

Although hydrogen has the potential to accelerate the aviation sector’s journey to net zero, challenges remain regarding accessibility and costs and industry cannot wait for its implementation, which is why SAF remains key to reducing aircraft emissions.

In April, Sustainable Aviation’s road-map confirmed that UK aviation can continue to grow whilst meeting its commitment to net zero carbon emissions by 2050 and their modelling suggests around 40% of emissions could be removed using SAF.

By the end of 2023, the government will publish their response to the second SAF mandate consultation and support Virgin Atlantic to successfully operate the world’s first transatlantic flight on 100% SAF, from London to New York.

In 2025, they will bring the SAF mandate into force and complete the funding period for projects supported by the Advanced Fuels Fund.

Metro has been carbon-neutral for several years and is committed to extending this zero-emission strategy as far down customers’ supply chains as possible, which is why we became the first forwarder to join and invest in the Air France KLM Martinair Cargo SAF programme in January.

Metro believes that moving away from conventional fossil jet fuels to alternative fuels is the most achievable way to obtain sustainable net zero flights, but it is essential that these fuels are manufactured in the UK to keep fuel costs affordable for businesses and to ensure availability of product to meet demand.

We welcome the awards by the government’s Advanced Fuels Fund to five projects that are developing commercial scale plants that use a range of technologies to convert black bin bag waste, industrial gases and CO2 into SAF. 

Metro is achieving CO2 neutrality by measuring, reporting and offsetting our CO2 emissions and the same ECO technology we use is available ‘free of charge’ to our customers. EMAIL Ian Powell, to learn more.

Category: Air

Air | Rail | Sea | Sea/Air | Supply Chain

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