coronavirus threat to car industry

Shipping challenge of electrical vehicles grow as they overtake diesel sales

May 19, 2022 | ,

The demand for lithium-ion batteries is developing at a rapid pace, as virtually every type of Electric Vehicle (EV) overtake diesel units in the new car market, but their presence on ships and planes are a concern for insurers.

While the UK new car market declined 15.8% in April, battery electric car registrations were up 40.9%, with plug-in cars anticipated to account for more than a quarter of the market in 2022 and with 1.72 million cars expected to be registered during the year, that equates to 430,000 lithium batteries of assorted sizes to transport to the assembly line.

We realise how confusing the new abbreviations are for alternative fuelled vehicles, so we thought we’d best put together a quick guide to explain what a BEV, HEV PHEV and MHEV actually is.

BEV – Battery Electric Vehicle

All aspects of the traditional diesel or petrol engines have been replaced by electric motors and the EV carries very large lithium battery packs to power the car.

HEV – Hybrid Electric Engines

In simple terms the Hybrid is a traditional combustion engine that works alongside an electric motor, with the battery pack on-board charged by the engine and most manufacturers offer a Hybrid, with Toyota’s Prius being an iconic example.

PHEV – Plug-in Hybrid Electric Car

The bridge between a regular hybrid and full electric (EV) has on-board battery pack, with a typical range of 20-40 miles, and has an engine to take over when the battery runs out.

MHEV – Mild Hybrid Electric Vehicles

The small electric motor assists the traditional engine, generally at low speeds to keep the emissions down as well as providing additional power for systems such as the Air Con and engine cooling systems.

UK new car registrations fell by 15.8% to 119,167 units in April, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), despite showrooms being open for the entire month, unlike the previous year which saw lockdown restrictions in place until 12th April.

Global supply chain shortages, of which semiconductors are the most notable, have continued to constrain the delivery of new vehicles.

Battery electric vehicle (BEV) registrations continued to grow in April, with 12,899 of the latest zero emission cars joining UK roads, an increase of 40.9% on last year and taking a 10.8% market share overall, with electrified vehicles representing 27.9% of all new car registrations during April.

And then there are hydrogen power vehicles and much more technological based creativity to consider as the world continues to speed up alternative production to the combustion engine, soon to become a distant memory with the ambitious global government policies. 2030 – the end of an era in vehicle production and procurement in the UK.

Our automotive team handle the movement of thousands of EV’s and battery components every month, by all modes of transport. With finished cars typically transported by specialist RoRo vessels, aircraft and in containers for sea transport, including the use of refrigerated equipment, to maintain ambient temperature levels, for additional safety precautions.

Lithium batteries, are used to power electric vehicles, because they have exceptionally long lives and are rechargeable, but they can heat up and combust if faulty and after a lithium battery fire in the cargo hold of an aircraft in 2010, legislative changes regarding the safe transport of lithium batteries was introduced.

Classed as ‘dangerous goods’, lithium batteries are subject to extensive international legislation. Their shipment via road networks is regulated within Europe by ADR 2017 regulations, and the rail equivalent to that is RID. Air freight is subject to IATA guidelines and sea freight falls under the remit of the IMO's International Maritime Dangerous Goods (IMDG) Code.

Transport requirements for road and sea-freight are very similar, and usually less restrictive than air freight requirements. There are also rating and labelling requirements, which means shipments should come with watt-hour rating marks, handling labels, and transport documents.

If you would like to learn more about our handling and long-standing safe transportation of all types of EV's, or discuss any other aspect of our immense car industry experience, please contact Ian Tubbs, Automotive Manager at our Birmingham HQ.

Shanghai

Shanghai to return to normal in June? Let’s hope so…

May 19, 2022 | , , ,

Shanghai is aiming to reopen the city and business operations, with normal life resuming from the 1st June, as all 16 city districts report acceptably reduced ‘zero-COVID’ cases.

At a press briefing on Monday, Shanghai’s Vice Mayor announced that 15 of Shanghai’s 16 districts had recorded no new COVID-19 infections for two consecutive days, with all of the city’s 16 districts achieving zero-COVID the following day. 

The news comes as the city’s case count fell under 1,000 for the first time in over a month, with the vice mayor announcing a three-phase plan for reopening, which aims to return to normal business operations by mid to late June.

Supermarkets, convenience stores and pharmacies have opened, but movement curbs will largely remain in place until 21st May, to prevent a rebound in infections, with efforts to restore normal production and life in the city from the 1st June.

The number of trains serving Shanghai and domestic flights are increasing and from the 22nd May bus and rail services will gradually resume normal operations, but passengers will need to show a negative COVID test.

At the end of April reports suggested that 20% of the global containership fleet was caught in congestion outside ports, with more than a quarter waiting to get into Shanghai, leading to fears of a cargo ‘tsunami’ when the port reopens and pent-up container flows are finally released.

Increasing numbers of factories are operating under “closed loop production“ and most warehouses are open (though operating with reduced capacity) while - critically - more trucking is available, which means more cargo is able to be shipped from Shanghai.

While other cities implement varied COVID control policies, cargo collection and deliveries is still facing challenges and heavy cost, so please check with us on a case by case basis, for the best solutions.

Flights serving Pudong (PVG) airport are resuming and are gradually increasing, but passenger flight policy has not changed, Chinese airlines are still re-routed to other airports, while foreign airlines are either ordered to suspend and cancel or reduce seating rate to 40%.  

China's severe zero-COVID restrictions are increasingly out of step with the rest of the world, which has been lifting restrictions even as infections spread, and are sending shockwaves through global supply chains.

China’s industrial output fell 2.9% in April from a year earlier, down sharply from a 5.0% increase in March and while economic activity has been improving in May, the strength of any rebound is uncertain due to China’s uncompromising “zero Covid” policy and the scale of future Covid outbreaks and lockdowns.

Beijing has been finding new cases almost every day, in an indication of how difficult it is to tackle the transmissible Omicron variant and while the capital has not enforced a city-wide lockdown it has extended guidance to work from home in four districts, banned dine-in service at restaurants and curtailed public transport.

We are working closely with our local partners to follow the evolving situation in Shanghai and Beijing and will continue to share any important developments.

With Shanghai’s lockdown lifting we anticipate the manufacturing bounce-back happening swiftly and we recommend checking the status of your orders with your vendors, to clarify when they will be manufactured and available for despatch.

We expect demand for space and spot/ FAK rates to increase very quickly and would suggest you start talking to us now about your potential requirements, so we can put appropriate plans in place.

With the long term fixed price and capacity agreements we have in place with our partner carriers we are well positioned to continue to deliver resilient, consistent and reliable supply chain movements as China recovers.

Our cloud-based supply chain management platform, MVT, simplifies the most demanding global trading regimes, by making every milestone and participant in the supply chain transparent and controllable, down to individual SKU level. 

To discuss how our technology could support your supply chain, please contact Simon George our Technical Solutions Director or Elliot Carlile.

Metro environmental focus not impacted by pandemic

Shipping lines act to support rates by cancelling sailings from Asia

May 6, 2022 | , ,

Across the major shipping trade lanes a total of 56 sailings have been blanked over the next four weeks - so far - representing an 8% cancellation rate.

The halting of factory production, following the continuing lockdown in Shanghai, is resulting in a drop in export bookings from China, the ‘worlds factory’, of up to 40%, while numerous containerships are waiting at anchor off Shanghai port for berths and cargo to be loaded, many are waiting for orders from their head offices. 

Despite seemingly diverging in strategic direction, the carriers response to market conditions is to implement blank sailings, that will keep supply aligned with demand and therefore freight rates elevated.

Up to w/c 30th May The Alliance has announced 21 cancellations, followed by 2M and Ocean Alliance with 14 and 6 cancellations, respectively. That is a fair chunk of capacity to be withdrawn.

Drewry's Cancelled Sailings Tracker

Asia-North Europe freight indexes suggest that carriers efforts to increase bookings have had little effect and the impact on spot rate indices has been minimal and are in keeping with the usual situation in the period after the Chinese New Year and before the start of the peak season.

Industry consensus is that rates would stabilise, or soften slightly if demand keeps falling, before starting to pick up again towards peak season – and when China ‘opens up’ there could be a huge spike in demand – resulting in spot/ FAK rates rebounding back to 2021 levels very quickly.

The number of import containers arriving at the port of Los Angeles was down 20% this week, compared to last year, reflecting the fall in Chinese export bookings and reducing the waiting times for vessels to berth to 2.7 days.

Our sea freight experts have highlighted the threat of a surge of containers, that will follow Shanghai’s reopening. Their primary concerns is that any surge may arrive on the US west coast when the ILWU are still negotiating their new current labour contract, with the threat of industrial action leading to massive disruption.

Maersk, now the world’s 2nd largest container shipping line’s 1st quarter net profit was $6.8bn, with expectations for Q2 to be better still.

Maersk’s loaded volumes declined 6.7% over the quarter, compared to a global market volume decline of 1.2%, which points to a significant decline in market share.

MSC, the world’s biggest shipping line, remain in private hands and do not publish detailed financials, but their focus has been on massively growing the MSC fleet with acquisitions and new ship orders. 

How much this rush to become the biggest carriers has cost is impossible to know and we don’t know what capacity may be added to 2M services in 2023/2024, but there could be big implications for deployment, capacity and pricing. However it is reported widely in the trade press that this year is expected to be a huge year for the mainstream container shipping lines profits with $300 BILLION cited as the expected 2022 record return.

We are working closely with our network partners, carriers and own offices across China, to monitor the evolving blanking situation and find solutions for our customers, including time-sensitive shipments.

We maintain long-term contracts with a selection of shipping lines across all three alliances that secure space and rates, to provide the best alternatives and options, whatever the situation.

Metro aim to keep you advised daily of the latest developments in the industry, across all trade lanes, all modes and all methods of transport – always giving options and the best alternatives available. Please call Chris Carlile or Andy Smith for the latest advice and recommendations – bespoke and tailored services are what we deliver…

Customs declaration

Importers from EU risking fines and worse

May 6, 2022 | , ,

The EU introduced full import controls at the end of the Brexit transition period, while the UK government has now delayed full import control four times, with concerns rising that UK importers are not making appropriate declarations, risking fines and penalties.

The UK government’s own Public Accounts Committee officials warned months ago that much remains to be done to introduce import controls and the government’s aspiration to create the most effective border in the world by 2025 is a noteworthy ambition, but it is optimistic, given where things stand today.

Ambition is usually good – but it needs to be deliverable.

The decision to defer food checks and security declarations due to come into force in July is raising fears that more import shipments will not be properly declared by importers, or subject to HMRC scrutiny.

The Goods Vehicle Movement Service (GVMS) is HMRC’s IT platform for moving goods into or out of Northern Ireland and Great Britain, but its rollout, adoption and operation has been fraught with issues for UK border officials. Concerns are mounting that import shipments are simply bypassing the system’s oversight and weaknesses will continue to be exploited until import safety and security declarations are introduced, which will not be before the end of next year.

Without safety and security declarations being imposed on the 1st July, Border Force officials cannot see what needs to be stopped and which arrivals are without pre-lodged declarations, which means vehicles coming off the ferry could be carrying any number of undeclared shipments.

Reports in the trade press accuse some hauliers of taking opportunistic shortcuts without understanding the repercussions that may follow and until GVMS is operating effectively there may be little chance to restore order.

While deferred entries ended last June there are suggestions that some hauliers still use the entry in declarant’s record (EIDR) shortcut for GVMS entries, with others ticking the ’empty vehicle’ option for GB inbound.

Part of the problem is that a goods movement reference can be finalised via GVMS with the entry of just one ‘movement, or employer, reference number (MRN/ ERN), running the risk that hauliers could avoid declaring all shipments onboard a truck.

HMRC told the press: “HMRC has a strong track record in tackling all kinds of avoidance, evasion and non-compliance, and we will continue to employ an end-to-end approach to tackling customs risks.”

We always saw the EIDR delayed declaration scheme process as fundamentally risky, which is why none of our importers adopted it, opting instead for full clearance and consequently no liability to HMRC. 

It is now clear that there will be issues arising from HMRC’s border ‘easements’ and potential pitfalls, that we are pleased our customers have avoided.

Our CuDoS customs brokerage platform is optimised continuously, in line with the regimes in force on both sides of the Channel, automating and submitting customs declarations, for simple and compliant border processing in either direction.

To learn more and to discuss your trading objectives, please contact Elliot Carlile who can talk you through the options.

Category: Supply Chain

Customs | EU | Fracht | Supply Chain

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