From a tactical and operational perspective, Russian naval forces have already contributed, albeit in a limited way, to the current invasion of Ukraine, notably with missile strikes and amphibious assaults. But from a strategic and political perspective, there are other important maritime elements to the conflict, for both Russia and Nato.

Russia is not, and has never been, a maritime power, but it would be a mistake to assume that Russia does not have maritime objectives. Since the late 17th century, securing access to global sea lanes of communication (the primary maritime routes between international ports) has been a recurring driver of Russian foreign policy.

In particular, the country has striven for access to the Turkish straits between the Black Sea to the Mediterranean. This route connects Russia to other global sea lanes and provides the sole access for Russia’s Black Sea Fleet. In the past 15 years, Russia’s annexation of Crimea, securing naval facilities in Syria, and attempts to warm up relationships with Turkey have all contributed to this long-term objective.

According to the 1936 Montreux Convention that regulates control of the straits, Turkey can decide to limit the transit of military vessels in case of war, although ships returning to base are permitted to pass through. The closure of the straits to warships will not make a substantial difference to the war in coming weeks, although it might hinder Russia’s efforts if the conflict continues for months by preventing reinforcements travelling by sea.

However, the political impact of closing the straits is immediately significant. It adds further weight to the various sanctions and acts of diplomatic opposition to Russia’s invasion, such as banning Russian banks from the Swift banking payment system, and closing EU airspace to Russian aircraft, reinforcing Russia’s status as an outcast on the world stage.

Helping Ukraine

There are other maritime actions that western countries can take as part of their efforts to support Ukraine. While they want to avoid an open confrontation with Russia, they are also keen to demonstrate support to allies and to deter Russia from aggression towards eastern European Nato members.

The US and EU could ban Russian ships from docking at their ports (as the UK has already done). And they can enforce sanctions at sea. For instance, on Saturday 26 February, the French authorities seized a cargo ship “suspected of being linked to Russian interests targeted by the sanctions” in the English Channel.

There is a risk that Russia will consider restrictions imposed on Russian assets, such as commercial ships, as a hostile act. This could lead to potential escalation between Nato and EU member states and Russia. But as demonstrated by France’s rapid action, it is possible to implement sanctions so long as risks are measured.

Similarly, Nato is surely going to avoid any naval skirmish that could degenerate into open hostilities. Nato’s priority is to support Ukraine’s defence and enduring independence and sovereignty without risking a war with Russia.

Sealift – the use of ships to deliver assistance and material such as defensive weaponry to Ukraine – is unlikely because of the status of the Turkish straits. Also, there is a large possibility of encountering Russian warships, which are strategically positioned along the access routes to Ukrainian ports, with a risk of an open confrontation.

Third party commercial ships in the Black Sea have already been hit by Russian weapons. What action Nato countries will take if their civilian ships are attacked is a crucial question. Indeed, even if provocations and collateral damages originate from the Russian side, any armed response to them could risk an open war with Russia.

However, naval diplomacy can be part of Nato’s toolkit. Deploying warships, and in particular aircraft carriers, for example in the eastern Mediterranean, would have a substantial symbolic and political effect. This would give a strong message on Nato’s resolve to oppose the invasion to both Russia and eastern European Nato members.

Source: www.theconversation.com

Image: www.pexels.com

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Where’s the beginning?

Although the shortage of semiconductors hit the world in 2021, the roots go back to 2020 with the arrival of the Covid virus. Countries, in an effort to protect society from a deadly disease, have forced everyone to isolate themselves by shutting down factories and halting many production processes, including car production. With the closure of factories and low demand for new vehicles, car manufacturers had cancelled orders for microchips one after another. As people’s need for a new car declined, their desire to buy electrical appliances increased, and so did the industry’s demand for semiconductors. While the demand for the product decreased in one industry and increased in the other, everything was fine. The problem began when countries eased the restrictions and people began to buy cars to avoid using public transport. On top of that, the growing demand for delivery service of various goods, and therefore for new trucks, was surging. As a result, microchip manufacturers now had to supply enough semiconductors to meet the needs of the industry as well. At this point, microchip manufacturers no longer had the capacity to produce so many products to meet the needs of all industries. In other words, the demand for semiconductors was much higher than the supply.

The already difficult situation in the industry has also been exacerbated by natural disasters, such as the fire at a Japanese microchip factory, which produced around 30% of the world’s microcontroller chips used in cars. The same microchips are used not only in the production of cars, but also in the production of trucks.

Where does it lead us?

As in any industry, the demand execution time was affected by the fact that the demand exceeded the supply. The production and delivery of new cars took at least three times longer than before the market crisis. According to ACT Research, manufacturers of Class 8 cars produced a total of 262,100 units in July 2020, but the plant was only able to produce 14,920 units in a month due to a shortage of semiconductors, according to the Wall Streat Journal. This affected not only factory revenues but also logistics companies. In the past, buying new cars was a way to successfully increase work capacity, but now that you had to wait at least three times longer for a new vehicle than before, it no longer seemed like a good decision. Therefore, logistics companies relied on the purchase of a used car, but there they also received an unpleasant surprise – a rise in prices. According to the Cox Automotive Manheim Used Vehicle Value Index, wholesale prices for second-hand vehicles in the first 15 days of March 2021 increased by 3.74% compared to average prices in February. In the middle of March, the index reached an all-time high of 175.5, which is 24% more than a year ago and 8% more than at the beginning of 2021, USA Today reported.

What is being done to remedy the situation?

Many technology-based industries suffer from a lack of semiconductors, so everyone is ready to make a difference as soon as possible. For example, Samsung has announced it will invest $ 17 billion (€ 15 billion) in the construction of a new microchip plant in Texas. The new plant is expected to start operations in 2024. STMicroelectronics, one of the largest French and Italian microchip manufacturers, is also building a new plant near Milan, Italy. Car customers are expected to receive chips from this plant by the end of 2023. These are just some of the companies that are willing to invest extra money to grow the microchip industry and put an end to this crisis. While this is definitely better than sitting with your arms folded, the construction of factories does not solve the current situation. Yes, it will help avoid similar incidents in the future, but what can car manufacturers and logistics companies do now? Settle on the situation, rely on existing trucks and temporarily abandon the idea of growing the company and buying a new one? Or should you decide to buy a car as an investment into the future? The answers to these questions can be found within each company.

Where’s the end?

We can speculate on various predictions about when the semiconductor crisis will cease, but unfortunately there is no concrete answer to this question. According to new estimates from AutoForecast Solutions, the number of vehicles removed from production plans worldwide due to a lack of chips in the second week of February was up by 61% from the previous week. This shows that the problem has persisted in 2022 and that again this year, manufacturers and customers will have to deal with the shortage of semiconductors and its consequences.

Author: Roland Peterson, logistics expert

Image: www.pexels.com

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The new guidance is designed to help to accelerate the transition towards safer and more resilient supply chains, while supporting Covid-19 response and recovery efforts.

Digital innovations are helping the air transport sector to transition away from paper-based documents used to facilitate the movement of global airfreight, promoting a contactless air cargo environment and greater cross-border trade resilience in the face of future pandemic threats.

In line with the recommendations of the ICAO Council’s Aviation Recovery Task Force (CART), the specifications aim to help reduce physical contact among international trade and transport professionals, and in so doing better protect the fluidity of cross-border trade and international transport operations from pandemic-related restrictions.

“The latest innovations reflect ICAO’s integrated, collaborative, and multilateral approach to transport policies encompassing air cargo and mail supply chains, and will play an important part in addressing both current and future pandemic risks,” highlighted ICAO secretary general Juan Carlos Salazar. “It’s our expectation that they will help address the tremendous double strain now being placed on global supply chains, whether by the COVID-19 pandemic itself, or the incredible surge in international e-commerce which has accompanied it.”

ICAO’s collaboration with UNECE on supply chain digitalisation is an outcome of the Joint Statement on the Contribution of International Trade and Supply Chains to a Sustainable Socioeconomic Recovery in COVID-19 Times, which was signed by eight UN agencies in September 2020.

Digital specifications will now replace the formerly paper-based Air Waybill (AWB), Dangerous Goods Declaration (DGD), and the Consignment Security Declaration (CSD). These in turn form part of a broader suite of deliverables for multimodal transport data sharing, applicable to air, road, rail, maritime and inland water transport.

Source: www.aircargo.com

Image: www.pexels.com

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The Omicron virus may be less deadly than prior variants of the virus, but it is taking a heavy toll on businesses and their supply chains.

The air cargo sector is being hit particularly hard. Schedules are in disarray as flight crews are unavailable because of infection, a patchwork of national policies shuts down routes at short notice, and infections and quarantine measures are decimating ramp and warehouse crews, affecting the flow of cargo.

In probably the starkest example of the impact of Omicron, Cathay Pacific stopped longhaul freighter flights for seven days altogether.

It has since resumed all-cargo service to the Americas at a much reduced level, but management does not expect to be running freighters to Europe through March.

For forwarders, these developments have made finding and booking flights a time-consuming slalom through quicksand.

Like airlines, they have been stretched to the limits since the pandemic started and have little leeway to absorb further complications and hurdles.

In the face of the pandemic this industry has shown remarkable flexibility and an ability to re-think the business, coming up with new solutions that often involved collaboration with other parties, including competitors.

Operators have shared resources and facilities with their rivals to keep cargo flowing.

A second crucial part of the struggle has been the effort to streamline processes and automate repetitive, routine functions.

Most firms are understaffed and can ill afford to waste their precious human resource on activities that a computer can perform. And in the current chaos of schedules and pricing, they do not have the time for this either.

Start with bookings. Before Covid it made sense for forwarders to send out blast e-mails to multiple airlines requesting quotes for a shipment.

How many carriers have the time to respond to this today? There is no reason why pricing queries, and indeed the full booking process, should not be performed online.

Of course, this can only happen if the airlines do their part to make this avenue viable. Posting last month’s rates on their website is not adequate.

They must offer fully functioning booking capability with the latest schedule and price information – ideally through multiple channels, but at least on their websites.

Source: www.aircargonews.com

Image: www.pixibay.com

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The group’s latest figures show that air cargo demand in cargo tonne km (CTK) terms in November increased by 3.7% compared with 2019 levels (used to mitigate the impact of Covid).

IATA said that this growth percentage was “significantly lower” than the 8.2% registered in October and the 6.7% increase over the first 11 months of the year.

“Supply chain disruptions and capacity constraints impacted demand, despite economic conditions remaining favorable for the sector,” the association said.

IATA highlighted labour shortages due to employees being in quarantine, insufficient storage space at some airports and processing backlogs exacerbated by the year-end rush.

Meanwhile, demand indicators remain positive, with retail sales in the US and China strong, trade and industrial production figures continuing to beat 2019 levels and inventory levels low.

IATA added that a surge in Covid cases was driving PPE demand.

Cargo load factors for the month stood at 55.9% – a 6.1 percentage point increase on 2019 – as capacity was down by 7.6% on two years earlier.

IATA director general Willie Walsh said: “Air cargo growth was halved in November compared to October because of supply chain disruptions.

“All economic indicators pointed towards continued strong demand, but the pressures of labour shortages and constraints across the logistics system unexpectedly resulted in lost growth opportunities.

“Manufacturers, for example, were unable to get vital goods to where they were needed, including PPE.

“Governments must act quickly to relieve pressure on global supply chains before it permanently dents the shape of the economic recovery from Covid-19.”

IATA is calling on governments to: ensure that air crew operations are not hindered by Covid-19 restrictions designed for air travellers; implement the commitments governments made at the ICAO High Level Conference on Covid-19 to restore international connectivity; and provide innovative policy incentives to address labour shortages where they exist.

Looking at regional performance, Asia Pacific airlines saw cargo increase by 1.1% in November compared with two years earlier.

North American carriers’ demand was up 13.3%, although this was down on 20.3% in October, as congestion at hubs affected growth.

European carriers registered a 0.3% increase in demand due to supply chain congestion and localised capacity constraints.

Middle East-based airlines saw cargo demand increase by 3.4%, although this was also a “significant drop” on previous months performance.

In Latin America, carriers saw demand drop by 12.8% on 2019, also a deterioration compared with October. Finally, African airlines noted a 0.1% decline, another drop on October.

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In a new blog, the White House National Economic Council said the Federal Maritime Commission (FMC), an independent agency, was already investigating excessive shipping fees, but should consider using other tools, including challenging carrier alliances if they resulted in unreasonable costs or delays.

It also urged Congress to enact reforms to give the FMC more tools to oversee the global shipping sector, including boosting transparency about fees carriers charge their customers.

President Joe Biden and his administration are racing to address supply chain snarls that emerged in the wake of stronger-than-expected recovery from the COVID-19 pandemic, fueling product shortages and inflation.

Much of the focus has been on U.S. ports, which have been inundated with cargo as a result of seismic shift in consumer spending during the pandemic, from travel and dining to physical goods.

The pandemic also reduced the number of workers needed to keep goods flowing smoothly. Aging truckers retired early, while infection control measures have limited dock and warehouse staffing.

The White House said new data showed continued improvements, with a record number of containers imported at the ports of Los Angeles and Long Beach, California, from January to October, retail inventories up 4% from 2020, and on-the-shelf availability at 90%, just 1% below levels seen before the pandemic.

“The good news is that we’re moving more goods than ever before, we’re seeing that retail is fully stocked, and we’re seeing that the ports are moving these goods more quickly,” a senior White House official said. “That means it’s going to be a normal holiday season for Americans.”

At the same time, the White House said more work was needed to improve exports out of U.S. ports, with rising shipping costs making it more profitable for carriers to load empty containers instead of waiting for loaded containers to get to ports.

“The problem … raises questions about the fair treatment of American exporters and importers in the shipping industry,” it said, noting that nine carriers organized in three alliances now controlled 80% of global shipping, up from just 29% in 2011.

The alliances are legally immune from antitrust laws, but the FMC can challenge them if they result in unreasonable delays, unreasonable increase in transportation costs or “substantially lessen competition,” the White House said.

It said the U.S. Justice Department stood ready to help the FMC, adding that the agency needs a bigger budget than its current $30 million.

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