It has been well documented that most maritime accidents (~80%) are caused by human error. Still, most of the focus on learning is rooted in technical causes and adding procedures and checklists.

Despite this bias, many accident investigation reports pinpoint that the leadership or safety culture was the root cause of more recent accidents such as the Bulk Jupiter, El Faro, Helge Ingstad and Costa Concordia, as well as older accidents such as the Exxon Valdez, Bow Mariner, Herald of Free Enterprise and Amoco Cadiz.

Industry blind spot

The critical failures leading to the accident were in most cases known before the accident took place. This demonstrates that failures which are not handled properly may develop into critical situations and accidents. This is a blind spot because the biased focus on technicalities and “impeccable” safety inspections makes people reluctant to be open about their failures, concerns and mistakes.

We at SAYFR think shipping companies, and the whole industry, needs to change its focus. Thousands of auditors and inspectors across the world are engaged by classification societies, flag and port state authorities, vetting and insurance companies and HSEQ departments. They verify that ships do the right thing and comply with technical and procedural requirements. However, ticking boxes never made anyone safer.

Cover-up culture

Also, and worryingly, there is a cover-up culture causing errors and unsafe practices. There are now so many procedures and checklists that, in some cases, it is impossible to comply with all of them. The fear of failure is driving accident statistics, and surveys reveal that 45% of seafarers admit that they regularly do not comply with procedures.

I firmly believe that human factors are key to prevent threats and failures from escalating. Yet improving safety or performance is about improving not only individuals but also the collaboration between sea and shore staff, between officers and crew and between different nationalities and cultures on board ships.

Huge potential to reduce accidents

Although this is recognized, it is not always addressed, so I believe a new approach is necessary to improve collaboration and reduce risks. Indeed, collaboration is strongly correlated with the risk of accidents and business interruption. Our experience of working on multiple projects over the years shows that it is possible to reduce the risk of major accidents by up to 75%.

However, there is no quick fix to improve collaboration and implement behavioral changes through, for example, training courses. Changing the culture is key and that process takes time. To help operators improve their approach to safety, proven methodologies must be used.

Safety leadership behaviors

Put simply, it involves observing and identifying working methods on board and then working with all the officers and crew in teams and as individuals to deliver the eight-point safety leadership behaviors, namely:

• Giving feedback
• Speaking up
• Building trust
• Creating openness
• Showing care
• Facilitate learning
• Promoting teamwork
• Managing dilemmas

Experience shows that the focus on the eight behaviors work because they address the blind spot. By encouraging the participants to openly share errors, failures and concerns, they are able to break the chain of events that can lead up to a major accident. Also, this approach helps to move beyond the culture of punishment to the positive safety-enhancing culture where crew members help each other.

Culture assessments key to improving safety

In order to understand how the organization culture influences safety, there is a need to use methodologies specialized for this purpose. One thing that many people are ignorant of is that a key professional competence of organizational psychology is advanced mathematics and data analysis. The evaluation of organizational culture relies on interviews, observations and questionnaires applying psychometric instruments that are tailor-made to ensure valid and reliable results. The professionals drive the process while the data provides the results. As a consequence, the more and better the data on these topics, the more valid, reliable and to-the-point are the results.

However not all the instruments used in the industry are valid and reliable. In a recent review of safety culture maturity instruments, only 3 of 43 instruments were valid. Indeed, there is not one single test alone that can demonstrate the validity of a survey instrument. Therefore, SAYFR has developed tailor-made psychometric instruments to assess these topics and has a database of responses from about 300 000 seafarers.

When it comes to the qualitative and quantitative tests that can be made to verify validity, the basic one is content validity. This dictates how well a safety instrument addresses a safety issue. It specifies that the survey instrument adequately covers the topic being studied as well as having sound scientific grounds and references.

This is important because so many historical examples show risks that were identified well ahead of time but were not addressed. These include the Deepwater Horizon blowout, which claimed 11 lives and caused huge environmental damage, rig personnel had knowingly by-passed safety barriers. In this case, failures were identified but the root cause of the problem – i.e. human neglect, whether cultural or circumstantial – was not factored in.

Reliability of survey instruments through data

Reliability of the survey instrument is also key and that is ensured statistically by use of data. Factor-analysis is a statistical method used to describe variability among correlated items in terms of a potentially lower number of unobserved variables, called factors. For our instrument, the eight factors are equal to the eight SAYFR leadership behaviours (8SLBs) mentioned above.

Moreover, predictive validity is the instrument’s ability to predict something in the future such as an event, or correlations with instrument measurements made by other instruments. If an organization scores low in terms of the 8SLBs, it is a good indicator of future problems. This has been shown on a number of occasions when departments, units or suborganizations have received low 8SLB scores only to have accidents occur in the intervening time, before action was taken.

Predictive validity can also be applied to solutions. When action was taken based upon a low 8SLBs score, a shipping company experienced a 60% reduction in the frequency of serious accidents, to a level which was maintained five years subsequent to the investigation.
Concurrent validity and construct validity are also important elements. Concurrent validity measures the correlation between two independent measurements performed at the same time. An increase in the ability to manage failures, for example, will necessarily correlate with the number of incidents that occur.

Construct validity is when a theoretical model of cause and effect – for example, do the improvements prescribed following appraisal of the 8SLBs – accurately replicate the real-world scenarios they are intended to represent? Construct validity is the ultimate validity measurement, and necessarily incorporates all other validity factors.

Reduction in the frequency of serious accidents

Also, it’s not only the psychometric instruments that rely on data. The use of digitalization, the internet of things (IoT), sensor data, machine learning, and big data has picked up in recent years. The idea is that those with the most data can create the best analytics and forecasts. With the use of more quality data, risk assessments and worst-case scenario simulations provide reliable predictions and identify effective interventions to prevent accidents.

In short, what we at SAYFR see is that the best shipowners and operators have a proactive organizational culture that goes beyond ticking the ‘compliance boxes’ and instead applies a collaborative, trusting approach from top to bottom in the company’s organization. This also includes assessing culture using valid and reliable survey instruments. This is what really helps to improve safety.

Source: www.maritimeprofessional.com

Author: Dr. Torkel Soma, Chief Scientific Officer, SAYFR

Image: www.pixibay.com

The post A New Approach to Maritime Safety is Needed appeared first on Cargo News Today.

The fragility or brittleness of a global marketplace so deeply dependent on just-in-time inventory. Any event, whether a pandemic, hurricane, or a container ship stuck in the Suez Canal, creates immediate disarray. In response, retailers have reverted to “just-in-case” practices, building up large safety stocks. It has become a choice between risking a stock-out or keeping costly excessive inventory. Where is the balance?

—Joe Dagnese
President and CEO
PECO Pallet

Supply chain professionals should use the experiences of 2020 and 2021 to take a fresh look at their supply networks, understand their vulnerabilities, and then take the appropriate actions to improve resilience. Doing so can create competitive advantage; failing to do so leaves an opening to the competition. Supply networks may contain potentially crippling risks, and organizations must identify and remediate them.

—Oliver Lemanski
CEO
OnProcess

Close coordination and support throughout every point of the supply chain is the new normal. Disruptions have had a lasting impact on customer confidence. Detail-oriented supply chain management, enhanced customer service, and data-driven inventory decisions are essential to reestablishing a chain of confidence.

—Angela McNally
Vice President, Global Provider Solutions
Owens & Minor

The supply chain is ripe for innovation. A singular disruption impacts a sequence of events, creating inefficiencies. The positive outcome of this unprecedented market cycle is collaboration across the supply chain resulting in technology solutions. This improves productivity by getting goods to shelves efficiently on a go-forward basis.

—Blair Blake
VP, Carrier Strategy
Arrive Logistics

I’ve learned not to take consistent air and ocean supply chains for granted. The past two years have been inefficient, making delays commonplace and causing deficits and surpluses of inventory due to increased freight costs. The solution is to stay informed and listen to suppliers, freight forwarders, and consumers.

—Richard Huang
CEO
Cloudious9

Flexibility in planning beats perfect execution. The market is in flux; the businesses succeeding are the ones adapting to what is being thrown at them. If I’ve learned anything over the past two years, it’s that perfectly planning for the long term doesn’t necessarily lead to success.

—Sean Elliott
Chief Technology Officer/Chief Digital Officer
Körber Supply Chain

Our reliance on a few key ports and jobs (dock workers and truck drivers) highlighted our supply chain fragility. It only takes one or two bottlenecks to have ramifications and ripple effects throughout the entire economy.

The recent supply chain challenges also demonstrated how critical the ports of Los Angeles and Long Beach are specifically to the United States—these ports are in earthquake-prone regions, and a large earthquake impacting one or both of these ports could make COVID-19 related challenges seem more like a nuisance than a major disruption.

—Megan Linkin
Senior Parametric Nat Cat Underwriter
Swiss Re Corporate Solutions

The companies that succeed are the ones that communicate most effectively. Because there are so many players (vendors, manufacturers, 3PLs, carriers) and software all working together to run a supply chain, the companies that create a common vision, communicate the vision, and hold all parties accountable to the same standard are the ones that have adapted to the pandemic successfully.

—Keith Moore
Chief Product Officer
AutoScheduler.AI

Inventory is not necessarily the “evil” that supply chain professionals once thought. Having distributed inventory in strategic locations at an inventory carrying cost that does not burden your balance sheet can be the key to supply chain resiliency and winning.

—Tom Nightingale
CEO
AFS Logistics

Having the right systems and technology matters. The supply chain changed in a hurry, our systems and technology helped us to adapt quickly with it. We were able to quickly identify obstacles and overcome them. By embracing forward thinking, we were able to limit the impact of supply chain issues.

—Lonny Holston
Export Operations Coordinator
Mickey

Two things we have learned: We must: 1) understand data to minimize risk and 2) identify weak spots in the supply chain to improve workflows. Organizations that have met the challenge of the past two years have done so by making calculated investments in technology and processes to limit disruptions.

—Mark Casiano
SVP, Sales, Marketing & Customer Experience
Odyssey

The past two years exposed infrastructure cracks in our industry—specifically when looking at effective capacity at ports and equipment availability. Simply adding more ships and more containers will not get us anywhere if there is not more capacity in the system to receive those containers.

—Nathan Strang
Director, Ocean Trade Lane Management
Flexport

Visibility is vital. The shortages of raw materials and extended supplier lead times have drastically increased stock-outs. You need complete visibility of 1) inventory indicators to ensure you can meet demand and 2) knowing how well your suppliers perform.

—Ara Alec Ohanian
Group CEO
NETSTOCK

We need to fully digitize our supply chains if we want them to be resilient in the face of unexpected disruptions. By unifying our digital systems, applications, and processes, we will be able to efficiently manage supply chain operations.

—Antony Francis
Supply Chain and Logistics Consultant
Endava

Retailers need better information to navigate quickly. As supply chain bottlenecks have impacted every retail touchpoint, winning means knowing your options and what the market is doing. With AI-driven market intelligence, brands can make better and faster decisions to deliver great customer experience and grow revenue.

—Juliana Prather
CMO
EDITED

We learned how to stand up brand new distribution operations in new markets at warp speed. In some cases, we went from no market presence at all to lease, equipment, and team in place and completely RF-integrated in just three weeks. We also delivered a building five months ahead of schedule.

—Dale Young
Vice President
Warehousing & Distribution
World Distribution Services LLC

The pandemic is by no means a short-term crisis event. Its impact on the work of people and the functioning of the supply chain in the organization will be long term. Therefore, in order to effectively confront the challenges of the future, the business must increase long-term resilience along the entire supply chain. To do this, supply chains must leverage platforms that offer access to applied analytics, AI, and machine learning solutions, and provide end-to-end transparency.

—Dmitri Fedorchenko
CEO and Co-Founder
Doft

The retail supply chain can no longer be protected from the impacts of omnichannel. The volume of omnichannel purchases and fulfillment has grown to the point that retailers can’t treat it like a rounding error. They must make supply chain strategy and network changes or risk losing their shirt—literally and figuratively.

—Nikki Baird
VP, Retail Innovation
Aptos

The most surprising lesson I learned was how much the supply chain relies on commercial uplift. The airlines fly passengers all over, and airline companies reserve space for cargo on commercial flights.

We saw firsthand how much companies relied on airplanes, so when the pandemic hit, and there were fewer flights happening, that contributed to the bogged down supply chain. As more passenger flights come back, that has the potential to ease supply chain challenges.

—Dustin Hansen
CEO
InXpress

The magnitude of disruptions supply chains faced over the past two years demand rapid innovation. The world around us has changed fundamentally, so legacy systems and their outdated approaches no longer serve supply chains well.

Adapting an adage, futility is doing the same things and expecting the same results, even when the underlying assumptions have shifted. Supply chain leaders who have digitally transformed their organizations are the ones positioned to address emerging trends, mitigate risk, and identify new opportunities.

—Polly Mitchell-Guthrie
VP, Industry Outreach and Thought Leadership
Kinaxis

Adaptation is absolutely critical. You have to offer substitutes, source creatively, have a plan B and maybe even C, and be vigilant in getting accurate data.

—Kevin Ledversis
Sales Director
Newcastle Systems

It’s more important than ever to “architect” agility into processes. The growing complexity of supply chains introduces plenty of opportunities for things to go awry. The more shippers can digitize and standardize manual operations, the better equipped you are to pivot when needed and keep shipments moving.

—Virgil Ferreira
COO, Rate Management
Magaya

The pandemic highlighted the need for a much closer relationship between manufacturers and their 3PL partners. We are working more closely with our partners than ever before—developing innovative and collaborative approaches to tackling these new, longer-term challenges.

—Jim Saponaro
President, Life Sciences & Healthcare
DHL Supply Chain

Relationships now are more important than ever. Whether it’s developing partnerships with secondary and tertiary suppliers to meet rising demand, or managing the expectations of vendors and customers during challenging times, the importance of establishing and cultivating strong, lasting relationships cannot be overstated.

—Jonathan Parks
Senior Vice President, Supply Chain
iGPS Logistics

Amateurs hunt dollars, professionals hunt relationships.

—Whit Smith
Director of Operations
TA Services

We need to be able to plan and face the consequences that result from the consolidation trend of brands and businesses. Consolidation has caused massive inefficiencies and created a lack of options due to the absence of competition. Many companies have benefited in the short term from these mergers but do not recognize their role in the supply chain or do not plan accordingly.

This has resulted in practices that can be monopolistic in nature and can have disastrous results in the operation of the chain, especially for smaller brands and product lines. However, big actors, who have actively promoted mergers and consolidations did not realize—maybe until very recently—that their operations are at risk as well. Until these larger groups and brands realize that their practices have affected the overall functioning of the global supply chain, logistic partners need to be prepared for disruptions.

—Eric Gomez
CEO
maxiaNET

Source: www.inboundlogistics.com

Image: www.pixabay.com

The post What is the biggest supply chain lesson you learned from the past two years? appeared first on Cargo News Today.

Traveling in rigid hull inflatable boats (RHIB), kayaks and as swimmers, protesters from Denmark, Sweden, Norway, Finland, Netherlands and Germany on Sunday went in front of supertankers Waikiki and SFC Baltica in the Baltic Sea, displaying banners with “Oil Fuels War” as Greenpeace calls on Europe to reject and ban Russian fossil fuel imports to weaken the attack on Ukraine.

Mads Flarup Christensen, executive director of Greenpeace Nordic, said, “While people suffer in Ukraine and people in Russia take to the streets pleading for peace, Putin’s oil and gas is still arriving at European ports, contributing to his war chest. Supertankers crossing our seas with Russian oil and gas are still delivering fossils to Europe. If we want to stand for peace, we must stop this and urgently get off oil and gas.”

Waikiki, owned by Greek shipping company Cardiff Marine, is reportedly carrying 100,000 tonnes of crude oil from Russia to Rotterdam, and SFC Baltica, owned by Russia’s Sovcomflot, is transporting 85,000 tonnes of fuel oil from Russia to Antwerp.

© Will Rose / Greenpeace

A new tracking service launched by Greenpeace UK has identified at least 189 supertankers carrying oil and gas from Russia since the start of its invasion of Ukraine on February 24, with 88 of them headed to Europe. Despite some countries declaring a ban on the arrival of Russian vessels, Russian cargo is still arriving via ships registered to other countries.

Russia is the largest source of the European Union’s fossil fuel imports. Europe spends up to $285 million per day on Russian oil, which funds Putin’s war effort, according to the Transport & Environment (T&E) thinktank.

Last week in France, Greenpeace activists confronted Russian liquefied natural gas (LNG) carrier Boris Vilkitsky at sea, and earlier this month 20 activists from Greenpeace Germany painted ‘No Coal’ and ‘No War’ on the side of the bulk carrier Grant T loaded with 100,000 tons of Russian coal as it approached the port of Hamburg.

Dockers in France, the U.K. and the Netherlands have already refused to unload fossil tankers coming from Russia. And the Swedish Dockworkers Union decided on Thursday to block ships from Russia.

© Jean Nicholas Guillo / Greenpeace

Source: www.marinelinks.com

Image: www.pexels.com

The post Greenpeace Protests Against Ships Carrying Russian Fossil Fuels appeared first on Cargo News Today.

Whopping fuel prices

The war has affected the logistics and freight industry both directly and indirectly. One of them is the rise in fuel prices, which has been felt by every driver in recent weeks. Fuel prices have now reached unprecedented heights. In America, for example, this increase was last seen more than a decade ago. This inevitably affects the costs for carriers, which in turn raises the price of the service. For example, according to Freightos, global air freight rates from Asia and Europe have risen by about 80% since the end of February, reaching $ 11.86 per kilogram. Higher shipping costs are likely to affect not only carriers but also consumers. Market comparisons are already showing significant price increases for commodities such as aluminium, wheat and exotic fruits.

Longer routes

More than 2,500 flights from the United States used Russian airspace in January, according to aviation data company Cirium. However, at present, due to security, sanctions and political stance, many carriers no longer deliver goods to Russia and avoid including its territory in their route plans. Due to military threats, Ukraine and Moldova have also become countries with a curve in both land and air transport. This means that companies in the sector need to think about alternatives to travel around certain countries, thus extending flight times and inevitably increasing fuel consumption. Due to the difficulties caused, several airlines have cancelled flights to some Asian countries. Such a step has been taken, for example, by an industry giant such as Finnair, which has decided to cancel passenger and cargo flights to Seoul, Shanghai and Guangzhou, as well as Hong Kong indefinitely.

Lack of capacity and congestion

The state of war in Ukraine has also affected freight transport capacity, which had already fallen sharply during the pandemic due to growing demand for goods, and is now being further eroded. Why? One of the reasons is the aforementioned sanctions against Russia. As a result, Russian cargo planes have been suspended. One of the most significant losses is the banning of Russia’s largest cargo air operator, the Volga-Dnepr, in the West. The Volga-Dnepr operates a fleet of particularly large cargo ships with ramps that can accommodate unusual types of cargo, such as metro wagons, as well as large general cargo shipments. Its subsidiary AirBridgeCargo has 17 Boeing 747 jumbo jets and 777 other cargo aircraft that have been banned from operating in almost 30 countries since the sanctions were imposed. Such bans have had a significant impact on the capacity of cargo aircraft, which is also contributing to the rise in air freight rates.

Congestion at borders and ports

Sanctions against Russia are also not helping the already growing congestion at the border and in major ports. As a result, all shipments of goods entering and leaving the country are subject to special scrutiny at the border to ensure that all sanctions imposed on the country are complied with. This, in turn, indirectly affects an already disrupted supply chain, creating congestion and making it even slower than before.

The air and land transport sectors are not the only ones indirectly affected by the military conflict between Ukraine and Russia. Russia’s invasion of Ukraine is also damaging world shipping, which accounts for 80% of world trade. Many Russian ships are currently stranded in the world’s oceans and seas, unable to deliver and receive cargo because they are barred from calling at ports in the Americas, England, Canada and many European countries. In addition, the crew on board has to deal with the reluctance of foreign seafarers to help in the event of a shortage of petrol. In recent weeks, the media has repeatedly published videos showing footage of the Russian ship’s crew crying for help, which has been unsuccessful.

Security risk

The war in Ukraine has also increased the security risks for logistics and freight workers. Although most logistics companies have stopped delivering goods to Russia and Ukraine, including Maersk, CMA CGM and Hapag-Lloyd, some 140 merchant ships from other countries are currently trapped in Ukrainian ports, risking being left without food or drinking water. There have been several reports in the media about the shooting of ships and the death of crew members. For example, on March 3, an Estonian-owned cargo ship with a crew of six, including two representatives of Russia and four representatives of Ukraine, sank off the port of Odessa. Three other merchant ships were sunk in the Black Sea; one of these attacks killed a Bangladeshi crew member. Undoubtedly, the security risk in the shipping industry is now higher than ever, and events are pushing up insurance prices, urging carriers to impose a ‘war risk surcharge’ and puts people in the shipping industry in fear for their lives.

All the above factors lead to the same conclusion: no matter how much we want to send Russian freight and logistics companies to hell because of their political position, we must understand that their absence from the market makes it difficult for the entire industry to function effectively. So let us hope for an early end to the war and a faster recovery of the industry, which will benefit everyone.

Author: Roland Peterson, logistics expert

Image: www.pexels.com

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During 2021, selected barge grain movements (moving through key locks, approximately half of overall tonnage shown above) were down slightly from the previous year, according to the U.S. Department of Agriculture’s December 30 Grain Trade Report. Michael Steenhoek, executive director of the Soy Transportation Coalition, in speaking with Marine News, stressed the linkages between the export markets and agricultural transportation on the rivers, noting that the U.S. exported 60.5 million total metric tons of soybeans in the marketing year ended August 31, 2021 adding that, overall, 35 million of the total went to China. He said the leading export region is the Mississippi/Gulf, accounting for 27 million tons in the 2020/2021 marketing year. He said that, normally, around 60% of U.S. soybean exports will come out of that region, with the overwhelming majority of that arriving via barge transportation.

Medium term trends on the waterway system were discussed within a detailed study on the waterways released by Vanderbilt University in September 2021. The authors noted, “The last 20 years validate that the underlying markets relevant to barge demand are stable and resilient, and the summary outlook for 2025 anticipates that tonnages will be slightly lower and ton-miles slightly higher than 2019.

The increase in ton-miles is in spite of a reduction of tons and is the result of a generally bullish outlook for the agricultural sector, which is expected to increase by nearly 15%. Most agricultural barge transports are also longhaul shipments of 1,000 miles or more. In short, the U.S. is expected to retain its position as one of the world’s largest grain exporters.” The USDA, in its 2021 “Agricultural Projections to 2030”, shows small, but steady growth in exports (which drives barge traffic into the Lower Mississippi region) for the major grains.

While agricultural moves are likely to grow, the opposite is true for coal. The Vanderbilt University researchers note that “…the energy sector sees the most significant projected change, reflecting a continuing decline in utility coal use, and the beginning of a gradual shift away from petroleum use across numerous economic sectors as decarbonization policies and practices are implemented, impacting overall refined petroleum demand.” Similar views can be seen at the level of individual ports. For example, in a Kentucky Economic Development Summit, held in Spring 2021, scenario-based forecasts for 11 individual riverports out to 2045 (prepared by IHS Markit) were presented. A number of ports saw grain replacing coal as the top commodity handled; in those ports handling coal, its moves fall substantially under the varied scenarios.

The forecast for the tank barge marketplace is upbeat. In a conference call accompanying the release of Kirby’s 2021 fourth quarter earnings, company CEO David Grzebinski told investors: “In inland marine, we expect a strong market in 2022 driven by continued economic growth, increased volumes and minimal new barge construction. This should contribute to further improvements in the spot market with our barge utilization ranging in the high-80% to low-90% range for the year.” He did caution that “the first quarter [would be] the lowest due to seasonality and the headwinds related to COVID with the positive pricing environment building throughout the year.” For comparison, during the Spring 2020 lockdowns, Kirby’s utilization had plunged toward the 60% level, with 2021 providing a recovery up toward 80% utilization.

Clark Todd, chairman and CEO of Blessey Marine Services, a New Orleans area based specialist in transporting liquid cargoes for petroleum and petrochemical companies as well as commodity trading houses, explained to Marine News, “We have continued to see a moderate increase in demand for inland tugboat and barge business to start the year. The equilibrium of supply and demand of our assets across the industry is tightening up as fewer new build tug boats and barges will be built in 2022. We are optimistic that the upcoming summer driving season will yield stronger demand as consumption of refined products increases. So, we look for 2022 to be a better year for everyone in the inland tugboat in barge business.”

In the investor call’s Q&A session, Kirby’s Grzebinski offered similar sentiments, saying, “Demand continues to grow. We still got some chemical plants coming on. And as you know, demand for liquid volumes typically goes up with GDP. We’re looking at a pretty good GDP number this year and probably next year…. [the supply picture] is even better. With barge pricing a new 30,000-barrel barge is probably $4.1 million to $4.2 million for a brand-new barge. That’s the highest we’ve ever seen. And a lot of that is steel price and some labor costs, but at those prices, we’re not seeing much newbuilds if any at all… and barge retirements are still going on because the equipment is getting older…So, when you put supply and demand together, this is about the best we’ve seen in a long, long time, and we think it’s a multiyear kind of upswing.”

Equity analyst Gregory Lewis, from brokerage BTIG, in a report released following Kirby’s call—where his recommendation was upgraded to “Buy” from “Neutral”—wrote, “After limping along for years, first around barge oversupply (2017-2019) and then from COVID (2020-2021), the inland barge market finally looks to be ready to inflect higher. Not surprisingly…the near- and medium-term setup looks good… And while the outlook for U.S. GDP remains constructive, which should buoy continued growth in both refined product and petrochemical volumes, on the back of what has been a challenging five-year period for barge owners the medium-term supply outlook is constructive (the inland barge fleet looks to have shrunk in 2021 and the lack of orders at yards points to negative fleet growth again in 2022).”

Going forward, new attention on infrastructure in Washington, D.C., against an ongoing backdrop of less carbon intensive transport generally—the subject of the Vanderbilt University study—may help waterborne cargo flows, with switching from less efficient modes and greater supply chain resiliency, encompassing matters such as Hurricane Ida, the I-40 Bridge and Colonial Pipeline disruptions now on the radar. The other big mover, aggregates (encompassing a variety of cargoes), is tied to construction, and waterborne flows could likely increase with spending on roads and other projects.

The WCI applauded the passage of the Infrastructure Bill, in late 2021, earmarking $2.2 billion for inland waterways projects. In mid-January, 2022, when the USACE identified specific projects to be funded, WCI president and  CEO, Tracy Zea said, “Today’s release of inland waterways infrastructure funds will not only advance the inland waterways construction portfolio but also create thousands of skilled jobs for America’s building trades, make American farmers more competitive, and promote energy security. WCI thanks its members and supporters on Capitol Hill, who helped to push this funding over the goal line.” Noteworthy projects funded included the Kentucky Lock (on the Tennessee River, near Paducah) the Montgomery Lock on the Ohio River (about 30 miles downstream from Pittsburgh), and Lock and Dam 25 on the Upper Mississippi River (mile 241, north of St. Louis), benefitting from the USACE’s Navigation & Ecosystem Sustainability Program (NESP).

Indicative of future shifts of traffic onto the rivers is progress being made on shifting containerized cargo from crowded supply chains onto ships built specially for transporting boxes down the Mississippi River. American Patriot Holdings (APH), a company formed by a trio of industry veterans involved currently involved in barging of liquid cargoes, announced that it would be seeking bids from U.S. yards for construction of four “hybrid”—liquefied natural gas (LNG) and conventional fuel—fueled container vessels, with options on four additional vessels. APH has been inking tie-ups with ports on the rivers, including terminals at Plaquemines Parish, La., Memphis, Tenn. (a distribution hub served currently by container on barge services linking it to New Orleans), and nearby to St. Louis, which local organizations have promoted as “The Ag Coast of America”. The vessel designs, ranging from 1,800 TEU for use on rivers with locks up to 2,400 TEU for use on the Mississippi River, will enable speeds faster than those of traditional tug/ barge tows. One group, the Mid-America Freight Coalition, wondered whether the plans represented a “Marine Freight Renaissance”.

Efforts to supercharge container transport on the Mississippi have been underway for several years, but they have taken on a sense of urgency with the ongoing supply chain chaos of 2021. The Soy Transportation Coalition’s Steenhoek offered a very positive view of APH’s plans, in remarks at Kentucky’s 2020 Riverports Summit. “There is a trend towards moving agricultural commodities via containers, including commodities like soybeans.” In moving beans to export markets, he noted that bulk transport would predominate, but container transits, backhauls for boxes that transported consumer goods up the rivers: “the slice of the pie chart that is labeled as containerized shipping will continue to grow….as shippers try to localize supply chains in a global market.”

Modal shifts from surface transport (road and rail) on to the rivers has also been a feature in the bulk cargo moves. The U.S. Maritime Administration’s America’s Marine Highway program’s late 2021 awards included a $1.4 million grant for the M-70 Barge Service linking Cincinnati with ports in Kentucky along the Ohio River, following up on $2.9 million awarded the previous year for related projects. Steel producer Nucor Corporation, the project sponsor, will increase its transport of steel products by barge, taking trucks off the roads. When the 2021 grants were announced (which also included funding for Seacor’s container-on-barge linkage from Memphis to the Lower Mississippi River), the Acting Maritime Administrator Lucinda Lessley described AMH as “an innovative program that encourages the use of America’s navigable waterways for the movement of freight and people as an alternative to land-based transportation.” Analysts and port executives participating in the Kentucky Riverports 2021 session (a follow-up to the 2020 event) emphasized the potential to divert multiple types of cargo moving in surface modes on to the Ohio River, and other waterways.

The year 2021 did not see any significant merger and acquisition activity, so that the well-known names continue to dominate. On the dry side, with a total fleet of more than 18,000 barges, Ingram’s fleet totaled around 3,900, American Commercial Lines (ACL) with more than 3,000 and American River Transportation (tied to agri-giant ADM) with approximately 1,800 barges. On the liquid side, with 4,000 total barges, Kirby dominated with more than 1,000 units, followed by Canal Barge, ACL and Florida Marine, each with more than 300 barges.

In summing up the sector’s overall picture for Marine News, Blessey’s Clark Todd said, “As the incoming chairman of the board of American Waterways Operators, I have a unique perspective of the entire inland tugboat and barge industry. In my role at AWO, I have the opportunity to have dialogues with the different sectors of the marine world. A few of the sectors have already started to see stronger demand and utilization. With rising crude oil prices, and an eagerness for folks to travel, we believe 2022 will be a very strong as a jumpstart to recovery in our industry.”

Source: www.marinelinks.com

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It expects underlying earnings before interest, tax, depreciation and amortization (EBITDA) at around $24 billion this year, similar to last year, but slightly below the $24.4 billion expected by analysts in a poll gathered by the company.

Its shares were down around 2% in early trading and have fallen 11% since reaching an all-time high in mid-January.

While Maersk’s customers faced “severe challenges”, the record-high rates caused by pandemic-related congestion at ports, container shortages, and a surge in consumer demand led to “record-high growth and profitability in Maersk,” Chief Executive Soren Skou said in a statement.

He said the current market situation was expected to persist into the second quarter before easing later in the year.

Maersk, which handles about one in five containers shipped worldwide, increased dividend payout to shareholders to a total of 47 billion Danish crowns ($7.20 billion), or 2,500 crowns per share, compared to 330 crowns per share a year earlier.

The company reiterated preliminary fourth-quarter results published on Jan. 14, when the company said a fall in ocean-going container volumes by 4% was more than offset by freight rates improving 80% compared with a year earlier.

Maersk said last month that it had been overtaken by Swiss-based container group MSC as the world’s biggest shipper.

Also on Wednesday, Danish logistics company DSV predicted the continued supply chain disruption would lift its profits this year.

Source: www.marinelink.com

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But already there is disagreement about how it will work given the complexities of the shipping industry and how fast it can decarbonize.

Here is what is known so far about the process ahead.

Why should shipping be included in the ETS?
With about 90% of world trade transported by sea, shipping accounts for nearly 3% of the world’s CO2 emissions.

Environmental campaigners say efforts by the industry to cut emissions are too slow and that including shipping in the European Union Emissions Trading System (ETS) will speed up decarbonization.

What are the proposals at the moment?
Launched in 2005, the ETS compels manufacturers, power companies and airlines to buy permits to cover each tonne of carbon dioxide they emit.

Prices for permits in the scheme are nearing 100 euros ($114.44) a tonne, a level analysts say will spur further investment in low-carbon energy sources.

Last July the European Commission proposed adding shipping to the ETS gradually from 2023 until 2026 when shipowners would need to buy permits covering all their emissions inside the EU and 50% of their emissions from international voyages starting and ending in the EU.

The proposal must be negotiated by the European Parliament and EU countries before it becomes law.

However, the European Parliament wants shipping phased into the ETS earlier, by 2025.

It also wants the entity responsible for decisions affecting CO2 emissions such as buying the fuel to pay, meaning they would need to buy carbon permits. That could be the shipowner, or the commercial charterer or operator of a ship.

In contrast, the Commission has said shipowners should always bear CO2 costs.

Parliament wants the EU to consider extending the ETS to cover all shipping emissions to and from Europe, if regulatory efforts to curb emissions by the UN shipping agency, the International Maritime Organization (IMO), fall short.

If IMO measures cut emissions quickly enough to avert disastrous climate change, the EU could roll back its inclusion of shipping in the carbon market, Parliament’s draft proposal said.

The European Commission’s proposal faces months of discussions. The European Parliament and EU countries can ask for changes to the text and agree on a final version.

How does the shipping industry view the proposals?
There are divergent views within the commercial shipping industry, which is made up of different segments including container, oil tanker and dry bulk.

There is disagreement over who will pick up the bill and whether it falls to the shipowner or the party that hires a ship, known as the charterer.

With millions of dollars in fuel costs for every voyage, the stakes are high.

The Union of Greek Shipowners, representing dry bulk, and tanker association INTERTANKO welcomed the inclusion of charterers saying those responsible for and benefiting from transporting cargo are responsible for emissions.

In contrast, the World Shipping Council (WSC) – representing container lines – says shipowners should share responsibility for decarbonization and that the proposed definition of a responsible entity “would corrupt the ETS”.

“Ship greenhouse gas emissions result from the combination of design technology, fuel consumed, and operational practice,” said WSC Chief Executive John Butler.

“A regional EU ETS carbon price must apply to all parties who have a role in GHG reductions – shipowners and operators.”

Pressure is building on the regulatory side too.

The IMO’s goal is to reduce overall GHG emissions from ships by 50% from 2008 levels by 2050, below targets set by countries such as the United States which have pushed for the agency to adopt a zero emissions target by 2050.

The IMO has said concrete progress was made in 2021 to combat climate change including new regulations to improve the energy efficiency of the world fleet, adding that it would work this year on revising its GHG strategy and finalize it in 2023.

The IMO has said regulations should come through the agency and be global in contrast to the EU’s approach, adding that regional legislation would not favor the concerns of developing countries.

Source: www.marinelink.com

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In his speech, Soren Toft explained MSC’s views on the status of decarbonization in the container shipping sector, summarized how the company is approaching this challenge and commented on how everyone must move forward together in collaboration to tackle climate change.

As shipping volumes have grown over the years, so have the environmental emissions produced as a by-product of delivering goods around the world. Container lines such as MSC must continue to do their part to help mitigate the impact of climate change while continuing to operate responsibly in meeting the ever-increasing demand for global trade, Toft said, “It is critical that our priority this year is not only to respond to the huge demand we are experiencing in the very complex, congested markets that emerged amid COVID, but also to ensure that we do not decouple this from our efforts to decarbonize.”

Toft said collaboration is key to achieving the decarbonization goals set out by the shipping industry, and noted MSC already fosters industry-wide, as well as cross-sector collaboration to enable the massive required investments. While the company continues to invest in low-carbon technologies and explore different fuel options, carriers in general continue to struggle from a lack of solutions available at scale, the CEO said.

With the total cost of decarbonizing shipping estimated into the trillions of dollars, carriers must make expensive capital decisions that will live on for decades. Urgent investment and a better understanding of how business and society will share the cost burden is also required, Toft said.

Soft emphasized that “the transition to a low-carbon economy requires broad collective action and productive partnerships with our stakeholders across and beyond shipping.”

“By cooperating and collaborating with others, we will capitalize and build on the interdependencies between ocean-going and inland logistics as well as other sectors providing fuels, distribution systems and infrastructure,” he concluded.

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The overall index, which factors in rates for capesize, panamax and supramax vessels, fell 24 points, or 1.7%, to 1,391, its lowest since mid-February 2021.

The capesize index slipped 55 points, or 6.2%, to 836, its lowest since June 2020.

Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, dropped by $455 to $6,935.

Iron ore prices fell on Monday as traders turned cautious ahead of the Spring Festival holidays and Beijing Winter Olympic Games, shrugging off a further liquidity-easing move by China’s central bank.

The panamax index edged 3 points higher to 2,013, snapping an 11-session losing streak.

Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, rose by $32 to $18,119.

The supramax index fell 21 points to its lowest level since end-February 2021 at 1,728.

(Reuters – Reporting by Brijesh Patel; Editing by Vinay Dwivedi)

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