Category Archives: Logistics

Liners get a preview of alternative fuel costs

A new technical and commercial comparison of alternative fuels for ocean carriers compares expected bunker costs for different size and differently equipped ships. Alphaliner, a consultancy for ocean carriers, has reviewed that comparison.

Alphaliner’s review shows the ship owner and operator what they can expect in economy over the next few years. The results indicate that as the new regulations for CO2 emissions kick in, fuel costs will become a much larger percentage of total ship operating costs, perhaps double, or even more.

For instance, the graph they publish shows fuel costs for differently equipped Megamax-24 (MGX-24) ships. A megamax-24 ship is typically 400 meters long and 61 meters wide, with a depth of about 33.2 meters. It should carry around 23,500 twenty-foot equivalent (TEU) containers (Alphaliner newsletter).

The graph compares use of fossil fuels, bio fuels, and power-to-fuel (PtX) fuels (read about them). The PtX fuels convert renewable sources such as wind, sun, hydro, and geothermal, to fuel products such as hydrogen, ammonia, or products containing carbon, such as syn-crude. If carbon is used in the PtX process it should be from non-fossil sources or unavoidable industrial carbon emissions capture and reuse.

Source: Splash247 article.

Even bio-fuels cost a lot more than conventional fuels when all the upstream supply chain emissions are considered, for these very large ships.

The graph seems to imply that scrubbers are still a very important technology in the fight to clear the air. And LNG has a role to play, though it might be temporary. At their best, the PtX technologies such as electric-powered ships are comparable to or better than bio-fueled vessels.

There’s clearly a long way to go for ocean shipping to go where it needs to in the race to clean up global emissions.

However, some of these non-fossil technologies will adapt over the next few years, and costs will come down. It’s hard to do much more with the fossil fuel technology.

The argument Alphaliner makes is that soon fixed costs will be a smaller part of the total cost of a large ship than fuel operating costs. As these proportions change, emphasis will come more on building ships with desirable emissions control power systems, since the availability and price of fuel will be driving overall costs.

That’s an interesting point. We will see the extent to which it influences the next generation or two of ship orders.

Sam Chambers July 27, 2022

Liners get a preview of alternative fuel costs – Splash247

Ripples from Black Sea shipping crisis hitting regional supply chains

It is interesting to hear about changes in regional supply chains. The Ukraine war provides a chance to see what disruption occurred and how it is impacting routes to move cargo in the area of the Black Sea. This article covers the effects of the blockade of Ukranian ports.

Naturally costs have changed, and so have equipment imbalances.

Finally, the markets for freight into and out of the area have changed a lot. Many shippers and carriers have been actively looking for alternatives, and have needed to create some new ones.

And sanctions imposed by the EU and US have forced other changes.

By Daniil Melnychenko data analyst at Informall BG 26/07/2022

Ripples from Black Sea shipping crisis hitting regional supply chains – The Loadstar

Owner-Operators appear to migrate to large trucking companies

This news service called ‘Loaded and Rolling’ is aimed at the trucking sector. The article here is intriguing. The author has postulated the downward swing of spot trucking rates compared to negotiated or contract rates as the driver for an apparent movement by owner-operator drivers back to large truckers rather than staying on their own. The evidence they cite comes from several large firms’ quarterly reports, which indicate how many drivers and tractors they have.

It’s easy to understand why drivers might want to do this. With fuel prices through the roof, they’d rather let the trucking firm foot that bill. And they can’t get a spot premium anymore for working alone. So signing on reduces their risk. It may also let them take advantage of fleet buying prices for services and for tractors themselves, which are quite pricey right now.

This doesn’t imply anything about the drivers’ status regarding independent contracting. While some drivers might become employees, many will remain independent contractors. It’s only California at present where the status of employee versus contractor is under such scrutiny.

But even there, the economics will favor a move for drivers to larger firms. The costs are everywhere, and with spot prices down it’s harder to earn a premium on piecework. In California, it’s mostly drayage drivers, who work short hauls to and from ports and distribution points, over relatively short distances, that are protesting having to become employees.

I think the protests won’t go on much longer, and won’t spread outside the ports. Port drayage involves short hauls, and when there’s not as much congestion, reasonable turn times. If a driver can do several turns a day and get home at night, being an owner-operator might be ok. But when delays and sudden changes in routing screw up driver schedules and paid time, drivers are not satisfied. Owner-operators have the luxury of parking their truck and working in another industry, such as construction. Employees can’t; but on the other hand, they can get benefits such as health care and pay for wait time at turns, and the trucking firm will be paying the fuel and billing the customer. But the questions about how AB5 will be administrated in California, especially for drayage drivers, can be settled without changing the law.

If more drivers what employee status, due to the economics, that will reduce the noise level also. And it will be easier to make sure trucking firms are not taking advantage of their drivers of whatever type.

July 27, 2022

https://view.em.freightwaves.com/?qs=a242abdc7be6dd0d9cd54d358271b14cdb7ff025e056d774ca4606226e2c3fedd1fb22c3490657b7b570652c8d49550ea94b10ff55e91f75d622816ff82c5e352392a069b88823e2