China-Mexico Trade, Red Sea Crisis Consequences, and Exclusion In Green Fuel. Your weekly All-Ways round-up of Supply Chain news.
Ocean carriers are launching new services to capitalize on the burgeoning
China-Mexico trade, responding to increasing container volumes and Chinese investment in Mexico.
Cosco Shipping and OOCL are initiating an express service with a 15 to 20-day transit time, while MSC is launching a similar shuttle.
These initiatives come amidst a surge in trade between the two countries, with Mexico overtaking China as the top exporter to the US. Chinese investment in Mexico, particularly in manufacturing, is fueling this growth, prompting speculation about Chinese exporters using Mexico as a route to bypass US tariffs.
The China-Mexico trade lane's shipping capacity has grown significantly, reflecting Mexico's status as one of the fastest-growing markets.
While these developments present opportunities, challenges remain, including concerns about circumventing trade agreements and the need for infrastructure and skilled labor in Mexico to sustain growth. |
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| Crisis Creates Consequences |
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| Spot ocean freight rates from Asia to Europe are rising sharply due to tightened vessel capacity exacerbated by the Red Sea crisis. With ships taking longer routes around Africa, weekly vessel capacity has decreased, leading to higher rates.
The Shanghai Container Freight Index shows significant increases in rates to both Northern Europe and the Mediterranean. Ocean carriers like Hapag-Lloyd are compensating by adding more ships to each service, but this has resulted in fewer sailings per week.
While long-term contract rates for 2024 are relatively stable compared to 2023, spot rates are experiencing significant increases.
The situation is further complicated by a shortage of ships and increased demand. Hapag-Lloyd anticipates a return to regular schedules once the Red Sea crisis is resolved, but insists on sustained stability in the region before committing to Suez Canal transits due to safety concerns. |
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| It’s Not Easy Being Green |
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| The alternative fuel lobby is concerned that biomethane and biomethanol produced outside the EU might be excluded from a database used to trace the sustainability and origin of renewable fuels, potentially hindering their importation into the EU.
Lobby groups like the Methanol Institute and SEA-LNG fear this exclusion could limit the availability and increase the costs of these fuels for the bunkering industry in Europe.
While Europe's Net-Zero Act aims to boost self-sufficiency and reduce import dependency, it's distinct from the implementation of the Union Database (UDB), which will trace renewable fuel usage. The European Commission plans to exclude automatic certification of biomethane and biomethanol produced outside the EU gas grids, raising ongoing concerns for economic operators.
Despite the EU's focus on clean energy technology, many of these technologies are imported, and non-EU countries are expanding their clean energy manufacturing capacities. Container shipping, a leader in decarbonization efforts, is increasingly adopting alternatives to fossil fuels, with a significant portion of new vessels designed for LNG and methanol propulsion. |
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