The Use of Electricity by Factories in China

Recently, China Government has implemented very strict electricity usage control which seriously impacts the production of many factories in China. Power rationing and forced cuts to factory production in China are widening amid electricity supply issues and a push to enforce environmental regulations. The curbs have expanded to more than 10 provinces, including economic powerhouses Jiangsu, Zhejiang and Guangdong.

Several companies have reported the impacts of power curbs in filings on mainland stock exchanges. Local governments are ordering the power cuts as they try to avoid missing targets for reducing energy and emissions intensity. Meanwhile record high coal prices are making it unprofitable for many power plants to operate, creating supply gaps in some provinces, the Business Herald reported.

In Zhejiang, about 160 energy-intensive companies in the textile, dyeing and chemical fiber industries have been ordered to halt production to meet energy consumption targets, Caixin reported. About 80% of the companies are in Ma’an, where a production halt order was issued from Sept. 21-30, the report said, citing an unnamed official.

Emergency power cuts were also ordered across 14 cities in the northern province of Liaoning after the grid suffered supply shortfalls, according to a notice on the local grid operator’s social media late Thursday. “Power suppliers will spare no effort to keep providing electricity to residents, hospitals, schools, radio, TV, telecommunications, transportation hubs and other important users,” the notice said.

Yunnan province is cancelling electricity price discounts for aluminium smelters that made power costs about 16%-22% cheaper than industry average, according to a separate Caixin report. Yunnan Aluminium Co. last week said its production through the rest of the year will be significantly reduced because of provincial energy consumption controls.

The widening power curbs are also impacting agriculture, forcing the shutdown of several plants in Jiangsu and the northern port city of Tianjin that crush soybeans into oils used in salad dressings and margarine and meal used for animal feed, Agri Census reported. China’s energy crisis is adding the risk of social instability to an economic slowdown and global supply chain disruptions, as per Bloomberg report.
Should you have any questions in regards to the above, please do not hesitate to contact your DEAN World Cargo Account Manager.

Nationwide Industrial Action – Patrick Terminals

Forty new industrial action notifications have been received from the Maritime Union of Australia (MUA) for our Melbourne terminal with strikes every Monday, Wednesday and Friday of October and impacts across all other days of the month. See bolded details below.

The Maritime Union of Australia has clearly launched an aggressive round of nationwide strikes during the peak pre-Christmas freight period. The actions consist of strikes and work bans at the largest container terminals in Australia, including Sydney, Fremantle and Melbourne, as well as rolling industrial action in Brisbane.

Patrick has been negotiating with the MUA since February last year and has held nearly 70 meetings in search of a new enterprise agreement.

Patrick CEO Michael Jovicic said “The MUA is clearly embarking on a major pre-Christmas industrial campaign. For more than a year, we have been dealing with overtime and other bans at ports around the country.

Last week they announced strike action at Port Botany commencing next Friday.

“Then late on Friday, the MUA hit Patrick with forty notices of industrial action in Melbourne in addition to industrial action and stoppages at our other terminals in Sydney, Fremantle and Brisbane.

This means there will be continuous rolling industrial action in Patrick Terminal’s Melbourne container terminal with strikes every Monday, Wednesday and Friday of October and impacts across all other days of the month.

This morning, Patrick Terminals has released the following statement: here and the Australian Financial Review has written the following article: here.

Terminal Operations Update

Patrick Terminals – Sydney AutoStrad

• Delays are forecast to extend to up to 2 days with the 24-hour stoppages across the first weekend in October

Patrick Terminals – Brisbane AutoStrad

• The terminal is currently experiencing low-level impact from industrial action

Patrick Terminals – Fremantle

• The terminal continues to be impacted by industrial action resulting in some extended port stays for vessels.

Patrick Terminals – Melbourne

• Melbourne terminal will be impacted by significant delays due to industrial action.
• We are attempting to support other stevedores and their customers in Melbourne that are facing restricted operations due to COVID-19 outbreaks however industrial action has severely impacted our capacity.

Should you have any questions in regards to the above, please do not hesitate to contact your DEAN World Cargo Account Manager.

Vessel Backlog in the Extremely Congested Shanghai and Ningbo ports

The latest data show that Ningbo and Shanghai replaced Los Angeles to become the most congested ports of global shipping industry.

The latest figures from Vessel Value showing that the total of 427 vessels are lining up at ports around the world, and the supply chain crisis has worsened by 14 per cent since the start of September. 74 vessels are waiting for berthing in Ningbo, Zhoushan which equivalent to 306,538 teu, 48% increase in just one week.

A major driver of congestion on both sides of the Pacific Ocean: landside capacity (terminals, trucking, rail, warehousing) is limited, but the vessel capacity of a single ocean trade lane is highly flexible. As ship operators pile more capacity into the Trans-Pacific, congestion rises, delays are mounting, the incentive for shippers to pay premiums is supported, and all-in rates remain at record highs.

In addition, ships are being drawn from other trades to serve as “extra loaders” (ships that perform one-off voyages). In some cases, multiple ad hoc ships are doing multiple round trips — a hybrid of an extra loader and a scheduled service. Carriers are pulling ships from Asia-Middle East and Asia-Africa and putting them into the Trans-Pacific trade. Yet another driver of increased trans-Pacific congestion is that there are not only more ships, but also Trans-Pacific ships are getting smaller, meaning that more vessels are needed to carry the same TEUs.

Given the extreme anchorage situations both off China and Southern California, a repeat of the blank-sailing scenario seems likely in Q4.In Pre-COVID carriers believed they were tied down by long notice periods for service changes. Now carriers are trying to get more capacity in, but they’ve definitely taken the liberty of being both more volatile with their capacity and with the ‘forecasting’ of their service. And the lack of visibility is causing the frustration among the BCOs [beneficial cargo owners; the shippers]. A BCO is forced to get used to the fact that the vessel is always 10 days late — or that they can’t even know when it’s coming.

Should you have any questions in regards to the above, please do not hesitate to contact your DEAN World Cargo Account Manager.