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HomeSourcingSupply Chain Weekly Wrap-Up 07/22/2022-07/28/2022

Supply Chain Weekly Wrap-Up 07/22/2022-07/28/2022


Grain exports from Ukraine may resume ‘within days’

Ukraine has announced that the first set of vessels loaded with grain could be leaving the Black Sea ports in a matter of days, as an UN-deal was recently signed. This news comes as a relief for many, as it is estimated that around 20 million tons of grain have been trapped in ports due to the Russian naval forces having control over most of the Black Sea.

Since the war broke out in February, the conflict has damaged harvests and blocked ports, causing food shortages and skyrocketing prices across the world. To increase safety, the Ukrainian Infrastructure Minister Oleksandr Kubrakov has said that the commercial vessels would be organized into convoys accompanied by Ukrainian ships. However, fears over the deal still remain, as Russia fired missiles on Ukraine’s port of Odesa on Saturday.

Kubrakov is aware of the risks involved with the deal, saying that “if the sides guarantee security, the agreement will work. If they do not, it will not work.” The supply of grain is not the only thing still being affected by the war, with Russian company Gazprom saying that this week, it would cut its gas supply through the Nord Stream 1 pipeline to Germany to 20% of its capacity, increasing concerns further.

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European heatwave poses risks to critical shipping lane

The water levels in Germany’s River Rhine are running dangerously low due to the extreme heat, posing a risk to not only Germany’s economy but supply chains across the world. The river, which passes through key cities such as Cologne, Dusseldorf and Rotterdam, is one of Europe’s most important shipping routes. In Germany alone, 80% of inland waterway goods rely on the river, with agricultural products, coal and oil and chemicals often being transported.

Salomon Fiedler, an economist at Berenberg Bank has said that “low water levels mean that river barges will have to travel with reduced freight to limit their draft or even cease operating altogether”, causing freight rates to rise. He also noted that low water levels can also affect production in industrial and power plants that rely on river water for cooling. At a measuring station in Kaub, the water levels for the Rhine reached 71cm, which is concerning as a normal water level is around 200cm.

Germany’s economy is at risk, with analysts fearing a recession could be looming. High inflation, supply chain bottlenecks and concerns about energy due to the Russian invasion of Ukraine are all contributing to economic problems. The problems could worsen if the water levels continue to decline, as in 2018, some water levels for the Rhine reached 30cm meaning large cargo barges could not travel.

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Tesla is reengineering software to maximize semiconductor supply

Elon Musk, CEO of the American automotive giant Tesla, has announced that the company will be rewriting certain software so that chip shortages create less of an impact on production. Shortages of vital components have caused chaos for the company’s output and at the beginning of the year, it decided to not release any new vehicles in 2022 because of the ongoing disruption.

Tesla has found an innovative way to combat the shortages, where software will be redesigned so vehicles can use different types of chips. In some cases, a single chip can serve dual functions. This means that a lower number of chips will be used to produce vehicles, allowing production levels to increase. Musk said that the shortages of semiconductors “has served as a forcing function for us to reduce the number of chips in the car.”

According to the U.S. International Trade Commission, one hybrid electric vehicle needs around 3,500 chips on average. To reduce this number, Tesla will continue to rethink their designs, and in return, costs can be reduced, and production can be maximized. The company aims to take control of its supply chain where it can and has already made steps to invest in battery production and lithium refining to meet demand.

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Etiknews Staff
Etiknews Staff
Etiknews is dedicated to Ethical and sustainable business news.


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