Is Shipping the Crux of Electric Vehicles Supply Chains?
This edition takes a dive into the blazing inferno that was the Fremantle Highway and the implications this may have for the electric vehicles of the future
The latest series of fires on board car carriers, culminating with the Fremantle Highway blaze, have restarted the electric vehicles (EV) safety onboard vessels questions, many of which emerged after the fire and sinking of the Felicity Ace in early 2022: Have EVs caused the fires on board the car carriers? Are EVs safe for transporting on-board sea going vessels? Will EV transport costs increase? These are all genuine questions to which the answer is, as of now, maybe. While some EV enthusiasts gloat that it wasn’t EVs who set off the Freemantle Highway fire it seems that the most important question is missed:
How should supply chains cope with the challenges of transporting EVs without breaking? The answer, as we’ll see, is extremely complex.First, we’ll tackle the questions that seem to have grabbed most media attention.
Do Evs Cause Fires on Board Car Carriers?
Transporting cargoes at sea is a rather dangerous activity and it’s unclear whether EVs are making it even more dangerous. Following the Ever Given’s blocking of the Suez Canal, shipping has found its way from specialty news website to the mainstream. The Fremantle Highway blaze is the latest in a series of incidents involving car carriers since around 2015 (gCaptain provides an overview of these incidents here). With increasing EV sales, it is perhaps unsurprising that an increasing number of electric vehicles are also transported by sea and, in some unfortunate cases, on board ships which are affected by fire.
Despite increasing speculation on whether the Fremantle Highway or the Felicity Ace fires were started by EVs, a definitive answer to the question, have EVs caused the fires on board the car carriers is still maybe. A crewmember on the Fremantle Highway told RTL that the fire had started from one of the EVs, however the a Royal Boskalis representative (the company tasked with the salvage of the Fremantle Highway) said that the EVs were in good condition. The Felicity Ace sunk in early 2022 along with much of the physical evidence to establish the cause of its fire and the Panama Maritime Authority’s investigation report into the incident submitted to the International Maritime Organisation (IMO) in May this year has not been released to the public. The 2020 fire on board the Höegh Xiamen in Jacksonville, FL was also rumored to have been caused by an electric vehicle.
Those of us that are more conspiratorially inclined may suggest that the lack of, or suppression of evidence around EVs’ role in these incidents has to do with the potential impact negative publicity on EVs, which doesn’t quite fit the clean green and renewable narrative and may have a negative influence on adoption rates.
How Risky Are EVs for Sea Transport?
The risk profile of EVs during transport also has some important nuances. Based on fire statistics in Sweden, EVs are 20 times less likely to catch fire than traditional internal combustion engine (ICE) vehicles. The Danish Institute of Fire and Security Technology ran a series of experiments to put out electric vehicles fire and concluded that “All the fires in our tests could be extinguished, so with the correct fire-fighting technologies on board, the correct training of the crew and well-coordinated collaboration with the onshore emergency services, electric cars should not pose a safety problem in ferry traffic” (Source). Notice that there are quite a few ifs in their statement, some of which may not necessarily occur in some conditions. The tests also covered ferry traffic, which likely assumes proximity to land and access to some more specialized equipment.
However, in the event that (especially used) EVs do catch fire, irrespective of what triggered the fire, they tend to perform worse than ICE vehicles. EVs burn at higher temperatures, for longer and may reignite meaning that they produce more damage to their surroundings. Extinguishing an electric vehicle fire is estimated to take 125,000 litres of water versus 1,300 litres required to extinguish a traditional vehicle (that’s close to 100 times more!). The added challenge on board vessels is that salt water cannot be used in firefighting activities. While this may not be a significant challenge on board ferries, this will likely be a significant issue for ships deployed on intercontinental routes. The consequence of the higher burn temperatures and other requirements for extinguishing fires is that burning EVs are likely to generate more extensive damage in their surroundings.
Experimental findings in controlled environments may not fully translate into operational realities (half a decade of research did teach me that at least). Hence, I’m tempted to say that there is an additional risk element to transporting EVs which may well be minimized by the industry - especially the automotive industry. For instance, Mike Hawes, CEO of the European Society of Motor Manufacturers and Traders stated, “We are unaware of any evidence to suggest that transporting electric vehicles, which is standard practice globally, poses a greater risk to cargo or ferry vessels than other types of vehicles.” While the shipping industry has been somewhat slow to reckon with these risks, that may start to change in the near future.
How Will EV Transport Costs Be Affected by Fire Risks?
While the automotive industry doesn’t seem to be willing to recognize the added risks of transporting EVs, the insurance industry definitely does. A Marsh insurance representative indicated that insurance premiums for auto makers and vessel owners are likely to increase. Allianz’ 2023 Safety and Shipping Review also highlighted the growing risk of transporting Li-Ion batteries in both container and car carriers. The same report indicates the growing need to build dedicated EV car carriers fitted with additional purpose-built firefighting equipment. Whether building new ships or retrofitting an existing fleet with advanced firefighting gear, the added costs are likely to affect charter and transport rates for EVs (and, potentially, ICE vehicles).
Another facet of the transport costs issue is who pays for the lost transport capacity due to incidents? If we assume that EVs do not increase fire ignition risks but contribute to its intensity and length, it may be also fair to assume that fire damage on board ship will increase. The risk that fire ignites may stay the same but the risk that fire will do more damage to ships increases. In this case, fire-affected vessels will likely be out of action for longer or worse, more likely to sink. The pressure this increased damage risk may put on maritime vehicles transport, both in terms of lost revenue and of capacity, is significant.
Shipping, The Crux of EV Supply Chains?
It is perhaps easy to look at EV supply chains and just consider the shipping component of new vehicles from the manufacturing facility to the dealerships or final customers. In a traditional sense, this is the EV manufacturing supply chain. However, EV transport may take place several times during the vehicle’s life cycle. Electric vehicles may be carried on ferries as their operators travel between different regions or countries. Ferry rides are generally short, few of them stretch for more than a night. Then, there is the secondhand market. Vehicles, including EVs, get re-sent to other countries, or continents, for reuse. Finally, and likely the least considered aspect, is the reverse supply chain of spent battery packs to disposal, recycling, or re-manufacturing facilities. The transport to secondhand markets and the spent battery pack transport generally take place using car carriers or container ships. Each of these transport stages will pose some, often somewhat different challenges for carriers.
Starting with last stage, the reverse supply chain of spent battery packs, may seem a bit counterintuitive, but there’s some method to my madness. Spent battery packs can be somewhat more unstable given that they’ve been in a vehicle for some time, may have been damaged during regular driving or wear and tear. Consequently, the fire risk from these battery packs may be increased. Given that battery recycling facilities are few and far between, particularly in Europe or Australia, these spent batteries will need to be transported by sea. Which carriers would take this risk, what transport capacity would be available for this and under which conditions?
Today, while every government is providing incentives to transition to alternative fuel vehicles, this is not an issue. But it may not take environmentalists too long to realise that having Li-Ion battery pack graveyards close to home because it’s too expensive or impossible to ship them away is not clean, nor green, nor renewable.
The secondhand market for EVs provides a way to limit demand for new vehicles in some markets. Oftentimes, this means transporting vehicles away from the original place of operation to another. It was quite common for vehicles in Western Europe to be exported Eastern Europe and some vehicles the Eastern Europe to be transported to countries on the African continent. At some point, sea transport will be required. This may be a problem as some shipping lines may refuse to transport EVs. Mitsui OSK Lines (MOL), the company which operated the Felicity Ace, banned the transport of used EVs onboard their ships following the vessel’s sinking. Wallenius Wilhelmsen, another car carrier, expressed concern over the transport of electric vehicles and especially used ones. If carriers do not take the risk of transporting used EVs, is it possible that their residual value will collapse?
Ferry operators have also signaled concerns about transporting electric vehicles with Norwegian operator Havila Kystruten indicating that they’ll no longer accept electric, hybrid and hydrogen vehicles on board their vessels. This is interesting because 9 out of 10 new vehicles sold in Norway are electric or hybrid. It will likely take one major fire onboard a ferry, even marginally involving electric vehicles, for more companies to follow suit. If lack of access to ferries would further restrict electric vehicle operators’ ability to travel, would EVs continue to rise in popularity as quickly?
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In Other News
Driverless Taxi Mania
California recently voted to allow two self-driving companies to provide unrestricted services to the broader public. The next day however, social media was flooded with posts about the erratic behavior of the self-driving taxis which included heavy congestion, nearly running over pedestrians and blocking access to emergency vehicles.
Cruise, one of the self-driving taxi operators, blamed congestion on mobile networks for many of the issues experienced which is interesting. Have they not considered the impact of running up to 500 vehicles on the mobile network?
After just one week, a large proportion of the self-driving taxi fleet was grounded by the Californian Department of Motor Vehicles which allowed just 50 vehicles during the day and 150 at night. This decision was taken in response to an autonomous taxi crashing into an emergency vehicle and injuring one passenger. The same day, another self-driving taxi crashed into another vehicle in the city.
We’re written quite extensively about autonomous vehicles on interconnected and the challenges that autonomy poses not only from a technology perspective, but also from a safety and legal perspective. It is rather unfortunate that the proponents for this technology and regulators have moved forward with allowing autonomous vehicles access on city streets without addressing the safety and legal issues first. I suspect that the first lawsuit against an autonomous vehicle company will be a landmark precedent in the U.S.
I think we’re a long way away from ever letting driverless trucks on the road unless we really want some Final Destination scenes on our streets.
Siemens Energy massive losses from wind turbine business
Siemens announced an expected loss of 4.5 billion euros primarily driven due to significant issues in the wind turbine business. Part of these losses (around 1.6 billion) stem from cumulated rotor repairs on their onshore turbines, while an additional 600 million are estimated from materials costs increases. These losses have been significant enough to trigger a “review the strategy in the wind business as a whole, which has been producing negative surprises and losses for years.” (Source in German).