Supply Chain & Logistics News Round-Up (October 7th – 11th)

This past week, I’ve been playing tourist in London, one of my favorite cities in Europe. I visited the British Museum and paid extra to see their “Silk Road” exhibit. The exhibit featured dozens of items, articles of clothing, and mementos dating back to the era of the Silk Road. Some pieces were recovered from shipwrecks found on the sea floor and restored for display. In the context of supply chains, I found the exhibit fascinating and saw that the obsession with foreign objects has persisted throughout history. If you find yourself in London soon, I highly recommend visiting this exhibit!

Additionally, much of my attention this week has been focused on my hometown, Tampa, FL. Hurricane Milton barreled through the west side of Florida, making landfall in Siesta Key with winds reaching up to 110 mph and bringing over a foot of rain in some areas. More than 3 million homes and businesses were without power on Thursday morning, some of which had just been restored after Hurricane Helene two weeks ago. Fortunately, the expected storm surge never materialized, and landfall narrowly missed the densely populated Tampa Bay area. I hope everyone in the affected areas can recover quickly, and that the Southeast can take a breather after these back-to-back storms.

Now Let’s Get to the Supply Chain News:

Hurricane Helene Disrupts IV Fluid Supply Chain Across Major East Cost Hospitals

Hospitals, nursing homes, and dialysis centers across the country are running low on IV fluids after Helene forced a factory in Marion North Carolina, to shut down operations. The factory, which is owned by Baxter International, is the largest supplier of IV fluids in the U.S., supplying 60% of IV products used by American hospitals. Last week, multiple bridges leading to its facility suffered damage during the storm and it does not have a timeline for when production will return. As a result, the University of Virginia Health System has canceled certain Tier 1, or nonurgent surgeries scheduled for both Monday and Friday at UVa Medical Center Charlottesville. UVa Health said it is working on reducing any unnecessary waste of IV products, including IV fluids, dialysis fluids, parenteral nutrition, and irrigation fluids. The shortage has not impacted Charlottesville’s other major healthcare provider, Sentara Health as this organization sources its IV solutions from a different manufacturer.

China’s Chery Assembles Cars In Russian Plants Previously Occupied by its Competitors

In the absence of their competitors, China’s Chery assembles cars in three Russian plants previously owned by rivals that left Russia. Data shows that Chinese car brands are quickly growing in sales representing over half of Russia’s new car sales. Now, they are extending their reach to account for more of Russia’s domestic production, highlighting how Beijing is playing a more influential role in Russia’s transitioning manufacturing landscape and economy since the invasion. Chery said in a written statement that it supplies the Russian market with passenger cars, but does not plan to build or buy its factories there. As the EU imposes tariffs on Chinese EVs and Russia raises fees on imported cars, could both factors potentially encourage foreign carmakers to localize production? Chery plans to make some models in Russia received approval for safety standard compliance, Russian documents dated from February to August and reviewed by Reuters show. Chery, along with brands its own like Exeed and Omoda, almost quadrupled its new car sales to just over 200,000 vehicles in Russia in 2023.

Aviation Coalition Announces Major Recommendations To Secure Supply Chain

The Aviation Supply Chain Integrity Coalition released a report on actions the aerospace industry should take to prevent unapproved parts from entering the propulsion supply chain. The recommendations focus on strengthening vendor accreditation, digitizing documents and signatures, and improving part traceability. It also proposed adopting best practices for receiving and inspecting parts and scrapping and destroying non-usable material. In 2023, jet engine maker CFM International, co-owned by GE Aerospace and France’s Safran (SAF.PA), said thousands of engine components may have been sold with forged paperwork by British distributor AOG Technics. These “key actions” include promoting suppliers who meet FAA or international standards, digitizing crucial documents (like FAA Form 8130), and establishing feedback channels for reporting suspicious vendors. Formed in response to counterfeit parts issues, the coalition includes major industry players like GE Aerospace, Boeing, and Airbus. These recommendations will close holes and add new layers of safety to strengthen the integrity of the supply chain. The report is the result of extensive collaboration and expert consultations over nine months.

US Official Says China is Oversupplying Lithium to Eliminate Rivals

A senior U.S. official, Jose Fernandez, accused Chinese lithium producers of engaging in “predatory pricing” by flooding the global market with excess lithium to drive out competitors. Fernandez, visiting Portugal, claimed that China is overproducing lithium in response to U.S. efforts like the Inflation Reduction Act, causing lithium prices to drop by over 80% in the past year. While this pricing strategy impacts other producers, including those in Portugal, it has also forced Chinese companies to reduce output and cut jobs. Europe is seeking to reduce its reliance on Chinese imports for green technologies and lithium, with countries like Portugal and Spain looking to develop their lithium industries. However, the price drop has hindered global investment in lithium projects. Trade tensions between China and the EU are escalating as both sides impose measures to protect their industries.

PJM Proposes New Projects to Fast Track Reliability in Interconnection Queue

The Pennsylvania-New Jersey-Maryland Interconnection has proposed a “reliability resource initiative” to address growing energy demand and delays in bringing new power plants online, especially in the face of generator retirements. This initiative would allow a limited number of critical generating projects to enter PJM’s interconnection study cycle earlier than scheduled in 2024 while avoiding delays in ongoing processes. PJM’s current interconnection process is transitioning and heavily focused on solar projects, which the operator sees as risky due to a lack of energy diversification. PJM intends to file the proposal with the Federal Energy Regulatory Commission (FERC) by mid-December, though it faces opposition from some stakeholders who argue that it unfairly favors certain generators. Separately, PJM advanced another proposal that would expedite the transfer of capacity interconnection rights from retiring plants to new ones, aiming to enhance reliability.

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