A recent gCaptain news article by John Konrad talks about A Deep Dive Into Shipping And Famine.
Catastrophic effects of shipping on global hunger
This editorial dives deep into the devastating effects of shipping on global starvation. Uncover how the marine transportation of fertilizer and food is contributing to the growing hunger crisis and what can be done to prevent famine from spreading.
by John Konrad (gCaptain) The first article to recognize Russia’s blockade of food exports from Ukraine drove grain markets higher and caused world leaders to take action. A sigh of relief came when the UN announced it brokered a deal to ensure the safe passage of bulkers from Ukraine and Russia. That plan, however, has failed to meet tonnage expectations and now Russia has employed a new strategy to disrupt the world food supply… the self-sanctions of fertilizer shipments and the slowdown of inspections under the UN’s grain deal in the Black Sea.
Today the New York Times has reported a worsening hunger situation and shocking move by Moscow: the restriction of its own exports, leading to a dramatic surge in costs for other countries. Most significantly, the sale of fertilizer – a vital resource for farmers all over the world – has been completely halted. This is a huge blow, as Russia was the leading exporter of fertilizer before the war. Now that it has taken a step back, the world in a precarious position.
Is The UN Grain Deal Sinking?
The hostilities in Ukraine have had a devastating effect on the country’s exports. From March to November, the average monthly export of grains and oilseeds plummeted from five to seven million metric tons to a mere 3.5 million metric tons, according to data from the Ministry of Agrarian Policy and Food. This is far short of the July 22 grain deal target 5 million metric tons per month and is a stark reminder of the immense damage that war can cause.
When the agreement was signed, the U.N. World Food Programme said some 47 million people were suffering “acute hunger” as the war halted Ukrainian shipments, causing global food shortages and sending prices soaring. A further 345 million people were suffering from or at risk of acute food insecurity, more than double the number from 2019.
UN Climate Deal Could Starve Millions
In addition to working on the Grain deal, the United Nations International Maritime Organization (IMO) has also issued new environmental social and corporate governance (ESG) index aimed at decarbonizing the industry but a recent report found that more than 75% of ships will not meet the UN’s new requirements.
Ships that can’t meet the goal have limited options to comply in the short term so many ship owners will be forced to slow ships down to reduce emissions. Doing so could deepen the global food and energy crisis by reducing available ship capacity.
“IMO decarbonization targets will cause ships to slow down delaying food shipments and people will starve,” a global security analyst told gCaptain. “How many people will die as a result of the IMO’s ESG efforts is unknown at this time. I don’t think most shipowners even understand the severity of the EEXI problem but it could threaten millions of lives.”
The International Maritime Organization’s Energy Efficiency Existing Index (EEXI) is a voluntary, incentive-based system that encourages ships to improve their energy efficiency. The Index uses a vessel’s speed, cargo-carrying capacity, and other factors to calculate a numerical score. The higher the score, the more energy efficient the vessel. More specifically EEXI is a measure of a ship’s CO2 emissions per transport work. Ship owners can meet the target by building new eco-friendly ships, investing in new decarbonization technology, and upgrading existing ships to burn cleaner fuels like LNG, or by slow steaming.
Slow steaming is a technique used by shippers to reduce fuel consumption and emissions by slowing down vessels. The process involves sailing at a slower speed, typically around 50% of the vessel’s maximum speed. This can be done by reducing the revolutions per minute (RPM) of the propellers. While older ships can be retrofitted with devices to lower emissions and meet EEXI requirements, analysts say the fix most ship owners will take is just to go slower. A 10% drop in cruising speed would slash a ship’s fuel usage by almost 30%, according to marine sector lender Danish Ship Finance.
“They’re basically being told to either improve the ship or slow down,” said Jan Dieleman, president of Cargill Ocean Transportation, the freight division of commodities trading house Cargill, which leases more than 600 vessels to ferry mainly food and energy products around the world.
For owners of older ships, the slow steaming option is the most cost-effective option to meet EEXI requirements. Many container lines like Maersk started slow steaming in 2013 after that segment of the industry went on a newbuild frenzy which brought too much capacity into the market. When a large fleet of ships like Maersk’s reduce speed they all spend more time in the ocean and less time loading cargo. This artificially reduces the fleet’s total cargo-carrying capacity.
Is a reduction of capacity really a troubling problem? Yes. Lower fleet capacity levels translate to fewer ships available to move grain, fertilizer and the fuel required to move trucks, tractors and power fertilizer processing plants.
“Nobody is calculating the price of a good ESG score in terms of human lives lost to hunger or cold,” said one global security analyst who wished to stay anonymous. “The question is no longer if people will starve to death because of IMO decarbonization targets. The question is how many?”
Global Weather Uncertainty
Ukraine is not the only problem. Droughts have ravished many food-producing regions and, in recent months, river levels have restricted the movement of grain in key areas like the Mississippi. Other important crop regions, like California, have seen recent storms and flooding. Global food shortages and increased prices have caused severe suffering in Africa, Asia and the Americas. U.S. officials are particularly concerned about the impact of war in Afghanistan and Yemen. Egypt, Lebanon and other major food-importing countries are struggling to pay their debts and other costs due to the rise in prices. Even in wealthy countries such as the United States and Britain, inflation caused by the war has left disadvantaged people without access to afordable food and Biden’s Inflation Reduction Act does little to address the core of the problem: safe shipping.
US Shipping Sanctions
“By attacking Ukraine, the breadbasket of the world, Putin is attacking the world’s poor,” said Samantha Power, the administrator of USAID. “Putin is spiking global hunger when people are already on the brink of famine.”
In a bold move to ensure that food aid and other assistance keep flowing, US Secretary of State Blinken announced on Dec. 20 that the US government would grant blanket exceptions to its economic sanctions programs worldwide. This action is a testament to the US government’s commitment to helping those in need, and it will ensure that companies and organizations don’t have to worry about running afoul of US sanctions when providing assistance.
According to a US State Department official gCaptain interviewed, this measure is not just to prevent hunger directly but is also an attempt to obviate the political and social unrest that often accompanies famine.
Buttigieg Remains Silent
The US State Department is taking a proactive step to not only prevent hunger but also to prevent the political and social unrest that often comes with famine. By taking this measure, they are hoping to avoid riots and security incidents globally but other critical government organizations have not followed Blinken’s lead. For example, Pete Buttigieg’s important US Maritime Administration has said little about the movement of grain and has been slow to publish security updates for ships operating in the Black Sea. The security updates they have published have been terse and largely unhelpful. The US Navy has mostly avoided discussing the topic of food ship security.
And only so much can be done without Russia’s help. Russia continues to block seven of the thirteen Ukrainian ports not located in Crimea, which was annexed by Russia in 2014. Today just three Black Sea ports and three Danube ports remain operational. Initially, the UN grain deal was for a four-month period but it was extended in October after tense negotiations that included several threats from Russia to leave the deal.
Could Putin change his mind and back out of the UN deal again? Will Turkey continue to cooperate and risk Putin shutting down the important Turk-Stream gas pipeline? What can the UN or IMO do if Russia asks for new terms? The US Navy and NATO’s reluctance to send warships into the Black Sea leaves the West with few options in the region.
Ukraine Troubles Worsen
The situation is becoming increasingly dire for Ukraine farmers. U.S. officials have reported that the Russian military continues to actively target grain storage facilities and wheat processing plants, and U.N. data has revealed that the rate of inspections under the grain deal has decreased in recent weeks. Ukrainian officials have even gone so far as to accuse Russian inspectors of deliberately slowing down the process. It is clear that something must be done to address this issue.
“We hope that this will change soon so that Ukrainian ports can operate again at a higher capacity,” a UN representative told the New York Times. “Ukrainian exports remain a vital element in combating global food insecurity.”
As a result of the war, weather, a port and supply chain crisis, the global shortage of ships and geopolitical uncertainty, the world today is dealing with the devastating consequence of the global grain storage shortage – a sharp rise in food prices, particularly in the Middle East, North Africa, and South America. Families around the world are struggling to make ends meet.
“You’re looking at price increases of everything from 60 percent in the U.S. to 1900 percent in Sudan,” Sara Menker, the chief executive of Gro Intelligence, told the New York Times.
That’s The Problem Today but What About Tomorrow?
However – and it’s a big HOWEVER – these problems exist because of present conditions TODAY. Feeding the world’s 8 Billion peopletomorrow requires improvements in the world’s ability to move food globally but also the ability to fertilize FUTURE crops.
If energy prices continue to rise then the cost of tractors and transportation will rise too further squeezing farmers. Ships slowing downto meet new UN climate goals which would further suck capacity out of the global bulk shipping system.
Worse of all, feeding 8 Billion people on a finite amount of land requires a lot of fertilizer, which Russia is now refusing to export. Other fertilizer plants in Europe were forced to shut down or slow production last year as natural gas prices soared, a result of the war. Natural gas is critical for fertilizer production and there is a shortage of LNG ships. Meanwhile, the US Maritime Administration has no plans to fund building more LNG ships in the US and it’s head, Commandant Ann Phillips, has been hostile towards plans to build more LNG export terminals in the US.
In addition to improving crop productivity, fertilizers can also help to improve the nutritional value of the crops that are produced. This is especially important in areas where malnutrition is a significant problem, as fertilizers can help to produce crops that are higher in essential nutrients such as vitamins and minerals. This is critically important in areas that don’t have naturally fertile soil.
“It’s not a one-for-one replacement,” wrote one farmer in an online chat. “If we move production from a naturally fertile area like Ukraine to a less fertile region of the world then a LOT more fertilizer will be required and producing a lot more fertilizer would require ships to move it, Russia’s help producing it, and a lot more American LNG.”
All this adds up to one devastating fact: the world hunger problem is bad now but, without fertilizer and stable energy/transportation costs, future crop yields will be much lower.
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