• ITVI.USA
    15,217.650
    537.460
    3.7%
  • OTRI.USA
    26.980
    -0.590
    -2.1%
  • OTVI.USA
    15,176.720
    538.120
    3.7%
  • TLT.USA
    2.550
    -0.040
    -1.5%
  • TSTOPVRPM.ATLPHL
    2.850
    0.220
    8.4%
  • TSTOPVRPM.CHIATL
    3.310
    0.440
    15.3%
  • TSTOPVRPM.DALLAX
    1.400
    0.050
    3.7%
  • TSTOPVRPM.LAXDAL
    2.670
    0.660
    32.8%
  • TSTOPVRPM.PHLCHI
    2.120
    0.240
    12.8%
  • TSTOPVRPM.LAXSEA
    3.070
    0.300
    10.8%
  • WAIT.USA
    125.000
    -2.000
    -1.6%
  • ITVI.USA
    15,217.650
    537.460
    3.7%
  • OTRI.USA
    26.980
    -0.590
    -2.1%
  • OTVI.USA
    15,176.720
    538.120
    3.7%
  • TLT.USA
    2.550
    -0.040
    -1.5%
  • TSTOPVRPM.ATLPHL
    2.850
    0.220
    8.4%
  • TSTOPVRPM.CHIATL
    3.310
    0.440
    15.3%
  • TSTOPVRPM.DALLAX
    1.400
    0.050
    3.7%
  • TSTOPVRPM.LAXDAL
    2.670
    0.660
    32.8%
  • TSTOPVRPM.PHLCHI
    2.120
    0.240
    12.8%
  • TSTOPVRPM.LAXSEA
    3.070
    0.300
    10.8%
  • WAIT.USA
    125.000
    -2.000
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Transmission: Some imports from major battery supplier of Ford EV F-150 banned

Here’s what’s cookin’ today in Transmission:

  • No more innovating for SK Innovation
  • Savannah adds port capacity to address growing demand
  • Industry news

No more innovating for SK Innovation 

On Wednesday, the U.S. International Trade Commission (ITC) ruled against SK Innovation Co Ltd. (SK), based out of South Korea, for stealing battery trade secrets from rival LG Chem. Both companies are based out of South Korea.

The punishment? SK Innovation can’t import some of its battery products and components to the U.S. for 10 years. SK Innovation plays a big role in the EV supply chains of both Ford (NYSE: F) and Volkswagen (DXE: VOW3.D.DX), and this disruption forces the automakers to rethink upstream suppliers as EVs continue to gain traction. Now, it isn’t all bad news. The ITC has been kind enough to show a little mercy to SK Innovation, allowing it to continue supplying both OEMs for a short period of time so they can locate alternative suppliers. SK has been given four years to import components for domestic production for Ford’s EV F-150 and two years for Volkswagen’s American MEB line. The ban also allows SK to replace or repair its batteries in electric vehicles made by Kia Motors, another OEM that SK supplies. 

SK Innovation plans to appeal the ruling after it conducts a detailed review. In the meantime, the company is focusing on the new facility under construction in the Peach State. In a statement addressing ITC’s decision, SK said, “We have serious concerns about the commercial and operational implications of this decision for the future of our EV-battery facility in Commerce, Georgia.” What delays will come about? How will this impact operation costs and lost production? That’s yet to be determined. 

This massive blow to SK serves as a massive win for competitors. If you’re LG Energy, whose parent company is LG Chem, or Samsung SDI, you’re probably jumping for joy at the moment. This predicament offers great opportunities to gain new business and develop new relationships.


Savannah adds port capacity to address growing demand

The Port of Savannah has experienced a flood of volume for the past couple of months thanks to the same surge in demand that’s clogging up ports on the West Coast (covered in Tuesday’s edition, Think Dogecoin is great? Check out Savannah’s port volumes). Savannah is a key player in the automotive supply chain due to its strategic location close to the heart of the North American automotive supply chain network, which runs from Ontario, Canada, through the Midwest, Southeast and into Mexico. As a result of high demand, Georgia Ports Authority (GPA) has its eyes set on expansion to meet capacity concerns.

By the end of February, the Port of Savannah is expected to have moved an additional 150,000 containers annually through an existing terminal. Two other expansion projects are set to be completed this year as well: the Savannah Harbor Expansion, which entails dredging 32 miles of the Savannah River, and the Mason Mega Rail project, which will double Savannah’s rail container capacity to 1 million lifts per year. 

Outside of those projects, GPA Executive Director Griff Lynch infomed FreightWaves’ very own Kim Link-Wills of seven upcoming projects. “We have seven big projects that will add over a million TEUs of capacity,” Lynch said. “We’re also looking at yard capacity. The port already owns the property. We had purchased 145 acres a couple of years ago and we’re looking to develop that land now.“

It’s extremely important, when expanding capacity during periods of inflated demand, to proceed with caution and not overcompensate. Let me elaborate. In the past, we’ve seen carriers purchase new trucks in order to meet demand. Once that demand subsides, carriers are left with a large supply of trucks with not enough freight to move. That same concept applies to all areas of freight transportation and infrastructure. Should we be concerned with how much capacity Savannah is adding? What if West Coast ports become efficient in dealing with current congestion and East Coast demand shrinks? 

Here’s the deal. It doesn’t look like that’s the case for these expansion projects. In regard to the rail terminal project, Lynch shared, “We’re getting a lot of inquiries right now about use of our rail and I think those who are using it are very pleased.” It looks like only healthy growth for the Port of Savannah.

(Chart: FreightWaves SONAR. Forecast outbound ocean TEU volume; China to Savannah)

With FreightWaves SONAR, we can gaze into the crystal ball to catch a glimpse of what’s to come using bookings that have been confirmed by ocean carriers. Based on the chart above, we can tell that volumes are going to be relatively high next week, dropping only 6% from Wednesday. Typically, February experiences very low volume due to the Chinese New Year. However, that’s not the case this year since demand has forced a great many production facilities in China to continue working through the holiday. Expect February volumes to remain high.


Industry news:

  • Semiconductor shortage update: The White House is stepping up efforts to help with the supply strain hitting the automotive industry. The Biden administration’s strategy involves identifying chokepoints currently affecting the bottleneck and addressing changes so this problem doesn’t recur. CEOs of chip companies have banded together and written a letter to President Joe Biden addressing the country’s need for domestic production. The country’s global market share has plummeted to 12%, falling from 37% in 1990. Biden is expected to sign an executive order calling for a supply chain review conducted by the government in the coming weeks. 
  • Taxi, taxi! Yes, fly me to the airport,” says you in three years. United Airlines (NASDAQ: UAL) is buying 200 electric flying taxis to transport commuters to the airport. The idea behind the $1 billion purchase is to reduce the airline’s carbon footprint and avoid congestion of interstates in large cities across the country. The taxis have to meet regulatory requirements before lifting off, which will be no easy task since flying cars have yet to exist.
  • Learning from Toyota: 2020 threw a pandemic at the industry. 2021 threw a shortage at the industry. But Toyota “is doing fine.” The Japanese automaker saw operating profit double year-over-year and ended 2020 with an operating margin of 12.1%, up from 8.4% in Q4 of 2019. The key to success is maintaining close relationships with suppliers and remaining in constant contact. Toyota is so confident that it can manage this crisis, it actually raised forecasts for both 2021 sales volume and operating profit.

Like what you just read? Join the community! Sign up for Transmission to get the latest insight, news and analysis regarding the automotive supply chain: https://freightwaves.com/transmission

Clay Katzman

Clay is a supply chain analyst with a specialized focus on the automotive industry. He graduated from the University of Tennessee-Chattanooga and joined the Freightwaves team in the fall of 2020. Prior to Freightwaves, he worked for a marketing agency while finishing up his degree in business analytics.

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