Tyre Hubs in Tamil Nadu to be big beneficiary of CAPEX

 

As the Indian automobile industry revs up for a top-gear run, the Indian tyre industry is ramping up to keep pace. And Tamil Nadu, with its tyre hub in Kancheepuram, the Oragadam-Sriperumbudur auto belt is likely to be a big beneficiary of the capex windfall that is expected.

The sector has got investments of ₹35,000 crore in the past three years nationally, says industry apex body Automotive Tyre Manufacturers Association (ATMA). With focus on truck, bus and passenger vehicle radials, Tamil Nadu will be a beneficiary of the next cycle of tyre capex, say experts.

Tamil Nadu, being one of the oldest tyre manufacturing hubs, houses units that makes radial tyres for trucks, buses and cars. ” The share of radial tyres, which is estimated to be around 60% in medium and heavy commercial vehicle category, is expected to improve in future due to higher cost economies owing to superior performance. Consequently, most of the capex expansion announced by OEMs are in truck, bus radial and passenger car category, and Tamil Nadu is expected to receive a significant chunk of capex announced for FY24.

INR 4000 Crore Capex by CEAT

A big announcement has come from Ceat. Says Ceat MD Anant Goenka: “We have planned a capital expenditure of approximately ₹ 4,000 crore at our Chennai facility over the next five years. It includes approximately ₹ 2,000 crore that we have spent on our plant commissioned in February 2020. ” This investment confidence is rooted in past experience. “The company has had a very good experience in Tamil Nadu,” says Goenka. “The industries department gave us infrastructure including electricity and water, besides timely approvals that helped us commission our plant within 18months from the date of the MOU,” he says.

 Since MRF set up its first tyre manufacturing unit in Thiruvottiyur in 1946, more than 40% of the country’s tyre production has been in Tamil Nadu. Companies like JK Tyre, Apollo, Ceat and Michelin have a substantial factory footprint in the state which has good port access, logistics network and access to the auto hub of Oragdam-Sriperumbudur.

Advantage Tamil Nadu

According to industry sources, Tamil Nadu attracted more than 8,200 crore capex in the past three years . But with many of the major tyre companies looking at other sites – including Apollo investing in an Andhra Pradesh greenfield plant and JK pursuing a 530 crore capacity expansion at Banmore and another 260 crore capacity addition at Haridwar – Tamil Nadu needs to step on the gas to stay ahead of the pack.

Says ATMA chairman Satish Sharma, president, Asia Pacific, Middle East & Africa, Apollo Tyres: “TN’s technically qualified workforce, proximity to port and good road network are some of the positives, but in an increasingly competitive investment climate no state can afford to rest on its past achievements,” he says. To maintain the momentum, continued focus on factors like easier acquisition of land and overall improvement of state infrastructure would help, he says. Incremental incentives are, in fact, the refrain of most of the major tyre investors in the state.

 “It would help if industries are able to get electricity at reasonable rates and if our own suppliers are encouraged to set up manufacturing facilities in Tamil Nadu covering raw material such as synthetic rubber, rubber chemicals, steel tyre cord and bead wire,” says Ceat’s Goenka. “It will also help if the state government includes tyres within the scope of incentives available for EV manufacturers. ” Agrees Apollo’s Sharma: “Industry is looking at getting subsidies from the government for new investments in research and development. ” Government sources, however, say ‘as and-when’ incentives are on offer for tyre-related sectors like carbon black, and a cluster approach will help tyre ancillaries to qualify for state support.

There’s a reason why industry voices are unanimous about add-on incentives. Tyre manufacturers are expected to record a healthy growth led by 8%-10% uptick in commercial vehicles and 9%-11% growth in passenger vehicle segments in FY24, says Crisil. 

The Next Ramp up for the EV revolution

For tyre companies, the next ramp-up will come from electric vehicles. Says Anuj Kathuria, president (India), JK Tyre: “The tyre industry has prepared for an upcycle in the auto industry with investment commitments. We are working with EV OEMs as well to meet the demand. ”

JK, he says, is “invested in Tamil Nadu” as one of its biggest plants is in Chennai. So far, tyre investments in the state were led by the internal combustion engine auto hub in Oragadam Sriperumbudur, but going ahead, the next phase will centre around the EV hub of Hosur Krishnagiri, he says. Since Ola ancillaries have received government support, other big projects may be looking for the same.

All About the Emission Trading System (ETS)

 

What is the ETS?

The Emission Trading System (ETS) creates a financial incentive for polluters to reduce emissions by putting a price on each tonne of emissions. This is in line with the polluter pays principle at the heart of European climate policy.

Emissions trading, sometimes referred to as “cap and trade” or “allowance trading,” is an approach to reducing pollution that has been used successfully to protect human health and the environment.

The ETS was adopted in 2003 and came into force in 2005. It covers all EU states plus Iceland, Liechtenstein and Norway. It mainly covers carbon dioxide (CO2 but also other greenhouse gases such as methane and nitrous oxide from energy intensive industries such as electricity and heat generation, oil refineries and production of various metals and chemicals, as well as aviation. From 2024, the ETS will apply to maritime shipping.

 

How does the ETS work?

The ETS works through the concept of ‘cap and trade’. Every year, a total limit is set on the amount of greenhouse gases (GHGs) that companies under the ETS can cumulatively emit in that year. This ‘cap’ is reduced each year by a politically decided percentage: the Linear Reduction Factor (LRF). The cap will eventually reach zero, meaning that companies operating under the ETS should no longer be allowed to pollute. Each tonne of emissions corresponds to 1 emission allowance (EUA). Companies can get EUAs either from European auctions (organised on behalf of Member States) – where companies bid for a certain amount of EUAs – or from trading with other companies. Hence the system is known as ‘cap and trade’.

In the past, some EUAs were allocated for free each year to certain sectors to mitigate the supposed risk of becoming uncompetitive as a result of the ETS and moving outside of Europe (often referred to as ‘carbon leakage’). Companies could use those free allowances to either comply with ETS or, if they lowered their emissions, they could sell these free allowances to other companies for profit. But these free allowances are gradually being phased out because of their environmental ineffectiveness. Each auction requires a certain minimum amount – e.g. 10,000 EUAs – to be sold. If, altogether, companies bid for less EUAs on that auctioning day, the EUAs are not sold. Larger companies tend to buy and sell allowances themselves, while smaller companies tend to get their EUAs through trading houses (‘aggregators’).

The auctioning of EUAs takes place throughout the year. From 2024, companies covered by the ETS will have to demonstrate that they have bought enough EUAs to cover their annual emissions by September 30, as opposed to April 30 as it has been the case so far. They will then ‘surrender’ these EUAs as an act of compliance. Surplus EUAs can either be kept for the next year or traded. If emissions are greater than the number of surrendered EUAs, a penalty of €100 (plus an inflation adjustment) is imposed for every missing EUA. The company will still need to surrender the missing EUAs the following year.

 

 

Has the ETS been successful?

The ETS has demonstrated that a cap and trade system works. Numerous other countries have copied the model, notably China. Moreover, ETS revenues have financed the development of clean technologies, for example through the Innovation Fund. However, the ETS has not always succeeded in its main goal of emissions reduction. In the aftermath of the 2008 economic crisis, European industrial production fell dramatically, leading to a surplus of EUAs, low ETS prices and no incentive for emissions reduction. Consequently, the European Commission established a mechanism, the ‘Market Stability Reserve’ (MSR), to keep the annual supply of EUAs in check. This mechanism makes sure the EUA price is at a high enough level to incentivise companies to reduce emissions. The MSR has helped to push the ETS price up to around €90 per EUA, whereas the ETS price struggled to go above €5 per EUA from 2013 to 2017.

Similarly, while the most recent revision of the ETS improves climate ambition, the impact of the ETS is still limited due to the late phase out of free allowances and relatively low prices of fossil fuels compared to renewables, hence most sectors are subject to other climate laws alongside the ETS.

 

Which emissions are covered by the Shipping ETS?

The ETS will apply to 100% of emissions on voyages between European ports and 50% of emissions on voyages from a country outside the EU to an EU country and 50% of emissions in the opposite direction (Fig.1). A voyage is defined as any movement of a ship that originates from and terminates in a port of a Member State and that transports passengers or goods for commercial purposes. A cargo ship will therefore pay for its emissions if it transports goods from the USA to Spain, but not if it only stops in Spain only to refuel or if a vessel simply transits Spanish territorial waters without calling at a Spanish port to load or unload cargo.

The ETS will cover CO2 emissions emitted in 2024 and onwards. Methane (CH4 ) and nitrous oxide (N20) emitted in 2026 and onwards will also be included in the EU ETS. There are some specific exemptions for specific national circumstances. For example, ships travelling on ice will pay less until 2030, while voyages to outermost EU regions like the Azores or Canary Islands and ferries travelling between islands with a population of under 200,000 are also exempted.

 

Maersk R&D center to launch tradable 'tokens' for low-carbon shipping

The Maersk Mc-Kinney Moller Center for Zero Carbon Shipping is developing a tradable instrument based on the greenhouse gas intensity of marine fuel consumption, following the example of similar mechanisms in the utility and aviation sectors, according to project developers.

Since the third quarter of last year, the Denmark-based research and development center has been designing a "book and claim" platform where shipping companies and cargo owners can digitally record emissions from their voyages.

The emissions then will be tokenized and expressed in CO2e/Megajoules in units, exchangeable among project participants that can use this instrument in their carbon accounting.

Frederik Jacobsen, a project manager at the center, said the system will allow those on the supply chain using more expensive low-emission fuels to sell their decarbonization effects to those consuming conventional oil-based fuels.

Such voluntary transactions would "funnel capital back to companies which are investing in green shipping capacity," Jacobsen recently told S&P Global Commodity Insights.

In turn, prospective buyers would be those who seek to make decarbonization claims but could not physically achieve low-emission shipping, Jacobsen said.

Industry participants said limited availability of low-emission fuels is among the main deterrents to maritime decarbonization. S&P Global expects such fuels to make up just 2.2% of global bunker consumption in 2030 in its reference case, versus 0.2% in 2021.

"It isn't necessarily a given that everyone has access to ships using alternative fuels," Jacobsen said.

The center is working on the system with Rocky Mountain Institute, Danish Shipping and Maersk Oil Trading, having received project funding from the Danish Maritime Fund.

It has been receiving feedback from 17 unspecified companies across the supply chain, including fuel suppliers, to launch a pilot platform in May, according to the center.

Jens Johannes Keppler, an MPC Capital executive also involved in the project's development, said transactions are expected to take place on an over-the-counter basis or via direct negotiations in the pilot phase.

The system could evolve into a fully fledged trading platform in the marketplace later, depending on the resolution of financial regulatory and other issues, Keppler suggested.

"It's very likely that we will start quite simple, and then we build out the system," he said. "it's not yet set in stone how this will look like in the future."

Amazing Technologies Automating Shipping and Logistics

6 Amazing Technologies Automating Shipping and Logistics

Automation in logistics is shaping the future of the industry and powering innovation to meet modern challenges. The booming popularity of e-commerce puts logistics and shipping companies under intense strain. Automation technologies are helping them meet demand by boosting efficiency, streamlining operations, and improving workplace safety.

1. Autonomous Guided Vehicles

Autonomous guided vehicles, or AGVs, are one of today’s biggest trends in automation in logistics technology. These versatile robots power the ultrafast shipping customers have come to expect.

Often acting as couriers, these robots move throughout warehouses and fulfillment centers shuttling goods between departments and employees. They’re great for reducing the amount of physical strain on workers while also improving efficiency.

Amazon’s warehouses and sorting centers are a perfect example of AGVs in action. Amazon has been using warehouse robots for years and owns an in-house robotics developer, Kiva Robotics. In June 2022, Amazon launched its first fully autonomous AGV, Proteus. This robot has advanced safety and navigation sensors that allow it to move throughout warehouses independently.

Most AGVs require geofencing, tracks, or programmed routes to navigate logistics facilities safely. Various sensors, like cameras and distance sensors, detect the robot’s surroundings so it knows to stop when a barrier or person is nearby. New developments are making AGVs smarter and more capable every year.

2. Pick-and-Place Robots

Pick-and-place robots are robotic arms that package goods or move boxes. Today’s models go well beyond simply using mechanical claws. Engineers have developed innovative designs for these robots to help them do their jobs as efficiently as possible.

For example, Israeli robotics developer BionicHIVE has invented a unique pick-and-place robot called SqUID that uses suction to lift boxes weighing up to 35 pounds. Using suction cups to lift objects allows SqUID to interact with more items using a mechanically simple design. A claw mechanism would limit it to products within certain dimensions and require more moving parts.

Pick-and-place robots like SqUID are helping warehouses and logistics companies automate their inventory management operations. These bots also make logistics jobs safer. For instance, they can retrieve inventory on high shelves instead of an employee using a basket crane. More adept, dextrous gripper technology will help these robots take on additional tasks in the years ahead.

3. Automated Logistics Software

Physical automation in logistics isn’t the only technology innovating the industry. Software is also giving warehouses and logistics companies a boost. Applications range from data processing to inventory management, demand forecasting, and more.

For example, smart load board apps have become a popular tool for automating finding the best shipping partners. These apps use AI and machine learning to match carriers with freight optimized for miles and capacity. The boards track shipping rates and vehicle capabilities to save time and money.

Logistics companies are also using apps to automate demand forecasting and data processing. AI and machine learning algorithms have become more capable and accessible over recent years. As a result, more businesses are using them to analyze data and extract valuable insights autonomously.

For example, an AI algorithm could analyze performance data from various warehouse departments and pinpoint bottlenecks. Managers could then use this information to concentrate optimization and automation efforts on operations that need the most attention.

4. Automated Quality Control

Quality control may be more closely related to manufacturing but is also important for logistics and shipping. For instance, how do managers ensure boxes are packed and sealed properly in an automated warehouse? Quality control is a key part of fully automating operations.

Engineers have developed automated quality control systems using AI, computer vision, and cameras. These systems are effective and faster than human inspectors. Quality control can be repetitive and monotonous, so automation allows employers to redirect employees to more valuable roles.

Companies are already putting automated quality control systems into practice. For example, health care manufacturer Baxter International uses an AI system developed by Amazon Web Services to automate quality control for its delicate medical products. The AI uses image recognition to differentiate defective and properly assembled items. Faulty products are flagged for inspection by an employee.

The application of automated quality control for delicate products like health care items clearly indicates this technology’s capabilities. It isn’t just limited to manufacturing but could be used in any industry where quality monitoring is important. In logistics, AI quality control could monitor packaging techniques, packing material quality, box folding, and more.

5. Stacking and Palletizing Robots

Stacking and palletizing might be simple tasks, but they are monotonous for employees and cost thousands of dollars per year in wages. These jobs are also more likely to cause injuries, so automation can improve employee safety. Robots have emerged as a great solution to automating this corner of shipping operations.

Robots are the ideal tool for handling packages. They are designed to operate with high precision, and repeatability is baked into every task. A machine can do the same thing countless times without unpredictable variation or diminishing returns — except for rare malfunctions.

For example, robotics developer Boston Dynamics invented a stacking robot that can handle 800 boxes per hour or approximately one box every five seconds. Moving that fast for a prolonged period while lifting heavy boxes could lead to serious injury for an employee. Machines remove this risk without sacrificing efficient operations. The Boston Dynamics robot can completely automate moving packed boxes from a conveyor belt into a shipping container.

6. Automated Storage and Retrieval Systems

The rising popularity of e-commerce is creating a shortage of warehouse space, causing rental rates to increase and putting a premium on every square foot available. Logistics companies need to optimize how they use their facilities to make the most of their space. Automation is helping them accomplish this by innovating product storage.

Warehouses are traditionally designed with wide aisles for people and vehicles to move through. Wouldn’t it be convenient if this space could also be used for storage? Warehouse robots are making this possible by allowing shelving units themselves to be mobile. AGVs act as transportation for whole shelving units.

This is exactly what Amazon is doing with Proteus. The AGV is flat so it can drive under shelving units raised off the ground. The shelves can be organized tightly together since there is no need for aisles, maximizing efficient use of floor space.

An inventory management system tracks where products are located and tells the AGVs which shelves to retrieve. The robot navigates to the appropriate unit, clamps underneath the shelf, and drives it to where employees are waiting to collect items and pack orders. This strategy keeps workers out of high-risk areas in aisles.

Any logistics company can utilize this automation tactic to make the most of warehouse space. AGVs are widely available today and becoming smarter every year.

Automation in logistics is helping the industry evolve to meet today’s challenges. Robotics, AI, and automated software are vital to the future of logistics and shipping. These technologies give companies a boost in efficiency, optimize operations, and improve workplace safety.