APRIL NEWSLETTER 2017
From the MD’s Desk
From the MD’s desk – Glenn Allison
Welcome to the April edition of the Orbit Logistics Newsletter
Change is coming, and perhaps so is winter, if recent weather is any indication.
In terms of operational cost impacts, road tolls, port infrastructure fees, FCL & airline terminal fees are all on the rise, and we provide an update in these key areas. Further updates should follow, once the ACCC provides direction on the proposed Port Infrastructure Fees at DP world, due April 17th.
The focus from Australian Border Force on the risk management of asbestos in imported goods is now looking closely at automotive parts. We expect to see an increase in red-line entry processing and possible inspection/sampling events for such commodities, as this issue remains a hot topic with ABF.
It’s good to see more positive news regarding Free Trade Agreements, with updates on Japan and the EU. Australia is certainly very active in the FTA space; it will become a cornerstone of our international trade model.
Packing Declarations for import consignments have changed slightly, and June 16th is the cut-off date for this change. Please check this with your suppliers; the required templates are included below for your reference.
What hasn’t changed too much are the licencing requirements and challenges for Customs Brokers, with some commentary provided in that area as well.
Please keep in mind the upcoming public holidays for Easter and Anzac Day; enjoy the breaks for these significant days; maybe a good time to catch up on a bit of reading…
ROAD TOLLS, PORT INFRASTRUCTURE SURCHARGES, ROAD RESTRICTIONS & AIRLINE TERMINAL COST INCREASES – SUPPLY CHAIN COST IMPACTS
The trading community is being hit from all angles in terms of increased in costs, especially in Melbourne. These increases will add to the supply chain costs for importers/exporters/service providers, and the bottom line is that these cost increases will get to the consumer, one way or another.
Tolls in Melbourne
As noted in broadcast messages and previous newsletters, the revised City Link tolls for heavy vehicles are now reality from April 1st. Not all transport operators are taking the same approach to their toll surcharges, but all carriers will be adding toll surcharges for MEL deliveries. Most carriers plan to charge as per the destination or pick up points. Information from carriers has been trickling in; it seems the carriers were all waiting to see what competitors were doing. Please expect to see toll surcharges included in invoices for shipments delivered after April 1st. We have been reviewing and negotiating with carriers on the tolls at the client level. Please bear with us on this as we get the details finalised for all clients, most of which have now been finalised.
Plans to ban trucks from suburban streets in future:
Under plans announced by the state government, trucks are to be banned from suburban streets in Yarraville and Footscray after the Western Distributor project is completed in 2022.
Heavy vehicles are to be prohibited from Francis Street and Somerville Road in Yarraville and Buckley Street and Moore Street in Footscray.
The truck ban announcement came hot on the heels of the commencement of the CityLink toll hikes for heavy vehicles, as much as 125%.
As noted in the Lloyds List news, the Container Transport Alliance Australia called on the Andrews government to help container transport operators get a “fair go”.
CTAA director Neil Chambers said container transport operators in the inner and outer Western industrial suburbs did numerous truck trips to and from the Port of Melbourne to service vital container trade volumes.
“The original Government business case called for Transurban to consider a reduced toll price for transport operators undertaking these shuttle operations, as well as suitable trip caps, and the favourable treatment of Higher Productivity Freight Vehicles,” he said.
“With the Government announcement that 24/7 truck bans will be applied to many inner western suburb roads once the West Gate Tunnel is completed, it is vital that the Government ensures that container transport operators receive a ‘fair go’ with the tolling structure and prices.”
Mr Chambers said there was a risk of heavily-laden trucks being funnelled onto a heavily-expanded Wurundjeri Way, as the raised section of the Western Distributor along Footscray Road did not connect directly with the Bolte Bridge for Webb Dock access.
“When the new Victoria International Container Terminal (VICT) reaches higher throughput volumes, there will be hundreds of heavy trucks on that route – night and day,” he said.
“What is the Government doing to protect these vital freight corridors?”
Port Infrastructure Fees
DP World announced Port infrastructure fees to commence in Sydney & to increase by ~ 1000% in Melbourne, impacting on their container terminals for FCL cargo. It was proposed that the fees would be payable by transport operators, rather than the terminal’s contracted customers, the shipping lines. Fees of approx $25 (SYD) & $35 (MEL) per FCL are planned. Transport operators & the peak industry bodies have succeeded in having this matter referred to the ACCC for review.
The planned April 3rd implementation date has been pushed back to April 17th, pending ACCC approval.
New Container Terminal VICT is up and running in Melbourne, with additional mandatory fees for Container weighing added to the costs of FCLs in/out of this terminal.
These costs, once implemented, will need to be passed onto the trading community.
Airline terminal fees
As has become the norm over recent years, the Airline cargo handling terminals are currently announcing some increases in their handling fees. Of note will be the X-ray fees for air cargo to USA destination, which will be mandatory from June 2017. We are yet to receive advice of all terminals’ increases; we will pass these details as they are received. Once again these costs will be borne by importers/exporters and eventually the consumers.
We encourage our clients, either individually or through their industry bodies, to raise their objections to these additional costs, to the federal & state governments, to local members of parliament, etc.
Without making too many political comments, we are seeing our governments at state and national levels taking hands-off approaches to these matters, and that is not the role of good governments when considering the importance of the trading supply chain. They can’t keep their heads in the sand or in other dark places. We encourage you to remind them of that.
DPWA CHALLENGED OVER INFRASTRUCTURE CHARGES
IN AN opinion piece last Tuesday (DPWA defends infrastructure levy changes, March 28), Brian Gillespie, demonstrates the thinking that must permeate senior management at DPWA.
He sympathises with transport operators, particularly those in Melbourne who have been challenged to pass on massive truck toll increases imposed by Melbourne’s largest toll road operator and uses this analogy as justification for the actions of DPWA to implement its infrastructure surcharges. The analogy is wrong, because transport operators have had to inform and negotiate with their direct customers – those engaging their services to transport containers by road – to recoup the cost increases. On the other hand, DPWA is not attempting to recoup the costs of doing business and investments for the future from their direct customers – the shipping lines – but instead see it as perfectly fine to pass these costs onto third parties who have next to no bargaining power with the stevedore, and no input into the quantum of the surcharges or how the revenue will be spent.
The so-called contract being used by DPWA to impose the infrastructure surcharges on road transport operators in Melbourne and Sydney is the DPWA National Carrier Access Agreement. The CAA is imposed on road transport operators on a “take it or leave it” basis. There is no negotiation on the clauses contained in the CAA, and if you don’t agree to it, then effectively you can be locked out of the terminals. The use of the Carrier Access Agreement as the vehicle through which to impose the infrastructure surcharges is one of the matters brought to the attention of the ACCC.
The only way container stevedoring in Australia is working the way it is with short container dwell times within container terminals (thus increasing the capacity of the terminals) is because transport operators have invested millions of dollars in yards, handling equipment, people and systems to clear containers away from and deliver to container terminals in a timely manner, night and day, weekdays and weekends. Effectively, the larger transport operators (responsible for more than 80% of the TEU movements) have become satellite terminals which stage between 80% to 100% of containers (import & export). The times and the manner in which they can access the container terminals are dictated by the stevedore companies, hence staging has become the norm.
Perhaps then, transport operators should levy an Infrastructure Surcharge on DPWA to recoup revenue related to those landside infrastructure, equipment and systems investments? This suggestion may seem fanciful – it probably does to many, because they are just not in a position of such market power that they could dictate to a third party in that way … unlike DPWA.
Closer to reality, as a result of the imposition of these Infrastructure Surcharges by DPWA, shippers using shipping Lines that call at DPWA terminals should be asking lines for a reduction in their Terminal Handling Charges (THCs) by a corresponding amount. Shippers should also avoid using shipping lines whose vessels are stevedored by DPWA to avoid the imposition of the Surcharges.
For transport operators, the immediate reality will be the need to carry the cost of the Infrastructure Surcharges before they can be recouped (in whole or in part, or not at all) from their direct customers. CTAA calculates this as a float of between $30,000 to $50,000 for a smaller transport operator, to closer to $300,000 for larger transport operators. This may be enough to tip some smaller transport operators, already facing the full force of a very competitive market, over the cliff.
Mr Gillespie concluded his opinion by suggesting at some point in the future, it’s entirely possible that waterside and landside stevedoring charges may be entirely separate, which would provide shipping companies and transport companies with full visibility of respective quayside and landside costs. Certainly, if the proposed infrastructure surcharges in Sydney and Melbourne stand, and more so if the other stevedore companies follow suit, something has to give.
Neil Chambers is a Director at Container Transport Alliance Australia
@LloydsListAustralia – Neil Chambers (Melbourne)
ABF TARGETING CAR PARTS IN ASBESTOS IMPORT INSPECTIONS
Australian Border Force (Customs) is casting its eyes on imports of car parts as it enforces Australia’s prohibition on imports of goods containing asbestos.
Speaking at an industry regional conference recently, ABF Inspector, Compliance Operations Josie Herman said some industry members had noticed an increase in operations that focused on the risk of asbestos in motor vehicle parts, including the expansion of community protection questions. “This is because this is where we’re detecting asbestos,” she said. Ms Herman said some of the motor-vehicle related goods the ABF considers high-risk include “friction materials for or within internal combustion and electric motor vehicles”.
“For example,” she said, “clutch lining; brake pads and shoes; and gaskets.”
But, Ms Herman said the risk of asbestos in motor vehicle parts was not new. Her recent commentary was:
“The ABF employs a risk-based intelligence approach to policing the border when it comes to goods containing asbestos, and the list of high-risk goods is constantly changing. Because of all the new risks that have emerged, we need to ensure our targeting for asbestos remains sufficiently directed to cover a wide range of commodities and countries of origin to ensure we address the risk and monitoring the potential for risk leakages through or current targeting and intervention efforts.”
Please direct your enquiries to Orbit Logistics Customs Brokers regarding this matter.
PACKING DECLARATION TEMPLATES – JUNE 16TH 2017 DEADLINE
Some minor, but legally necessary changes were made in 2016 to the Templates for Annual & Shipment Packing Declarations that are required for import Cargo clearance.
Whilst the changes have been in for some time, the June 16th deadline when the old templates will no longer be accepted is looming.
We encourage all clients to provide all suppliers with the Templates that are included in the attached Industry announcement. NEW PACKING DECLARATION TEMPLATE
Most of our clients have had their suppliers review and amend their annual packing declarations, but shipment levels PDs are still common.
If you are not sure about the compliance levels of your current Packing Declarations, please refer these to our office.
Please do so at the earliest opportunity, the cut-off date is looming, and that date is based on when the goods are cleared, not when they are shipped.
LOWER TARIFFS FOR AUSSIE GOODS TO JAPAN
THE FOURTH round of tariff cuts under the Japan-Australia Economic Partnership Agreement (JAEPA) is due to take effect tomorrow (April 1).
Agriculture minister Barnaby Joyce said this latest round of tariff cuts and quota volume increases would provide more opportunities for exporters of a range of agricultural commodities, including honey, beef, dairy, wine, seafood, cereals and horticulture products.
“Japan has been a leading market for Australia’s high quality and safe agriculture, food, fishery and forestry product exports for several decades, and is currently ranked second with $4.7bn worth of trade in 2016,” Mr Joyce said.
“This fourth round of cuts includes chilled and frozen beef tariffs falling to 29.9% and 27.2% respectively, down from 38.5%. Beef remains our leading agricultural export to Japan, worth $1.8bn in 2016.”
Yet more examples of products with decreasing tariffs include honey reducing by a further 2.3%, Southern Bluefin tuna by a further 0.4%, and grated cheese by 1.2% (this with a quota volume increase of 80 tonnes to 440 tonnes for the year from 1 April 2017).
Continuing, Mr Joyce said in 2016 Australia gained new access for melons and an expansion of access for pumpkins from just Tasmania to all of Australia.
“The pumpkin tariff is now zero under JAEPA, and the pre-JAEPA 6% tariff on melons is also now zero,” Mr Joyce said.
The Australian Melon Association industry development manager Dianne Fullelove welcomed the opportunity to export melons to Japan through the JAEPA, with the new technical market access and the pre-JAEPA 6% tariff on melons now at zero.
“The further tariff reductions benefit nearly 380 rockmelon, watermelon and honeydew melon growers,” she said.
LICENSING REVIEW DRAFT RECOMMENDATIONS PRESENTED TO THE COMPTROLLER-GENERAL OF CUSTOMS
A CALL for de-regulation of individual customs brokers by one industry sector appears to have been brushed aside with the Department of Immigration and Border Protection appropriately retaining licensing for this important trade profession.
In fact, the Department’s principal recommendation is that licensing be retained for customs brokers, depots and warehouses with the remaining recommendations looking to strengthen and streamline procedures, including:
- Retention of a licensing regime for customs brokers, depots and warehouses;
- Alignment with other agencies;
- Reducing duplication on fit and proper checks;
- Electronic lodgement of information;
- Review of application and documentation requirements;
- Alignment of licence renewal processes;
- Retention of 60 days for decisions on licence applications;
- Alignment compliance and auditing;
- Review for permissions for movement of goods;
- Continuing existing licence categories for customs brokers;
- National Customs Brokers Licensing Advisory Committee (NCBLAC) revised powers and industry appointee process to have a wider reach;
- Licences to allow coverage of multiple facilities;
- Use of bonds, securities and indemnities;
- Review of licence conditions; and
- Maintain integrity of licensing regimes.
It looks as though streamlined application and compliance measures will be implemented and this will certainly be welcomed by industry. The sleeper may be recommendation 13 – “the Department should retain the right to use bonds, securities and indemnities”.
Freight & Trade Alliance (FTA) recommended it its formal submission that instead of the mandatory imposition of a financial security for Sec 77G Depots, that the Department consider whether the establishment is insured for duty imposed by authorities for breach of regulations.
Strict licensing requirements are justifiably in place for depots and warehouses, yet there continues to be little, if any, rigour placed on transport operators that physically handle under bond cargo between secure premises. It remains possible that recommendation 9: “review for permissions for movement of goods” will align the department’s expectations on transport operators on inbound cargo to that of the secure handling of export air cargo as administered by the Office of Transport Security (OTS).
While merit is seen in the 15 recommendations, the concept of a “provisional” customs broker licence and other key recommendations put forward by industry did not rate a mention. Furthermore, it remains difficult to understand the implications of the reforms as limited explanatory material has been provided. Disappointingly, and following an extensive exercise lasting over 18 months, the department has not sought final industry comment on the draft recommendations.
We understand that the final report was submitted to the Comptroller-General of Customs late last week. In order to complete the industry engagement process, we trust that the department’s leader will release the review in its entirety and seek further industry comment prior to implementation of the findings.
Paul Zalai is an advocate for the Australian Freight and Trade sectors
@LloydsListAustralia – Paul Zalai (Sydney)
THE DIFFICULT LIFE OF A CUSTOMS BROKER
IT IS a trying time to be a licenced customs broker in Australia as regulators put more responsibility on the customs brokers to ensure that their customers are compliant.
At last weekend’s Customs Brokers and Forwarders Council of Australia New South Wales regional conference, the council’s NSW president, Adam Butler highlighted some of the issues faced in the profession.
“The life of a customs broker is becoming increasingly difficult, it seems like the only thing that is on the decrease is our margins,” said CBFCA president NSW Adam Butler.
He went on to say that in the customs broking profession, one has to deal with many government departments, service providers and libraries of legislation, and it was the feeling in the profession that the same issues have been resurfacing over the past few decades.
“In addition to these same issues, we have more recently been dealt the mammoth task of managing asbestos community protection questions, along with prohibited import regulations,” Mr Butler said.
He went on to say that it is in the regulators’ interest to work with customs brokers.
“There is a genuine, resounding respect for the private sector in international trade because the government realises what a monster of an industry this is,” he said.
“I know that sometimes you may think on the contrary, but principally, the regulators know how powerful we are as an extension of the regulator in the private sector.”
Mr Butler encouraged all at the conference, in spite of today’s frustrating environment, to remain compliant and ensure business, staff and colleagues exercise due diligence in the best way they can.
“This is your best weapon at the coalface, and will put you in a better position,” he said.
@LloydsListAustralia – Ian Ackerman (Sydney)
AUSTRALIA/EU FREE TRADE DISCUSSIONS UNDERWAY
While it is only early days in the process, the development of an FTA between Australia and EU is starting to take some basic shape, with a scoping exercise completed, identifying the potential and setting some of the boundaries for the FTA.
The linked article from the Daily Commercial News provides more information: https://www.lloydslistaustralia.com.au/lla/market-sectors/law-and-regulation/FREE-Key-step-taken-toward-Australia-EU-FTA-negotiations-553427.html