MARCH NEWSLETTER 2017
From the MD’s Desk
From the MD’s desk – Glenn Allison
Welcome to the March edition of the Orbit Logistics Newsletter
There is plenty to read in this month’s newsletter, and not all of it is great news.
There are increased costs coming, in Victoria initially, but some of the increased costs will impact nationally.
Huge increases in Heavy vehicle road tolls in Melbourne will commence in April 2017, and this is likely to be suburb based in terms of the toll surcharge levels.
The redevelopment of the Victorian Webb Dock terminal into the new VICT automated terminal has come with a range of extra user costs for FCLs in/out of that terminal.
At the time of this email being broadcasted, DP World terminals has now also flagged upcoming increased costs at their Melbourne & Sydney terminals.
On a more positive note there is an article of the benefits of the Free Trade Agreements that Australia continue to develop, as well as commentary on the increased export volumes in the last financial year.
Please note also the reminders regarding the upcoming changes for air freight exports to USA, and the revised import packing declaration templates, both to impact mid-year.
It’s a mixed bag of news, but well worth a read.
VICT CONTAINER TERMINAL
As a major new player in the stevedoring market in Melbourne, VICT, the new terminal at the old Webb Dock site, is now open for business. https://www.vict.com.au/#/
The terminal is planning to be the most automated terminal in the country, which is a big investment, and they will be working to get a return on this investment, by some new procedures and charges.
All transport operators have been required to sign acceptance of the T& Cs if they are to move FCLs in/out of this new terminal. In these T & Cs are some cost and procedural challenges…
Not all issues will impact all parties, but many have the potential to do so across the supply chain.
There are issues that may impact in several areas:
- Timeslot timing for imports
- Timeslot cancellations
- Truck weighing
- VGM (declared container weight) fees
- The order in which containers can be picked up
- Operational restrictions that have potential to impact on our transport arrangements with import/export clients (such as all FCLS in/out must have doors facing to the rear on the truck.)
So far this terminal has only handled 1 vessel, and that hasn’t gone so well, with software glitches delaying the vessel departure. As this terminal develops their business, they will seek agreement with shipping lines for ongoing service agreements. It is only early days yet, and we will update as business develops, but please be aware that there may be some additional costs for FCLs moving in/out of this terminal. More to follow in this regard.
TOLLS – THE IMPACT OF EXORBITANT TOLL INCREASES FOR HEAVY VEHICLES IN MELBOURNE
More news on the cost front…from April 1st 2017, significant road tolls levied against heavy transport vehicles will become operative in Melbourne. The fact that the toll increases are not directly impacting on commuters means that the issue has not been given a great deal of air time, but indirectly the cost of these tolls will certainly impact on domestic transport supply chain costs.
The transport industry bodies seem to have a couple of proposed methods for handling these additional tolls, but the common theme of all communications from the road transport industry that these costs cannot be absorbed and will be passed on in full.
There has been different suggestions of post-code based tolls and of an overall toll surcharge model, as noted in the attached article https://www.lloydslistaustralia.com.au/lla/market-sectors/logistics-and-supply-chain/VTA-releases-Toll-Levy-recommendations-550560.html
At the time of this Newsletter, we are engaging with our transport operators as to the model and amounts to be applied. We will share that information with clients once finalised.
AIR EXPORTS TO USA – UPDATE ON THE SECURITY AND CARGO HANDLING CHANGES COMMENCING JULY 1 2017
In our September 2016 newsletter (insert link to article) we provided details of the significant changes due to be implemented for USA bound air freight cargo, involving 100% cargo screening.
The Known Consignor Scheme was a key component of this message, highlighting the opportunity for regular exporters to USA to qualify & register as a Known Consigner, avoiding the delays and costs with the 100% cargo screening requirement. In an update from our key Industry Group, Freight & Trade Alliance, it is noted that exporters are not moving quick enough to get their applications submitted for the Known Consignor scheme. Advice has been received directly from the Office of Transport Security and is noted below:
Preparedness of Exporters
From Sachi Wimmer, Executive Director Office of Transport Security (OTS) on Friday evening, 24 February 2017
We have been focusing on the transitional tasks to ensure successful delivery of the project as we move towards the 1 July 2017 US ‘piece level’ examination requirements. These include continuing communications with exporters and freight forwarders, supporting uptake of piece-level screening with industry, and undertaking assessments and validations of the first wave of known consignor businesses wanting to enter the scheme.
With only four months until the requirements for piece level examination starts ensuring that industry is prepared will be challenging.
The Known Consignor Scheme is up and running and to date, we have over 260 Expressions of Interest, 81 applications received with 50 validations conducted and 7 approved known consignors.
However, the response to the Known Consignor Scheme is still relatively low and our experience is that there is quite a delay between people being given the application form and when they return it. With only 126 days until 1 July, we really need a quicker turn around on applications coming in. Further information on the Known Consigner Scheme can be found on the Departments website at the following link Known Consigner Scheme
Please direct any initial queries or comments on this matter to your Orbit Logistics for guidance.
FTAs SECURE BENEFITS FOR AUSTRALIAN MANUFACTURERS, SAYS MINISTER
ASSISTANT trade minister Keith Pitt is to host a seminar in Sydney on Friday March 3 aimed at helping local businesses make the most of Australia’s free trade agreements (FTAs) with South Korea, China and Japan.
Business representatives are invited to attend the free information seminar at the Prince Henry Centre in Little Bay, from 9am until 11.30am.
Attendees are to hear directly from Australian Government representatives as well as special guest speaker David Jack, export development manager at local mattress and bedding manufacturer A.H. Beard. Mr Jack is to share lessons from the company’s experience exporting to North Asia.
“The Australian Government has secured unprecedented access to more than a billion potential customers for Australian goods and services through our free-trade agreements with Korea, Japan and China,” Mr Pitt said.
“Our North Asia FTAs create new possibilities for exporters while delivering jobs and growth here in Australia.
“Australian mattress and pillow exporters have enjoyed big wins, with tariffs on spring and latex mattresses and pillows being immediately eliminated under our agreements with Japan and Korea, and progressively reducing to zero on 1 January 2019 for exports to China.”
Mr Pitt said he strongly encouraged small and medium-sized business owners in Sydney to attend this FTA seminar.
“The Australian Government is determined to support Australian exporters through these important seminars, which have already helped almost 3,000 SMEs improve their understanding and take advantage of the opportunities under Australia’s FTAs with Korea, Japan and China,” he said.
@LloydsListAustralia – David Sexton (Melbourne)
EXPORT VOLUMES INCREASED FOR MOST STATES AND TERRITORIES OVER THE LAST FINANCIAL YEAR
EXPORT volumes increased for Tasmania, Queensland, ACT and South Australia over the 2015-16 financial year, with New South Wales hitting a new record as its exports increased $3.1bn over the period.
This was according to Australia’s Trade by State and Territory 2015-16, recently published by the Department of Foreign Affairs and Trade.
NSW was Australia’s leading destination for imports, accounting for 40% of the country’s total imports, valued at $139.6bn. NSW was followed by Victoria, which accounted for 26.7% of imports; Queensland with 14.4%; and Western Australia with 13.5%.
China was the largest trading partner for all states while Japan was the largest trading partner for the Northern Territory. Switzerland, which imports Australian-made gold coin and legal tender, was the Australian Capital Territory’s largest trading partner in 2015-16.
In 2015-16, Western Australia continued to be Australia’s major exporter, accounting for 35.2% of Australia’s total exports (valued at $110bn), followed by New South Wales (22.8%), Queensland (20.1%) and Victoria (13.7%).
Produced by DFAT, Australia’s Trade by State and Territory 2015-16 is the latest report of annual analyses of international trade. It provides a statistical guide to goods and services imports and exports for each state and territory.
The full report is available on the DFAT website.
@LloydsListAustralia – Ian Ackerman (Sydney)
MAERSK ANNOUNCES TASSIE CALL
CONTAINER shipping giant Maersk Line is to welcome its first container ship call to Tasmania when the vessel Searuby arrives at Bell Bay on Monday February 13.
The Bell Bay call is being added to the existing Tasman Star service.
Maersk Line Australia sales director Anthony Randell said the new weekly shipping service to and from Tasmania would enhance the business’s network coverage.
“Australia is an important market to Maersk Line and we are committed to offering Australian businesses competitive and reliable connections to markets around the world,” Mr Randell said.
“With our latest service launch, we look forward to offering Tasmanian shippers a year-round superior product, with easy access and competitive transit times to and from key global markets.”
Qube Ports director Michael Sousa said he welcomed the opportunity to support Maersk Line from the Qube facilities in Bell Bay.
The Tasman Star service involves three 1100-1300TEU ships, each with 250-plug reefer capacity.
@LloydsListAustralia – David Sexton (Melbourne)
PATRICK TERMINALS – CONTAINER DAMAGE REPORTS
On Friday afternoon, 10 February, Patrick East Swanson Terminal issued the following alert through 1-Stop regarding Container Damage Reports:
Issue: Damage reports to truck drivers
Short Description: Patrick Management will no longer issue damage acknowledgments to truck drivers regarding damaged containers.
If a container is damaged the Shipping Line will contact Patrick directly.
Issue Commencement: 10/02/2017 12:55
Notification Date: 10/02/2017 03:00
Patrick East Swanson
CTAA understands that this is a national decision taken in consultation with all Shipping Lines serviced by Patrick Container Terminals that Patrick will no longer prepare container damage reports unless directly requested by a Line.
Further, we understand that the reference to the Shipping Lines in the notice is that if requested by a Line, Patrick can provide photographic evidence of the container while it was in the Terminal to check for damage.
We understand that the Patrick AutoStrad Terminal in the Port of Brisbane has not issued container damage reports for quite some time. Whereas, damage reports have still been issued at Patrick in Port Botany and in Fremantle.
CTAA is checking with Patrick nationally to ascertain whether the practice of providing a damage report to a driver if requested will now also cease in Port Botany and Fremantle.
CTAA is working with Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) to investigate the implications of this regarding container damage claims by Shipping Lines on importers and other parties in the supply chain.
Clearly though, this put further onus on transport operators, freight forwarders, importers and even Empty Container Parks (ECPs) to be vigilant for visible container damage when it is identified, and to take photographic evidence of the damage at the earliest opportunity as a defence against subsequent attempted damage compensation claims by Shipping Lines.
If you have any views about this development, please forward them to Neil Chambers, CTAA at: email@example.com
CMA CGM CHIEF FORECASTS MORE CONSOLIDATION AS LINER KEEPS WATCH FOR TAKEOVER TARGETS
CMA CGM chief executive Rodolphe Saadé expects consolidation to continue in the container shipping industry this year after the wave of merger and acquisition activity in 2016, and is watching out for takeover targets that bring synergies and will expand the line’s presence in key trades.
Speaking to Lloyd’s List during the TPM conference in Long Beach, Mr Saadé said the current round of consolidation was not yet over, although there were fewer targets now.
“We are always looking, and small and medium-sized shipping lines realise that they cannot afford to continue for ever in the current situation even if market conditions look better in the beginning of 2017,” he said.
“Only the big will survive.”
But he effectively ruled out interest in some of the smaller global carriers identified by Alphaliner earlier this week as vulnerable because of their scale, including OOCL, HMM, PIL and Zim.
“What is important for us is complementarity,” said Mr Saadé. “We are talking to a few but it is only discussions at this stage,”
One region where CMA CGM wants to grow is South and Central America, which is why the line made a bid for Hamburg Süd late last year before the Oetker family accepted Maersk’s offer.
“If there are other opportunities we are ready and willing, but for the time being we have not identified anyone that would require us to go back to the acquisition trail,” he said in an interview.
“Even though the market is tough, we still feel that Latin America is an area where it would make sense to develop our presence and grow market share, ideally through acquisition rather than reducing rates.”
Mr Saadé, who was recently promoted to chief executive of CMA CGM by his father Jacques who has just turned 80, said the banks were ready to finance the Hamburg Süd acquisition, but Maersk Line was in a position to pay cash.
He also warned that there was still a risk of casualties in the container shipping industry, despite a recovery in freight rates in recent months and a general view that there will not be another bankruptcy.
Although the first quarter has been better for carriers, “what happens if the second and third quarters are not?” he asked. ”
“For small and medium sized companies they cannot take another 2016. I hope I am wrong but it happened with Hanjin and it could happen to someone else. Who I do not know, but it will be a small to medium-sized carrier who was not able to find a buyer and who goes bust.”
Over the past few years, Mr Saadé has been taking an increasingly prominent role in the business which has expanded considerably following two acquisitions including the $2.4bn takeover of Singapore’s NOL. CMA CGM then later the bid for Hamburg Süd, underlining the French group’s continued appetite for growth.
At the same time, CMA CGM is looking for investors for some of the terminals it acquired through the purchase of NOL and its liner shipping arm APL, including APL’s Global Gateway South terminal in Los Angeles. Several potential buyers have expressed interest in this facility although there appear to have been fewer enquiries for APL’s other terminals in Asia.
Mr Saadé confirmed that CMA CGM was willing to consider partners while keeping a stake in facilities although there was a possibility it could sell Global Gateway South entirely
“The APL terminal business is a good one but we do not need to keep 100% ownership.” he said, with some talks already underway for LA facility.
“There are many interested parties because it is a good facility and the fact that we have loops calling there is a guarantee of revenue.”
CMA CGM is the only line to date to test out US west coast ports with an 18,000 teu-class ship, bringing CMA CGM Benjamin Franklin to LA and Long Beach in late 2015 and early 2016, before dropping plans for a transpacific service with this size ship because of market conditions.
At the time of the CMA CGM Benjamin Franklin call, Mr Saadé said he had expected to see more ships of that size on the Pacific, but then changed his mind as market conditions deteriorated and because of the structure of the transpacific trade with just one main port call.
“They will come, but not now,” he said.
@LloydsListAustralia – Janet Porter (London)
AUSTRALIA SENDS TRADE DELEGATION TO INDONESIA
As Australia looks to build on the Economic ties with our Indonesian neighbours, comes the news of an upcoming trade delegation heading to Indonesia, following on from the recent visit from the Indonesian President Widodo.
This economic trade activity is leading towards the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). Orbit Logistics are also building trade activity with our Indonesian partners, with a visit this week to Australia from the MD of our partner agents.
Enquiries regarding Indonesian freight matters can be referring to our Sales & Marketing team. The attached article provides more information regarding the Trade mission https://www.lloydslistaustralia.com.au/lla/market-sectors/law-and-regulation/FREE-Ciobo-to-lead-trade-delegation-to-Indonesia-550757.html
ANNUAL PACKING DECLARATIONS (APDs) FOR IMPORT CONSIGNMENTS – REMINDER re CHANGES IN JULY 2017
We have been working closely with our import customers to ensure their import APDs are in place, up to date and are using the new format ANNUAL PACKING DECLARATION
Please ensure your suppliers are aware of this new form that is compulsory from July 2017 for all APDs.
Please contact our office if you want any guidance in regards to your APDs.