FEBRUARY NEWSLETTER 2018

Posted by ORBIT LOGISTICS
Category:

Welcome to the February Edition

Happy Lunar New Year and welcome to the year of the dog!

As always, there are a number of interesting articles in this month’s newsletter.

Pressure on costs around transport and port charges continues to increase.

We draw your attention to the article regarding the developing trend of shipping lines directing that some empty containers are to be returned back into the waterfront container terminal rather than to an empty container yard.

This is a new, escalating issue, especially in Melbourne, and there will be additional costs incurred for these container movements.

Trucking problems seem to be international; note also the article on the shortage issues being faced in the USA after some legislation changes.

Some trade and FCL volume results are also noted and are reflective of the busy period we have been in.

Our old foe the Brown Marmorated Stink Bug is back causing Quarantine chaos for shipments ex USA and particularly from Italy, and some emergency measures are in place from the Department of Agriculture. This is an evolving topic, so stay tuned for further updates during the BMSB season that goes through to May.

Please contact our office should you require further information on any of these topics.

Happy reading!

Glenn Allison
Managing Director


RETURN OF IMPORT CONTAINERS TO AUSTRALIAN SHIPPING TERMINALS

CHANGES in Maersk Line’s empty container return policies come into effect 1 February, requiring some empty container returns to be made at a shipping terminal and not an empty container depot.

A statement from Container Transport Alliance Australia pointed out that Maersk Line is now joining other shipping lines requiring direct empty returns to terminals, including OOCL, ANL (CMA CGM), Hamburg Süd and COSCO.

CTAA has raised concerns that these policies are increasing logistics costs particularly in the Port of Melbourne, and container transport operators in the city are looking to recover these costs in the marketplace.

CTAA director Neil Chambers said Maersk has had its traditional empty container park providers issue statements to transport operators that de-hire instructions would be “strictly enforced” and that trucks would be “rejected” if operators attempt to de-hire at alternative locations.

These strict instructions remove operational flexibility in the landside logistics sector and trigger a range of additional operational costs.

In comparison with other Australian ports, in the Port of Melbourne some stevedore practices involved in receiving direct empty de-hires are not efficient from the point of view of the landside operators.

Mr Chambers pointed out that in the Port of Melbourne, additional costs are generated when there is:

  • A lack of available container slots for the return of the empties to the designated stevedore terminal (day shift & night shift);
  • The need to stage empty containers through transport yards due to the lack of available terminal slots, including the costs of additional container lifts and yard storage;
  • Additional truck kilometres travelled;
  • No ability to backload full import containers (i.e. not being able to achieve two-way truck running by returning empties in conjunction with import container pick-ups) due to the operational practices and vehicle booking system restrictions of the stevedore;
  • Longer Truck Turnaround Times (TTT) at the stevedore terminal in comparison to ECPs;
  • No show & wrong time zone penalties imposed by the stevedore on transport operators for empty returns when no such penalty regime applies at traditional ECPs;
  • Additional administration costs, including in some instances the costs of administering the production of a Pre-Receival Advice (PRA) message for container receipt into the terminal; and
  • The greater chance of Container Detention charges being levied by Shipping Lines for the late return of the empty containers due to the operational delays.

Consequently, container transport operators in Melbourne can no longer commercially absorb the additional costs.

CTAA strongly believes that there is a need for genuine cost recovery to ensure business viability through the adoption of a transparent ‘direct de-hire to terminal’ surcharge levied on cargo interests (transport customers).

Mr Chambers stressed that not all of the aforementioned inefficiencies apply to all stevedore terminals in Melbourne.

“We thank those terminals who do work closely with transport operators to ensure timely empty container de-hire slot availability, the ability to back-load (i.e. take in empties when the truck is manifested to pick up import containers), and have acceptable truck turnaround times,” he said.

Mr Chambers noted that CTAA companies had not identified the same level of inefficiencies in Port Botany or Brisbane.

The above impacting issues are still being discussed at length, with firm rates for returning empty containers back to the terminal still being negotiated. Therefore further details will be advised as details come to light.

In the meantime, should you have any questions or concerns, please contact our sales department.


NATIONWIDE TRUCK SHORTAGES – U.S.A.

A nationwide truck shortage is forcing thousands of shippers into a tough choice of either to postpone all but their most important container deliveries, or pay higher rates to move their shipments. The surging transportation demand is spurring trucking companies to charge as much as 30 percent more for long-distance routes compared with prices a year ago, and they’re hard pressed to add capacity because of a long-standing shortage of drivers.

A new federal safety rule in December requiring drivers to track their hours behind the wheel with electronic logging devices (ELD’s) has exacerbated the problem.  Prices shot up for some routes that now might take two days instead of one because of stricter time keeping.

Another factor is a growing shortage of qualified drivers.  The shortage is having a dramatic effect on our ability to deliver freight in a timely and effective manner.
Covenant Transportation Group Inc. is offering a $40,000 bonus to persuade more drivers to work in teams, which boosts the usage of the company’s trucks by having one person rest while the other takes the wheel. That will help Covenant meet “extremely strong” freight demand,
Some long-haul cargo may move to railroads, which tend to be slower but charge less than trucks.
The consolation for companies faced with pricier trucking rates is that the increases are hitting everyone, so no competitor is getting an upper hand.
It’s going to be an industrywide issue that we’re all going to have to face, which is higher freight cost going forward.

There is also an increased risk of demurrage, detention, storage and dry run charges.
All of us at Orbit Logistics will continue to work diligently to provide the highest level of service our clients deserve.

DFAT report shows trade increases

AUSTRALIA’S total trade in 2016-17 was worth a record $735.5bn. In a statement released by federal trade minister Steven Ciobo said Australian exports had risen 16.8% to $373.2bn, while imports were valued at $362.1bn, up 1.4%.

“For the 12 months to June 2017, resources were again the driver, with iron ores and concentrates and coal accounting for 31.4% of total exports.

Australia’s third largest export was education-related travel services, which rose 16.1% to $28bn, natural gas rose 34.5% to $22.3bn as Australia’s fourth largest export, and personal travel, excluding education, services was fifth, and rose 4.8% to $21.7bn.

Mr Ciobo said Australia’s top trading partner was again China, a position it has held for the past 11 years. Two way trade with China was valued at $174.7bn, or 23.8% of total trade.

Japan also overtook the United States to become Australia’s second largest trading partner at $68.6bn, with the United States as the third largest partner valued at $66.5bn.

Delving deeper into the report, we find that Australia’s exports of goods alone were worth $291.6bn, showing a 19.4% increase over the previous financial year. Meat and meat preparations $11bn, a decrease of almost 10% on the previous year, Cereal grains and cereal preparations were worth $9.3bn, which was an increase of 17%, Exports of metal ores and minerals were worth $85.2bn for the year an increase of 23.1% on the 2015-16 financial year. The value of coal exports was up a whopping 57.1% on the previous year to $54.3bn. Imports of goods were worth $277.9bn over the past financial year, showing an increase of 2.4% on the 2015-16 financial year.

Australia’s top import (excluding services) by value for the financial year were passenger motor vehicles, imports of which were worth $21.8bn in the 2016-17 financial year, an increase of 1% on the previous year. Refined petroleum was the second-largest merchandise import, worth $17.4bn after an increase of 7.2%. Telecom equipment and crude petroleum followed, worth $12bn and $8.6bn, respectively.
China
Merchandise exports to China rose in value 27.1% in 2016-17 over the previous year, to $95.7bn.

It comes as no surprise that exports of iron ore and concentrates dominated Australia’s trade with China. Over the past financial year, exports of iron ore were worth $51.7bn, after an increase of 33.4% on the previous year. Iron ore accounted for 54% of the value of Australian exports to China. The value of coal exports to China increased 99% over that time to $11.2bn and wool and animal hair increased 20.1% to $2.4bn.

Imports to Australia from China over the financial year were worth $61.5m in total. At the top of the list of Chinese imports were telecom equipment and parts, worth $7m after an increase of 2% on the previous year. Computers were the second-most valuable import from China, worth $5m after a very small increase on the previous year (0.6%). Furniture was the third most valuable import, worth $2.6m, and imports of prams, toys games and sporting goods were worth $2.3m.

USA
The US came in third when looking at the value of merchandise trade with Australia, representing a 7.5% share of Australia’s total merchandise trade.

Merchandise exports to the US totalled $12.3bn over the past financial year. Australia’s biggest export to the home of the brave was beef (fresh, chilled or frozen), worth $1.5bn after a decrease of 40% on the previous year. Other meat (fresh, chilled or frozen) was the second-biggest export to the US, worth $934m over the past financial year. The third biggest export to the US was aircraft, spacecraft and parts, worth $855m after a decrease in value of 23.5% on the 2016-17 financial year. Turning towards merchandise imports from the US, we find they were worth a total of $31bn last financial year. At the top of the list was passenger motor vehicles, imports of which were worth $2.2bn after a 6.6% decrease on the previous year. This was followed by aircraft, spacecraft and parts ($2bn) and medical instruments ($1bn).

South Korea
South Korea accounted for 6.2% of Australia’s total merchandise trade (by value) during the past financial year.

Exports of both coal and iron ore to South Korea saw significant increases in value (35.7% and 28.4%, respectively). Exports of coal to the peninsular country were worth $6.3bn, while iron ore exports were worth $3.9bn.

The third largest export to South Korea was beef (fresh, chilled and frozen), worth $1.2bn after a decrease of 7.3% on the previous year. Other notable export include sugars, molasses and honey ($998m); aluminium ($748m); and other ores and concentrates ($693m). Refined petroleum topped the list of imports from South Korea, worth $4.8bn over the past financial year after a decrease of 3% on the previous year. Ships, boats and floating structures was the second biggest import category by value from South Korea, worth $3.9bn. Passenger motor vehicles were the third most valuable import from the country, worth $2.4bn after a decrease of 4.6%.


FURTHER UP-DATE ON BROWN MARMORATED STINK BUGS – EX ITALY

To Re-Cap:  The Brown Marmorated Stink Bug (BMSB) is an exotic pest of bio-security concern to Australia’s and New Zealand’s agriculture industry as they feed on and severely damage fruit and crops. Typically the Peak Season for these bugs is from the 1st September to the 30th April.

The Department of Agriculture has just announced that an escalating number of failed treatments have been identified for shipments ex Italy, treated with Sulfuryl Fluoride (SF). Recent detections of Brown Marmorated Stink Bug (BMSB), due to ineffective SF treatments out of Italy required the department to implement pro-active controls to manage offshore SF treatment providers.

Currently, to manage the risk posed by these consignments, all containerised consignments shipped from Italy that arrive in Australia between 17 January 2018 and 30 April 2018 will be required to undergo an approved treatment offshore or onshore before being released.  Consignments treated offshore with one of the approved BMSB treatments, and where a valid treatment certificate is presented to the department, do not require onshore treatment.

Where a SF fumigation failure from a treatment provider is confirmed, the department adds the treatment provider to a published list of ‘unacceptable’ treatment providers and profiles them using the AQIS Entity Identifier (AEI) field in the Integrated Cargo System (ICS).

Currently the list is:

Offshore Sulfuryl Fluoride Treatment Providers – Italy

As at 8 February 2018 – All sulfuryl fluoride certificates issued by fumigators from this country are acceptable, except for those issued by companies listed below as “unacceptable”. All consignments treated by companies listed as “unacceptable” will be treated on arrival, exported or voluntarily disposed of in a manner approved by the Department of Agriculture and Water Resources.

Treatment certificates are not accepted from treatment providers as of the date they are listed as ‘unacceptable’. There is no allowance for goods in transit.

More information may be found at this link: Offshore Sulfuryl Fluoride Treatment Providers List

Company Name Address Branch Status AEI
All companies not listed as unacceptable Acceptable IT4001SF
Societa Italiana Sterilizzazioni All branches All branches Unacceptable IT4002SF
Ligur Control Salita S. Francesco da Paola 27r
16126 GENOVA
GENOVA Unacceptable IT4003MB

When a treatment provider is listed as ‘unacceptable’ and profiled in the ICS, all consignments with treatment certification from the treatment provider is referred to the department to be directed for appropriate onshore treatment. This system ensures treatment certificates issued by treatment providers responsible for past and future SF failures are rejected by the department and appropriate risk measures taken.

By including the requirement for customs brokers to enter the IT4001SF AEI for ‘All companies not listed as unacceptable’, the department is able to track consignment volumes, conduct random interventions where necessary and have confirmation that customs brokers have conducted the necessary assessment of the certificates and they are determined to be acceptable. This is the same practice currently in place for all methyl bromide certificates received from non-Australian Fumigation Accreditation Scheme (AFAS) countries.

The list is obviously small as this process has only just been implemented, the list is expected to grow as the department receives more failed treatments.

Please review the full details via the following notice from Department of Agriculture and Water Resources:http://agriculture.gov.au/import/industry-advice/2018/04-2018

 


Infrastructure Levies on the Increase

Further to DP World Australia’s announcement In December/January to Increase their Port Infrastructure surcharge in Melbourne, Sydney and Brisbane terminals. Patrick’s have now announced they will also be increasing their infrastructure fee’s effective 12th March 2018. Infrastructure surcharges recover a portion of the costs that relate to:

  • Capital investments already made on dedicated infrastructure that services our land-side interface operations.
  • Excess charges over CPI that relate to our property and related costs, (Including rent, land tax and council rates).
  • Maintenance and operational costs associated with providing our land-side interface.

The infrastructure surcharge will be applied to both road and rail transport operators for all full container movements, both Import & Export, made at the terminals.  Any clients that will be affected by this increase, will be notified separately by a member of Orbit Logistics Sales/Management Team. In the meantime, should you have any questions, please do not hesitate to call our office.


MONTHLY OVERSEAS CONTAINER TRADE UPDATE: 

Total overseas container throughput (full + empty) for December was 209,789 TEU, this was an increase of 6.7% over December 2016. Total (full + empty) overseas container imports for the month were up by 11.8% while total (full + empty) overseas container exports were also up by 1.7% in comparison to December 2016.

Full overseas container imports were 104,846 TEU, an increase of 11.7% against December last year. Most commodities recorded gains for the month including furniture, electrical equipment, machinery, timber, plastic ware, chemical products and misc. food preparations. Commodities with the most notable declines were wood & cork manufactures, paper & fibre boards, toys & sporting goods, glass & glassware and vehicle parts.

Full overseas container exports were 63,847 TEU for December 2017 which was up 9.6% against December 2016. Several commodities recorded gains for the month including cereal grains, paper & fibre boards, wool, beverages, timber, meat, dairy products, metal scrap and paper & newsprint. Commodities with the most notable declines were fruit & vegetables, oil seeds, nuts & kernels, vehicle parts, stockfeed and pulp & wastepaper.     Empty overseas container movements for December were down 7.8% over the same period last year to 41,096 TEU. Empty overseas exports fell 9.6% for the month, while empty overseas imports increased by 14.8% against December 2016.


WEATHER CONDITIONS IN THE U.S.A.

Please be advised in the USA, some states are experiencing a severe weather event. In the states of TEXAS, ATLANTA & GEORGIA have recently been affected by a severe weather pattern and this has now has moved up through the mid-south impacting the states of South & North Carolina and parts of the Northeast. Some Line Carrier branches are advertised as currently being closed in HOUSTON, DALLAS, CHARLOTTE, & ATLANTA, (which are the most affected) Line Carriers & Transport Companies have announced that in these areas they have no service or very limited service (depending on safety).

This will impact all deliveries and pickups within the regions. Expect transit delays as carriers are suspending service in some areas. You can also expect when the weather does clear that Line Carriers will be backlogged as much as 2-3 days. We’ve seen service delays in the past due to weather, so please be aware pickups and deliveries will be impacted.


New Packing Declarations Implementation

Further to the Department of Agriculture and Water Resources (the department) Import Industry Advice Notice 101-2017 – Implementation of revised Minimum Documentary and Import Declaration Requirements and Non Commodity Information Requirements Policies, we would like to remind you the department has now updated the packing declaration templates. The department has aligned the Non Commodity Information Requirements policy and the Non Commodity BICON Case with the import conditions for bamboo packaging. Bamboo packaging is now acceptable provided it is treated by an approved method prior to export or on arrival and does not need to be declared as unacceptable packaging.

The department will continue to accept packing declarations that are in the current format for consignments shipped on or before 30 June 2018. All consignments shipped on or after 1 July 2018, must be accompanied by a packaging declaration that meets the revised requirements.

Updated templates are now available on the Acceptable documentation templates webpage to enable you to advise your clients / suppliers to start using the new templates.


Regulations for Importing Vehicles into Australia

A reminder to all clients Importing vehicles into Australia, that an Import Permit is required to be applied for.

An application for a Vehicle Import Approval, with all necessary supporting documentation will generally be assessed by the Department within 20 working days of receipt (including payment of the lodgement fee). This process will take longer if the necessary supporting documentation is not initially provided, if the original application is incomplete or any further information or clarification is required.

Obtaining a Vehicle Import Approval is only one step in the process of importing a vehicle into Australia. Depending on the type of vehicle, the processes may be complex, involve several organisations, and take many weeks. For an overview of the process, read the 8 steps to import a vehicle.

Permits are required for all of the following forms of vehicles.

New & Used Cars / Race/Rally car or Motorbike’s / New & Used Trucks / Motorbikes / Moped’s / Buses / Motor-homes / Trailers / Motorised Wheelchairs / Power assisted pedal cycle or motorised scooters / ATV’s / Quad Bikes / Go-Carts / Scooters /  Small or mini motor-bikes / Any non standard vehicle/special purpose (eg: city utility vehicles – fire tenders, garbage trucks, sweepers, mobile cranes, mobile drilling rigs and mobile plant operators.

If you are unsure if you require a permit or have any questions, please follow the link below or contact our office for further details.  https://infrastructure.gov.au/vehicles/imports/


Performance of Australian Freight Infrastructure

BITRE released this week the Australian infrastructure statistics yearbook 2017, providing an overview of the performance of Australian freight infrastructure.

The report reveals that Australia’s five major container ports handled 7.2m TEU over the 2015-16 financial year, an increase of 1.4% on the previous year. In fact, combined container throughput at Sydney Melbourne, Brisbane, Fremantle and Adelaide has risen nearly every year since 1993-94, the farthest back the BITRE data goes.

The only year container throughput didn’t grow was in 2008-09, when it actually decreased by 3% on the previous year. Four of the ports saw decreases in throughput that year, with Sydney showing an increase of just 5495 TEU over the 2007-08 financial year.

Since the 1993-94 financial year, container throughput at the ports increased an average 6% per year. Looking at the Australian trading fleet, we see the fleet’s total deadweight tonnes steadily increasing – at an average yearly rate of 3% between 2001-02 and 2014-15.

Zooming into 2014-15, the total Australian trading fleet’s deadweight tonnage was 4.88m tonnes – of which only 11% is Australian flagged.

In the 2001-02 financial year, 50% (by deadweight tonnage) of the Australian trading fleet was locally flagged. Looking at the number of vessels, we see 53% of the vessels in the Australian trading fleet were locally flagged in the 2001-02 financial year, while in 2014-15, that number went down to 43%.

The full report can be found on BITRE’s website.


Cost Recovery reform opens the door for Trusted Traders

Feedback to date justifiably questions whether this opens the door for further reforms.

The much publicised Australian Trusted Trader programme creates an environment of establishing low risk industry participants allowing Home Affairs to focus resources on targeting higher risk entities and associated import consignments. Those importers that have received this accreditation argue that they should receive a differential cost recovery rate as this too aligns with the AGCRGs principles to move away from cross-subsidisation.

To date this concept was difficult to digest as non-trusted traders would have been required to have a further inflated cost recovery rate to maintain net cost recovery.It is now a realistic outcome that we could see an import cost recovery model whereby high volume / low value consignments attract a transactional levy (as proposed in the discussion paper) and high value consignments  subject to a two-tier levy, a lower fee for trusted traders and another for non-trusted traders?This could be achieved without increasing existing cost recovery levies on high risk entities yet still delivering a saving to Trusted Traders. If this concept has legs, those importers that were looking for an extra incentive to join the Australian Trusted Trader programme may well be queuing up to be direct financial beneficiaries of this innovative reform … read more