FEBRUARY NEWSLETTER 2020

Posted by ORBIT LOGISTICS
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Welcome to this month’s edition of the Orbit Logistics Newsletter.

Welcome to our new readers!

As mentioned last month, myself and Glenn were due to travel to Hong Kong and China this month, due to Coronavirus this trip has been postponed.

We are sending out updates on Coronavirus daily as we receive them, please keep a look out for them as they will have the most current information available for both Airfreight and Oceanfreight.

We will keep you abreast of all industry updates that come to light!

Happy Reading!

Gerard Reed
General Manager

 


February 2020 Void Plan – Update

We will re-arrange the cargo to the available sailing during this period. For any further void sailing, we will update when we receive advice.

Please refer to below two more sailing A1X & NEW PANDA will be voided on Feb – Week 6 (blue color).

Please be noted we count the blank sailing week base on the first call China port, therefore, some China ports calling later might already enter into next week which please better refer to the actual POL ETD.

WEEK 5

CAT SERVICE  (COUNTED FROM NGB ONBOARD DATE)

OPERATOR: YML / SINOTRANS / EMC  / TSL / APL

VESSEL SIZE: AROUND 4200 TEUS

ROUTING: NGB – SHA – SKU – KAO – SYD – MEL – BNE

ORIGINAL ETD NGB: 1 FEB / ETD SHA: 03 FEB / ETD SKU: 06 FEB

ORIGINAL ETA SYD:  20 FEB / ETA MEL: 23 FEB / ETA BNE: 28 FEB

 

A1X / CA6 SERVICE  (COUNTED FROM QDO ONBOARD DATE)

OPERATOR: APL / EMC / HMM / ONE / HPL

VESSEL SIZE: AROUND 3000 – 4000 TEUS

ROUTING: PUS – QDO – NGB – SHA – YTN –  SYD – MEL – BNE

ORIGINAL ETD QDO: 30 JAN / ETD NGB: 01 FEB / ETD SHA: 03 FEB / ETD YTN: 06 FEB

ORIGINAL ETA SYD:  17 FEB / ETA MEL: 20 FEB  / ETA BNE: 24 FEB

 

A3S SERVICE

OPERATOR: ANL / COSCO / OOCL (COUNTED FROM XMN ONBOARD DATE)

VESSEL SIZE: AROUND 5500 TEUS

ROUTING: KHH – XMN – SKU – HKG – SYD – MEL – BNE

ORIGINAL ETD XIAMEN: 01 FEB / ETD SHEKOU: 03 FEB / ETD HONG KONG: 04 FEB

ORIGINAL ETA SYD: 15 FEB / ETA MEL: 19 FEB  / ETA BNE: 23 FEB

 

A3C SERVICE (COUNTED FROM XMN ONBOARD DATE)

OPERATOR: ANL / COSCO / OOCL

VESSEL SIZE: AROUND 5500 TEUS

ROUTING: XMN – SHA – NGB – SYD – MEL – BNE

ORIGINAL ETD XMN: 26 JAN / ETD SHA: 31 JAN / ETD NGB: 02 FEB

ORIGINAL ETA SYD: 13 FEB / ETA MEL: 17 FEB / ETA BNE: 23 FEB

 

NEW PANDA / FA2 / CAE / YOYO (COUNTED FROM XMN ONBOARD DATE)

OPERATOR: APL / H-SUD / MSK /MSC / ONE

VESSEL SIZE: AROUND 4500 – 5000TEUS

ROUTING: KHH – XMN – NSA – HKG – YTN – MEL – SYD – BNE

ORIGINAL ETD XMN: 29 JAN / ETD HKG: 01 FEB / ETD YTN: 02 FEB

ORIGINAL ETA MEL: 16 FEB / ETA SYD: 19 FEB / ETA BNE: 22 FEB

 

NEW WALLABY SERVICE  (COUNTED FROM QDO ONBOARD DATE)

OPERATOR: MSK / MSC / ONE / H-SUD

VESSEL SIZE: AROUND 5500 TEUS

ROUTING: QDO – SHA – NGB –  BNE – SYD – MEL

ORIGINAL ETD QINGDAO: 03 FEB / ETD SHA: 05 FEB / ETD NGB: 06 FEB

ORIGINAL ETA BNE: 19 FEB / ETA SYD: 22 FEB  / ETA MEL: 26 MFEB

 

CNS (COUNTED FROM SHA ONBOARD DATE) – Mainly call BNE & NZ

OPERATOR: ANL / COSCO / OOCL / PIL

VESSEL SIZE: AROUND 4500 – 5000TEUS

ROUTING: SHA – NGB – SHK – KHH – BNE – AKL

ORIGINAL ETD SHA: 31 JAN / ETD NGB: 01 FEB / ETD SHK: 04 FEB

ORIGINAL ETA BNE: 17 FEB / ETA AKL: 21 FEB

 

WEEK 6

A3S SERVICE

OPERATOR: ANL / COSCO / OOCL (COUNTED FROM XMN ONBOARD DATE)

VESSEL SIZE: AROUND 5500 TEUS

ROUTING: KHH – XMN – SKU – HKG – SYD – MEL – BNE

ORIGINAL ETD XIAMEN: 08 FEB / ETD SHEKOU: 10 FEB / ETD HONG KONG: 11 FEB

ORIGINAL ETA SYD: 22 FEB / ETA MEL: 26 FEB  / ETA BNE: 01 MAR

 

A3C SERVICE (COUNTED FROM XMN ONBOARD DATE)

OPERATOR: ANL / COSCO / OOCL

VESSEL SIZE: AROUND 5500 TEUS

ROUTING: XMN – SHA – NGB – SYD – MEL – BNE

ORIGINAL ETD XMN: 02 FEB / ETD SHA: 07 FEB / ETD NGB: 09 FEB

ORIGINAL ETA SYD: 20 FEB / ETA MEL: 24 FEB / ETA BNE: 01 MAR

 

NEW PANDA / FA2 / CAE / YOYO (COUNTED FROM XMN ONBOARD DATE)

OPERATOR: APL / H-SUD / MSK /MSC / ONE

VESSEL SIZE: AROUND 4500 – 5000TEUS

ROUTING: KHH – XMN – NSA – HKG – YTN – MEL – SYD – BNE

ORIGINAL ETD XMN: 05 FEB / ETD HKG: 08 FEB / ETD YTN: 09 FEB

ORIGINAL ETA MEL: 23 FEB / ETA SYD: 26 FEB / ETA BNE: 29 FEB

 

A1X / CA6 SERVICE  (COUNTED FROM QDO ONBOARD DATE)

OPERATOR: APL / EMC / HMM / ONE / HPL

VESSEL SIZE: AROUND 3000 – 4000 TEUS

ROUTING: PUS – QDO – NGB – SHA – YTN –  SYD – MEL – BNE

ORIGINAL ETD QDO: 06 FEB / ETD NGB: 08 FEB / ETD SHA: 10 FEB / ETD YTN: 13 FEB

ORIGINAL ETA SYD:  17 FEB / ETA MEL: 20 FEB  / ETA BNE: 24 FEB

 


Australian Customs Notice No. 2020/02

Free Trade Agreement between Australia and Hong Kong, China – Entry into Force

The Free Trade Agreement between Australia and Hong Kong, China (A-HKFTA) will enter into force on 17 January, 2020

Hong Kong originating goods
Hong Kong originating goods are those that meet the requirements of Division 1M of Part V111 of the Customs Act 1901.  The Australian Border Force will publish further information about determining the originating status of goods and materials on the A-HKFTA web-page:  www.abf.gov.au/importing-exporting-and-manufacturing/free-trade-agreements/hong-kong

Hong Kong Originating Goods
Schedule 13 of the Customs Tariff Act 1995 (Customs Tariff Act) sets out the preferential customs duty rates that apply to Hong Kong originating goods.  Goods classified to tariff subheadings not listed in Schedule 13 have a ‘Free’ rate of duty from the date A-HKFTA enters into force.

On entry into force, all Hong Kong originating goods are entitled to a ‘Free’ rate of duty, except for excise-equivalent goods.  The customs duties applied to Hong Kong originating excise-equivalent goods are listed in Schedule 13 and will be indexed consistent with the equivalent rates listed in
Schedule 3 to the Customs Tariff Act.

Customs Tariff Working Pages for Schedule 13, and amendments to Schedule 4, are Attachment A.
The Online Tariff will reflect the updated rates for Hong Kong originating goods from commencement.

Claiming preferential rates of customs duty
The Integrated Cargo System (ICS) preference scheme for A-HKFTA, relevant country code and the applicable Preference Rules are outlined in the table below:

Refund circumstances
The Customs (International Obligations) Regulation 2015 has been amended to provide for the refund of overpaid customs duty in the circumstances outlined in the table below.  The information presented here is of a general nature and does not constitute legal advice.

Further information
Further information about A-HKFTA is available on the Australian Border Force website, www.abf.gov.au/importing-exporting-and-manufacturing/free-trade-agreements/hong-kong and on the Department of Foreign Affairs and Trade website, https://dfat.gov.au/trade/agreements/Pages/trade-agreemens./aspx


Better times for container shipping in 2020/21

SLUGGISH activity at ports around the Greater China region has been one of the most visible effects of the downturn in world trade in 2019, according to a research paper issued by Oxford Economics. But port operators – as well as shipping lines, logistics providers, and others engaged in the sector – may now be able to look forward to gradually improving conditions in 2020 and beyond.

“In our view improving global business sentiment and a range of local factors should mean that world trade starts to recover from mid-2020 onwards,” the paper said.

“Our forecasts indicate global trade growth picking up to 2.5% in 2021 and 3% in 2022, driving a similar rate of growth in the container sector.”

The outlook is uncertain, though, especially with respect to trade policy. While the phase one trade deal offers hope of better relations ahead, the risk of further barriers being erected – especially between the United States and China – remains.

“In our view, a re-escalation of trade stresses would trigger a slump in world trade and container throughput in the coming couple of years. Conversely, should trade tensions ease, the pace of trade and container growth through 2020-2021 could be more than doubled,” the paper said.

However, even in an upside scenario the pace of recovery will be noticeably weaker than that seen after previous slowdowns. This is because the trade intensity of global growth is falling at a time when China is also restructuring its economy.

Latest data offers a mix of reasons to be both hopeful and wary about world trade prospects in 2020. Surveys point to further contraction in trade volumes in early 2020, consistent with the view that the full impact of barriers erected in 2019 has yet to feed through. But underlying conditions look to be improving.

“Our global sentiment indicator finds overall business sentiment improving across the economies, while also seeing reasons for optimism on consumer confidence and evidence that inventories might be due for a rebound,” the paper said.

What could substantially improve the outlook? A reduction in trade tensions, particularly those between the US and China, which have disrupted supply chains across the region.

“Our latest Global Scenarios Service simulates a scenario in which President Donald Trump takes a more clearly constructive tone towards China and unwinds recent tariff hikes. In response, investor sentiment around the world improves, supporting business confidence and ultimately boosting consumer incomes,” the paper said, adding that such a scenario is increasingly viewed as the most plausible upside risk for the world economy.

Against this backdrop, global growth could rise 0.7ppts faster than baseline in both 2020 and 2021, accelerating global trade by as much as 2ppts relative to the baseline.

For the trade-intensive economies of China, Hong Kong, and Taiwan, the boost would be even greater, lifting goods trade (and potentially container throughput) by as much as 5ppts versus the baseline by 2021.

 


Shipping Market Recovery Predicted in 2020

THE shipping industry is predicted to make a comeback in 2020, following a decade of “ups and downs”, IHS Markit predicts.

IHS principal analyst Dalibor Gogic talked of potential for fleet removals and the impact of IMO sulphur rules and the adoption of scrubbers.

“Considering the fact that fleet supply will likely tighten due to scrubber retrofitting and potential demolitions, given that demand remains healthy, we may see stronger freight rates this year,” Mr Gogic said.

“In addition, the fact that the orderbook for major commodity fleets has been relatively quiet in the last two to three years, we expect to see some intensification of newbuilding orders throughout the next couple of years.”

Mr Gogic said demolitions had been low during the last couple of years, after almost 1m TEU of capacity was removed in 2016 and 2017 from the container shipping market.

About 3% of fleet older than 20-years would be prime candidates for demolitions in 2020.

As of 1 January 2020, about 2000 vessels, or less than 10% of the global fleet capacity, are equipped with scrubbers.

“Scrubber adoption started slow last year and scrubber retrofitting also has been delayed due to technical difficulties and lack of key parts available in yards,” Mr Gogic said.

“However, scrubber adoption is expected to continue and a second wave of installations is expected this year.”

IHS Markit expects more than 3,500 units to be equipped with scrubbers by January 2021, including the number of new orders expected to be delivered and the number of vessels expected to be retrofitted with scrubber technology.

 


Ocean Shipping in Coronavirus Crosshairs   

The news around Coronavirus is at the front of international and local news. Our team is working with all concerned to ensure the safe handling of your shipments with any delays kept to a minimum. The impact will be with suppliers not returning as expected due to restrictions whilst the Chinese Government deals with the situation on hand

Should you need any assistance or information please don’t hesitate to contact our team.

Please see an extract of an article on this matter

The only risk to improved tanker fleet utilization in 2020-21 is “a black-swan economic event that punishes global oil demand,” wrote Evercore ISI analyst Jon Chappell in his latest shipping forecast.

Enter the black swan.

Or at least, a potential candidate – one that could, in the worst-case scenario, curb demand for crude, products and gas tankers, as well container ships and dry bulkers.

That unforeseen event is the Wuhan coronavirus. There are currently 2,794 confirmed cases (2,737 in China) and 80 deaths (all in China, including one in Shanghai). The head of China’s health commission warned that “the epidemic has entered a more serious and complex period.” Outside of China, additional cases have been reported in Asia, Australia, Europe, the U.S. and Canada. (A frequently updated infection dashboard using data from the World Health Organization is now online.)

Major unpredicted world events are often a positive for ocean shipping freight rates, but not epidemics. Downsides from decreased vessel demand far outweigh positives from fleet inefficiencies – particularly in cases when an epidemic epicenter is China.

The shipping demand effect of a major global event is calculated in ton-miles, i.e., volume multiplied by distance. If an event pushes more volume to sea, or alternatively, makes the same volume detour along a longer route (such as occurred with the closures of the Suez Canal in 1956 and in 1967-75) , it boosts ocean freight rates for nonscheduled bulk services because it drives the supply/demand balance in the favor of vessel owner/operators.

For scheduled services, such as container liner container operations, major global events are generally a negative, as they can induce lower utilization and/or higher costs on routes that must continue to be serviced.
If a global event reduces (as opposed to redirects) the volume of cargo shipped by sea, as is the case in an epidemic, it is negative for both nonscheduled bulk operators and scheduled liner operators.

Tanker demand effects
To gauge potential impacts on oil markets, analysts are comparing the latest outbreak to the SARS epidemic in 2002-03. Using SARS as a reference, Goldman Sachs predicted in a Jan. 21 client note that the coronavirus could reduce oil demand by 260,000 barrels per day (b/d), driven by a 170,000 b/d drop in jet-fuel demand and additional declines in gasoline demand.

Regarding gasoline, officials have now instituted a ban on driving in the city of Wuhan. The overall region has been placed in lockdown, restricting the movement of 56 million people. “Tanker demand could be at risk if the outbreak lasts longer than expected,” said Randy Giveans, the shipping analyst at Jefferies.

According to energy consultancy and brokerage Poten & Partners, “The main differences between 2003 [the SARS outbreak] and 2020 are the size of the Asian economies and their regional energy demand. China, in particular, has experienced dramatic growth in the intervening period. In 2003, China’s oil demand was about 5.8 million b/d, as compared to 13.6 million b/d in 2019. Any impact on Chinese/Asian oil demand is likely to be much more significant, not only in volume terms but also in terms of oil import flows and the ripple effect on tanker markets.”

Poten pointed out that the market could rebound quickly. “The SARS epidemic in 2003 created significant fear and uncertainty. More than 8,000 people were infected, resulting in 774 deaths in 27 countries. However, the fear ultimately subsided. The recovery of economic activity and oil demand was swift and strong. If the current crisis follows a similar pattern, we may see short-term headwinds followed by a strong rebound later this year.”

Non-tanker effects
China’s economic growth has an inordinate effect on dry bulk spot rates, due to the country’s imports of iron ore and coal for steel production, as well its high demand for agribulk.

Dry bulk spot rates are already painfully low. For Capesizes (vessels with capacity of around 180,000 deadweight tons), rates are not even covering the cost of low-sulfur fuel. Any further rate deterioration in the wake of the coronavirus outbreak would heighten stress on vessel operators.

For all shipping sectors, including container shipping, a major concern is the potential inability for Chinese employees at mills, refineries, factories and terminal facilities to go to work in a quarantine situation. As in the case of weather-related disasters, an inability of workers to work decreases oceangoing cargo flows.

The onset of the Wuhan coronavirus occurred during the Chinese New Year holiday week. The Chinese government announced that the holiday period would be extended another three days. Factories in the major manufacturing hub of Suzhou in eastern China have been closed through Feb. 8.

Minor positives
When ship operators and investors talk about rate upside from unexpected events, they often highlight voyage delays that reduce effective global fleet capacity. The less global vessel supply, the better for rates, assuming, of course, that it’s not your ship stuck in the delay.

Past epidemics have resulted in a variety of voyage inefficiencies. According to a new client note from insurance provider Steamship Mutual, “If the prevalence of the virus increases, the shipping industry can expect to see the same sorts of issues arising as with prior severe disease outbreaks. Apart from the obvious danger to crew members of contracting the illness at a port in an infected area, port authorities may institute reporting and quarantine measures to guard against the spread of the disease from vessels that have previously called at infected ports, and in the most severe cases of outbreak, ports may be closed altogether.”

Steamship Mutual continued, “A risk of quarantine might lead to a reluctance by owners to call at contractually agreed ports in two situations: where a call at an agreed port might lead to quarantine elsewhere and where the agreed port has itself instituted quarantine measures on particular vessels.”

Chinese port-call delays are already being reported for container ships and gas carriers as a result of the outbreak.
Beyond fleet inefficiency, there’s also a potential silver lining for shipping due to lower fuel costs. When crude prices rise, bunker (marine fuel) prices rise quickly in tandem. When crude falls, bunker prices fall as well, albeit with a lag.

The price of Brent crude oil has fallen 7% over the past week, largely driven by coronavirus fears, so it is possible that bunker pricing could decrease in the weeks ahead, which would be a welcome development given the surge in fuel costs due to the IMO 2020 regulation. Poten noted that the SARS epidemic in 2003 “pushed oil prices down nearly 20%.”

Equity fallout
In the case of Middle East unrest in the second half of last year and earlier this month, analysts had a legitimate argument that geopolitical unrest could cause rates to increase because the cargo volume at sea would remain the same or increase and the voyage distances would rise.

Not so with the Wuhan coronavirus. The potential vessel-demand negatives from pressure on the Chinese economy far outweigh the potential fleet-inefficiency positives. Shipping stocks are falling. Just as trade-war concerns have instilled a negative sentiment overhang among shipping investors, coronavirus fears could overshadow otherwise positive market fundamentals when it comes to stock pricing.