JULY NEWSLETTER 2017
From the Desk of the GM
The Managing Director is travelling at present, so allow me to welcome you to the July edition of the Orbit Logistics Newsletter.
As we click over into the 2nd half of the year, we will start to move towards the peak period for imports, especially Ocean Freight. Already we see the announcement of OOCL shipping line being taken over by COSCO shipping line. The ‘business as usual’ message is coming from OOCL. We are a touch cynical of that; shipping line mergers and acquisition bring change, to services, equipment, market share and freight rates. With the spate of M&A activity over the last 2 years, it is now estimated that the top 10 shipping lines will control approximately 82% of global volumes by 2018. So much power for so few…
It doesn’t matter how big the shipping lines are; being involved in global trade exposes the lines to global challenges such as the recent ransomware cyber-hacking incident in Europe. Shipping lines in Australia were at one stage last week unable to release cargo delivery orders due to the impact of this IT attack. Global IT systems in the global trading village can be placed at risk, and we all need to ensure our security firewalls are robust to minimise the risk element.
There is an article in this month’s newsletter regarding the ABF (Customs) Compliance Update, where they flag the areas of compliance focus for the 2nd half of 2017.
Included in this Compliance update is very important information regarding the correct documentation to be used for China Free Trade Certificates of Origin. Please take note.
In our newsletter this month, there is information on the OOCL/COSCO merger, port stats indicating volume growth in Melbourne & Fremantle, advice regarding Port Infrastructure Fees, and delays on the implementation of GST collections on low value consignments. There is also an interesting article on the future impact of automated vehicles on the transport industry, and news of some of our new staff members in the Orbit Logistics team.
Enjoy the articles, and we welcome your feedback on any of the topics.
Regards
David Browne
General Manager [Operations]
OOCL SHIPPING LINE TO BE ACQUIRED BY COSCO
OOIL, the parent company of OOCL shipping line has announced that COSCO SHIPPING Holdings Co., Ltd. (COSCO SHIPPING Holdings) and Shanghai International Port (Group) CO., Ltd. (SIPG) have offered to acquire OOIL the parent company of OOCL, pending relevant regulatory and COSCO SHIPPING Holdings shareholder approvals. The full message from OOIL indicates that it will be business as usual with OOCL. Read the full announcement from OOIL:
As global trade patterns continue to evolve, we believe that this combination will enable us to have larger scale and be more competitive, to ensure YOU, our customers benefit from access to an even wider network and superior services.
In addition, in order to retain the focus on quality service and operational efficiency that is our hallmark, it is the intention for OOIL / OOCL to remain publically listed on the Hong Kong Stock Exchange and to continue to operate as an independent brand, with our global headquarter function retained in Hong Kong as it is today.
We understand that this latest news may raise questions about the future of our relationship. We will continue to focus on building a level of mutual trust with you, our customer. We greatly value our relationship and as such I want to reassure you that business continuity remains a top priority, now and in the future.
We want to reassure customers that there is no change in how you do business with OOCL. We also want to reassure you that there will be no change in how OOCL does business with our customers.
Full details of this announcement are available on the OOIL website, www.ooilgroup.com.
AUSTRALIAN BORDER FORCE (ABF) – GOODS COMPLIANCE UPDATE
ABF have recently issued their 2nd 2017 compliance update information.
Similar to the ATO, ABF issues this update document to alert the trading community what areas of compliance are being focused on going into the 2nd half of 2017.
There is a range of topics of interest, including:
- Asbestos
- Asbestos content found in cars, motorbikes, all-terrain vehicles and go karts
- Asbestos stats on the heightened focus in this area [e.g. 10 asbestos content tests were conducted in 2013-14, current YTD there has been 742]
- Dumping duties [certain glass & paper products have recently been affected]
Of particular interest to many of our customers will be an update on the documentation requirements for Certificates of Origin for Chinese Free Trade eligibility.
Clients may wish to alert their Chinese suppliers regarding the rise of non-genuine COO documents and the harder line that will be taken in monitoring compliance in this area.
Update on China-Australia Free Trade Agreement
Since the China-Australia Free Trade Agreement (ChAFTA) entered into force on 20 December 2015, the Origin and Verification team located within Customs Compliance has been asked to clarify which Certificate of Origin (CoO) can be used to claim preferential treatment under ChAFTA regulations. In a number of cases, incorrect CoOs have been used when trying to claim preferential tariff treatment.
Using the Correct Certificate of Origin
| To claim preferential treatment under ChAFTA, the correct CoO must be used. The correct CoO for ChAFTA must:
1. state “Form for China-Australia Free Trade Agreement” in the top right hand corner 2. have a box four titled “Means of Transport and route” 3. have a box six titled “Item number” 4. have a box ten titled “Origin criterion” 5. contain 14 numbered boxes 6. be completed in English 7. be stamped and signed by an authorised body of exporting country 8. be completed as per the ChAFTA Annex 3-A instructions. The China Council for the Promotion of International Trade issues a generic CoO for goods exported from China. The generic CoO cannot be used to claim preferential treatment under ChAFTA as it has deficient boxes and information. For example, the generic CoO has only 12 boxes, does not state it is for ChAFTA, and does not have a box for the Origin Criterion. A comparison of the correct CoO for ChAFTA and the generic CoO is provided below. |
PORT STATISTICS – MELBOURNE & FREMANTLE
MELBOURNE Port’s container throughput for May showed an uptick over the previous month’s numbers, according to the latest trade report from the Port.
Total container throughput at the Port of Melbourne for May was reported to be 234,412 TEU – a 6% increase on April’s throughput of 220,548 TEU.
As an indicator of the imbalance of FCL equipment for a country with Australia’s geography, it’s interesting to note that nearly 20% of the FCL throughput in Melbourne was empty containers.
Port of Melbourne handles more cargo than just containers; the port handled 39,307 motor vehicles in May. The changing landscape of our vehicle manufacturing industry is driving some change in this area, with Motor vehicle trade showed a 31% increase over the previous month’s unit throughput of 29,990.
FREMANTLE Port also recorded a slight monthly increase in May.
Total container throughput at Freo for May was 58,797 TEU – 782 TEU more than April’s throughput, however this figure was 3% higher than the May 2016 result.
May 2017 volumes were just below the average throughput for the 2016-17 financial year to-date which was 59,802. Interesting to note that nearly 7500 FCLs in the May figures was coastal trade, the balance being international.
WILL AUTOMATED VEHICLES TRANSFORM TRANSPORT LOGISTICS IN AUSTRALIA?
As we move into the brave new world of automated vehicles (at a time where roadworks are having a very negative effect on drivers) it is interesting to consider the flow on impact of automated vehicles in the Supply Chain. An industry opinion piece from Jeremy Chee in a recent Lloyds List publication gives some insight to the future:
IN NOVEMBER 2016 Australia’s transport ministers decided to reform vehicle regulations so fully automated vehicles will be allowed to travel our roads from 2020.
It will be a major disruption to the transport industry, one that forces vehicle booking systems to the next level. Not only will logistics systems book vehicles and log manifests, they will plan and monitor truck and rail routes as well.
The next generation of booking systems will therefore need to provide users with a complete ecosystem – a more predictable and consistent utilisation of assets that maximises the use of supply chain capacity. Automated vehicles carrying freight will be linked to this booking system.
It is expected that autonomous vehicles will increase efficiency by reducing traffic congestion and accidents, and saving fuel through more efficient driving patterns. Driver shortages will also be solved, with an obvious saving on payroll.
A human-free logistics chain will probably be the first application for autonomous road vehicles and rail. After all, distribution networks follow fixed routes scheduled at specific times. Efficiency gains will be made by shaving off minutes in delivery time by taking alternate routes to avoid accidents or congestion.
The new, digital dashboard will not be viewed from the driver’s seat of a truck on an outback highway, but from a monitoring centre in a city far away. Decisions about the route taken by a container truck in Dubbo could be decided by a digital logistics platform based in Dublin.
GST COLLECTION ON LOW VALUED GOODS DEFERRED UNTIL 2018
Online shopping continues to create a revenue reduction challenge for the Government.
Legislation titled the Treasury Laws Amendment (2017 Measures No. 1) Bill 2017 proposed that overseas vendors, electronic distribution platforms and goods forwarders account for Goods and Services Tax (GST) on sales of low value goods to consumers in Australia if they have GST turnover of $75,000 or more. The intent of the Bill is to ensure that low value goods face an equivalent GST treatment to goods sourced in Australia. Importantly, the legislation will also generate a significant quantum of GST revenue.
The matter has been bouncing around both Houses of Parliament, and an amended version of the legislation was passed through the Senate on June 19th. A key element of the amendment was that the Senate has included an amendment to delay the commencement of the legislation until 1 July 2018.
PORT INFRASTRUCTURE FEES
As mentioned in previous communications, DP World introduced or increased their Port Infrastructure Fees in April this year. They went ahead with the implementation despite the matter having been referred to the ACCC. The noise around those fees has died down and as expected, Patrick terminal, DP World’s major competitor, has now decided to pull the trigger on their own implementation of Infrastructure fees, with costs nearly identical to DP World’s fees. This will impact for all shipments through the terminals from July 10th onwards and will be included in final invoices accordingly.
STAFF CHANGES AT ORBIT LOGISTICS
There has been some changes in the Orbit team, with some internal movements and some new faces coming on board:
Customer Service:
Kerrie Hall has moved across into the Customer Service Team from the Transport Team. Kerrie’s email address is kerrie@orbitlogistics.com.au and she is also included in the customerservice@orbitlogistics.com.au group email.
Rebecca Clinnick has now left the Orbit team with our best wishes. Please remove her contact details moving forward.
Transport:
Damian Maresceaux has joined the Orbit Logistics Transport Team, and is an experienced, welcome addition to our team. Damian’s email address is damian.maresceaux@orbitlogistics.com.au and he is also included in the transport@orbitlogistics.com.au group email.
Sales:
Kasey Ciappara has joined the Orbit Logistics Sales Team, bringing a strong commercial background into the business. Please email sales@orbitlogistics.com.au for any sales related or quote requests.
Thank you for reading this month’s newsletter! If you have any questions, please reach out to the team and we are happy to assist.