JULY NEWSLETTER 2020
Welcome to this month’s edition of the Orbit Logistics Newsletter.
Dear Valued Customer
We are pleased to provide you with the latest industry news.
I would like to thank you for your ongoing support during this Global crisis.
The situation is every changing with the Government bringing in new lock down arrangements within Victorian hot spot area’s.
Like all of us we feel for everyone in these areas as they must endure major disruptions to their everyday life, the question post COVID-19 will be what is the new “norm”.
Whilst this creates challenges for all us, I can assure you that our team is working diligently to ensure minimal disruptions to your supply chain.
Ocean freight costs are continuing to increase ex China with shipping lines continuing to use high level’s of blank sailings, reduced(smaller vessels) capacity etc.
This in turn causes a supply imbalance which they use to drive rates upwards as they look to recoup losses due to COVID-19.
The industry feedback is larger ships coming to the market and if there is any downwards trend we will update your rates accordingly.
The airlines are continuing to utilise “freighter” planes whilst global travel is restricted. There has been a fall in airfreight rates ex China, however, they are still maintaining high levels compared to pre-COVID-19. Its important to note that the airfreight rates in other countries are still high, in particular long haul shipments and India.
Please be assured that we continue to negotiate the best possible options for you, our valued partners.
In this months newsletter we have included an article regarding the immediate imposition of Tolls in Sydney by the State Government of NSW. They gave the market less than one week notice of an immediate increase and shows little regard to many of customers.
If you need to contact me and you cant get me at the office, please don’t hesitate to contact me +61 404 444 447.
Thanks again for your continued support, its appreciated by the everyone at Orbit Logistics.
Weight Discrepancy Fee Applying Reminder
Kindly remind you that, effective from 1st July, 2020 (Pricing Calculation Date), shipping lines will start charge Weight Discrepancy Fee (WDF) for packed export container from Greater China Area to global with any of the following checking rules:
- Actual cargo weight exceeds allowable container payload;
- Discrepancy between declared VGM and actual cargo weight exceeds 1000 kgs or 5% of the actual cargo weight (triggered by the small one);
- Declared VGM exceeds allowable container max gross;
- Discrepancy between declared VGM and weight in shipping instruction (Shipping instruction weight + Container Tare Weight);
- Declared VGM is less than container tare weight;
Charge standard: USD300.00 per mis-declared container
We further reiterate the importance of declaring the weight in an accurate and timely manner.
Sydney’s New Toll Road
Sydney’s newest motorway, the M8 tunnel, could open as early as this weekend and will shave 30 minutes off a commute from Liverpool to the city’s south.
- The new tunnels will cost motorists up to $6.95 to use
- When they’re open, a toll will also be put on the M5 East
- The M8 will eventually be linked to the M4 via a series of tunnels under the inner-west
NSW Premier Gladys Berejiklian today toured the twin tunnels, which are 9 kilometres long and link Kingsgrove to a new interchange at St Peters.
It is the second stage of Sydney’s $16.8 billion WestConnex road network to open after the new M4 tunnels and widened open-air section of the motorway, started taking traffic in July last year.
“You will get an hour of your life back every day,” Ms Berejiklian said.
“Half an hour travel time savings if you’re going from Liverpool to the inner south — that’s massive.
“Five hours of savings every week will make a huge difference to people using this new piece of infrastructure.”
The new tunnels run alongside the existing M5 East, which was built in 1992 to provide a quicker journey between the CBD, Sydney Airport, Port Botany and city’s south-western suburbs.
They, essentially, duplicate one of the most congested roads in Sydney.
But the faster commute will come at a cost — the new M8 will have a maximum distance-based toll of $6.95 for cars.
There will also be a new distance-based toll of between $3.04 and $6.95 on the M5 East between King Georges Road and General Holmes Drive, when the M8 opens.
“I know that when motorists use this for the first time they will be pleased with the travel time savings, pleased with the convenience,” Ms Berejiklian said. “We’re building a network which is efficient, which saves time, which is safer and above ground it reduces congestion and pressure.”
Eventually, the new M8 will be linked to the already-completed M4 component of WestConnex via a network of tunnels under Sydney’s inner-west. It’s also anticipated the M8 will connect to other major arteries that are in the planning stages.
Transport Minister Andrew Constance said the M8 had been future-proofed, with the capacity for a third lane to be added in both tunnels at a later date.
“We’re going to see a 43 per cent drop-off in trucks in the M5 East tunnel, as a result of the M8 tunnel,” he said.
“It’s going to make that motorway start to work in the way that it should.”
Engineers are currently assessing the tunnels, which could open as early as this weekend.
Customer Advisory – Rate Increase on Southeast Asia – Australia Service – August 1, 2020
In order to maintain a high standard of service and comprehensive liner networks, Shipping lines are advising of a potential rate increase with effect from August 1, 2020 on freight rates for traffic from Southeast Asia, South Asia, Indian Sub continental and Middle-East to Australia of approximately US$150 / TEU and US$300 / FEU in the base ocean freight.
This potential increase will be applied in full on top of existing ongoing market rates to all shipments based on shipment onboard date, and will be subject to ancillary surcharges applicable at the time of shipment.
Rates ex China are at a high level due to blank sailings, reduced(smaller vessels) capacity and increased volumes
The shipping lines are driving rates as part of a cost recovery.
Coronavirus Trade Update
A New Year – what does it hold for us?
Well we are into the second part of the year and a new financial cycle. Finances, be they personal or business, will be on everyone’s mind as we approach September 30 and the possible removal of Jobkeeper, along with other financial support schemes. Many in our industry have managed to continue trading through the last few months with both support from Federal & State governments as well as cooperation from staff in managing hours and wages. However if the financial support through Jobkeeper is removed many businesses will need to re assess how they move forward given that airfreight trade is not likely to return to “normal” till well into 2021 and ongoing outbreaks in China and other countries are placing uncertainty across all trading patterns.
The links provided throughout this update may assist you in assessing both the financial status and readiness of your business to manage these changes as well as how to ensure the health and well being of your employees is maintained.
- Looking after your mental health during the COVID-19 Pandemic
- Employers and workplace mental health during the COVID-19 Pandemic
China – Update
Our sources from China have provided us with the following updates
- As at July 1, 2020 China had 531 confirmed cases with 326 cases happening in Beijing. However the Beijing breakout is slowing down as cases are now less than ten per day since June 25..
- As reported in the Xinhua Press, on June 24, Chinese authorities have approved a new COVID-19 vaccine candidate for human trials, as per the statement from the Institute of Microbiology under the Chinese Academy of Sciences.
- China’s Ministry of Finance and the Ministry of Transport jointlyissued preferential policieson June 24 to help enterprises tide over difficulties and advance the development of foreign trade. The extension of fee cuts and exemptions for import and export enterprises have been announced, including waiving port construction fees levied on importers and exporters and halving oil-pollution damage compensation for ships, to be extended to Dec 31, 2020.
The National Development and Reform Commission has announced a decision that is trying to reduce business costs and stabilise the job market. The policy includes extending the cutting of electricity prices by 5 percent until year-end
VICT Announces Increase in Infrastructure Surcharge
STEVEDORE Victoria International Container Terminal has announced an infrastructure surcharge increase in what it says is a necessary move to cover the 2020 lease increases.
From 1 August 2020, customers are advised VICT will adjust its infrastructure charge to $131.03 per container (exclusive of GST).
This is to apply to full containers, received from or delivered to VICT.
“The change to VICT’s Infrastructure charge will provide income only to cover the lease increase, and equates to a direct pass-through of the increased port costs,” the stevedore said in a statement.”
A VICT spokesperson said $9.23 was a direct pass through to cover costs.
“VICT delivers a global leading standard in modern technology operations,” the company stated.
“We deliver a world class service with leading truck turnaround times, continual systems improvements and investments to ensure greater efficiencies for both landside and shipside operations and a convenient receival period underpinned by extended operating hours.”
Melbourne Welcomes Big Box Ship
MELBOURNE has welcomes the CMA CGM Ural, the largest container ship by “maximum capacity” to call at the port.
The 299 metre ship is one of six currently deployed on the South-East Asia – Australia trade route called the ‘AAX1’.
It began its 42-day round-trip in Malaysia, calling at Singapore before making its way to Webb Dock via Australia’s south-west coast. Named after the Ural mountain range, the vessel can carry up to 10,662 TEU, with containers stacked up to 12 high on-deck.
Compared with the 4,500 TEU carried by the average container ship currently calling at PoM, this is said to be “a significant increase” in load carrying capacity. The CMA CGM Ural will spend 44 hours in Melbourne before leaving for Sydney and Brisbane.
Port of Melbourne CEO Brendan Bourke said the arrival of CMA CGM Ural showed the durability of the Australia-Asia trade and the port’s ability to accommodate the “next generation” of ships.
“The arrival of CMA CGM Ural shows Port of Melbourne’s capacity to service the growing number of bigger vessels we’ll see into the future,” Mr Bourke said. “PoM’s operations have undergone significant change over the years including automation, changes to supply chains, and to the infrastructure that supports them. We’re always looking at ways to leverage the significant capability of our operations.”
ANL general manager Asia ANZ lines, Anthony Orgill, said the arrival of the ship was significant.
“By implementing larger container ships into our services, we can support clients operating between Australia, South East Asia and beyond,” Mr Orgill said. [This] occasion marks a fantastic milestone as a business and as an industry, highlighting our ongoing evolution to accommodate increasing demand, population growth and productivity.”
VICT chief executive Tim Vancampen said the arrival of CMA CGM Ural showed the growth of the shipping industry.
“VICT welcomes the 10,622 TEU CMA CGM Ural as the largest capacity vessel to call at the Port of Melbourne and congratulates all parties involved,” Mr Vancampen said. “VICT is well equipped to accommodate this class of vessels ranging from 10,500 – 13,000 TEU and plans to further invest in the Port of Melbourne to accommodate the next generation of vessel ranging from 15,000 to 18,000 TEU,” he said. “We will ensure that Port of Melbourne will continue to fulfil its role as the main gateway to Victoria, and consolidate and expand its position in the global shipping network.”
Employee crushed by stone slabs in shipping container
WorkSafe is issuing a reminder about the dangers associated with unloading objects from shipping containers, following a recent incident where an employee was crushed and killed unloading stone slabs.
A female employee recently died while unloading stone slabs from a shipping container. The employee was inside the shipping container when the stone slabs fell, crushing her against the internal wall of the container.
This year, in Victoria alone, there have been a number of serious crushing incidents where slabs, panels or other objects have trapped a person against the floor or wall of a shipping container or other structure. These have resulted in fatalities, amputations and musculoskeletal injuries affecting the trunk, back, shoulders and arms.
The speed, force and extent of movement of objects are commonly underestimated. Once the load begins to fall, there is often no opportunity to escape.
The risk of crushing or entrapment when unpacking shipping containers is increased by the following:
- activities carried out within the ‘fall shadow’ of an object that is not restrained, or where there is potential for restraints to fail. The ‘fall shadow’ of a slab is the region swept by a slab during its toppling movement from vertical to when it stops falling
- people attempting to physically restrain or stop an object while it is falling
- objects moving more than expected or in an unintended way during handling, which often causes the object to fall
- inappropriate packing of shipping containers
- damage or loads shifting in transport
- incorrect use of plant, such as overloading forklifts and using lifting attachments not specifically designed for the task
- mass, speed and force applied is underestimated when an object is moved by a crane or forklift
Recommended ways to control risks
Employers and self-employed persons should:
For all activities
- ensure work is never done in the fall shadow of an object without suitable controls in place
- ensure employees never attempt to try to restrain or stop an object while it is falling
When ordering and delivering
- ensure objects are ordered and delivered that would allow for safe unloading. The shipping configuration and container chosen should allow for a person to stay out of the fall shadow of an object. An example is an open top container allowing objects to be accessed for mechanical lifting from above.
When inspecting the contents of a shipping container
- ensure the shipping container is sitting on level ground to reduce the likelihood of objects becoming unstable before opening the container
- check the outside of the container for any damage that may indicate the load has shifted
- secure the container doors with a safety rope or strap to prevent the doors opening suddenly
When unloading objects from a shipping container
Develop a safe method for opening the container and unloading objects. Safe methods of work could include:
- ensuring employees do not enter into the fall shadow of the object to facilitate the removal
- removing crates using an overhead bridge or gantry crane. When this is not possible, frames or crates should be removed with a forklift and then broken down outside of the container, where employees can avoid the fall shadow
- using a specialised forklift attachment to remove objects
- using equipment that minimises the need for a person to be positioned close to the object, such as grabs that automatically or remotely lock and unlock on the object
- using equipment to brace and secure the object to prevent falling during inspection and handling
Before objects are released from any transport restraints, ensure that:
- the handling process has been planned and understood by everyone involved
- that no person is in the fall shadow
- ensure lifting gear (such as shackles, cables and clamps) are:
- used in conjunction with a fork lift or crane
- compatible with any other equipment used
- have the appropriate rating
- regularly checked by a competent or licensed person in accordance with manufacturer’s instructions
If A- frames are used to store objects
- ensure the A-frame sloping arms are leaning at an angle of between 4º to 8º. The angle of the base or leg should be 90° to the A-frame. Any packing between objects must not reduce the angle of the object to less than the A-frame angle
- ensure that any A-Frames designed and used for transport that arrive without engineered load ratings are not used for storage. Objects should be transferred and stored on systems engineered specifically for storage.
If objects are not stored on A-frames
- use a forklift attachment designed specifically for the handling of the crate
- brace any crated slabs that stand vertically, to prevent movement during transport
Under the Occupational Health and Safety Act 2004, employers must, so far as is reasonably practicable, provide and maintain a working environment that is safe and without risks to the health of employees and independent contractors.
Employers must provide or maintain plant or systems of work that are safe and without risks to health, so far as is reasonably practicable. Employers must also eliminate, or if not reasonably practicable, reduce the risk of objects falling on the operator of powered mobile plant so far as is reasonably practicable.
Employers must provide employees with the necessary information, instruction, training or supervision to enable them to do their work in a way that is safe and without risks to health.
Employers must also ensure, so far as is reasonably practicable, that people other than employees are not exposed to risks to their health or safety arising from the employer’s conduct.
Self-employed persons must ensure, so far as is reasonably practicable, that persons are not exposed to risks to their health or safety arising from the conduct of the undertaking of the self-employed person.
Guide for Unpacking Shipping Containers
Unpacking shipping containers involves significant hazards to workers. The following information is for employers, workers, importers, labour hire companies and container freight station operators. It will assist to develop safe work practices and outlines practical ways for the safe unpacking of containers to ensure the health and safety of workers.
The main hazards associated with unpacking shipping containers include:
• hazardous placement of
• falls from height
• falling goods
• manual handling
• slips, trips and falls
• pedestrian and mobile plant
• palletising of goods for
• removal of shipping
Employers must provide a safe work environment to workers by implementing adequate controls to all identified hazards.
How to use the table
The table lists and shows an example of the main hazards. It also includes the possible consequence (eg being hit by a forklift) of the hazard and provides a list of recommended controls. The controls listed are for unpacking shipping containers on an infrequent basis. If unpacking is done frequently, additional/varying controls may apply – some of these are highlighted in the table. ‘Frequent’ is considered to be more than one container per day.
Hierarchy of controls
There are various ways of controlling risks – these can be ranked from the highest level of protection to the lowest. This ranking is called the ‘hierarchy of control’. The most effective method of control is eliminating the hazard. If the hazard cannot be eliminated, the risk should be controlled as far as reasonably practicable. Using personal protective equipment (PPE) is the lowest form of control and should be used in conjunction with other controls.
Port of LA Director fears permanent loss of imports
Gene Seroka reports worst May in more than a decade, predicts 15% of import cargo won’t return
The Port of Los Angeles has been battered by its slowest May since the recession of 2009.
Year-over-year volume was down 30%, from the 828,662 twenty-foot equivalent units (TEUs) handled in May 2019 to 581,664 TEUs this year.
“Key factors included America’s shutdown economically due to COVID-19’s pandemic. There’s less consumer purchasing, less U.S. manufacturing. We also see the continuing negative impact of the trade war between the United States and China and the policies that have been in place,” said Port of LA Executive Director Gene Seroka.
“We’re also comparing the busiest month of May in our 114-year history and that was in May of last year in 2019, so the bar was set pretty high due to a strong advance of inventories during that trade debate,” he noted.
Seroka expects the negative effects from the U.S.-China trade war and the coronavirus pandemic to linger throughout the remainder of the year, and he said both have significantly damaged the supply chain.
Seroka said as an example, “the U.S.-China Phase One trade deal calls for $36.5 billion worth of agricultural exports from the United States to China in year 2020. The United States Department of Agriculture projects that by September, after three-quarters of this year, that total will only be $8 billion, so we’re lagging behind in the commitments of this Phase One China trade deal by the principals.
“And our traditional peak season is in jeopardy right now, although we see some modest demand signals. Some economists are predicting not until Q1 of 2021 will we start to see any noticeable economic bounceback with respect to consumer spending. That would mean a cargo uptick ever so slightly in the fourth quarter of 2020, but it’s a little bit early to say that with any certainty.”
Seroka said in his estimation, “we will have a permanent loss of 15% of our imports that won’t return due to the trade policies.”
But if there is a silver lining with the loss of imports, he said, “we may just have a chance to have a better balance of trade with imports and exports, which in effect could lower our cost to serve, making us a more desirable trade gateway.”
Some volume moves to Long Beach
Seroka said 2020 volumes at the Port of LA are tracking 19% lower than the first five months of 2019.
“For perspective, the San Pedro Bay ports of Long Beach and Los Angeles were down nearly 14% in the month of May and are lagging 2019 year-to-date by about 13%,” he said.
The two ports combined handled 1,209,872 TEUs in May, down 13.7% from 1,402,286 in May 2019. From Jan. 1 to May 31, the San Pedro Bay ports handled 5,901,270 TEUs, compared to 6,782,331 in the same period last year.
The Port of Long Beach, however, earlier this week reported a positive May, with volumes up 7.6% year-over-year. According to The McCown Report, Long Beach was the only major U.S. port to turn in a positive May.
Seroka alluded to the volume gain across the bay when he said, “We saw a shift of some vessel services from the Port of Los Angeles to Long Beach that amounted to about 10% of our normal business traffic.”
Volumes down across the board
Seroka said all lines of business at the Port of LA in May were in “negative territory,” with the exception of the automotive sector.
“But we only had two ships in the month of May in the automotive sector, carrying only a little more than 1,900 units, and there are no ships scheduled for the entire month of June. So that positive year-to-date number will quickly turn negative by the end of the second quarter,” Seroka said.
Autos handled between January and May totaled 46,820 units, up 4.85% compared to 44,656 last year.
“In the scrap metal market, limited demand overseas and a slowdown in manufacturing globally have hindered this segment. We had no scrap metal vessels in the month of May. Demand has plummeted since the onset of COVID-19 as manufacturers have idled plants in the steel market and the ongoing effects of the trade war have also impacted us here.”
The scrap metal volume between January and May was down 40.6% year-over-year, from 376,096 metric tons to 223,449 metric tons.
Less cargo means less work, Seroka said.
“Week-over-week, our labor shift work is down nearly 4%. Year-over-year we’re down 19% and by the all-important, three-year moving average, we’re down 30% in labor work shifts compared to what we had been running since 2017,” he said.
Canceled sailings, “the largest we’ve seen in the industry in some time,” delivered a blow to the port, Seroka said.
“Quarter 1 showed 40 canceled sailings coming to the Port of Los Angeles and by the end of Quarter 2 we’re estimating 23 ship sailings will have been canceled coming to the Port of LA. For the month of May specifically, we received and worked 60 vessels, compared to 89 ships last May,” he said.
Seroka did say it appeared container ships from Asia are beginning to return to LA.
“June canceled sailings estimates have eased somewhat compared to months recently witnessed and those in May,” he said.
Launch of Australia-UK FTA Negotiations
Negotiations for a free trade agreement between Australia and the UK have been launched with the first round of talks scheduled for 29 June 2020. The announcement comes ahead of the UK-EU exit transition period ending on 31 December 2020.
At the same time the UK has announced that it is pursuing accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Both announcements reflect the UK’s desire to embrace free trade as part of its recovery from COVID-19 and its desire to have a strong global voice having exited the EU.
The UK is Australia’s 8th largest 2 way trading partner. Key Australian exports are gold, wine, lead pearls and gems. The key UK exports to Australia are passenger motor vehicles, medicaments and alcohol.
For those engaged in Australia – UK trade, it is important that DFAT is made aware of both tariff and non-tariff barriers that you would want the FTA to overcome. There will no doubt be calls for public submission in respect of the proposed FTA.
The UK move to join the CPTPP comes at the same time as Thailand is reviewing whether it will seek to become a CPTPP member. The growth of the CPTPP would be a welcome boast to global trade and send a message to the existing CPTPP members that are yet to ratify the agreement, not to mention the US that withdrew from the original TPP.
It is impossible to predict the timing for either a UK Australia FTA or the joining of new members to the CPTPP. However, even the most ambitious observers would be surprised if a UK Australia FTA commenced prior to 2022.
In other trade developments, the Indonesia Australia FTA is set to commence on 5 July. The agreement will particularly benefit exporters who will gain greater market access to Indonesia. For importers, they will not see a practical decrease in tariffs as most goods from Indonesia are duty free under the ASEAN FTA. However, the Indonesian bilateral FTA does have the potential to allow easier access to FTA benefits through more relaxed documentation requirements.
While FTAs are exciting for traders, for customs brokers they can represent greater risk. When discussing the benefits of FTAs with traders, always be sure to remind the client of the compliance requirements. This includes not only documentation requirements, but also ensuring that the goods are correctly classified and actually meet the rules of origin under the relevant FTA.
Steel pipe classification case decided against Customs based on French translation of HS Code
Customs famously went to the High Court arguing that the interpretation of the Australian tariff classification legislation should be interpreted consistently with the French version of the harmonised system for tariff classification. The High Court agreed, but Customs still lost that case. Now in an ironic twist, the Administrative Appeals Tribunal has relied on the French translation of the HS code to find against Customs in a classification case concerning steel pipes.
In Smoothflow Australia Pty Ltd and Comptroller-General of Customs  AATA 1890 the issue was whether steel pipes imported for building fire sprinkler systems should be classified to 7306 (general steel pipes) or 7308 (structures and parts of structures). The relevant pipes were 5.8 metres in length and had printed on them information showing that the goods met standards applying to pipes used in fire protection systems. The Tribunal found that the goods would be put to use in fire sprinkler systems in buildings.
Customs assessed the goods to heading 7306. If correct, the ABF argued that the goods were subject to dumping duties applying to hollow structural sections. The same duties did not apply to goods classified to heading 7308.
The English wording of heading 7308 included the following “Structures … and parts of structures … of steel; … tubes and the like, prepared for use in structures of iron or steel“. However, the French version of the heading translated to “…tubes and similar … steel, prepared for use in the construction industry“.
Following the High Court decision in Pharma-Care, the Tribunal felt that it had to interpret the Australian wording in a way that was harmonious with the French wording. The AAT interpreted the Australian wording as not requiring the pipes be used in the structure, but merely in connection with the structure.
The AAT also found that pipes of 7308 do not need to necessarily for part of the structure or structures involved.
The AAT found that the pipes were at the time of importation prepared for use in connection with the building of structures. It was relevant that the pipes complied with the mandatory standards for the relevant buildings.
Interestingly, Customs argued that the interpretation went against the explanatory notes. However, the Tribunal said that the explanatory notes could only be used where the headings were unclear. In this case the Tribunal said that the heading was not unclear and the explanatory notes could not be used to create uncertainty.
Ultimately, the pipe could fit into either heading 7306 or heading 7308. The Tribunal applied the interpretation rules and classified to pipes to 7308 being the more specific of the two headings. The heading was held to be more specific as it applied to pipes prepared for a particular purpose, not merely “pipe”.
This case shows the practical implications of the approach adopted by Customs in the Pharma-Care case. It was easily foreseeable that arguing that the interpretation of Australian legislation should be influenced by the French text would lead to uncertainty. This recent case shows that tariff classification will now involve consideration of both the English and French text of the tariff headings and relevant section/chapter notes. This will create additional administrative burden for both the ABF and customs brokers at a time when the Government is trying to lower the regulatory burden of international trade.
This decision is particularly important for importers that have been subject to a large dumping duty demand on steel pipes and tubes (HSS) to be used in the building industry. Following this decision, there may now be grounds to argue that the dumping duty was incorrectly claimed.
Worldwide Public Holidays in July 2020