JUNE NEWSLETTER 2020
Welcome to this month’s edition of the Orbit Logistics Newsletter.
Dear Valued Customer
I would like to thank you for your ongoing support during this Global crisis. Its appreciated by all the team at Orbit Logistics.
The government continues to ease restrictions whilst we all look to do the right thing. Personally, its great that we can see more of our loved ones and go out for dinner again. However there are still challenges for all us, and our team is working to ensure minimal disruptions to your supply chain.
The shipping lines continue to “park” vessels as they look to keep costs down and maintain freight rate levels. This action impacts on space availability and we encourage you to work with our customer service team around forecasting.
The airlines are utilising “freighter” planes whilst global travel is restricted. Rates from China are maintaining their high levels with the increased demand for protective equipment.
Please be assured that we continue to negotiate the best possible options for you, our valued partners. 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 and I am confident we will all get through to the other side of the bridge together.
General Rate Increase ex China, Hong Kong, Korea, Japan, Taiwan and South East Asia to Australia and New Zealand – 1st July 2020
Shipping lines are advising of a potential general rate increase (GRI) of approximately US$300 / 20’ and US$600 / 40’ from 1st of July 2020, to be implemented for all cargo moving from China, Hong Kong, Taiwan and Korea to Australia and all cargo moving from Bangladesh, Cambodia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Myanmar, Philippines, Singapore, Taiwan, Thailand and Vietnam to New Zealand.
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.
We will keep you updated when confirmation is received as to the actual quantum of any potential increase.
Coronavirus Trade Report
July 1 fast approaching
Over recent weeks, we have been hearing from shipping lines and contacts that the current trend of full capacity vessels is expected to drop off come the new financial year.
We understand that current volumes have been driven by many retail businesses looking to attract EOFY sales by luring customers in with “sale” prices. Commentators suggest that a V-shaped recovery that was initially hoped for (where economies bounce-back to pre-Crisis levels quite quickly) is now unlikely to happen because the return of consumer demand will be slower than initially thought.
In Australia, should the financial assistance schemes be stopped or wound back this may further prolong the recovery period. We are witnessing businesses now looking to restructure to cope with lower work volumes.
We applaud the response from members who have made a priority to safeguard the well being of staff – not just as an employer and community interest responsibility, but as a sound business practice for when trade volumes return.
- 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 June 1 there were 14 confirmed local COVID-19 cases in 7 cities. There are 63 quarantined traveller cases in Mainland China. 43 cases in Hong Kong and 12 in Taiwan.
- According to the WTO trade statistics and outlook report for April 2020 the predictions are that global merchandise trading could reduce anywhere between 13% – 32% in 2020, with suggestions that under the right circumstances could bounce back 24% in 2021
- Based on a China Daily report of June 1, manufacturing activity in China sustained a steady recovery in May with the rally in domestic demand gathering pace. Analysts expected the manufacturing sector to continue to pick up over the coming months, but cautioned about the uncertainty over external demand and the pressure on employment. China’s purchasing managers index for the manufacturing sector came in at 50.6 in May. It is third consecutive month for the index to stand above 50, the dividing line between expansion and contraction, after the plunge in February due to the COVID-19 outbreak.
- Xinhua press reported on May 30, that as of May 23, 98.4 percent of transport enterprises had resumed operation, according to Sun Wenjian, spokesperson at the Ministry of Transport. Freight volume had begun to increase year on year. Official data showed that logistics demand in China improved in April as economic activities recovered following easing epidemic containment measures. According to the Ministry, in the middle 10 days of May, the country’s cargo throughput at ports and export cargo throughput both increased from one year ago, with that of container throughput close to last year’s level, according to the ministry.
- According to Chinese Customs Announcement No. 69, effective June 1, if the importer or agent do not request Iron Ore Quality Certificates, Customs will release the imports once physical inspection has been done without further Lab testing. This new procedure will reduce the Customs clearance processing and time for importers.
- Yang Ming and Evergreen get support from Taiwan’s Ministry of Transport through a T$30 bullion aid package. Support had previously been supplied to China Airlines and EVA Airways.
- According to Ministry of Transport of the PRC, effective June 1, China will tight restriction with overweight shipments and shippers will be the liable party for this restrictions.
Shipping lines continue to advise that current capacity is solid, albeit with managed capacity, and is expected to remain so for the rest of June. As for what July will bring time will tell – some lines we have spoken with suggest volumes will remain steady with some small troughs. Much will depend on consumer confidence in a future where so much is still unknown.
Members have also been reporting issues with cargo being rolled and delayed, whilst reduced capacity may have some impact here, most of the lines we addressed this with suggested that vessels missing connections due to weather was a contributing factor. The recent bad weather on both the east and west coasts of Australia may see some further disruption when these vessels return to their load / transship ports for their next south bound voyages. In cases of rolled cargoes these were usually picked up on the next sailing.
Being aware of what to expect will assist shipping lines in supplying the capacity needed to maintain efficient service levels. It is crucial that lines of communication between exporters / importers / forwarders and shipping lines need to flow freely. The lines advise there is vessel capacity available but knowing when to bring that on line is based solely on the knowledge of expected bookings.
Holiday Notice – Hong Kong & China Offices in June/July 2020
Our Hong Kong and China Offices will be closed during the below dates.
Please ensure we have shipping documents to facilitate customs clearance and delivery during this time.
Weight Discrepancy Fee Applying Rule Update
To ensure the safety of maritime transportation, shipping lines will further strengthen the control on the actual cargo weight and VGM related information. Since August 2019, they have started charge for containers’ VGM misdeclared. The applying rule for this charge will be further updated from 1st July, 2020 (pricing calculation date) as below:
- Charge name: Weight Discrepancy Fee
- Charge audience: VGM Provider
- Charge applying rule: (Below points of 3,4,5 are newly added)
- (1) Actual cargo weight exceeds allowable container payload;
(2) Discreapncy between declared VGM and actual cargo weight exceeds 1000 kgs or 5% of the actual cargo weight (triggered by the small one)；
(3) Declared VGM exceeds allowable container max gross;
(4) Discreapncy between declared VGM and cargo weight in shipping instruction with container tare weight added exceeds 5000 kgs;
(5) Declared VGM is less than container tare weight;
- Charge standard: USD300 per mis-declared container
For the losses and expenses resulting from the misdeclared VGM, shipping lines retain the right to make a claim and pursue legal liability against the responsible party. Shipping lines once again remind you to submit verified gross mass (VGM) before the related deadline and ensure the data accuracy
Containers Overboard from APL England
CONTAINER ship APL England (IMO 9218650) has reported the loss of 40 containers overboard while sailing off New South Wales. The ship’s master reported the incident to the Australian Maritime Safety Authority on Sunday.
“Just after 6.10am, the Singapore-flagged container ship APL England experienced a temporary loss of propulsion during heavy seas about 73 kilometres south east of Sydney,” AMSA said in a statement.”
The ship was sailing from China to Australia. “The ship’s power was restored within a few minutes but during this time the ship reported that it was rolling heavily, causing container stacks to collapse and several containers to falloverboard,” AMSA stated.
As well as the 40 containers lost overboard, another 74 containers are reported to have been damaged. Six containers are reported to be protruding from the starboard side of the ship and three from the port side of the ship. AMSA plans on using one of its challenger jets to proceed to look for containers and debris and to inspect the ship for any signs of damage or pollution.
At this stage it is unknown whether there will be any shoreline impacts associated with this incident and AMSA is working with NSW Maritime to monitor the situation and develop an appropriate response,” AMSA stated.
The Australian Transport Safety Bureau has been notified.
ATSB transport safety investigators are to meet the vessel when it arrives in port to survey damage to the vessel and container stacks, interview the crew and retrieve available recorded data.
A preliminary report is to be released in about one to two months. The incident occurred just days after the completion of salvage work of containers that fell overboard from YM Efficiency, an incident that occurred on a wild night off the NSW Central Coast in mid-2018.
APL England was launched in 2001 and, according to the MarineTraffic website, is 277 metres long, 40 metres wide and has capacity for 5510 TEU.
Methyl Bromide and the Road to 2047
AUSTRALIA is a signatory to the Montreal Protocol on Substances that Deplete the Ozone Layer, this protocol was signed in 1987 and entered into force in 1989. The protocol has been ratified by 198 countries. The purpose of this protocol is to eliminate Ozone Depleting Substances; ODSs commonly known as Hydrofluorocarbons can be found in goods like white goods and air-conditioners but in my opinion one of the more important and forgotten ODSs is methyl bromide (CH3Br) which is known as United Nations Number 1062.
Methyl bromide is the most commonly relied upon fumigant used to fumigate goods prior to shipping by sea to Australia and also used to treat goods on-shore in Australia. There are five countries who manufacture CH3Br. The Department of Agriculture, Water and the Environment heavily relies upon methyl bromide to treat goods that enter Australia; this reliance has been further escalated in recent years with the brown marmorated stink bug seasons.
The Montreal Protocol on Substances that Deplete the Ozone Layer, the World Customs Organisation, the World Health Organisation and the Australian government are all aware methyl bromide [CH3Br] is an issue to the ozone layer. In Australia CH3Br is listed as a Prohibited Import (Prohibited Imports) Regulations 1956, Regulation 5K, Schedule 10 but fumigators in Australia are able to obtain an import permit under Section 16 of the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989.
In 2016 New Zealand consumed 602,000 kilograms of CH3Br on-shore; in total the world consumed 68,400,000 kilograms of CH3Br in 1996; this does not take into account the amount of CH3Br which has been required in recent years to have goods treated for BMSB either on-shore or off-shore. In 2017, the Australian Border Force reported Australia had 429,105 LCL declarations with a value over $1000 AUD and 1,153,363 FCL declarations. In 2018, the ABF reported Australia had 448,692 LCL declarations with a value over $1,000 AUD and 1,242,962 FCL declarations; there would be cargoes involved in this number which were not required to be fumigated but for the reporting years of 2019-2020 there were 33 countries which were required to be treated for BMSB either on-shore or off-shore.
Not every TEU needs to be fumigated off-shore or on-shore but considering that the Department of Agriculture, Water and the Environment had listed 33 countries as BMSB high risk in the 2019-2020 season, the use of CH3Br has had, and will have, a usage increase year on year.
The United Nations has a “road map” to 2047 where ODSs will be eliminated; my question is: the more that governments’ rely upon CH3Br, what will be the alternative to methyl bromide? The United Nations has forecast a phase down of ODSs by 2047.
Whether a shipment has been fumigated off-shore or on-shore, the importer should receive a copy of the Material Safety Data Sheet [MSDS] for UN 1062 – Methyl Bromide [link here: http://www.inchem.org/documents/icsc/icsc/eics0109.htm] so that the importer can risk assess their workplace and employees exposure. Considering the fact that FCL shipping containers are delivered to importers premises and can be unpacked within one hour (I have never seen a forklift driver wear personal protective equipment to protect themselves from any fumigant gas residue).
CHAFTA / Packing Declaration Forms
Please see below sample CHAFTA & Packing Declaration Forms. CHAFTA COO needs to be completed so that WE can enter your goods duty free.
LCL Packing Declaration, needs to be completed by your supplier.
Any wooden articles, will need to be treated/fumigated. Supplier will need to provide the treatment certificates or them, otherwise they will require fumigation when reaching Australia.
Virus Leads To “Vessel Blankings” At Melbourne
PORT of Melbourne has recorded an increase in cancellations or “vessel blankings” between January and April, largely attributed to COVID-19 impacting upon volumes.
Management has just released its figures for the month of April and the start of the year.
“Of the 30 ship cancellations (vessel blankings) between January and April 2020, over two-thirds relate to shipping lines managing the COVID-19 volume impacts and a third to the annual Lunar New Year reductions,” port management reported.
“The result is significantly more than the 15 cancellations for the same period in 2019.”
According to management, there was “a marked slowdown” in trade in April 2020 compared with April 2019, with total monthly container volumes (full and empty) down by 11.3%.
Within this result:
- Full overseas container imports are down 9.2%;
- Full overseas container exports are down 8.1%; and
- Empty container throughput is down 21.1%.
For the financial year to date comparison as at April:
- Total container throughput (full and empty) is down 5.3%;
- Full overseas container imports are down 4.8%;
- Full overseas container exports are down 3.2%; and Empty container throughput is down 6.3%.
According to management, trade data for the first two weeks of May suggests a continuation of the April trend.
Shipping Australia deputy CEO Melwyn Noronha, said that “in these difficult times, shipping lines are trying to maintain their service levels and they are also experiencing extensive cash flow issues”.
“Shipping Australia has written to Australian ports, and to port service providers, seeking a reduction in fees,” Mr Noronha said.
To date, several organizations have either given a freeze or a reduction in charges. However, the Port of Melbourne has stated that it will increase its prices by the change in annual CPI for the 12 months ended 31 March 2020. That increase will apply from 1 July,” he said.
“Shipping Australia calls upon the Port of Melbourne to step-up and recognize the value of its customers by suspending its annual price increases.”
Meanwhile, Port of Melbourne management indicated it expected business during the next few months to be “soft”, dependent on the industry response to forecasts of a slowing economy, noting June and July were typically low season months.
This year’s investment program includes four major projects that are currently at different stages of the procurement process, from tendering through to construction:
- Start of procurement for the $125m Port Rail Transformation Project;
- Asset integrity upgrades at South Wharf 30/31 and Gellibrand Pier;
- A new maintenance facility at Short Road; and,
- Ongoing work to facilitate larger capacity container vessels.
Chief executive Brendan Bourke said the Port “continues to work closely with key stakeholders to explore further opportunities for operational efficiencies through the supply chain”.
Container Transport Alliance Australia director Neil Chambers said the latest results weren’t surprising and “are following the predictions that now the wave of import back-orders from China and other Asian countries have been received (which occurred in April and early May), we are bracing for a potential sustained period of slower economic activity and suppressed demand”.
“Unfortunately on the export side of the ledger, good conditions for agricultural commodities are likely to be hampered by a lessening of demand from overseas buyers, a restricted choice of vessel schedules, and potentially a shortage of food quality and refrigerated (reefer) container stock,” Mr Chambers said.
“Any continuation of trade tensions with China will just exacerbate these concerns.”
Vehicle booking system changes at VICT aimed at boosting productivity
CONTAINER Transport Alliance Australia has welcomed changes to the export container vehicle booking process at Victoria International Container Terminal from Thursday 19 May.
“CTAA has been in direct discussions with the management of VICT to improve aspects of its Vehicle Booking System processes, which, in turn, enhance landside transport planning and vehicle utilisation efficiency and productivity,” said CTAA director Neil Chambers.
“CTAA alliance companies are pleased that the first changes will be implemented from Tuesday, 19 May 2020, removing the need for export containers to have a valid pre-receival advice (PRA) lodged with the terminal prior to an export delivery timeslot being obtained at VICT.”
Mr Chambers said the change realigned VICT with other international container stevedores in the Port of Melbourne, allowing transport operators to plan ahead.
“In many container export supply chains, the PRA is completed relatively late in the logistics process, when the container has been loaded and its verified gross mass determined,” he said.
“Not being able to book an export time slot at VICT before the PRA is completed has been an increasing concern for transport operators and their export customers as the volumes of trade have increased at the Webb Dock Terminal.”
Mr Chambers said exporters and their transport logistics providers now would be able to better plan ahead, increasing the opportunity for truck utilisation rates to be maximised, and the certainly of being able to secure export slot bookings before vessel cut-off dates.
“This is particularly critical for regional exporters and their transport operators who have hundreds of kilometres to travel to/from the Port of Melbourne to meet vessel export cut-off timeframes, and for their trucks to complete other work while in Melbourne, including full import or empty export container backloads,” he said.
Mr Chambers said the CTAA was continuing to discuss other vital changes to VBS processes at VICT relating to import containers.
“We are confident that the spirit of cooperation displayed by the revitalised management team at VICT under new CEO Tim Vancampen on export booking processes will be applied to the landside sector’s concerns on import slot bookings and container availabilities,” he said.