NOVEMBER NEWSLETTER 2019

Posted by ORBIT LOGISTICS
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Welcome to the November Edition of the Orbit Newsletter

Dear Valued Customers

It’s peak period for many of our customers, and this is reflected on a larger scale with FCL limitations on import vessels.

Space is tight, upwards rate pressure continues and the impact of blank sailings is adding to the volatility of the container trade.

Our Team are working everyday to minimise any issues and rate impacts for our customers.

There are a number of interesting articles in this month’s newsletter, but I do urge in particular to take note (and action where needed) regarding advising us of your Christmas Closure and Reopening dates, and ensure all documentation for Customs Clearance is submitted as soon as possible.

Happy reading!

Gerard Reed
General Manager


 

Infrastructure Surcharge – FTA / APSA escalation of advocacy activity

Freight & Trade Alliance (FTA), the Australian Peak Shippers Association (APSA) and Container Transport Alliance Australia (CTAA) are making significant inroads with our advocacy efforts aimed at turning around the spiralling costs of Infrastructure Surcharges – refer to the summary below.

Its now time where we need your support to demonstrate the impacts on our exporters (and downstream implications on local manufacturing and farmers) as well as the broader trade and transport sectors.

We need this evidence to support what will be a significant escalation of our media coverage and to present compelling cases to government for regulation – please send details to pzalai@FTAlliance.com.au

Paul Zalai – Director and co-founder FTA / Secretariat APSA

 


 

FTA / APSA meet with the NSW Productivity Commissioner / ACCC reports “Stevedore’s revenue up due to higher infrastructure charges”

 

Sydney – David Scott (FTA Member Representative Sea Freight / Commercial Freight & Logistics) and I met yesterday (5 November 2019) with Peter Achterstraat AM (NSW Productivity Commissioner) and his senior advisors – we thank the Hon. Andrew Constance (Minister for Transport and Roads and Member for Bega) for setting up this engagement following our meeting with him on 12 August 2019.

Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) will be supporting the NSW Productivity Commissioner on agreed action items.

Melbourne – as outlined in last weeks’ member notice, the Victorian government commissioned a Port Pricing and Access Review led by Deloitte Access – a summary of the formal submission prepared by Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) is available HERE.

FTA/APSA and the Container Transport Alliance Australia (CTAA) have reached out to Deloitte and Freight Victoria for an update on the release of recommendations and the Victorian government responses. Sean Richards (APSA Chair and EM Visy Logistics) and I are scheduled to meet Roma Britnell MP (Shadow Minister for Ports and Freight and Member for Warrnambool) in Melbourne on 12 November 2019 to elaborate on matters raised in the FTA / APSA submission .– for further detail contact pzalai@FTAlliance.com.au

Fremantle – FTA / APSA provided a submission to Fremantle Ports on 27 Sept 2019 warning of the escalating threat of Infrastructure Surcharge increases to Western Australian operations and seeking intervention via the Ports’ stevedoring leasing renewal arrangements – refer HERE. As outlined in Monday’s notice from DP World Australia, these concerns have clearly come to reality with their Infrastructure Surcharge (now referred to as “Terminal Access Charge”) scheduled to increase from $8.22 (excl GST) to $45 (excl GST) per container effective 1 January 2019 – refer HERE

We are delighted to see the strong and immediate response from the Fremantle Ports CEO, Chris Leatt-Hayter

“DP World’s action is disappointing, given the substantial effort both parties have made to reach agreement on the new lease arrangements over the past months. It also confirms Fremantle Ports’ concerns about the level of future infrastructure surcharges that may eventuate if no agreed approach is in place under the new lease.Fremantle Ports is currently considering its position with regard to longer-term lease arrangements at Fremantle. It will continue to strive for fair and reasonable commercial arrangements that are in the interests of all port stakeholders.”

The full statement from the Fremantle Ports’ CEO titled INFRASTRUCTURE SURCHARGES – DP WORLD FREMANTLE CONTAINER TERMINAL is available HERE . John Park (Head of Business Operations, FTA / APSA) met with Chris yesterday and will keep members up to date with developments – for further detail contact jpark@FTAlliance.com.au

National – as outlined in last weeks’ notices, we have maintained our engagement with the Australian Competition and Consumer Commission (ACCC) and delighted that they have met their commitment to support for our advocacy activity on this matter.

The Container stevedoring monitoring report 2018-19 released today (6 November 2019) reported higher Infrastructure Surcharges imposed on trucks and rail operators at ports helped the container stevedoring industry increase average revenue per container lift for the first time in seven years,

The full report is available HERE and the accompanying ACCC Media Release titled Stevedore’s revenue up due to higher infrastructure charges is available HERE

 


FTA helps Aussie skin care products storm Korea

Australian skin care products have increased in popularity in parts of Asia.

A FREE trade agreement with South Korea (KAFTA) has allowed Australian exporters to storm that country’s market for beauty and skin care products.

Department of Foreign Affairs and Trade director, trade and investment advocacy, Michael Dean, explained the situation while speaking at the CBFCA national convention in Melbourne.

“This is an example that is less well-known, but this sort of export is benefiting from tariff reductions under our Korea – Australia free trade agreement,” Mr Dean said.

“Prior to the free trade agreement… there was a tariff of 6.5%.”

Since the Korea – Australia free trade agreement came into force, the tariff, which was 6.5%, has been reduced progressively and was eliminated altogether on 1 January, 2018.

“Since then, exports have increased dramatically from about $12.9m (in value) in 2014 (the year before the agreement came into force), to about $36m at the end of 2018,” Mr Dean said.

“So quite a dramatic increase.”

Mr Dean went on to speak about free trade agreements that are set to be implemented with other nations such as Indonesia and plans to negotiate with the United Kingdom once Brexit takes effect.

He also reiterated Australian support for the World Trade Organization.

Questioned about the impact of the US – China trade war, saying that Australia urged the two nations to resolve their differences.

Stevedores revenue up due to higher infrastructure charges

Higher infrastructure charges imposed on trucks and rail operators at ports helped the container stevedoring industry increase average revenue per container lift for the first time in seven years, according to the ACCC’s Container Stevedoring Monitoring Report 2018- 19.
Revenues generated by the infrastructure charges rose by 63 per cent in 2018-19 on the previous year, the report shows. These revenues helped to offset an 8.1 per cent decline in average quayside revenue because of competition between stevedores and increasing bargaining power of the shipping lines.
To read the full ACCC Media Release click HERE.
CBFCA Commentary
The CBFCA continues to communicate directly with the ACCC on this issue. ACCC recently presented at the CBFCA National Conference in Melbourne and provided an update on their monitoring role and powers.
Based on the ACCC finding now is the time for State Governments involvement to regulate the infrastructure charges just like the port service charges.

CBFCA will continue to work with other key industry peak bodies and State Governments advocating for regulation of infrastructure charges.

 


Regional trade deal agreement welcomed

Bangkok played host to the East Asia Summit.

AUSTRALIA has welcomed agreement to finalise a regional trade deal tipped to boost export opportunities for businesses.

Trade minister Simon Birmingham said the Regional Comprehensive Economic Partnership, agreed during meetings of the East Asia Summit in Bangkok, would integrate Australian businesses into “the world’s fastest growing region”.

Substantial progress has been made with 15 of the 16 RCEP countries committing to finalise minor outstanding matters within months and proceeding to signing this deal next year,” Minister Birmingham said.

“These countries account for nine of Australia’s top 15 trading partners, 58% of our trade and 66% of our exports.

“Australia will also look to expand the value of RCEP by working with India on its outstanding issues, with a view to having it also sign the deal, while continuing to actively pursue implementation of our India Economic Strategy.

“As RCEP economies develop and their middle classes grow, this deal will open up new doors for Australian businesses and investors across our region.

“With one in five Australian jobs trade related, the more trade opportunities our businesses have, the more local jobs we can continue to create.”

When finalised, Australian businesses and investors are set to benefit from opportunities under RCEP that are expected to include:

  • New scope for trade in services throughout the region including across telecommunications, professional and financial services.
  • Improved mechanisms for tackling non-tariff barriers
  • Greater investment certainty for businesses
  • Rules on e-commerce to make it easier for businesses to trade online.
  • A common set of rules on intellectual property
  • Agreed rules of origin that will increase the competitiveness of Australian inputs into regional production chains
  • Access deals with all RCEP parties which build on our existing free trade agreements, as well as the prospect of an agreement on market access with India.

India has to date opted not to join the RCEP.Further analysis of the RCEP is to be provided later this week by trade lawyer Andrew Hudson of Rigby Cooke


The void plan in November 2019

We will re-arrange the cargo to the available sailing during this period.  If there are any further void sailings, we will updated you as soon as we are advised.
Please note:  We count the blank sailing week based on the first call China port, therefore, some China ports call later and might already be entered into the next week, please refer to the POL ETD.
All of the below routings show whole vessel blank sailings:

WEEK 45

NAEX SERVICE (COUNTED FROM QDO ONBOARD DATE) Whole vessel blank sailing
OPERATOR: APL / EMC / H-LLOYD / ONE / SINOTRANS / YML
VESSEL SIZE: AROUND 4400 – 4600 TEUS
ROUTING: QDO – SHA – NGB – MEL – SYD – BNE
ORIGINAL ETD QDO: 03 NOV / ETD SHA: 06 NOV / ETD NGB: 07 NOV
ORIGINAL ETA MEL: 19 NOV / ETA SYD:  22 NOV / ETA BNE: 25 NOV

A3N SERVICE  (COUNTED FROM QDO ONBOARD DATE) Skip Qingdao ONLY
OPERATOR: ANL / COSCO / OOCL
VESSEL SIZE: AROUND 6500 TEUS
ROUTING: QDO – SHA – KHH – MEL – SYD  –  BNE
ORIGINAL ETD QDO: 09 NOV (SKIP) / ETD SHA: 12 NOV
ORIGINAL ETA MEL: 26 NOV / ETA SYD: 29 NOV / ETA BNE: 02 DEC

WEEK 46
NAEX SERVICE (COUNTED FROM QDO ONBOARD DATE) Whole vessel blank sailing
OPERATOR: APL / EMC / H-LLOYD / ONE / SINOTRANS / YML
VESSEL SIZE: AROUND 4400 – 4600 TEUS
ROUTING: QDO – SHA – NGB – MEL – SYD – BNE
ORIGINAL ETD QDO: 10 NOV / ETD SHA: 13 NOV / ETD NGB: 14 NOV
ORIGINAL ETA MEL: 26 NOV / ETA SYD:  29 NOV / ETA BNE: 02 DEC

Please contact our Customer Service with any queries regarding the above.


INDUSTRY OPINION: Larger box ships – a regular sight or once-off?

THE arrival of two 9400 TEU container ships, the MSC Elma and Maersk Skarstind, back in July heralded the arrival of a new class of container vessel to visit Australia. Both vessels are of the so-called ‘Bosporus’ class, so named as their overall length, 300 metres, is the maximum size for a vessel to transit the Bosporus Strait without special permission. The Bosporus Strait connects the Black Sea with the Aegean Sea and divides the City of Istanbul into two halves. The Bosporus class vessel’s beam (width) is 48 metres that translates into 19 containers wide on deck.

Both vessels have called at most major Australian ports but with varied levels of success. The draft, the width and height of the container stack on deck as well as the air draft (height from the waterline to the top of the mast) of these vessels have all been issues that have limited the efficient working of the vessel. Due to their size the berthing and unberthing of the vessels in some ports was restricted to daylight hours only as well as light wind conditions.

Stevedoring challenges
Patrick Port Botany and VICT at Webb Dock are currently the only operators in Australia that have quay cranes large enough to reach 19-containers-wide, consequently the stowage of containers on deck had to be adjusted for other ports as the outer cell could not be reached.

Both Patrick and DPWA have on order quay cranes that are able to reach in excess of 19-containers-wide. The first of these cranes are expected to arrive in early 2020. The stacking height of containers on deck had to be limited to seven-high in all ports as a number of cranes did not have the clearance to go any higher.

The limitations on these ships were due to restrictions on the draft to which the vessel could be loaded at some of the ports. For example, the Westgate Bridge in Melbourne caused a problem for the MSC Elma. To have sufficient clearance to pass under the bridge careful calculations and additional measures had to be taken. The Maersk Skarstind however, had a collapsible mast which made the pass easier.

From comments made by the shipping lines involved and looking at their forward schedules it seems that these vessels were once–off only and were used to test the ability of Australian ports and stevedores to handle vessels of this size. No doubt Maersk, MSC, port authorities, harbour masters and stevedores will be analysing the results of the vessels’ calls and see if using this type of vessels on a regular basis will be an option. Further simulations will also be done to investigate whether vessels of up to 346 metres in length are able to enter certain ports. Shipping lines will no doubt want to keep bringing larger vessels to Australian ports due to the reduction in cost per TEU. However, it’s unlikely that this reduction will be passed on to the importers and exporters.

MSC Elma at Port Botany. Photo: Brett Patman – Lost Collective

Global perspective
Globally it’s a different story. The largest containership presently afloat is the 23,000 TEU MSC Gulsun, which entered service back in July. The vessel is the first one of a batch of six ordered by MSC in 2017. While the new building order market for 18,000+ TEU is currently healthy, the major workhorses in the global container fleets are in the 5000 TEU to 15,000 TEU-range or smaller feeder vessels in the sub-3000 TEU-range.

Maersk CEO Soren Skou, as well as other shipowners, thinks 20,000+ TEU is about the upper limit of container vessel size as there are only a small number of ports which can handle these behemoths efficiently. One of the issues is that while the width (the MSC Gulsun can carry 24 containers wide on deck) and depth of these vessels is getting bigger, the overall length is approximately 400 metres, which limits the number of quay cranes that can fit over the vessel whilst working alongside. This in turn affects the berth rate and how quickly these vessels can be turned around whilst in port. To fill these vessels also requires more port calls meaning an increase in inventories costs. And let’s not forget the logistical problems if one of these ships is involved in an incident such as the grounding of the 19,000 TEU CSCL Indian Ocean in the River Elbe in 2016, or if there is a fire on board.

Considering our market conditions and port infrastructure I doubt if we will see one of these vessels in Australia anytime soon as our container market is just too small to fill them, even 50 years from now.


Going on Holidays?

It’s hard to believe, but it won’t be long before businesses start to make arrangements for end-of-year holiday planning.

Please assist Orbit Logistics to fit in with your company’s plans by sharing information with us regarding business closures over holiday periods.

Please email or Sales department with your holiday planning details.