Welcome to the December Market Update.

 

While in many respects, this year has been relatively benign in terms of the level of difficulty in planning and managing supply chains, within recent weeks, a cascade effect has occurred that may make the next few weeks challenging.

 

For those awaiting just-in-time shipments via the ports, the combination of industrial action at DP World, rescheduling of sailings ex-North Asia and global re-routings to avoid the eye-watering costs of the Panama Canal are among the factors that may slow your deliveries down.

 

Costs have also begun to soar, not just due to the shippers' tactic of implementing blank sailings to reduce supply and justify GRIs but also there are major price rises on the table that have the Freight and Trade Alliance concerned.

 

It is not an ideal situation, and rest assured, we are always going to work with you to find the best option for your shipping needs. So, as you draw a deep breath and prepare to plan out 2024, get in touch with your Client Success Manager or Client Service Specialist and make a time to discuss your forward planning and any changes you are expecting to your operations and your freight and logistics requirements for the new year ahead.

 

North Asia

November saw the shipping lines achieve not one, but two GRIs, and there could be more ahead. A GRI of USD 100 per TEU was implemented effective 1 November to capitalise on the surge in demand ahead of Christmas, and another GRI at USD 100 per TEU was tabled as of 15 November as a direct consequence of the DP World MUA industrial action in Australian ports, which has seriously disturbed the vessel rotations and capacity in the trade lane.

 

ANL have, however, added an extra sailing, ANTWERP BRIDGE 023S, and we hope this may help with clearing some of the backlog of containers ex China.

 

While operations landside within this market are smooth and working well from factory to wharf, once cargo arrives at the terminal, things become chaotic. The delays at the destination end are causing shippers to alter sailing schedules, with blank sailings, changes to port rotations and vessel delays. This is all causing further space capacity shortage – cue price rise. Carriers have announced a GRI of USD 200 per TEU effective from 15 December, and a further GRI has been announced for 1 January 2024 of USD 300 per TEU.

 

While the carriers may be somewhat optimistic in proposing the December price hike, as market demand does not support it, there is still some chance part of the GRI may get through if the situation at the terminals does not get resolved.

 

Meanwhile, air freight is progressing smoothly. There are no space issues being reported, and new services are continually being launched or additional flights being returned to the trade lane. In addition, rates have improved ex major airports, making airfreight again a choice worth considering for urgent and just-in-time Christmas shipping.

 

South East Asia

In contrast to the North Asia market, this trade lane remains quite stable. No GRI was announced for November, nor has any been announced for December. Blank sailings are still frequent, as the carriers are aiming to retain the current rates even as demand continues to remain relatively subdued.

 

Unlike other years, even the level of congestion at the transshipment hubs of Singapore and Port Kelang is minor. Air freight also is flowing smoothly, with no shortage of space. Hile the fuel surcharge remains high, the rates still appear quite workable for importers.

 

North America

It’s official – the current conditions in the Panama Canal region are the driest that have been seen in 73 years, and as a result, movements through the canals are now incredibly expensive. Between the limited number of slots available and the additional costs involved, some carriers are choosing to avoid the route entirely, choosing instead the longer route via the Suez Canal.

 

Another factor affecting operations at the canal is anti-mining protests in the region, which have included street blockades by protesters objecting to an agreement to extract copper in Panama between the government and Minera Panama, a subsidiary of Canadian transnational First Quantum.

 

Recently, the Panama Canal Authority introduced Reservation Slots for the period from November to February 2024, which severely curtailed the number of vessels permitted to transit the locks to 49 vessels between 3 – 30 November, 22 in December, 20 in January and 18 in February. These slots are being auctioned, and the winners are generally LNG (liquified natural gas) or LPG (liquified petroleum gas) vessels where carriers are prepared to pay up to USD one million or even more for the slot.

 

Within the USA itself, between the challenge of obtaining passage via the Canal and onshore industrial action, more carriers are switching to the ports of the US West Coast as their preferred hub.

 

If you are planning any shipments ex-North America, it is important to have a conversation as soon as possible with your Client Service Specialist or Client Success Manager so we can consider whether the costs and the complexities of this route are a fair trade compared to potentially longer timeframes for other solutions.

 

New Zealand

The New Zealand Government has removed a Fuel Subsidy that was supporting the shipping sector, among others, and as a result, Fuel Surcharges are increasing in this market. While this increase has been on the radar since October, it must now be implemented, and the increase of 26% to the NZ Fuel Surcharge will be implemented from 1 January 2024 for imports into or exports from New Zealand.

 

Australia

During November, ongoing port strikes caused disruption, delay, and congestion for cargo movements into and out of Australian DP World terminals. The industrial action is slated to continue into December, which is the kind of news no one wants to hear ahead of Christmas. In addition, both Hutchinson Ports Sydney Terminal and, more broadly, Port Botany were blocked for some hours on 21 November by pro-Palestinian protestors specifically objecting to ZIM line-controlled vessel Calandra, which they believed was somehow aligned with the Israeli government.

 

Hutchinson responded to the action by cancelling landside truck entry zones, which disrupted cargo flows and caused a backlog.

 

And as if all of this wasn’t quite enough complexity as we try and navigate the holiday shopping peak, a cyber-attack on DP World systems in November added further disruption and generated a significant backlog, and Patrick Sydney Terminal has been experiencing some operational difficulties that have resulted in significant truck queuing and blow-outs in turnaround times of up to four hours.

 

Given the absolute constellation of challenges, we do rate this as one of the most challenging operational periods for shippers since the height of the COVID-19 pandemic. It also shows again just how interconnected the various markets are, with the ongoing episodes of industrial action in Australia having flow-on effects for the ports of origin due to loop carriers being delayed and flow-on effects for global scheduling as carriers change rotations to implement damage control.

 

Landside is not escaping the turmoil either. Transport companies are reporting excessive delays, slot cancellations, manifest limits, disruption to delivery services and delays to return of empty containers. The trucking companies are putting on extra shifts to try and catch up, surrendering their weekends to ensure client containers are not subject to storage issues or missing export vessel cutoffs.

 

This kind of overtime does have a cost, so in Fremantle the trucking companies are applying a $75 per container surcharge that requires delivery or collection at the wharf over the weekend, effectively immediately. While at this stage, we have only heard this being implemented for Fremantle, it would not be surprising if other trucking providers for other ports followed suit.  

Another cost increase we are seeing is an increase in Via Yard Charges at all Australian ports due to increasing costs from the transport companies. It would be sensible to have a conversation with your Client Success Manager or Client Service Specialist about your arrangements for containers over the Christmas period if you are closing for any of the holiday dates and may have containers arrive that will require storage.

 

Specific news for Melbourne, Perth and Brisbane

Ongoing port strikes were seen throughout November and more have been published for December. DP World has also announced exorbitant rate hikes from 1 January 2024, and we are also seeing some tariff adjustments come through from other terminals also.

 

Adelaide news

New PONDUS weight amendment fees have been introduced from 4 December at Flinders Adelaide Container Park Terminal (FACT). A Weight and Adjustment charge of AUD 278.85 per container plus GST

will apply to all containers determined by the PONDUS Stand to have a weight variance of greater than +/- one metric tonne of the documented VGM (Verified Gross Mass) weight.

 

Domestic transport

Airfreight Terminals in all cities will be increasing their Terminal Fees effective 1st Jan 2024. You will see this reflected in adjusted Rate Cards for airfreight. LCL Timeslot booking fees will also increase from 1st January as we see other landside charges increase.

 

BSMB Due Diligence

Freight & Trade Alliance (FTA) have recently received an increase in member enquiries relating to the List of Approved Offshore BMSB Treatment Providers, possible interim provisions, and clarification on the 120-Hour Transshipment Rules.

 

FTA made inquiries with the Department of Agriculture, Fisheries and Forestry, and the following clarification and commentary has been provided by the department's Hitchhiker Pests Policy Team.\

 

Due Diligence of Approved Treatment Provider:

Prior to treating goods for BMSB, especially where goods are being treated in a target risk country, due diligence should be taken by the importer/supplier to ensure that the treatment provider is approved and published on the website prior to treating the goods. Checking the list retrospectively does not indicate the treatment provider was approved at the time of the treatment. Treatment providers must apply prior to the start of each BMSB to be on this list -

Offshore Treatment Providers - DAFF (agriculture.gov.au)

BMSB measures have required and still do require any target high-risk goods treated in target-risk countries must be treated by a treatment provider listed as ‘approved’ on the List of treatment providers - https://www.agriculture.gov.au/biosecurity-trade/import/before/brown-marmorated-stink-bugs#bmsb-measures-for-goods

Where goods are not treated by an approved offshore treatment provider, the treatment certificate will be deemed to be invalid, and the goods will be denied discharge and directed for export on arrival - https://www.agriculture.gov.au/biosecurity-trade/import/before/brown-marmorated-stink-bugs/prepare-import#what-do-i-need-to-do-if-my-goods-require-mandatory-offshore-treatment

Details of the Treatment Providers and their Approval Dates:

Details of the treatment providers and their approval dates are available in two places on the departments list of treatment providers.

 

The first place this can be found is on the Summary of Recent Changes page. Simply select the Summary of recent changes section, and then select the relevant country of the treatment provider, and the date the company was approved is readily available.

 

The second location, the details and the approval date of the treatment providers can be found via the individual treatment provider details page. If you enter the AEI code or treatment provider name in the search boxes at the top of the treatment provider page, the individual treatment provider will show on the line. If you select the line, the option to “View Contact Details” appears on the left side of the list. If you click on this, then the details of the treatment provider, including the approval date and any subsequent changes to their approval, will appear.

 

120 post-treatment window and the 120-hour transshipping window:

Where goods spend more than 120 hours transhipping in a target risk country, they do require treatment for BMSB due to the risk of reinfestation or cross-contamination of the cargo in the transhipping port. Where goods both load and tranship in target risk countries, both the 120-post treatment window and the 120-hour transhipping window apply.

https://www.agriculture.gov.au/biosecurity-trade/import/before/brown-marmorated-stink-bugs/prepare-import#goods-transhipping-through-a-target-risk-country

Underbond movement of non-compliant cargo:

Movement of these potentially non-compliant goods underbond to an AA does not exclude the goods from being subject to the measures and any associated outcomes resulting from an unacceptable treatment. Even though ABF permits underbond movements to be lodged, underbond movements should not be utilised to move containers held for Biosecurity concerns, particularly if there is the potential for goods to be non-compliant with BMSB measures. There are already provisions in place for broker to contact the department to request movement of these goods to Class 1 AA where there may be potential delays relating to document processing, however it looks like this has not been utilised, and if it had, the department would not have permitted the movement due to the potential risk.

Underbond movement of non-compliant cargo is also specifically addressed in our published frequently asked questions.

Movement of non-compliant BMSB break bulk cargo (including open top and flat rack containers), including movement via underbond, is not permitted. If non-compliant BMSB break bulk has been moved off the wharf, a direction will be issued to envelope tarp the goods and to undertake a verification inspection by a departmental officer prior to movement back to the wharf for export. A non-compliance report will be lodged against all relevant parties.
No exemptions from this requirement will be approved and all non-compliant break bulk (including open top and flat rack containers) will be directed for export.

There are no provisions for this cargo type to be treated onshore for BMSB. These requirements are applied equally and consistently to all goods shipped as break bulk (including open-top and flat rack containers) that arrive non-compliant.

 

DP World cyber attack

While digital systems offer enormous benefits including improved efficiency, visibility, and accountability, they do require all of us to be vigilant about cyber safety and cyber security. The recent major cyber-attack on 10 November, which targeted DP World’s IT Systems, for example, has caused a backlog of tens of thousands of containers and disruption across all ports.

 

Our advice is to check your devices and invest in anti-virus protection. It is thanks to robust cyber security protocols that DP World was in a position to recover and restore operations rapidly.

 

Spiraling supply chain costs

There is an element of Scrooge (before he changed his ways) in the announcement by DP World that they intend what amounts to utterly exorbitant increases to landside fees from 1 January 2024. The Freight and Trade Alliance (FTA) have taken a proactive stance on this, recognising the flow-on effects for importers, exporters, the Australian economy, and the general population, who are already struggling with inflation and interest rate rises.

 

The proposed price hikes include increases in Terminal Access Charges, particularly impacting Australian East coast container terminals:

 

·         Terminal Access Charge (TAC): Full Exports - 52.52% increase in Melbourne; 38.80% increase in Sydney; 37.50% in Brisbane.

·         Terminal Access Charge (TAC): Full Imports - 26.18% increase in Brisbane; 25.49% in Sydney; 21.22% in Melbourne.

 

The FTA and the Australian Peak Shippers Association (APSA) have engaged in correspondence with DP World executives expressing frustration at having nil engagement on the proposed increases.

 

They have also sent correspondence to various Federal Government Ministers, and included another request for a meaningful response to the Productivity Commission recommendations as outlined in their review of Australia's Maritime Logistics System with specific reference to the proposed introduction of a Mandatory Code administered by the Australian Competition and Consumer Commission (ACCC) to oversee / approve any adjustments to landside fees.

 

Making resolutions

The last few weeks of the year often pass in a mad blur of details, deliveries, demands and the odd social event to mark the start of the summer holiday season. Before we know it, there’s stockings hanging, ice in the eskies and menus planned for long, relaxed lunches.

 

No matter where you plan to celebrate the end of the year, we hope you have plenty of reasons to feel it was a successful one. While already 2024 does appear to have some curve balls ready to bowl, together, we can field them and ensure your business, your staff and your customers continue to thrive.

 

Before you clock off for the break, give some thought to some of the goals you had for this year, how well you were able to meet them, and what improvements could be made for the fresh new calendar ahead. Then, if you have not already done so, touch base with your Client Success Manager or Client Service Specialist and start the conversation about what your 2024 needs will be.

 

Wishing you and yours all the best for the holiday season ahead,

 

Wishing you and yours all the best for the holiday season ahead

 

Matt Ward

COO International – YKGA

AXIMA Pty Ltd

www.axima.com.au