AXIMA Market Newsletter - December 2020

AXIMA Market Newsletter - December 2020

As 2020 draws to a close, many of us will be reflecting on just how challenging this year has been. From the outset we had bushfires affecting large parts of the country, then floods and storms, then a global pandemic disrupting societies and economies. It really has been one of the toughest years the freight and logistics industry has ever experienced.


Unfortunately, there is yet another complication affecting our sector – the current global container shortages. This has been described as a "Black Swan" event and it is exacerbating pressures in a market that has already been extremely stressed. As 40GP and 40HC containers have been in very short supply, we have been advising clients to switch to 20GP containers. However, these are also now in short supply. Contact your Client Service Specialist or Key Account Manager to help you plan a solution if this shortage affects your supply chain planning.


In addition to the equipment issues, freight rates across the majority of trade lanes remain high, and conversations with representatives of some carriers do indicate there may be further rate increases into the new year ahead. 


There is one exception to the general upward trend of rates and charges. DP World have announced their Ancillary charges for 1 January 2021 and while we would normally expect to see them increase their charges, they are holding their booking fees firm for now.


Another piece of positive news is there is some relief in terms of empty container park issues in Sydney. An increase in allowable stack heights to seven containers high at Port Botany has been granted as a temporary measure to allow some relief and DP World have made more time slots available for Direct Dehires.


North Asia 

The market remains challenging, with limited space on vessels and ongoing blank sailings. This is putting added demand pressure on the limited airfreight capacity as importers resort to air freight to meet seasonal demand from their customers. Prices for air freight are high and expected to continue to increase as it is very much a carriers’ market. Also, some sea freight carriers are only quoting rates per sailing, a clear sign that this market also has not yet stabilised. 


Last month’s GRI for sea freight went through in full and new GRIs are set for December 1, varying from USD 300 per TEU through to USD 1000 per TEU depending on the shipping line. We expect these will go through and are expecting another GRI for 15 December 2020. 


In addition, the Port Congestion Charge MSC were imposing for Sydney shipments is being retained under another name as a Peak Season Surcharge.


South East Asia

As space remains tight and demand high, last month’s GRI did go through in full. It remains a carrier’s market and effective 1 December 2020, another GRI of USD 150 Per TEU is expected to also go through in full.


North America
While general market conditions remain similar to the rest of the world in terms of blank sailings continuing, limited air freight services and high demand, the big news is the official process has begun in terms of a transition from the Trump administration to the Biden-Harris administration. Biden is expected to be inaugurated on 20 January 2021, and while this does raise questions around how it may affect our trading relationships with the USA at this stage no direct effects are expected. A commitment to maintaining the strong relationship between the USA and Australia has already been expressed and it remains to be seen how other diplomatic ties and trading relationships may shift as Biden and his team settle into office.


Los Angeles Port had their busiest month in October. This saw the processing of 980,729 TEU’s which is an increase of more than 27% on same time last year. The huge volume has affected the ability for cargo to be unpacked, slowing the availability of equipment such as empty containers and chassis for hire. Port congestion in Southern California is now rated as severe and is spreading to Seattle and Tacoma ports. In addition there is a shortage of drivers and rail delays. 


In terms of rates, a GRI is set to be passed on 17 December 2020, and depending on the shipping line will be between USD 200 per TEU to USD 250 per TEU – with LCL of approximately USD 10 per cbm. We expect this will pass in full due to the constraints on available space. 


Europe and the UK 

Due to the ongoing situation of limited space and high demand, some carriers have begun skipping specific port calls or reducing their time at selected ports as they attempt to bypass port congestion. In one incident, Cosco announced a vessel departed a port without unloading all the necessary containers. This resulted in significant delays for some cargo as it waited until its second call into the port to complete offloading.


In addition to demand pressures, container shortages and haulage issues are also driving up freight rates. Port Congestion surcharges have also been introduced and a Peak Season Surcharge will be effective from 1 December 2020 for sea freight ex Italy, Spain, Portugal and France.


As the EU and UK attempt to manage the second wave of the COVID-19 pandemic, there is some chance lockdowns being put in place in some nations may help ease demand. Whether this has an impact on rates, however, only time and market intelligence will reveal.


ACCC Stevedoring Monitoring Review 

We have an update on the ongoing advocacy by the FTA and APSA in regard to Stevedore Monitoring. Considering a reduction in container volumes, stevedores’ total revenues increased by 2.8% with the main contributor to this increased revenue coming from further increases in Terminal Access Charges, which appears on shipper invoices as Infrastructure Fees. 


The ACCC has advised this is a matter for the individual States and Territories to monitor. Deputy Prime Minister, Michael McCormack, made a formal response to the FTA/APSA submission of its Status Report – Container Stevedore Imposition of Terminal Access Charge. He said he supported the industry advocacy but clearly articulated that stevedore pricing is a state and territory responsibility.


The matter was referred to the ACCC to ensure the stevedores involved integrate operations on a level playing field and do not use Terminal Access Charges to gain commercial advantage or to offset pricing.


The ACCC are also closely monitoring the Port Congestion Surcharge, which is on average USD 350 per TEU, and have indicated they consider this to be a temporary surcharge. 


Khapra Beetle Interceptions

In addition to the Brown marmorated stink bug (BMSB), the Department of Agriculture, Water and the Environment (DAWE) is increasingly on the lookout for the Khapra beetle. The Khapra beetle (Trogoderma granarium), which is a serious pest overseas, is Australia’s number two National Priority Plant Pest and the number one plant priority pest for grains. 


In recent months, Khapra beetles have been intercepted in Australia. Several cases have occurred on imported cargo and containers at the border and post-border. DAWE is currently shifting more of their resources to manage the emergency response, in particular inspections and treatments required at a number of locations around the country. This shift in DAWE resources may delay some cargo. Read further information on the potential delays here. We will continue to share more information as we move forward. 


Looking beyond 2020

I think we can all agree that 2020 has been one for the record books – and sincerely hope for a less challenging year ahead. With only weeks to go until we change over the calendar, we know that planning in advance for the first quarter of 2021 and beyond is already on many people’s minds. 


As market conditions remain difficult, having a conversation with your Client Service Specialist or Key Account Manager is important to ensure that together we can navigate all the various complications. At any time, we are only a phone call or an email away and ready to help you keep your supply chain moving as smoothly as possible.


Our very best wishes to you and yours for the coming Christmas holiday season,

Best regards,

Matt Ward

General Manager - International