AXIMA Market Newsletter - August 2021

Market Newsletter- August 2021

 

Welcome to the August Market Update.

 

 While recent weeks have seen the sudden re-introduction of COVID-19 lockdowns in multiple Australian states, it is important to keep our eyes on the months ahead as peak season approaches. Every year there is an emphasis on planning ahead, but this year the need is more acute given the continuing tumultuous conditions world-wide 

 

Due to the lockdowns in New South Wales and Victoria, both AXIMA’s Melbourne and Sydney office staff have pivoted to working from home. Please be assured, your Client Success Manager or Client Service Specialist are still just a phone call or email away. Our Sydney and Melbourne warehouses also remain fully operational during the current Delta variant outbreak, with all appropriate health, hygiene, and safety practices in place.

 

Another reason we all need to be staying up to date perhaps a bit more than usual is things can change rapidly. We have just this week been informed Air Menzies at T2 Matraville and a DHL facility in Sydney have had positive COVID-19 cases amongst staff and as a result, staffing levels were reduced as multiple staff at both sites had to enter isolation. The flow-on effect is expected to be delays while collecting or delivering freight and possibly a wait time being charged by transport providers.

 

Which brings us to the matter of rates generally. While we would like to now give you some good news, there is no early Christmas present expected from any of the shipping lines. Rates are expected to remain high well into 2022, with perhaps some easing late next year, before some stability is reached in 2023. ANL is also indicating that a shortage of vessels and equipment is expected to continue in 2022 and this means space will remain at a premium and congestion is likely to remain a feature of many ports well into next year.

 

There are also new surcharges being regularly announced. One shipping line has just introduced a Value Added Surcharge of USD 5000 per 40ft that will affect shipments from China to the USA and Canada, citing high demand impacting its operations as the driver. The surcharge replaces the previous Shipment Guarantee Fee and is yet another price hike on a trade lane that has already seen prices spiral to more than USD 20K per 40GP.

 

Most shipping lines are also charging cancellation fees, and these can be highly variable with the conditions and timeframes for cancellation varying with each shipping line. This is an important thing to be aware of as these charges are quite significant and charged as soon as you cancel. To minimise the risk of this, and discuss timing, conditions, rates and fees reach out to your Client Success Manager or Client Service Specialist to discuss your supply chain planning, shipping and freight needs.

 

 

North Asia

Just as it recovered normal operations following a disastrous fire in June, Yantian Port was hit by a COVID-19 outbreak which reduced operations. It is now returning to normal levels of activity, but the carriers learned a useful lesson when they were forced to use alternate ports during the slowdown. The shipping lines that make up “the Alliance” - Hapag Lloyd, Yang Ming and Ocean Network Express – added a direct port of call to Nansha.

 

Now they are more familiar with this alternate port, it has opened the door for the major carriers to consider using Nansha port more permanently. There is no timeline or formal decision on this yet – but watch this space! Yantian International Container terminal is still the well-established port of call and has strong demand on the import side, handling 13 million TEU every year, which equates to 36,000 TEU every day.

 

Another GRI has been announced effective 1 August of USD 500 per 20GP and USD 1000 per 40GP and USD 20 per cbm for LCL.

 

Another development in the North Asia market is airfreight demand is increasing. The traditional Peak Season is now ramping up, and space will be in high demand. Further, from 1 August the airline fuel surcharge ex Hong Kong increases to HKD2.40/kg. Rates are expected to increase suddenly as we advance into the final months of this year and will remain high until the end of 2021 at least.

 

South East Asia

The Indian Subcontinent is an extremely challenging market right now. We are seeing reports of astonishing freight rates being quoted as carriers are not always honouring contracted rates. Severe container shortages are combining with lack of space to create a perfect storm on the price front, and carriers are hitting freight forwarders, importers, and exporters with eye-wateringly high rates. Just to add to the challenge, waiting periods to secure bookings have increased dramatically over the past month with space booked out a month ahead. Waiting times to secure an empty container have recently increased also to between 10 and 20 days.

 

Major carriers Maersk, MSC, CMA CGM/ANL, Hapag –Lloyd and Cosco have all reported very limited space from Indian Ports to Oceania, Africa and South America and forwarders at the port of origin are also reporting that shipping lines are not honouring contractual bookings. Some carriers are keeping rates high to deter bookings, and some are sporadically not taking bookings to enable them to clear what bookings they do have before they take bookings again. The key message here is – if your supply chain involves freight ex-India, speak to your Client Success Manager or Client Service Specialist at the earliest opportunity so we can help ensure you successfully secure the space you require.

 

In Vietnam, port congestion is currently causing delays for cargo ex-Vietnam. This congestion is a flow-on effect from vessels being delayed at transshipment hubs and transshipment ports and is also being exacerbated by the general shortage of equipment and limited space availability. There are also some problems being caused by the current COVID-19 outbreak in Vietnam, which has sent Ho Chi Minh into lockdown, and is affecting land transport as drivers are required to show a negative COVID-19 test result has been received within the last 3 to 5 days before they are allowed to travel between provinces. The Ho Chi Minh lockdown is currently due to lift in early August.

 

COVID-19 is also causing disruption in Malaysia, which is currently under a nation-wide lockdown. Selangor and Kuala Lumpur are the worst affected locations, and supply chains relying on manufacturers and suppliers in these regions are expected to face significant delays.

 

There is no good news on prices, with a GRI from 1 August of USD 500 per 20GP, USD 1000 per 40GP and USD 20 per cbm for LCL.

 

 

North America
 

Congestion and equipment shortages are having an impact across all freight modes in the US. There is one piece of good news - ANL has a replacement vessel that will be brought back into service from West Coast USA in early August.

 

But otherwise, there are multiple complications. On Sunday 18 July, Union Pacific halted intermodal services from West Coast Ports to its terminal near Chicago to attempt to reduce congestion at their Global IV facility.  This embargo affects the ports of Long Beach, Los Angeles, Oakland, and Tacoma and was set to end 25 July.

 

Norfolk Southern reduced the number of domestic containers in four of its busy routes due to a shortage of chassis, and trucking is also currently strained with container dwell times and truck turnaround times deteriorating at Los Angeles and Long Beach Ports and the number of vessels waiting to berth increasing.

 

Shipping Lines will be introducing an Emergency Intermodal Surcharge on 26th August 2021 at USD 350 per 20GP and 700 per 40GP/HC.

 

Perhaps due to some shipping lines trying to avoid the West Coast port congestion, New York recorded a record 467,763 TEU imports during June. Overall, though, with the increase in freight volumes and the ongoing strain on infrastructure, delays in the USA are expected to worsen as peak season advances, and the peak season itself may last longer than usual.

 

On a more positive note, the Federal Maritime Commission (FMC), the independent federal agency responsible for regulating the U.S. international ocean transportation system, has announced a new Audit Program. The Audit Program will analyse the top nine carriers by market share for compliance with the Commission rule interpreting 46 USC 41102(c) as it applies to detention and demurrage practices in the United States.

 

According to agency Chairman Maffai, "the Federal Maritime Commission is committed to making certain the law is followed and that shippers do not suffer from unfair disadvantages. The work of the audit team will enable the Commission to monitor trends in demurrage and detention practices and revenue, as well as to establish ongoing dialog between staff and carriers on challenges facing the supply chain. Of course, if the audit team uncovers prohibited activities, the Commission will take appropriate action.”

 

Europe

The recent floods in Europe shocked many of us with their ferocity and suddenness, and they have had a major impact on barge shipping. Congestion is occurring on inland waterways due to difficulty navigating and as the flood water subsides the debris left behind is also proving a challenge and making the journey for containers bound for Rotterdam extremely slow. The shipping lines have introduced a Congestion Surcharge for feeder services and barges to Rotterdam, Netherlands.  The duration of the surcharge will all depend on how long the congestion lasts.

 

August also sees major slowdowns in Italy for the annual summer holidays from 13-22 August. Most suppliers and trucking companies are closed during this period, and delays are to be expected particularly in relation to deliveries and cargo collection. On 2, 7, 14 and 22 August heavy vehicles will be banned from travelling on roads at specific times, so please consult with your Client Success Manager or Client Service Specialist about how the limitations on transport and various regional business close down periods in August may affect your supply chain planning.

 

A GRI has also been announced which comes into effect on 1 August of USD 400 per 20Gp and USD 800 per 40GP and USD 20.00 per cbm LCL.

 

The UK

Shipping lines are imposing haulage surcharges for cancellations and amendments as the UK is struggling with landside transport due to the continuing driver shortage. The larger road transport carriers are also responding to this with the introduction of driver retention surcharges in an attempt to keep enough drivers behind the wheel.

 

New Zealand

A recent interview given by Shane Walden from ANL and the Freight and Trade Alliance gave us some excellent insights into the big issues facing shipping lines in New Zealand. Auckland (AKL) is the real pain point for ANL and other carriers due to terminal constraints, skilled labour shortages and repositioning disruptions. Berthing windows have been abolished, and as a result, delays are currently running at between eight and 12 days and it has become very challenging to get vessels back to Australia from NZ. 20% of ANL containers move to AKL port, however ANL has  had to make some changes to avoid further delays and have repositioned containers to Northport and Tauranga to assist in getting vessels back to AU. Mr Walden said that while ANL is seeing some improvements in AKL, the situation will not fully resolve until berthing windows are reinstated.

 

Australia Ports

Mr Walden also had plenty to say about Sydney, currently Australia’s most challenging port in terms of congestion. ANL is seeing delays of up to seven days for its two services berthing at Patrick Terminals, in a large part due to industrial action and due to an ongoing cascade of larger vessels into Australian trade lanes. The delays are causing additional charter costs of up to $350,000 per call for the shipping lines.

 

In addition, imports are booming, and this is putting further pressure on ports, adding to delays and tightening overall capacity. In some cases, this means shipping lines are no longer able to maintain a weekly service, which is reducing the amount of space available considerably.

 

More work stoppages are planned by the Maritime Union of Australia in August, but Mr Walden noted that now the MUA has reached agreements DP World, Hutchison and VICT, Patrick can more easily sub-contract calls and the impact of industrial action should be reduced.

 

Nevertheless, he said, the berthing delays were causing additional charter costs for shipping lines, especially ANL, which charters nearly all its 32-vessel fleet. Another push factor in terms of costs is increasing fuel prices, so overall, with carriers’ costs rising for the foreseeable future, shippers can expect to see prices remain high.

 

New requirements for fumigation certificates for imported goods

 

An update from AXIMA National Customs Manager Gary Brasher

 

If it were not for change, our lives would be boring, right? The Department of Agriculture and Water Resources (previously known as AQIS) have changed the mandatory requirements for statements on fumigation certificates.  One part of a fumigation certificate has been multiple statements indicating whether the goods are wrapped in plastic or not. There are specific requirements to ensure any fumigant gets past the plastic wrap to penetrate the goods and/or the packaging. Fumigators operate within these rules; no change to that; it’s just how it is recorded.

 

We ask you to advise your suppliers that if they arrange fumigation of your shipments, the following fumigation certificate addition be required from fumigators.

 

“The target of the fumigation indicated above has met the Department of Agriculture, Water and the Environment’s plastic wrapping, impervious surface and timber thickness requirements as per Appendix 3 of the Methyl Bromide Fumigation Methodology”.

 

This revised policy comes into effect for shipments exported to Australia after 2 August 2021. Only a few weeks away - not a lot of time. Obviously, the department has never dealt with suppliers before. The department informs us that if a shipment arrives that has not had this statement included, they will order the shipment for an unpack and inspection or re-fumigation.

 

Further reading can be found here.

I am sorry this necessary change comes at a time of incredible upheaval in the shipping industry, it's just another change we all have to deal with.

 

If you wish to discuss this in any way, please do not hesitate in reaching out.

Regards,
Gary Brasher
National Customs Manager

 

Khapra Beetle
 

Tis the season to be on the alert for Khapra Beetle. You can learn everything you might want to know about it in this short video – including where it lives, the damage it can do, why we don’t want it here and who to call if it is found in containers. New measures have come into place from 12 July 2021 including mandatory offshore treatment requirements for all FCL/FCX sea containers packed with all types of goods in a Target Risk Country unpacked in a rural grain growing area of Australia.

 

Let’s talk solutions

 

With so much disruption and difficulty happening both here at home in Australia and around the world, it can be a challenge to find reasons for optimism. But find them we must, and here at AXIMA we do find that having access to real-time information from our global network of offices and suppliers gives us a degree of trust that we can always find a solution to a client’s shipping needs. Flexibility, forward planning, covering the contingencies and looking ahead are all important also to ensure your supply chain success.

 

Perhaps given the current delays and congestion issues you want to bring forward some shipping and plan on warehousing onshore – and that is a conversation you can have with us. In unusual times like these, it is worth considering new ways of thinking about how to reach your end goal of satisfied customers.

 

So, as you look ahead to the coming months of surging customer demand and also the light at the end of the 2021 tunnel, stay in regular contact with your Client Success Manager or Customer Service Specialist and let’s look at your options.