AXIMA Market Newsletter - September 2021

Market Newsletter - Sept 2021

 

Welcome to the September Market Update.

 

So many aspects of the global pandemic have caused changes in global trade and shipping. As we have seen over the past 18 months, soaring prices, sudden lockdowns, and a dramatic reduction in space availability for sea and air have altered the cost and time equations for supply chains around the world and put the balance of power firmly on the side of the carriers.

 

One - perhaps unexpected – change has been a resurgence in long-distance land transport for international import and export freight. China has been deploying significant effort towards its Belt and Road initiative, and as a result, land transport links between Asia and Europe have dramatically improved. The ‘New Silk Road’ is now becoming a popular way of ensuring goods get from manufacturer to market.

 

Of course, the actual transport has changed dramatically since the days of camel trains and horse-drawn overland cargo, and we suspect Marco Polo would think he was dreaming if he witnessed the goods being shipped now as well!

 

Speaking of goods being shipped, there are some major disruptions being caused by changes in customs requirements for handling and sea or air transport of dangerous goods and hazardous goods. This particularly affects items that contain lithium batteries. Some warehouses and key ports in the USA, NZ and North Asia are no longer accepting them, and this is causing major disruptions to schedules and planning for affected importers.

 

As we head into the critical time for readying the shelves and storerooms for peak consumer season, if your shipments include items with lithium batteries, talk to your Client Success Manager or Client Service Specialist now to ensure your supply chain planning is not compromised.

 

In general, conditions globally remain volatile in terms of pricing, space availability and the potential for disruption. Be assured we are keeping a very close eye on all circumstances that may affect your supply chain success and will always keep you updated.

 

North Asia

 

Xiamen Port is among those currently refusing shipments of some types of dangerous goods, in particular lithium batteries and goods containing lithium batteries such as small consumer electronics, laptops, and mobile phones. The warehouses at Xiamen are refusing to hold them, which in turn means they cannot be loaded on the ships. Our North Asia experts advise it would be preferable, if shipping terms can be changed, switch to FOB Hong Kong, if your suppliers are willing. While this does not guarantee the cargo bookings will be accepted, it is worth speaking to your suppliers to find out if they are amenable to this option, and then speaking with your Client Success Manager or Client Service Specialist about securing space.

 

For LCL ex-North Asia to NZ we are seeing co-loaders rejecting lithium batteries also, as they are taking longer than standard timeframes to accept DG cargo from shipping lines and as a result, incurring additional storage costs at terminals. Because space is in such high demand, some service providers are dealing with the DG goods complication by simply refusing to provide space for it for the foreseeable future.

 

The recent Ningbo Meishan Port closure has had major effects on vessel delays. There was a six-day closure as of 17 August 2021 with 50 vessels at anchorage. Though the port is still in shutdown at the time of writing, ships have resumed berthing, and this gives us some optimism the port may reopen soon.

 

It appears rates have not finished their upward momentum, and the indications for the final quarter of 2021 is freight rates could increase by as much as 100% between now and 31 December 2021. Shipping lines are not issuing rates any further out than 14 days which makes it extremely challenging for importers needing to make forward bookings and price their shipments.

 

Airfreight rates ex China are also on the rise, exacerbated by the COVID-related partial closure of Nanjing Airport earlier in August. This created disruptions for flights into and out of the airport, and flow-on issues for cargo moving to other cities for uplift. The seasonal surge in demand is also seeing airlines generally increase rates ex-China on a regular basis.

 

We are also hearing that shipping lines are considering blank sailings, and as forward bookings remain strong this will almost certainly mean rates will be pushed higher through peak season. A GRI has been announced of USD 500 per TEU and USD 20 per cbm for LCL. Both of these increases are very likely to go through in full.

 

As if soaring freight rates and a ballooning of the amount of spot rate quotes were not enough to make the peak season a challenge, there is an additional consideration emerging for importers and shippers in the form of Container Detention Charges.

 

This rubs salt into the wound of shipping lines not honouring contracts and terms and forcing spot rates onto shippers, because they are now lowering the free time for container hire in the terms and conditions of the spot rates. For many containers, free time begins when the container is discharged from the vessel, however that may not be when the container is available. Therefore, the pressure to collect, unpack and return the container clean is enormous. If that time is exceeded or if the empty container terminal is full and/or the container cannot be de-hired, the importer is hit with the increasing costs. 

 

For Australian importers the key thing to keep in mind is 48 hours (72 hours for Fremantle) notice is allowed to have transport companies collect empty containers. If you need to know more, our terms and conditions can be found here, or contact your Client Service Specialist or Client Success Manager for advice specific to your unique supply chain situation.

 

One final item of note, National Day Golden Week is coming up from 1 October to 7 October 2021, and this will result in closures of offices and other businesses in China for this holiday.

 

 

South East Asia

Where there’s a will, there’s a way and for the South East Asia to Europe trade route, that way is increasingly by road transport as a response to the soaring prices for air and sea freight, delays at transshipment ports and capacity issues at ports. The New Silk Road is proving both cost-effective and looks to be a sustainable option for the foreseeable future.

 

Port congestion remains a major problem in Singapore and Port Klang and looks likely to remain a stumbling block throughout peak season. If you are opting to use transshipment services, ensure your planning makes allowances for possible delays of up to 14 days in vessel connections at transshipment hubs, depending on the shipping line.

 

With demand for space so high, ANL have introduced an Overweight Surcharge (OWS) for containers from Malaysia to Australia on all 20GP containers that have a container gross weight equal to or over 14 tonnes (incl tare). In addition, a GRI has been announced for cargo from South East Asia, South Asia, India Sub Continent and Middle East of USD 200 per TEU and USD 8 per cbm for LCL effective 15 September.

 

As we have reported in recent months, the surge in demand and reduction in space ex-India has caused major difficulties including shippers having possession of stock they simply cannot get out of the port to bring to their market. Please be aware the challenging market conditions are leading to some underhanded dealings, and there have been reports a black market now exists for spot rates. This just underlines the importance of partnering with a provider you trust to secure your bookings.

 

Already the above-board market has seen shippers requesting space for September forward back in early August or before, and we expect the Indian Subcontinent to Oceania market will become even more of a pressure-cooker the closer we get to the Christmas peak. We urge you to not only think ahead and plan ahead but contact your Client Success Manager or Client Service Specialist as soon as possible to ensure you have the space you need at the best possible price.

 

 

North America
 

With no end in sight to the COVID pandemic in North America, driver shortages remain a critical issue. Some companies have now launched major recruitment drives in an effort to solve the problem before the Christmas consumer goods start piling up even higher. There are also labour shortages in other parts of the logistics supply chain having an impact too, including wharf workers, staff at ramps and with warehousing. The resulting degree of chaos is causing some planning headaches for importers and exporters.

 

The USA is another jurisdiction where changes to Hazardous Goods arrangements are having an effect. OOCL have announced they will no longer accept bookings of “consolidated cargo” that contain Hazardous goods, and as CMA CGM share vessel space, this will also be the case for CMA CGM bookings that share container space with OOCL.  This will affect importers of LCL DG goods, so speak to your Client Success Manager or Customer Service Specialist about your options.

 

Prices are also on the move – upwards – with a GRI announced effective 1 September for FCL ex USA, Canada, Mexico, Caribbean and Central America to AU and NZ of USD 500 per TEU. For LCL, a GRI of  USD 30 per cbm has been announced effective 11 September 2021.

Another GRI has been announced for 1 October for FCL of USD 300 per TEU. For LCL, a GRI of US 12 per cbm.

 

Europe

There are two major challenges for shipping in Europe. Firstly, in Germany the Train Drivers Union (UDL) have started striking, While UDL maintains freight and essential goods will continue to move to meet customer deadlines, there is some concern the industrial action may interrupt the supply chain should the strikes be prolonged.

 

Second, the impact of August’s catastrophic floods continues to be felt, with inland waterway feeders to Rotterdam and Antwerp very congested and having a reduced capacity. There is also a lack of berthing capacity at the major ports of Antwerp and Rotterdam which compounds an already problematic situation.

 

Prices remain high, and a Peak Season Surcharge has been announced Ex Antwerp to AU of USD 90 per cbm.

 

The UK

The UK remains congested, drivers remain in short supply and prices remain high. None of this is expected to change at least until into the New Year. One new piece of information to consider, is that details are beginning to emerge of the Australia – UK Free Trade Agreement (AUKFTA) which was first announced on 15 June 2021. You can read a fact sheet here and further information is available on page 14 of the August Goods Compliance Update from the ABF. There will be benefits for exporters of goods ex-AU to the UK. We will keep you updated as more information comes to hand and the agreement moves toward finalisation.

 

New Zealand

Our brethren across the ditch are in a level 4 lockdown which has been extended until the end of August at least. The lockdown may in the short-term worsen the ongoing issue with Auckland Ports congestion. Quite aside from COVID, the suspension of berthing slots at Auckland and Tauranga continues to create havoc.

 

And, just like everywhere else in the world, shipping schedules are subject to change without notice as shipping lines make snap decisions to omit ports. A GRI has been announced for cargo ex Australia to New Zealand effective 1 October 2021 of USD 200 per TEU for FCL and USD 7 per cbm for LCL.

 

Australia Ports

It is very important to have excellent dialogue with your suppliers right now for many reasons, but here’s another one: Patricks Melbourne Terminal are introducing a PONDUS Container Weight Amendment Fee from October.

 

Interestingly, PONDUS is a Latin word for “a weight”. What the fee is about is ensuring there is a price to be paid for having mis-declared container weights that are found to be one tonne or more outside of the VGM. If this happens, a Weight Amendment Fee of AUD 230.00 per container will be charged to the shipper, so ensure you communicate to your suppliers the importance of capturing an accurate weight for the container and include this on your VGM.

 

Goods Compliance Update and Shipment X-Ray Process

 

It seems that with the ABF becoming a more Policing organisation with the departure of the true trade professionals, it seems every time the ABF sends something to industry, it’s another threat...With this in mind, the industry has been pushing the ABF for quarterly feedback on identifying errors and penalties applied by the department. You can read the full update here.

 

Although this Compliance update is written for industry service providers, it certainly provides insight into what is involved in moving and clearing your freight, whether imported or exported. This update is particularly handy as it provides background info on several topics, including export permits, upcoming UK FTA, and a real push for regular importers to become Trusted Traders.  AXIMA is already certified under the scheme, and importers and exporters are also eligible – find out more here.  If you are interested in becoming a Trusted Trader, reach out to Gary Brasher, our National Customs Manager (garyb@axima.com.au), who is a member of the National Trusted Trader advisory group to the department.

 

This is a timely reminder to point out that the import declaration sent with your disbursement is there for a reason; it’s there for you to confirm that the declared information is correct.  If by chance you find the import details are incorrect, i.e., production assists, royalties or commissions, or any shipment-related costs not included, please reach out and discuss.  In many circumstances, additional costs may not be dutiable however they may affect what we declare to Customs.


 

Another aspect of customs requirements to be aware of is the X-Ray process used by ABF to detect any prohibited goods or illegal shipments. This is not a predictable process in terms of which shipments are selected for X-ray, how long it will take (and therefore what delay is caused) and what extra costs or fees may result. There is one way to reduce the complications and risks, and that is to become a Trusted Trader under the Australian Government’s Trusted Trader program. Again, reach out to Gary Brasher, our National Customs Manager (garyb@axima.com.au) to learn more.

 

Khapra Beetle
 

September sees us shift into Khapra Beetle Phase 3 measures, with urgent actions commencing on 30 September. All high-risk plant products moving via sea or air into Australia will need to be treated.

 

Brown Marmorated Stink Bug

Brown Marmorated Stink Bug season is also here, with fumigation requirements applying from 1 September 2021 to 30 April 2022. This means any impervious wrapping of goods must be either removed, opened, or slashed prior to fumigation to allow treatment.

 

Looking after your customers


It is hard to think of anywhere in Australia or the rest of the world that has not found 2021 stressful, unpredictable, and challenging. The pressures have been immense but there is one thing to take comfort from, and that is the way people have been able to work together to overcome adversities.

 

We’ve seen how people in communities reach out to each other, and we’ve watched as businesses have made dramatic shifts in how they operate and how they serve customers. As we approach the end of year consumer peak with some of our largest cities still locked down and many brick-and-mortar stores shut, ensuring people can still obtain the goods they need and want remains a priority.

 

We are always just a phone call or email away to help you ensure your supply chain keeps moving, so you can continue to do business with your customers. Please, stay in regular contact with your Client Success Manager or Client Service Specialist, and together, we’ll keep everything moving.