AXIMA Market Newsletter - December 2021


Market Newsletter -

December 2021

Vessel

Welcome to the December Market Update.

 

As we all prepare to draw a line under 2021, hoping for a smoother, more positive year in 2022 is uppermost in many people’s minds. We are seeing some extremely welcome steadying of global shipping prices, and hopefully this is a sign the world-wide disruption to our sector is generally easing for now.

 

It won’t be all smooth sailing. Demand for sea freight remains strong in the lead up to the holiday season and exceeds capacity on some trade lanes. Schedule reliability continues to be sub-optimal, and delays are still to be expected into 2022. Equipment shortages are also still challenging, both in Australia and in key overseas trade nodes, so forward notice of shipping plans remains crucial so your Client Success Manager or Client Service Specialist can support your supply chain success.

 

The Australian Competition and Consumer Commission’s latest Annual Container Stevedore Monitoring Report gives a forensic level of detail about just how tough the past 12 months have been for those relying on the shipping industry. It found prices for sea freight have risen on average seven-fold in just over 12 months, and that only 10% of vessels arrived in their designated berthing window. That means 90% of shipments have been delayed causing enormous pain for both importers and exporters. On top of this, industrial action at congested ports has added further distress and the combined impact has been a multi-directional financial hit for importers and exporters.

 

The report looks in detail at the confounding problem of equipment shortages, with empty container parks overflowing in places like Australia, but containers not available where manufactured goods need to be packed and shipped.

 

The ACCC observed that a contributing factor was consumers shifting their spending during lockdowns from intangible experience-based spending like hospitality to purchases of actual manufactured things. The global shipping industry simply was not ready for the impact that had on container demand. Some importers have been taking matters into their own hands to navigate the shortage, for example, some larger retailers are purchasing their own containers and chartering vessels.  The report is well worth a look!

 

Please keep in mind the Australian Christmas-New Year holidays will be soon followed by the Chinese New Year holidays in February. So, tempting as it might be to down pens and plan your break, if you can take the time to get in touch and start planning for Q1 2022 and beyond, January and February will likely be far less stressful.

 

If there is one thing we all need after the past two years of pandemic rollercoaster it is less stress, and more assurance that we have all our supply chain bases covered! It is also important for our team to know your businesses’ holiday plans over the summer, including dates you are closed and the hours you will be open for container deliveries, so please contact your Client Success Manager or Client Service Specialist this week and let us know.  

 

 

 

North Asia

 

Over the past month sea freight has stabilised, with some lines dropping their FCL rates while LCL shipments have remained steady. In more good news, there have not been any announcements for General Rate Increases for December out of North Asia, so we can hope stability will continue in at least the short term. While the reductions in rate are not substantial, after the constant almost stratospheric price hikes of the past 12 months, any reduction is definitely a net positive!

 

That said, priority/guarantee shipping fees are still in place. Some shipping lines have also increased their Container Detention Fees for the late return of containers, but others are being more understanding of the shipper’s plight and recognise stevedores have contributed to landside delays due to factors such as industrial action, equipment malfunctions and COVID-related labour shortages. The shipping lines that have not increased their Container Detention Fees are at times waiving them or extending free time where necessary.

 

Another thing to have on your radar is OOCL have advised they have ceased bookings from China to Australia and New Zealand for cargo that contain Lithium Batteries until further notice.

 

Shipping lines, ONE and Hapag-Lloyd have warned of suspension to the feeder services in the Pearl River Delta from end of December through to Chinese New Year. The suspension of cargo services to South China with final destination under Pearl River Delta area and Fuzhou will be until further notice. Cargo will continue to be accepted on mainline services Hong Kong, Yantian/Shekou.  This is likely to affect imports to China mainly as exports are expected to keep flowing and be managed from terminals such as Nansha as the alternative.

 

Turning our eyes to the skies, the industry had expected air freight would be in extremely high demand, however, November began with less than expected airfreight volume, so while rates did increase, flights were not full.

 

The Asia to Europe air freight trade lane is seeing increases of USD 1.50 to 2.00/kg overnight, and Asia to America is seeing an increase of 12.00/kg. The reason for the price hike is a combination of peak season and labor shortages at airports due to COVID outbreaks. Through November, congestion was also being reported at air freight nodes in Europe, USA and India. The Airfreight Fuel Surcharge has also increased to HKD 3.30/kg.

 

Given the various challenges in this region, it is important to get in touch with your Client Success Manager or Client Service Specialist in the coming weeks to start planning for Q1 2022 and secure sea or air freight space at the most cost-effective rate.

 

 

 

South East Asia

 

In contrast to the steadying in North Asia, in South East Asia, sea freight rates have increased slightly due to the high demand from major ports. A GRI ex South East Asia ports to Australia has been announced, effective 1 December, mainly due to the booming demand for space and the ongoing problems of congestion at ports.

 

But take heart, there are clear signs congestion is starting to ease and cargo movements are improving somewhat. Let’s hope this trend continues and improves into 2022.

 

But for now, Chittagong Port which is difficult at the best of times, has been affected by recent strikes by truck drivers over diesel price increases. Earlier in November, three vessels departed 1500 TEU short as the containers had not arrived at port as scheduled, and some containers had also missed their feeder vessels. The Government eventually backed down and reduced the price of diesel, and the drivers returned back to work but it takes time to clear the backlog caused by these disruptions.

 

The sea freight situation in India overall has reportedly eased, if only slightly.  Empty containers are being moved from Kolkata to Mundra and Nhava Sheva, and the extra equipment will bring some relief.

 

Indonesia, Thailand, and Vietnam are all facing congestions issues, and the transshipment hubs continue to struggle with congestion. Feeder vessels are offloading containers, but connecting vessels are not always arriving on time for the scheduled loading.  Singapore’s Port Authority was forced to open the storage area of the new Tuas Mega Container terminal to cope with the volume of boxes, and there are flow-on effects of disruption to feeder vessels that are impacting Intra-Asia shipping.  

 

Cosco announced they are taking no more bookings to Sydney as they are omitting calls to the port until the end of 2021. They are also taking no bookings to Adelaide or Fremantle as they try to clear congestion at the Singapore transshipment port.  No DG bookings are currently being accepted either.

 

 

 

North America
 

The recent severe weather has interrupted cargo flows between Vancouver, Canada to most inland areas. This is the second time this year major climate events have upset the trade applecart. In the recent extremes, which included devastating landslides in British Columbia, rail for inland points has been affected and roads were cut. This is anticipated to further aggravate port congestion in Vancouver.  A 14-day state of emergency was declared in November, and it is expected there will be significant and likely long-lasting flow-on delays.  Engineering teams are working to assess the full extent of damage to rail lines.

 

In light of the current market and challenges in Canada, a BC Cost Recovery surcharge (Intermodal LTL) has been implemented on LCL shipments arriving at Vancouver moving Eastbound to Montreal and Toronto.  USD 14.00/cbm will be effective immediately.

 

Meanwhile, in the south, terminals on the West Coast of USA were not convinced staying open 24/7 would be enough to clear the ongoing congestion.  Despite the new operating hours, terminals planned to introduce a new Container Excess Dwell Fee, originally proposed to commence 15 November 2021 if there was no improvement on the clearance of congestion. 

 

However, since the fee was announced, there has been a 26% decline in aging cargo on dock, so the implementation date of the new fee was reset for 22 November.  Again, conditions continued to improve so the implementation was rescheduled for 29 November based on the good response to moving containers more quickly.

We do wonder if in fact the new fee will actually come into effect as the decline of ageing cargo on docks has reduced dramatically. If it does, it will affect cargo that dwells for more than nine days on truck moves or more than six days for rail bound moves.  Your Client Success Manager or Client Service Specialist will be able to give you the latest information on whether this will affect your shipments in any way. 

 

There are still issues around vessel wait times. Mid-November saw over 80 vessels at anchor and waiting times had doubled since September to 16 days.  Long Beach and Los Angeles Ports will be subjected to adjusted Traffic Mitigation Fees from 1 December to 31 January 2022. This means that during this period there will be a financial incentive for containers to be moved during off peak times to and from the port. Air freight is also experiencing some congestion at LAX and JFK airports.

 

Much like the shipping lines, US trucking companies are posting good gains. However, this is not without some struggle - the driver shortage has been estimated at 80,000 persons, even higher than the previous labour shortfall of 61,500 persons. COVID-19 has caused many drivers to retire even while demand has risen. The bottom line here is, supply chain disruptions aren’t set to ease any time in the near future.

 

We have received notification of a GRI on LCL shipments of USD 6/cbm effective 15 December 2021 and MSC have announced an increase of USD 500 per TEU effective 1 December 2021.

 

 

Europe

 

It’s been one thing after another with Europe’s inland waterways and the pendulum has swung from flood-induced issues just a short time ago to new hurdles caused by low water levels. This is resulting in challenges moving cargo via barges to the main seaports. Due to the current low water levels, barges can only carry 27% of their rated capacity, and this means costs are on the up due to demand for space holding firm.  

 

In addition, a Peak Season Surcharge ex Italy to Brisbane and Fremantle will be implemented 1 December  of USD 10 per cbm.

 

 

New Zealand

 

Capacity and congestion continue to be an issue at Auckland. Local transport companies are now applying congestion fees to all import and export container cartage to combat the delays they are experiencing. The transport companies are reviewing these charges regularly and will reduce or eliminate them once the congestion clears, so stay in touch with your Client Service Specialist or Client Success Manager for the very latest intelligence.

 

 

 

Australia Ports

 

The big news item for Australian ports is Port Infrastructure Charges/Time Slot Fees and ancillaries.

 

Form 1 January 2022, DP World will be increasing their Terminal Infrastructure Fee, Time Slot Fees and ancillaries in Sydney, Melbourne and Brisbane terminals.   

 

In response to the announcement Container Transport Association of Australia (CTAA) wrote to DP World requesting clarification including:

  • Why certain fees were increasing more than CPI (currently 3.8%)?
  • Why Terminal Access Fees for full export containers will rise by 18.32%, while full import container fees will rise by only 3.95%?
  • Why VBS slot fees will rise by 8.96%, and what productivity benefits will flow to transport operators to offset this increase?
  • Why the Direct Return of Empty (DRE) Booking Fee will rise by 33.57%, and why a VBS slot for the return of an empty container to a terminal is any different to a normal VBS slot?
  • Address the concern that the No-Show Fee of $222.40 is now a disproportionate penalty for non-truck arrival.
  • Why a Side-Loader Fee was being introduced in Melbourne and Brisbane, given that the consequence is a large disincentive for direct side-loader deliveries from the wharf?
  • Whether the increased revenue from the Chain of Responsibility (CoR) Weigh-in-Motion (WIM) Fee would be used to fix the accuracy (calibration) of the devices?

 

It all seems somewhat opportunistic.

 

Also, the ACCC have reported that stevedores have been earning less from shipping lines and relying on transport companies.

 

So, as we get some answers to the above and learn more, we will continue to keep you updated.

 

 

Pondus Fees
 

In September, we advised of the new Pondus fee being introduced by Patricks Melbourne.  This Pondus Fee will now come into effect for Patricks in Sydney from 17 January 2022.  This will be charged when a container weight discrepancy is greater than +/- one metric tonne within the documented weight (VGM).

 

 

Documentation Changes for Khapra Beetle

The Federal Government has announced changes to phytosanitary Certification requirements in relation to Khapra Beetle for other high risk plant products and the introduction of phytosanitary certification requirements for seeds for sowing  - read the requirements here https://www.awe.gov.au/biosecurity-trade/import/industry-advice/2021/232-2021 The main impact will be delays, which seems to be a recurring theme for 2021.

 

 

Important Customs Update – Potential for Extreme Delays

 

The Department of Agriculture Water and the Environment (Quarantine) have recently reviewed how they assess clearances. Our Industry has endured years of Quarantine’s failure to meet commercial expectations. Quarantine recently admitted to Industry they regularly fail to meet their own (lowball) service standards.

 

Quarantine has recently implemented a new two-tiered system for the processing of import clearances documents. The new system determines that shipment documents lodged with the department two calendar days or less before ETA be defined as “late”. Those that are lodged “late” will now take Quarantine a minimum of four working days to assess and process. Those that are lodged more than two days from ETA will take the priority processing lane...

 

To date, we have experienced up to seven days of delay in documentation assessment processing. Where any delay is foreseen, AXIMA will consider all options to reduce your costs, i.e. moving cargo under bond to a depot to minimise high wharf storage costs.

 

In reality, from most loading ports, we have enough time to lodge documents with Quarantine promptly. The general delay is often an incomplete set of documents where suppliers retain or do not send critical documents like fumigation certificates, packing declarations, Manufacturers Declarations (and FTA certificate of origins) until requested…. Please make part of your default order on your suppliers that they provide a complete set of shipping documents by email to you and cc docs@axima.com.au within five days of shipment.

 

As an example, documents to include:

  • Commercial invoices
  • Packing list
  • Bill of Lading
  • Packing declaration
  • Fumigation certificate / Veterinary certificate (if applicable)
  • Manufacturer’s declaration (if applicable)

 

Our Industry is pushing hard against this new scheme both locally and with Canberra, but we can, for the moment, take this as the new “norm”. However, this is an excellent opportunity to have suppliers take the communication of shipping documents more seriously and not require double handling.

 

As always, the team at AXIMA, from the Client Services team through Operations, Customs and the Cartage team, are always working for your best interests.

 

If you have any questions or would like to discuss any of the above, I welcome you reaching out.

 

Regards,

Gary Brasher
National Customs Manager
03 8368 5352 (direct) or 0418 103432

 

 

The finish line is almost here

 

2021 may have seemed like an endless series of unfortunate and challenging events but it is coming to an end, and we can all start making plans for some much needed down time. As part of your planning for the coming break, do notify your Client Service Specialist or Client Success Manager of your company’s scheduled Christmas closures and also – and most importantly - when deliveries of cargo can be made before those closures.

 

Our AXIMA office will be closing at 2pm 24 December and will be closed on 25 December, 26 December, 27 December and 28 December. We will reopen on 29 December and closing again at 2pm on 31 December through to and including Monday 3 Jan. We will all be back on deck and ready for a new year of working to support your supply chain success on Tuesday 4 January.

 

Together, we have made it through 2021 – and we are hopeful the New Year ahead will prove to have more positives and more success stories for all of us.

 

Stay safe and well,

 

 

Matt Ward

COO International – YKGA