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Henning Harders March Newsletter

Table of Contents

Container Ship Dali Collides with Baltimore Bridge

A container vessel with two pilots onboard crashed into a support pylon of the Francis Scott Key Bridge in Baltimore, Maryland, in the early hours of Tuesday morning, demolishing the 1.6 mile bridge and plunging at least 20 people into the Patapsco River. Authorities described the collision as a “mass-casualty incident” and said emergency services were still searching the river for seven people.

The 2015-built 9,962 teu Dali was less than 30 minutes into its backhaul voyage to Asia, after completing two days of cargo operations at the Seagirt Marine Terminal, when the incident happened.

The vessel was deployed on Maersk’s Asia-US east coast TP12 loop and MSC’s Empire service. Marine cargo insurers, WK Webster, warned Maersk’s customers that delays or loss would be inevitable.

“There is likely to be significant cargo loss and damage as a result of this very serious incident, including to a number of containers which are reported to be hanging from the bridge. It also seems almost certain that the vessel will not be proceeding with the voyage in the near future resulting in serious delays to all cargo on board.”

Vespucci Maritime’s Lars Jensen said the collapse of the bridge would effectively cut off the container terminals and its other cargo facilities. Baltimore handles around 21,000 teu a week, which will now have to be routed via other ports in the region.

“Additionally, this means that the cargo already gated into the Baltimore terminals would either have to wait an unknown period for the sealane to reopen, or be gated out and shifted to a different port,”
said Mr Jensen.

Emily Stausbøll, Market Analyst at Xeneta, remarked:

“The impact of the collision on supply chains will depend on the extent of damage and the duration of repair works. However, it is likely to lead to increased shipping costs and potential rerouting of vessels, affecting transit times and inventory management for businesses reliant on the affected routes.”

Our team will continue to provide updates and impacts to shipping lanes as further details emerge.

Maturation Requirement for Spirituous Beverages

Australian Border Force has released Australian Customs Notice (ACN) 2024/11 to supersede ACN 2007/19.

The notice details changes to importation requirements concerning brandy, whisky and rum, as well as certain unmatured spirits.

In a departure from previous advice, the maturation requirements in s. 105A(1) of the Customs Act 1901 only apply to goods classified under 2208.20, 2208.30 and 2208.40 and are labelled as, described as or intended to enter the domestic economy as brandy, whisky or rum.

Unmatured spirits derived from grape wine, sugar cane or cereal mash that were previously imported under these headings were captured by the requirements of s. 105A(1) and denied entry into Australia.

The onus is on importers and their brokers to declare whether or not the imported spirits are brandy, whisky or rum, and if so to hold sufficient evidence to demonstrate that the goods meet the maturation requirements.

The notice also provides an evidentiary hierarchy that may be used to support the maturation claims, no longer relying solely on certification from the customs and excise authority in the country of export. This evidence may include public advertisements, product labels and similar evidence, however in the absence of official certification, multiple other sources may be requested, rather than an individual source of evidence.

The full ABF customs notice can be accessed here.

If you have any questions, please contact Harders Advisory.

Removal of Nuisance Tariffs

The Albanese government has announced tariff reform that will see the abolishment of almost 500 nuisance tariffs in a bid to boost productivity, reduce costs to businesses and to ease the cost of living for Australian families.

Import tariffs on items including toothbrushes, hand tools, refrigerators, dishwashers, clothing and menstrual and sanitary products are among those set to be removed from 1 July 2024.

The cost to budget has not been announced, owing largely to the fact that the plan is subject to consultations. The invitation to comment is open until 1 April 2024 and can be accessed here.

Further updates will be provided in future newsletters as information is released.

Seafreight Market Update

As we move towards Quarter Two, the market conditions are expected to remain volatile on the Asia to Oceania route. Demand is expected to ease during the traditional off-peak period, also known as the “slack season”. 

Earlier this month, we saw a strong return in the market as demand indicators were positive, and Chinese factories resumed production after the long Chinese New Year holidays. 

This resulted in stabilisation of carriers’ spot rates. However, we are now starting to see a decline in rates as demand begins to soften. To prevent rates from declining to unsustainable levels, shipping lines will continue to balance their supply in line with demand. They will remove capacity via blank sailings, particularly on the Northeast Asia to Australia and New Zealand trade lanes.

We have received information that there will be five cancelled sailings in the first half of April, which will affect all consortiums on the Northeast Asian routes. This will result in the removal of over 20,000 TEUs from this trade lane during this time and will represent more than 50% of the total capacity in this trade lane. This is a significant reduction in supply in the market, and as a result, carriers may become more confident in pushing the freight rates back up to the levels seen prior to Chinese New Year.

Major shipping lines have announced that they plan to implement a Rate Restoration (RR) from April 15th, 2024. The RR quantum will be USD 300 per 20’ and USD 600 per 40’ for both dry and reefer cargo shipments from Northeast Asia to Australia.

Next month, demand may outpace available supply due to the removal of capacity via the cancelled sailings, and, as a result, shipping lines may be able to achieve these rate increases. 

Our team of Key Account Managers will be available to customise solutions to meet your supply chain needs to ensure you have access to competitive and reliable options.

Vessel Attacks Continue in the Red Sea

A merchant vessel has been damaged in a missile strike in the Red Sea off Yemen as the Iran-aligned Houthi rebels threatened to expand their attacks on shipping which have severely disrupted global trade.  The vessel has sustained some damage however the crew was not injured and the vessel was able to continue its journey after the incident west of the rebel-held port of Hodeidah on Friday the 15th of March.

The Houthis did not immediately claim responsibility for the attack, which comes as its leader, Abdul Malik al-Houthi, said the group’s operations targeting vessels will escalate to prevent Israel-linked ships from passing through the Indian Ocean towards the Cape of Good Hope in South Africa.

“Our main battle is to prevent ships linked to the Israeli enemy from passing through not only the Arabian Sea, the Red Sea and the Gulf of Aden, but also the Indian Ocean towards the Cape of Good Hope. This is a major step and we have begun to implement our operations related to it,” al-Houthi said in a televised speech. The Houthis have been attacking ships in the Red Sea and Gulf of Aden since November in what they say is a campaign of solidarity with Palestinians and against Israel’s continuing war on Gaza.

Months of Houthi attacks in the Red Sea have disrupted global shipping, forcing carriers to re-route to longer and more expensive journeys around Southern Africa with the recent attack a sign that the disruption to shipping through the Red Sea is far from over.

Airfreight Update

The rapid rise of e-commerce, disruption in ocean shipping and supply chain diversification are some of the main drivers of air cargo demand in the current market.

Global air cargo volume is up by +10% YoY vs Feb’23, mainly boosted by pre-Lunar New Year combined with Middle East disputes.

Strong growth in air cargo traffic from China in early 2024, as shippers rushed to get goods shipped before the Lunar New Year (LNY) period.

Worldwide air cargo capacity remains sufficient in most regions.

Increasing expectation of market normalisation continued to drive the shift towards long-term contracts.

Another market that has seen rapid growth over recent years is perishables. Let us know well in advance for all your perishable movement.

We have weekly consoles from USA, Europe, China, and South Africa into AU. Please contact our team of supply chain professionals who will continue to provide you with the most competitive options to support your supply chain needs.

Harders Contract Logistics: the journey to enhancing efficiency and environmental responsibility.

Harders is actively implementing initiatives to reduce our environmental footprint while enhancing operational efficiency. These initiatives at our 5-star green-star built site to support our sustainability goals and contribute to cost savings as we continue to build our brand. 

LED lighting consumes significantly less energy than traditional fluorescent lighting while providing superior illumination. According to recent studies, LED lighting can reduce energy consumption by as much as 75% along with lower carbon emissions. This along with the translucent roof sheeting (skylights) which covers some 20% of the roof, and light zoning, means that the lights only turn automatically when required.

Another impactful initiative is the installation of a solar panel system on the warehouse roof. Solar energy not only reduces reliance on conventional energy sources but also offers long-term cost benefits. A report by the Solar Energy Industries Association states that the cost of solar panels has decreased by over 70% in the past decade, making it financially viable to harness the sun’s natural energy to efficiently power the site and contribute to a cleaner environment. 

As a result of these initiatives, during the current period, Harders Contract Logistics sold more kilowatt-hours back to the grid than has been consumed onsite.

By leveraging advanced technologies such as route optimisation software and GPS tracking via Transport Management Systems, our distribution partners are streamlining transportation routes and optimising backloads. This not only reduces fuel consumption and greenhouse gas emissions overall but also improves delivery timelines and customer satisfaction. Recent studies show that optimised routing, backloading and load optimisation can lead to fuel savings of up to 20%, making it a significant driver of sustainability.

Implementing recycling programs for materials such as cardboard, plastic, and paper helps reduce landfill waste and promotes a circular economy. According to the Environmental Protection Agency (USA), recycling one ton of cardboard can save up to 17 trees and reduce greenhouse gas emissions by 46%. By Harders partnering with recycling facilities and adopting waste reduction strategies, we are minimizing environmental impact.

Studies show that switching to sustainable packaging not only reduces waste but also enhances brand perception among environmentally conscious consumers. According to a survey by Nielsen, 73% of consumers are willing to pay more for products packaged sustainably.

These sustainability initiatives are not just about environmental stewardship; they also yield tangible benefits. Reduced energy consumption leads to lower utility costs, while optimized transportation results in fuel savings and operational efficiencies, attracts environmentally conscious clients, and fosters a culture of innovation within the organization.

Harders is driving positive change with initiatives demonstrating a commitment to environmental responsibility while improving business outcomes. By continuing to prioritise sustainability, together we can create a greener, more efficient future.

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