Table of Contents
Spot Rates Update
Global economic pressures affecting worldwide demand are causing volumes to decline which continues to put pressure on freight rates. Worldwide indices depict an approximate fall of 57% in the spot market rates in comparison to figures this same time last year.
There is certainly no hint of any rate stabilization in 2022 and all factors are pointing to increased downward trend at a more rapid speed from China than any other trade which is expected to continue well into Q1 of 2023.
The overall Shanghai Containerised Freight Index (SCFI ) spot rates declined by almost 10% in comparison to last week. In the last month, the index has reportedly seen a drop of 33%.
With Golden Week Holidays in China upon us there has been a lack of build-up in volumes and the rush to ship cargo has certainly been missed this season!
There is no doubt the steadfast decline in the spot market is sending shock waves across industry as long-term contracts are under pressure in what is now a market that is turned on its head as we are experiencing high volatility in a non-traditional peak season.
It must be said though that the 5-year average still depicts current rates remaining stronger than pre COVID 2020 levels. The question now is will the shipping lines be forced to take capacity out of the market on Oceania trades to void sailings as they are currently doing in the larger Transpacific / Trans-Atlantic trades where Drewry reported over 118 cancelled sailings to try and minimise further erosion of freight rates.
As the market continues to fall shipping lines are already feeling the pinch with reported cancellation of newbuilds, falling second-hand containership sales and purchases.
As we have seen in the past the current market conditions can change very quickly if supply is controlled and services are re-engineered to suit their needs. This may affect port calls and frequency of services and will continue to put pressure on freight rates which will set the benchmark for the 2023 contract period.
Landside Logistics
With scheduling delays still occurring with our shipping, a phenomenon known as vessel bunching continues to inflict pain on our landside transport providers. This occurs when vessels arrive within a short window of time causing providers to evacuate larger numbers of containers from the terminal with limited slots and delayed turnaround times.
Initially during the pandemic this effected Fremantle port but is now being seen in the east coast ports.
Coupled with vessel bunching is the arrival of larger vessels coming into each port around Australia. Without the relevant infrastructure to cope with these vessels and the increased activities around our ports, congestion and delays will be a common occurrence.
It’s important to understand your agreed number of free detention times provided by the shipping lines. Most shipping lines will start the clock on free time from the day the container is offloaded from the vessel. If the container comes off the vessel on a Friday evening and the transport provider is not able to collect until the Monday, already three days are used with very limited time to have deliveries turned around and container dehired.
With congestion at our ports continuing to be a major disruptor in the supply chain, container detention will be a penalty that importers need to consider when costing shipments. We encourage our customers to discuss this with their Account Manger to gain a better understanding of how this cost can be limited.
Empty Park Update
The situation with Empty Parks at capacity across all main ports within Australia is still at a critical junction. Higher volumes over the past two months, caused by scheduling issues and vessel bunching has impacted the already frail system. In Sydney most parks are now at capacity and once again trucking companies are forced to hold onto empty containers until space becomes available. By block stacking containers, older containers with higher risk of detention are quickly buried and difficult to move out. This situation occurs not because of the perceived inability from the truckers but lack of space and planning which purely lies with the shipping lines.
On a more positive note, a new empty container park in Sydney with a capacity of 6000 containers is currently under construction. This is due to be completed sometime in 2023 and go somewhat into alleviating congestion and capacity issues.
Container Transport Rate Increases
Container road transport costs continue to increase due to several factors:
– Rising fuel and additive costs – Fuel surcharges have considerably increased over the past six months. These are very transparent however what we don’t see is the cost of fuel on other equipment used by transport companies. Fuel has risen over 40% in the past 12 months alone and these high costs will continue into the foreseeable future.
– Road transport operators were unable to claim Fuel Tax Credits for on road diesel use when the government of the day halved the Fuel Excise rate for petrol and diesel. This inhibited the operators to pass on any reduction in fuel levies which most of us enjoyed as we filled up our vehicles. This will now change again now the government fuel subsidies have ended.
– Labour and skills shortages has like many other industries has impacted the transport sector. With labour in demand comes higher wages which impacts transport providers.
– Spare parts and equipment shortages including vehicles, reach stackers and forklifts are severely being impacted by delays within the supply chain.
Increase in base rates across the country have ranged between 8-10% on transport alone and similarly with warehouse costs. With CPI increasing 6.1% to the June quarter, Transport companies have been quick to implement rises to cope with increasing inflation.
Importation of raw milk cheeses from the United Kingdom
The Department of Agriculture, Fisheries and Forestry has notified industry that effective from 20th July 2022, twelve kinds of raw milk cheese can be imported from the United Kingdom if accompanied by the correct health certificate ‘Export of Raw Milk Cheese to Australia Health Certificate’.
The following cheeses are included:
- Appleby’s Cheshire
- Appleby’s Double Gloucester
- Hafod
- Isle of Mull
- Keen’s Cheddar
- Kirkham’s Lancashire
- Lincolnshire Poacher
- Montgomery’s Cheddar
- Sparkenhoe Red Leicester
- St Andrew’s Anster
- St Andrew’s Cheddar
- Westcombe Cheddar
Please contact your Key Account Manager if you require further information.
Change to documentary requirements for importation of non-retorted fresh and frozen berries and pomegranate arils
Importers of berries and pomegranate arils should be aware of changes to import conditions that will apply from 9th November 2022.
Ready to eat berries and pomegranate arils that are fresh or frozen and not retorted must be covered by food safety management certificates. The department will verify and maintain a record of all valid certificates which will be referred to when assessing import documentation for consignments arriving from the above date.
Copies of third-party food safety management certificates or recognised foreign government certificates must contain certain data requirements and be submitted prior to arrival of consignments. Further information can be found in Imported Food Notice IFN 03-22.
Department of Agriculture delays with import permit assessments
The department has issued a notice to industry advising of lengthy delays with permit assessments for some plant-based commodities:
- Stockfeed, stockfeed ingredients and stockfeed additives
- Pet food, pet food ingredients and pet food additives
- Aquaculture feed and aquaculture feed ingredients
- Fertilisers and Bioremedial products
- Baits
Current approximate minimum assessment times are:
- Minimum 12 weeks for permit assessments
- Minimum 16 – 20 weeks for desk audits
Importers of the above commodities should factor these estimated timeframes into any permit applications or renewals as goods arriving into Australia without a permit will be directed for re-export or destruction.
Spanish sheep and goat pox outbreak
The Department of Agriculture, Fisheries and Forestry has removed Spain from the list of countries approved for ovine and caprine fluids and tissues and the sheep pox and goat pox free country lists in response to reports of an outbreak of sheep and goat pox.
Permit holders should already have been contacted by DAFF to explain how the changes affect them and have issued a varied permit. Importers are advised when planning an import of goods under a permit that references either of the approved country lists, to contact DAFF as soon as possible to discuss options.
For further information please contact Harders Advisory.
Duty Drawbacks Reforms
Owing partly to a few high-profile cases through the court system, Australian Border Force has determined that changes are required to Part 7 of the Customs (International Obligations) Regulation 2015. The changes are listed below.
- Provide clarification regarding the record keeping requirements for drawback claim goods.
- Remove ambiguity related to tobacco and tobacco products re-landed in Australia.
- Remove ambiguity around the value of exported goods by changing ‘free on board price’ to read ‘free on board export price’, assisting claimants to verify eligibility that their goods meet the 25% threshold.
- Align the lodgement timeframe of one year for duty drawback claims currently in place for tobacco and tobacco products with alcohol products to allow consistency for excisable and excise equivalent goods.
- Insert the pre-export notification requirement for tobacco and tobacco products from ACN 2020/44 into the Customs (International Obligations) Regulation 2015, and expand the requirements to alcohol. Other goods may be added if ABF deems the risk of non-compliance with duty drawbacks to be high.
Please contact Harders Advisory for further information.