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Henning Harders October Newsletter

Table of Contents

Bonded Warehouse Update

The Role and Responsibility of a Bonded Warehouse in Australia for Storing Excise Equivalent Goods and Excisable Goods 

In Australia, bonded warehouses are pivotal to the regulatory framework governing excise equivalent goods (EEG) storage, with a spotlight on alcoholic beverages regulated under Section 79 (S79) of the Customs Act 1901 and the Excise Act 1901.

Bonded warehouses are entrusted with ensuring lawful storage and handling of EEG, under the licensing regimes of the Australian Border Force (ABF) and the Australian Taxation Office (ATO).

Bonded Warehouses in Australia

These secure, closely regulated facilities allow goods, including alcohol, to be stored without immediate excise duty or Goods and Services Tax (GST) payment. The stored goods remain in a “bonded” status until cleared for delivery into home consumption or export.

Role of a Bonded Warehouse

  • Secure Storage: The primary function is to offer a secure environment for EEG storage, including alcoholic beverages. Stringent security measures are in place to prevent unauthorised access and protect against theft or damage.
  • Customs Compliance: Bonded warehouses defer the payment of duties and taxes from the time of importation to the date the goods are released into home consumption. Warehouses are obligated to comply with customs related laws, specifically S79 of the Customs Act 1901.
  • Inventory Management: Accurate records and inventory management are vital, with all movements documented and subject to regular ATO audits.
  • Quality Control: Quality control and inspection facilities help maintain the quality of alcoholic beverages, which can degrade over time.

Responsibilities of a Bonded Warehouse for Alcoholic Beverages

  • Payment of Excise Duty: Bonded warehouses are responsible for the safe storage of EEG until duties and taxes are paid or goods are released under periodic settlement permission or are exported.
  • Record-Keeping: Detailed records of storage, movement, and release of alcoholic beverages are maintained and reported accurately to the ATO.
  • Security Measures: Robust security measures are implemented to prevent theft, tampering, and unauthorised access.
  • Environmental Compliance: Environmental and safety regulations are followed to safeguard against potential risks related to alcohol storage.
  • Audit and Reporting: Bonded warehouses cooperate fully during periodic ATO and ABF audits to ensure compliance under both Acts.

Bonded warehouses in Australia play a crucial role in protecting the revenue and ensuring the safety and security of stored products, particularly alcoholic beverages. They provide secure storage, customs compliance, accurate record-keeping, and quality control. For alcohol, responsibilities include meticulous record-keeping, security measures, environmental compliance, and audit readiness. 

If you require assistance with bond storage or bond related services, please reach out to your Harders representative for a confidential conversation.

Air Freight Update

The global air cargo market is still muted and has been flat at a global level now for three months in a row. September produced no surprises, with traditional seasonality pushing up demand over what we saw in August, and we would expect a similar trend in October with less capacity flying around.

We believe it’s not just a matter of moving freight. We provide knowledge of all the options available to you, and we’ll engineer those in a way that best meets your needs.

Harders Advisory Update

Department of Agriculture, Fisheries and Forestry Document Assessment and Inspection Delays

The Department of Agriculture, Fisheries and Forestry (DAFF) continues to experience delays in processing documentation for import assessments.

It is anticipated that in the short to medium term these pressures will remain due to the commencement of the Brown Marmorated Stink Bug season and the challenges faced in attracting and retaining staff.

Industry can assist the department by presenting import documents as early as possible to their broker for lodgement. 

Inspection delays are also continuing, especially for dual-trained officers required for inspection and sampling of food products. Importers have the option of requesting and paying for out-of-hours inspections, subject to availability.

Alternatively, they may also wish to consider applying for a Food Import Compliance Agreement (FICA) with the Department, which allows the importer to self-regulate and handle their inspections and laboratory analysis internally without intervention from DAFF.

For further information relating to these delays and FICA, please contact Harders Advisory.

Further Extension of the Additional Customs Duty on Russian and Belarusian Goods

The Australian Government has extended the additional duty on goods manufactured in, or that are the produce of, Russia and Belarus. This extension is until 24 October 2025.

As previously advised, an additional duty of 35% of the customs value is applied to all imports of goods that are the produce of, or are manufactured in either country, that left for shipment to Australia on or after 25 April 2022 and is in addition to the rates of duty listed in schedule 3 of the Customs Tariff Act 1995.

Further information can be found in Australian Customs Notice 2023-42.

Seafreight Market Update

The shipping industry has faced a series of challenges this month. A significant number of sailings have been cancelled, and MSC and ZIM have made changes to Northeast Asia to Australia trades.

The situation has been exacerbated by adverse weather conditions caused by Typhoon Koinu in Southern China and Taiwan, as well as industrial unrest at DP World Australian terminals.

The aftermath of the Golden Week Holidays has resulted in excess cargo that wasn’t shipped before the holiday due to limited sailings. Urgent cargo is now emerging with only a few windows left for shipping to meet the demand for Christmas and New Year sales.

Shipping lines have finally balanced supply and demand, artificially creating a peak they had hoped for by rationalising supply, and as a result, spot rates continue to rise steeply. Space is now at a premium, with vessels full and rolling.

Based on the current market conditions, shipping lines have successfully implemented rate increases through Rate Restorations.

As a result, they have announced plans to proceed with another increase effective November 1st, 2023, at USD 100 – 150 per TEU. It’s worth noting that this will be the sixth consecutive increase since August.

The Maritime Union of Australia has announced additional industrial action at DP World container terminals in Australia this month due to ongoing contract negotiations for port operations workers. These actions have already had a significant impact on all operations including landside services to road and rail and delays will be inevitable.

On the East-West head haul trades of the Transpacific, Trans-Atlantic, and Asia to North Europe and the Mediterranean rates have resumed their downward slide with a minor drop of 1% as reported by Drewry this week. It is anticipated that freight rates will remain stable in the next few weeks on these larger trades which has been largely due to the shipping lines managing their supply and demand via blank sailings.

There will be a total of 40 cancelled sailings between weeks 42 and 46, representing a 6% cancellation rate out of 660 scheduled sailings. However, service reliability has improved, with an average of 94% of ships expected to sail as scheduled over the next five weeks. 

The fluctuations in freight rates are likely to continue as carriers make changes to their capacity. It’s crucial to maintain effective communication throughout the entire supply chain during this volatile period. Accurate forecasting is also essential for our team to prepare for shipments. 

Shippers are encouraged to seek lead times of three to four weeks from the cargo-ready dates for new bookings.

Our team of professionals will remain dedicated to providing customised solutions to our esteemed clients to tackle the challenges that arise and minimise delays.

Landside Logistics

Major Qantas Freight Terminal Delays 

Late last month, Qantas Freight Terminal suffered widespread system issues which caused significant delays to the release of import cargo. In a released statement, they advised

“Qantas Freight cut-over to a new, fully integrated cloud-based system on 24 September 2023 after many months of testing and validation and following successful releases of the new technology in all regional Australian ports and key offshore terminals.

Unfortunately, our national cut-over did not go as planned which has resulted in delays to processing freight. Whilst we immediately implemented a comprehensive plan to rectify the issues, our recovery has been hampered by system integration complications which required reverting several functions to manual processes. This has created significant backlogs across the key terminals of Sydney, Melbourne, and Brisbane.”.

Industry members reported instances of cargo not being released that arrived on flights as far back as the 22/23 September, spoilt perishable shipments and widespread IT issues impacted cargo identification.

As of 12th October in an updated released statement, they advised

” We’re still on target to clear import backlogs in Sydney by 19 Oct 2023 and Melbourne by 21 Oct 2023. Brisbane is processing small volumes of loose freight which will be cleared once break down is completed. Loose freight in other ports is being processed based on commodity, with priority given to urgent shipments.”

We will continue to monitor this ongoing situation and if you have any questions, please contact our Account Managers.

Industrial Action at DP World

Industrial Action has been back in the news over the past month as the MUA and DP World go through the motions of agreeing to a new Enterprise Agreement. We saw this occur during the pandemic when either by design or coincidental all three main terminals were negotiating Agreements with the MUA around the same time.

This placed additional stress on the already broken supply chain that was weak through this pandemic period.

The industrial action has heated up with multiple stoppages across all DP World terminals, ultimately affecting vessel arrivals and container collections.

Stoppages (around 2hrs at a time during Monday to Friday) are planned to continue for the remainder of October. Landside trucking companies will continue on work arounds to ensure all containers are collected as planned.

If you have any questions please contact your Account Manager.

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