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Henning Harders May Newsletter

Table of Contents

Demand for new warehouse capacity remains high

The industrial property sector in Australia, particularly in Melbourne, Sydney and Brisbane, is facing a challenge due to a significant shortage of available and new warehouse space. 

Driven by increased demand from e-commerce and the logistics industry, the vacancy rates of industrial properties remain extremely low (between 1% -2%) in Melbourne and Sydney. This situation has left investors and developers struggling to meet the rising demand for warehouse space. Additionally, the rising costs of land and construction have made it more challenging to build new industrial properties to meet the increasing demand.

Adding to the issue is the recent supply chain disruptions caused by the COVID-19 pandemic, which has had a profound impact on warehouse demand. With the shortage of available warehouse space, many businesses have been forced to store their inventory in suboptimal facilities, leading to operational inefficiencies, increased costs and unhappy customers. 

The shortage of available warehouse space has also led to higher rental costs, in most cases more than 20% – 30% compared to 12 or 18 months ago in Melbourne and Sydney, making it difficult for small and medium-sized businesses to enter the market. As a result, some businesses may be forced to relocate to less desirable areas or forego expanding their operations altogether, ultimately hurting the economy.

Harders is aiming to meet this challenge head on by offering third-party logistics / contract logistics services with its first Truganina, Melbourne site. The site will accommodate 12,461 pallet positions from October 2023.

Many companies are currently refining their sales and inventory forecasts for the coming financial year and peak period. 

If you need additional warehouse capacity or are not happy with your current third-party logistics provider solution, reach out to your Harders key account manager or sales representative for a confidential conversation.

Our new 12,461 pallet storage facility is currently being built in Melbourne and will be ready to receive customer pallets before this year’s peak season.

Australia – United Kingdom Free Trade Agreement (A-UKFTA) Commencement Date Announced

The A-UKFTA is a comprehensive free trade agreement that will allow approximately 99% of Australian exports to enter the United Kingdom tariff free. Conversely, around $200 million a year will be saved on imports of UK products into Australia. After five years, all UK imports will enter Australia duty free.

The agreement will enter into force on 31st May 2023, with shipments arriving into Australia from that date eligible for preferential rates. To claim the reduced tariffs the importer must hold a declaration of origin. There is no set documentary template for the declaration, but it must include, at a minimum, the following data elements:

  • Indicate whether the signatory is the exporter or producer.
  • Provide the signatory’s name, company name, address, telephone contact number and email address.
  • Provide the exporter’s name, address, telephone number and email address (if different from the signatory).
  • Provide the producer’s name, address, telephone number and email address (if different from the certifier or exporter).
  • Provide the importer’s name, address, telephone number and email address.
  • Provide a description of the good and the harmonised system tariff classification to a six-digit level.
  • If the declaration of origin covers a single shipment of a good, indicate the invoice number related to the exportation.
  • Specify the rule of origin under which the good qualifies.
  • If the declaration of origin covers multiple shipments of identical goods for a period of up to 12 months, state the period during which such shipments will be made.
  • Apply an authorised signature and date and make the required additional statement.

Further information regarding the data elements and required additional statements can be found here.

Henning Harders will continue to monitor the situation and share any pertinent information in the lead up to commencement.

If you have any questions regarding the A-UKFTA, please contact your Account Manager or Harders Advisory.

Hitchhiker Pest Awareness

Hitchhiker pests pose a significant threat to Australia’s biosecurity and agriculture industry. These pests, including khapra beetle, brown marmorated stink bugs and giant African snails, travel to Australia within sea containers, imported goods and other conveyances.

To raise industry awareness, the Department of Agriculture, Fisheries and Forestry (DAFF) has launched a new website. This provides key information on each pest, including how to identify them, where to look and what to do if you detect one.

Protecting Australia’s biosecurity is everybody’s business. With extra vigilance the wider importing community can help spot these unwelcome visitors and prevent their establishment and spread across the country.

Brown Marmorated Stink Bug (BMSB) 2022-23 Season Conclusion

On 1st May 2023, the 2022-23 BMSB risk season ended.

Goods shipped on board or vessels departing from BMSB identified target risk countries on or after 1st May 2023 will no longer be subject to seasonal measures.

Target high risk goods manufactured in or shipped from target risk countries that were shipped on board vessels between 1st September 2022 and 30th April 2023 are still subject to measures regardless of arrival date.

Further information regarding the upcoming 2023-24 BMSB risk season will be released in these newsletters when the Department of Agriculture, Fisheries and Forestry advises industry.

Sea Freight Market Update

Volatility escalates this month as we once again find ourselves at the cusp of a possible rate increase on the North East Asia to Australia Trade Lane, as shipping lines fight to restore unsustainable spot freight rates. Will they succeed in their plight, or will this be another futile exercise?

We have witnessed the market decline to historical lows in April while minimal capacity adjustments were made as carriers were trying to maintain their market share and ensure that any sailings during the May labour day holidays would have enough cargo.

While some carriers have suspended services and others have slowly reduced their supply by changing their frequency in services from weekly to fortnightly and to now monthly this has not been enough to prevent the freight rate erosion. Therefore, more drastic measures to remove capacity had to occur as mounting pressure on high operating costs versus untenable freight rates was dangerously looming. We have been advised that a multitude of blank sailings will be implemented during this month of May, removing over 50% of the supply in the market, and paving the way for rate increases.

With confidence mounting in creating a space shortage, major shipping lines have recently announced their intentions of implementing a Rate Restoration (otherwise known as a RR) or rate increase, which will take effect from May 21st at a quantum of USD 200 – 250 per 20’ container and USD 400 – 500 per 40’ container to apply on top of the current existing spot freight rates on North East Asia to Australia trade lane.

All current factors are pointing to the high probability that the carriers will finally see a high percentage of this quantum be applied however this will continue to be influenced by the current market as weak demand will continue this quarter. 

We need to remind our valued clients that there will be a conscientious effort by all shipping lines to restore freight rates to sustainable levels. Those at the lowest end of the spectrum will be pushing for 100% of the advertised quantum to apply while others will look at specific port pairs and have their own agendas to fulfill.

Understanding what sailing schedules are available during this time will be increasingly important as communication will be key to mutual success.

Our experienced team of professionals is ready to assist to navigate through these challenges and partner with you to ensure your supply chain needs are matched with a price-competitive sailing option.

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