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Important Shipping Update

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India & Australia Finalise Free Trade Deal (ECTA)

Australian Officials confirmed yesterday that the Indian Government has completed its domestic requirements to enable implementation of the Australia-India Economic Cooperation and Trade Agreement (ECTA).

This trade agreement will deliver new market access opportunities for Australian businesses and consumers from 29 December 2022.

Australia finalised its domestic requirements for the trade agreement last week with the unanimous passage the Government’s Bills through Parliament. ECTA is a ground-breaking agreement that brings Australia and India’s economies closer together.

From 29 December, tariffs on 85 per cent of Australia’s exports to India will be eliminated and high tariffs on a further 5 per cent of goods will be phased down. Entry into force of the agreement before the New Year delivers a double bonus of two tariff cuts in quick succession: one as the agreement comes into effect and a second on 1 January 2023.

ECTA will save Australian exporters around $2 billion a year in tariffs, while consumers and business will save around $500 million in tariffs on imports of finished goods, and inputs to our manufacturing sector.

The tariff commitments provided by India in the agreement will open up access for Australia’s exporters of products including critical minerals, pharmaceuticals, cosmetics, lentils, seafood, sheep meat, horticulture and wine.  

Australian service suppliers will benefit from full or partial access across more than 85 Indian services sectors and subsectors. Australian suppliers across 31 sectors and subsectors will be guaranteed the highest standard of treatment that India grants to any future free trade agreement partner. 

Australian services sectors to benefit include higher education and adult education, as well as business services such as tax, architecture and urban planning. ECTA will support tourism and workforce needs in regional Australia by making 1000 Work and Holiday Program places available to young adventurous Indians.

Further details will be released shortly about the certification process and requirements for qualification for any shippers wishing to benefit from the new FTA.

For further details, please contact your Key Account Manager.

China’s COVID Lockdowns Continue

The number of covid cases in China has spiked to record highs this week as officials ordered lockdown measures in major cities, including Zhengzhou, where protests were staged at the largest iPhone factory in the world.

More than one-fifth of China’s total gross domestic product (GDP) is currently under lockdown, according to a report issued yesterday by finance group Nomura.

Hotspots include Guangzhou, Beijing and Chongqing. The report also projected the amount of GDP affected by lockdowns would continue to rise in the coming weeks as China deals with its biggest covid case surge since the start of the pandemic.

Bearish Nomura is forecasting Chinese GDP growth of just 4.3% next year.  Many headlines have been made from Zhengzhou where workers for Foxconn have battled police this week in covid riots. Exports from there are slipping.

Henan province, which is home to Foxconn’s mega iPhone factory, assembled and exported 8.4m smartphones in October, down by 16.9% from 10.2m in the previous month, according to Chinese customs data.

If China pushes back its economic reopening to the first half of 2024, an anticipated recovery in private consumption will be delayed, Oxford Economics’ senior economist Louise Loo wrote in a Friday report. That may knock almost a full percentage point off the firm’s projected growth forecast of 4.2% for 2023.

“Disruptions to household spending and industrial activity may put the brakes on growth and dampen appetite for petrochemical imports,” researchers at Singapore-based Eastport Maritime stated in a daily update today.

China’s zero covid policy has created an industrial slowdown across the nation, the world’s most important country for shipping demand. This has been reflected in China’s dry bulk commodity import demand, which has declined by 4.7% year-on-year to 1.6bn tonnes across the first 10 months of the year.

Blank Sailings Start To Make a Return

As the competition from carriers to keep demand high and try to stabilise the freight market continues, many have resorted to issuing blank sailings and removing capacity from major tradelanes in Asia.

As a result, there is already talk that mid-December a GRI (general Rate Increase) may potentially take place and carriers will try  to push through USD 500 p/teu increase.

This however will only gain traction if demand exceeds the supply and currently there are many other factors contributing to the current market conditions .

As such, a rate adjustment of USD 100 – 200 p/teu seems more likely with many carriers wanting an urgent return of freight rates to 4 digit figures per TEU.

Our team maintains a close eye on the market and will continue to update you as new developments become available.

Brisbane Terminal Turn Around Fees

A timely reminder to importers that 2 out of the 3 Brisbane terminals will only load containers onto outbound trucks with doors facing the rear as their standard process. In cases where delivery sites require containers facing the cabin, a container turn-around fee may be incurred if shipments are imported through DP World or Hutchison Brisbane with this policy.

The fee is to cover the delivery of a container via depot, unload and then turn around before reloading the truck for final delivery.

If the container is imported through Patricks terminal, they will accommodate requests to load containers facing either direction so please be sure to pass on this instruction prior to your vessel’s arrival. 

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