We have had relative stability over the last few months, the first in a very long time. I believe this relative stability is short lived and we should buckle back down for some more rate turbulence. 

Shanghai has fully re-opened and there is now a backlog to clear. Currently there are 260,000 TEU to be cleared out just as peak season starts. This will more notably effect Europe and the USA. 

USA continue to have chassis shortages, dwell delays and like all of us, driver, and staff shortages. Shipping lines have notified more LA omissions so more delays will be experienced. Europe are struggling with capacity as they hold containers bound for Russia due to the conflict in Ukraine. Along with the current strike action in UK it seems no port is safe from its own form of pain.

As an industry we are completely exhausted and over the short-term rate validities and the disappearance of long-term contracts. Online portals are hard work and have delivered nothing but lower levels of service and WAY more issues. Schedules are not reliable, and delays and changes are adding to the additional work operators already have.

Additionally, landside charges are also increasing regularly, empty parks remain congested and continue to experience issues and of course let’s not forget fuel increases!!

Stockwell’s have worked hard to try and put contingencies in place for all supply chain pain points. In response to less available contracts and less space we opened our booking office in April. Just this week we have expanded with new booking operations staff. This area of our business just focuses on space and rates. In just a short time we have seen a great amount of success with our booking office for clients. Our team plans, finds and secures the best and most suitable booking slot for our clients making sure it remains competitive. To get a container on a vessel is taking triple the amount of work (and time) so we will be separating freight bookings and customer service to ensure that they have time to continue to offer the best possible customer service to our clients. Our customers won’t notice the difference as our customer service team always remain their point of contact.

In summary, it’s been a year!! Its exhausting, challenging, frustrating and at times heart wrenching.   Shipping lines continue to have a monopoly on our market, can do what they want, when they want, without recourse or justification and forwarders take on all the fallout and additional charges.

It is good to see customers educating themselves to all of the issues and forming stronger partnerships with forwarders rather than blaming them, working transparently and closely ensures both parties needs are met and there is an understanding on the common goals.  

In closing don’t forget to start your Christmas ordering now, just in time shipping is for dummies and is always late and as we get closer to Christmas freight prices will increase.

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According to reports, the trio say they expect to save ¥50bn ($440m) in costs in the first fiscal year ending 31 March 2019m and thereafter ¥110bn a year.

The synergies will come from personnel consolidation, combining agencies and subsidiaries and a lowest-common-denominator-reduction strategy on port costs and service provider fees.

In their traditional New Year messages to staff today, the presidents of K Line, MOL and NYK, Eizo Murakami, Junichiro Ikeda and Tadaaki Naito, spoke of the advantages of the integration and a “turning point” for their companies.

Mr Murakami said the “spinning-off” of K Line’s container business would “deliver the advantages of expansion of scale”. He expected ONE would “achieve greater competitiveness by bringing to bear the best practices of the three companies”.

Mr Ikeda said the “new business venture” would be a “major turning point for MOL and mark a new beginning”. He added that the MOL group was “transforming itself into an enterprise capable of generating steady profits”.

Mr Naito advised his workforce that the container business integration, along with the acquisition of Yusen Logistics, were “major decisions that will shape the future of the NYK group”.

He said ONE, in which NYK has a 38% stake – compared with the 31% each held by K Line and MOL – would “aim to commence services from April” and that “the difficult work of bringing the company to life is continuing”.

After the merger, ONE will rank sixth in terms of global ranking by capacity with its combined 1.48m teu on 234 ships, comfortably above Evergreen’s 1.1m teu and just behind Hapag-Lloyd’s 1.56m teu. However, with a combined orderbook of some 187,000 teu, ONE could leapfrog Hapag-Lloyd, which has no ships on order.

Nevertheless, a primary function for the new ONE ship planners will be to reduce costs by cutting out duplicated sailings, and there is likely to be a number of charter ships off-hired in due course.

(Reference: https://theloadstar.co.uk/three-japanese-carriers-looking-forward-coming-together-one/)

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The ACCC Report provides information about the operating performance of the container stevedores, as well as the level of competition, investment and productivity in the industry.

It also explores issues affecting the broader supply chain, including road and rail connections to container terminals.

Notable Observations:

• On average across the stevedores, total revenue per TEU fell by 2%, due to increased stevedoring competition on the east coast; the increasing use of 40′ containers rather than 20′ containers; and greater bargaining power of consolidated shipping lines.

• However, the combined operating profit margin (EBITA/revenue) of the stevedores rose 4% in 2016-17 to 17.1% (with the profitability of DP World, Patrick and Flinders Adelaide being significantly higher than Hutchison).

• Unit stevedoring revenue fell by 4.5% to $138.8 per TEU. This decline was offset by a 2% increase in non-stevedoring revenue which now accounts for some 18% of overall revenue.

• Non-stevedoring revenue has become an increasingly important source of income for the stevedores – increasing by 14.9% per TEU in the past ten years, in contrast to a 25.2% decline in unit stevedoring revenue over the same period.

• VBS revenue increased by 12.2% in 2016-17 / Storage revenue rose 16.9% in 2016-17.

• Revenue from non-stevedoring activities is likely to rise dramatically with the implementation of new and increased Infrastructure Charges by DP World and Patrick in Melbourne, Sydney, Brisbane & Fremantle.

• It is estimated that the new Infrastructure Charges will gross DP World and Patrick some $70 million per annum, which is equivalent to a 5% to 6% increase in unit revenues.

• While a justification by the stevedores for the implementation / increase in Infrastructure Charges was increasing costs, the ACCC has noted that overall unit costs for DP World and Patrick are stable.  The ACCC has noted however that the stevedores have faced, or are anticipated to face, higher property prices, government taxes and rates.

• The ACCC has noted that it would appear that the stevedores are restructuring their revenues away from the shipping lines and towards to transport sector.

• The ACCC has expressed concern that transport operators are “limited in being able to switch stevedores in response to higher prices.”

• Shipping lines may now be receiving subsidised stevedoring services as a result of the Infrastructure Charges, with the ACCC noting that “it is possible that the revenues being collected from the transport operators are simply replacing revenues that used to be collected from shipping lines.”

• The ACCC has indicated that it will fully examine the impact of the Infrastructure Charges in future monitoring Reports, and will be interested to see whether the stevedores will be able to demonstrate clear infrastructure improvements for transport operators above and beyond business-as-usual capital works.

• The lion’s share of identified future terminal investment by DP World and Patrick in 2017-18 are for quay cranes, which will benefit the waterside, rather than landside operations.

Reference: Container Transport Alliance Australia, http://mailchi.mp/6a132b95d9ea/accc-container-stevedoring-monitoring-report-2016-17-ctaa-observations

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Immigration Minister Peter Dutton has signed a Mutual Recognition Arrangement with China, in a move aimed at boosting trade between the two countries.

Mr Dutton and Minister of China Customs Yu Guangzhou signed the agreement in Canberra today, enabling the countries’ customs and border protection departments to recognise each other’s Authorized Economic Operator programs.

Australia already has similar arrangements with New Zealand, Korea, Canada and Hong Kong, with MRA negotiations underway with other major trading partners.

“China is our largest trading partner and this arrangement is expected to bring a benefit of $440m to Australia’s economy over 10 years,” Mr Dutton said.

Picture: Kym Smith.

Minister for Immigration and Border Protection Peter Dutton and Minister of China’s Customs Yu Guangzhou signed a landmark Mutual Recognition Arrangement between Australia and China.

He said MRAs reduced the regulatory burden on Australian businesses, and would provide faster and more efficient access to the Chinese market for Australian Trusted Traders.

“This arrangement will provide Australian and Chinese businesses unprecedented access to trade facilitation benefits and will reduce costs for businesses trading between our two countries, while ensuring the integrity of our border,” Mr Dutton said.

“I encourage Australian businesses of all sizes to participate in the ATT program in order to make the most of this exciting opportunity.”

If you would like to find out how to become an Australian Trusted Trader, contact Stockwells at [email protected] or call 1300 786 468 and ask for Angela Gambell

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That was customs specialist and Platinum Freight Management chief executive Peter McRae’s interpretation after reading the latest Australian Border Force Goods Compliance Update.

Mr McRae said the report, alongside the 2015-16 ABF annual report, showed a lack of compliance testing, making for a perfect fraud breeding ground when matched with poor regulation.

He called for improved import audits before the goods were released from Customs.

“If regulation and compliance testing was up to scratch, Scott Morrison might find the money for his budget that he so desperately needs,” Mr McRae said.

He noted the Update stated 2445 cargo reports were examined during the period from July 1, 2016 until February 28, 2017, as a result of the Compliance Monitoring Programme (CMP) which focused on cargo reporting accuracy.

Of the 2445 cargo report audits reported, the ABF found 3% of errors and only three errors in relation to value of goods imported.

Mr McRae noted an average of 306 checks a month.

“Comparing reports, it doesn’t take a genius to see that only hundreds of audits are being carried out on millions of imports landing each month.

“This shows the enormous opportunity for abuse of the system – and the very high chance importers have of getting away with it,” Mr McRae said.

“The Australian government is asleep at the wheel.”

“Underestimating value of goods declared might just be small petty fraud, saving shady importers hundreds of dollars on a single import, but when multiplied over a year, Australia’s revenue loss from under- or uncharged duty and GST is likely to be in the high millions.”

Mr McRae also expressed concern about a failure to adequately certify and regulate cargo, with cargo reports filed by cargo reporters who were untrained, unlicensed employees of airlines and freighting firms.

“Customs compliance needs to be separated from organisational KPIs,” Mr McRae said.

“Cargo reporters working for airlines and freighting companies can be operating under KPI stress that promotes a speedy delivery of goods through the borders at a low cost to the client (the importer).

“Really, this role should be promoting accurate information to assist the correct assessment of duty and GST owed. Regulating the job would improve this.”

(Reference: Lloyd’s List Australia, Australia “bleeding revenue” through petty fraud, May 18 2017.) 

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The 2016 DHL Export Barometer indicates that trade between Australia and New Zealand is likely to continue on the ongoing growth path, with 50 per cent of Aussie exporters expecting demand of export orders to NZ increase in the next 12 months.

Growth outlook for both North America and China is slightly more optimistic, with up to 60 per cent exporters expecting export orders to both regions to increase in the next one year.

The report also reveals that up to 59 per cent Australian exporters perceive China as one of the biggest competitive threats, followed by the United States (29 per cent), India (14 per cent), and the United Kingdom and New Zealand last on the list (12 per cent each).

“Australia and New Zealand have traditionally been very significant trading partners and we have seen very solid growth in shipment volume over the past five years, with double digit volume growth,” Edstein says.

AusTrade data had earlier reported that Australia-New Zealand trade increased at an annual rate of approximately eight per cent since the implementation of the ongoing Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA).

“While exporters see a lot of opportunities in North America and Asia, New Zealand remains one of our most popular trading partners and continues to be an important source of revenue for Australian businesses,” Edstein says.

“The free trade agreement has proven to provide a range of benefits including the smooth transition of goods.

“With comparable markets and business cultures, Australia and New Zealand make ideal export destinations for small and medium-sized businesses that are starting to export internationally.”

(Reference: Australian Transport News, Australian Export Confidence Strong: Report, May 11^th 2017).

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