Industry Update – April 2021
Attention: Shipping Manager
Sydney Port Congestion Surcharge Withdrawal
Finally, some good news! Shipping lines that introduced this charge last year have announced the subsequent withdrawal of Sydney port Congestion charge. Dates mentioned for the withdrawal have varied but an example is below:-
Hamburg Sud – Effective from March 15th sailings
ANL/CMA – Effective for cargo loaded from March 17th
Hapag Lloyd – Effective for bookings received from March 22nd
Maersk – Effective from March 15th sailings
MSC – Effective for bookings received from March 11th and for some trade routes, from 9th April 2021.
All-Cargo Screening coming in 2021 for airfreights from USA
In the ongoing effort to keep passenger and cargo aircraft flying safely, additional international screening requirements will be implemented this year on cargo flights from USA.
From July 1, 2021, 100% of international all cargo flights, will have to have the same level of screening as cargo shipments on passenger flights.
What does this mean?
- All international cargo will require screening prior to flight
- The added screening may cause terminal congestion at carriers across the USA
- Earlier cutoffs due to screening requirements
- Added costs to cover the screening and additional handling
Industry has been preparing for this for over a year to accommodate the changes. Our airfreight agents have certified cargo screening facility certifications and are well placed to handle these new regulations.
Situation in USA and Canada:
As advised in our previous notices, USA is facing major congestion and challenges at both, East and West Coast. Ports in South Carolina such as Charleston handled record volumes during the month of March and the volume was 34 % higher year over year (Source – American Shipper). Similar volume increases were seen at the port of Savannah which reported its all-time high in March. In line with the ongoing increases, Georgia Port Authority recently approved projects to increase container handling capacity by 20% over the next year to cope up with the volume increases (Source – Georgia Ports). On the West Coast, Long Beach port broke its own record of December in terms of the total container volume handled in a given month and as of mid-April, there were about 20 ships at anchor outside the Long Beach port (Source – Freight Waves). Such an increase is unprecedented, given the fact that the month of March is generally slower. One of the West Coast shipping lines have implemented a Booking Administration fee of 50 USD per booking to cover some of the additional costs. Demand for US Imports is expected to stay at these higher levels for the foreseeable future.
The effect of COVID-19 and increase in import demand is also being faced by US rail network, which has faced major challenges over the past six months. The volume handled by rails increased by more than 14% in March 2021, compared to the same time last year (Source – Association of American Railroads). There are frequent delays, last minute changes to rail schedules, embargoes on excess freight, receival window changes and backlog of containers in various USA inland hubs. This is also adding pressure on the trucker availability, which itself is quite limited, as the entire chain is being impacted by the ongoing crisis. Shortage of laborers at ports, rail depots, container yards etc. due to COVID related restrictions in USA is putting significant strain on the overall supply chain network. Over the last few months, we have seen various delays and frequent booking rollovers due to trucker unavailability and last minute problems.
In addition to sea freight, Air freight is also experiencing major challenges. Air freight demand has been on the rise since the start of pandemic, as normal passenger flights cancelled and the capacity was reduced. Problems with the sea freight are also enhancing the demand for air freight. Qantas now has a backlog of about 100 Ton cargo in Chicago. Similarly, other airlines are also experiencing space issues and the rates have constantly increased over the last couple of months. Air freight situation has deteriorated since our last update.
In Canada, the situation is similar to USA. There are frequent vessel delays, booking rollovers and rail disruptions. To make the matters worse, Labor Unions have given notice to Montreal Port Authorities of their planned Industrial Action starting at 7 am, Monday 26th April. The strike will last for 72 hours during which the port operations will stop. Rails have also stopped taking containers destined to Montreal Port. Due to these strikes, we experienced a few booking cancellations over the weekend.
Situation in Europe:
Space availability from Europe is extremely limited. Vessels are overbooked and the recent Suez Canal issue has further worsened the situation. Some of the carriers have limited the bookings to Australia as a result of congestion in Singapore and Port Kelang. There are reports of equipment shortages in North Europe, particularly in Germany, Austria, Switzerland, Hungary and Czech Republic. One of the FCL carriers have implemented an empty pickup window of 6 days prior to departure, for the release of empty containers. The space/equipment situation is likely to remain extremely tight over the next few weeks.
Over the course of last month, we have also seen a constant rise in rates where carriers have implemented significant General Rate Increases and Peak Season Surcharges from various parts of Europe. LCL rates have also seen a significant surge, particularly from Italy, Belgium, Spain, Netherlands, UK, Germany and France. These increases have been from 12 USD to 30 USD per w/m.
In addition to the above, UK’s exit from European Union have now introduced additional security requirements demanded by EU ports. Since most of the shipments ex UK call at EU ports en route, these additional requirements are increasing the transit time for LCL’s and causing some delays.
Impact of Suez Canal Blockage earlier this month:
Earlier this month, the blockage of Suez Canal choked the flow of vessels between Europe and Asia. This blockage had various impacts. Vessels coming from Europe to Australia and South East Asia were delayed and as a result, all future vessel schedules were disrupted. Ships had to take the longer route, all the way around Cape of Good Hope in South Africa, stretching the transit times. The flow on effect of these extended transit times and delays was seen in freight rates from China which started increasing again and the situation with empty containers there worsened. Most of these European vessels had empty containers which were supposed to arrive in China, get loaded and exported back to Europe, USA and other parts of the world. These didn’t arrive in time and as a result, freight rates from China started increasing. There is still a shortage of 40’ HC containers there and some shipping lines are implementing an empty container release window in various ports of China and Hong Kong, only allowing empty release 5 days before vessel’s ETD.
To overcome the equipment shortage issues, Hapag Lloyd have recently invested more than half a Billion dollars, ordering 150,000 new containers. Delivery of these containers will take quite some time but it’s a positive development.
Situation in Asia:
Equipment situation in China has once again deteriorated. Our partners have advised that due to the Suez Canal blockage earlier this month, they are experiencing equipment shortages, particularly for 40’ High Cube Containers. Some of the carriers have cancelled many 40’ HC bookings and have offered customers the option to change their bookings to 40’ GP containers instead. Our partners think that the situation will last for the next few months as 40’ HC are mainly being used for USA and European markets. Note that there will be labor day holidays in China from 1st till 5th May and some of the vessels during this period are already overloaded.
Situation in South East Asia, particularly Singapore and Port Klang still remains congested. Vessels are over booked and space is tight. Congestion at these ports is also affecting many other services which transship via these South East Asian Hubs. Some of the carriers have started implementing booking cancellation fee for shipments from Vietnam, effective 1st May 2021, if these are cancelled 4 working days before the port cut-off.
India is experiencing the worst COVID-19 outbreak since the start of this pandemic. Daily reported cases are consistently well over 300,000 since the last week. It is expected that the authorities will soon lockdown major cities in order to contain the virus. Please expect delays both in terms of inland moves and sea freight moves from India. Space is very limited and vessel schedule changes are quite common.
Please plan well in advance if you plan to ship from any of the above regions.
General rate increase ex US East Coast and Gulf Coast to Australia/New Zealand:
A general rate increase will be implemented on exports from US East Coast and Gulf Coast to Australia/New Zealand, with effect from 1st May 2021, as below:-
USD200 per 20GP
USD400 per 40GP/HC
LCL will increase by USD8w/m
Another carrier, MSC introduced this GRI on 8th April from both US coasts to Australia and New Zealand.
US East Coast to Australia – Panama Canal Adjustment Factor:
One of the direct carriers, which operate from US East Coast to Australia have recently implemented a Panama Canal Adjustment Factor due to the ongoing issues, effective 8th April 2021. The advertised amount for this charge is as follows:
USD 25 per 20’ container
USD 50 per 40’ container.
Note that this is in addition to the normal Panama Canal Surcharge charged by various shipping lines which transit through the canal.
General rate increase ex Canada west coast to Australia/New Zealand:
A general rate increase has been announced for exports out of Canada West Coast, with effect from 1st May 2021, as below:-
USD100 per 20GP
USD200 per 40GP/HC
LCL will increase by USD4w/m
North Europe and Mediterranean to Australia Peak Season Surcharge:
We have been advised of a Peak Season Surcharge effective 11th May 2021 for all cargo from North Europe and Mediterranean to Australian ports as follows:
USD400 per 20GP
USD800 per 40GP/HC
For reefers, this surcharge is higher.
LCL Peak season surcharge/GRI will apply accordingly. Over the last few months, increases have been enormous from all across Europe. Limited space availability, equipment shortage, increased demand, congestion in Singapore and Suez Canal blockage have all been the primary causes of sudden surge in LCL rates.
General Rate Increase from UK to Australia/New Zealand:
Announcements were made in relation to a rate increase from the UK to Australia, effective from the beginning of April. The increases were:-
USD500 per 20GP
USD1000 per 40GP/HC
LCL will increase by USD20w/m
General Rate Increase from Australia to New Zealand:
Shipping lines operating from Australia to New Zealand have announced a general rate increase from the beginning of April as below:-
USD100 per 20GP
USD200 per 40GP/HC
LCL will be applied accordingly.
New Zealand to Australia General Rate Increase:
We have been advised of a General Rate Increase effective 1st May 2021, for all cargo moving from New Zealand ports to Australian ports as follows:
USD 100 per 20’ container
USD 200 per 40’ container
LCL will be applied accordingly.
North East Asia and South East Asia to Australia General Rate Increase:
Shipping lines operating in NEA and SEA to Australia trade route announced General Rate Increase effective 15th April 2021 for shipments from Korea, China, Japan, Hong Kong, Taiwan and South East Asia to Australian ports as follows:
USD100 per 20GP
USD200 per 40GP/HC
For LCL, this is advertised as 4 USD per w/m
Sydney Empty Container Parks – Peak Time Surcharge:
DP Logistics empty container park 1 and empty container park 2 have now introduced a Peak Time Surcharge of 25 AUD per container, for containers dehired between 5 am and 4 pm Monday to Friday. This surcharge is only applicable to these two empty container parks and came into effect on 19th of April 2021.
Melbourne Port Infrastructure Surcharge Increase:
Melbourne Port Infrastructure surcharge will increase again slightly, effective 1st of May 2021. The updated port infrastructure surcharge in Melbourne will be 155 AUD per Container after this date.
Fremantle Time Slot and Empty Park Fee Increase:
Since the beginning of April, empty container park Fee and Time slot booking fee in Fremantle have increased. The updated surcharges in Fremantle are as follows:
Time Slot Fee – 55 AUD per container
Empty Container Park Fee – 40 AUD per container
We will keep you posted with further updates.