News
Industry Update – February 2022
Supply Chain Disrupted by COVID-19 Omicron Outbreak
The international supply chain has been further impacted by the recent surge in COVID cases with the Omicron variant being reported across the world. We are seeing all divisions of the logistics sector severely affected as there are major labour shortages across the industry due to the increasing number of truck drivers, terminal/yard operators, and office staff testing positive or being a close contact.
The diminished available workforce coupled with the continued extremely high volume of import and export containers has put huge pressure on the supply chain and rising operational costs. Staff shortages are estimated at approximately 50% of the industry.
In Australia, the Omicron wave has affected the freight industry adversely, causing congestion at trucking depots and delays to the release of cargo and imports, resulting in problems with transport schedules, getting timeslots, empty containers returning to nominated yards. Transit delays are between 3 to 10 business days for road services.
The Airfreight market has also been facing various challenges due to the rapid global spread of the Omicron variant. Cathay Pacific has recently announced a substantial reduction to their cargo long-haul freighter capacity, including to Australia and New Zealand as a result of the latest aircrew quarantine measures imposed by Hong Kong’s government. We are anticipating similar decisions from other airlines, which will have a significant impact on the supply chain and consequently result in rising freight rates.
The current supply chain chaos is expected to last at least throughout 2022.
Regional Comprehensive Economic Partnership
RCEP is a regional free trade agreement that will complement and build upon Australia’s existing free trade agreements with 14 other Indo-Pacific countries.
RCEP entered into force on 1 January 2022, for ten countries, Australia, New Zealand, Brunei Darussalam, Cambodia, China, Japan, Laos, Singapore, Thailand and Vietnam, with Australia as an original party. RCEP entered into force for the Republic of Korea on 1 February 2022 and will enter into force for Malaysia on 18 March 2022.
It is a modern and comprehensive free trade agreement covering trade in goods, trade in services, investment, economic and technical cooperation, and creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and medium sized enterprises.
Deliveries to our Chicago warehouse facility
Deliveries to our Chicago warehouse facility now require an appointment. Please ensure your shippers contact our head office before arranging any deliveries to this facility so an appointment can be arranged.
Deliveries without an appointment are likely to be turned away.
China added to BMSB Emerging Risk Country List
The Department of Agriculture, Water and the Environment has recently issued Import Industry Advice Notice 20-2022 advising of the Addition of China to the Brown Marmorated Stink Bug (BMSB) Emerging Risk Country List for the remainder of the 2021-22 BMSB season.
The increased random inspection activities will apply to the following goods:
- Goods manufactured in, or shipped from China and,
- FCL / FCX containers – for goods shipped in sealed 6 hard sided containers and,
- Goods tariffed as Chapters 39, 68, 69, 70, 73, 84, 85 and 89.
LCL / FAK containers and breakbulk goods (including those shipped on flat rack or in open top containers) are out of scope for increased inspection activities.
In scope containers, as identified above, will be selected at random and will be directed for an ‘Inspection – Seals Intact Inspection’ at a Class 1.1, 1.3, 2.1 or 2.2 Approved Arrangement.
Please refer to the following link for further information – https://www.awe.gov.au/biosecurity-trade/import/industry-advice/2022/20-2022
Situation in USA and Canada:
- Port Congestion – Service delays, limited space/equipment
Port congestion in the US, which significantly worsened in the second half of 2021, seems to have temporarily peaked. However, according to industry experts, it is still too soon to tell whether it is just a reprieve before the next runup or the beginning of the end. The number of container ships waiting for berths off Los Angeles/Long Beach ports dropped to 78, down 28% compared to January’s record, the lowest in the last 3 months (Source – American Shipper).
Nevertheless, average transit time for shipments to/from the US has risen to double pre-COVID levels, and they continue to increase due to large import volumes and major labour/equipment shortages across the industry. The ongoing congestion is still causing berthing delays in west coast ports. Current delays at the ports of Los Angeles/Long Beach are 25-30 days, and are between 7 to 10 days at Oakland and Vancouver ports.
In addition, container shipping in the US continues to experience a severe shortage of inland truckers. Shipping lines are not offering to/from door services due to limited trucking capacity, which makes shipping in the US extremely challenging.
- Airfreight market – Staff shortages, backlogs
The current staff shortages and backlogs are being felt across the global air cargo market. All airport cargo terminals, airlines, freight businesses and transport companies are having significant service delays. The situation is expected to deteriorate over the coming months with a possible peak of COVID cases.
Situation in Europe:
Storm Eunice has been causing extensive disruption to air traffic and shipping industry across North-West Europe. All railway traffic including both passenger and freight lines in the Netherlands were halted last Friday to avoid the hazardous weather conditions. In Germany and Belgium, rail traffic was also partly suspended. Many factories in the region shut down operations in anticipation of the storm. Hundreds of flights were cancelled across the UK and the Netherlands amid record winds from storm Eunice. Off the Belgian coast, two cargo and tanker ships were at one point adrift and got stuck in a wind farm.
Widespread flooding is predicted in the coming days, particularly in the port cities of Cuxhaven and Hamburg, which were badly hit by the storm. The weather is expected to remain stormy over the following days.
(Source – The Guardian).
Situation in Asia:
- China – Shipments delayed due to COVID-19 outbreak
Shipping lines have been diverting their services to Shanghai and Xiamen ports to avoid delays at Ningbo port due to some trucking services being suspended during a recent outbreak of COVID-19. These diversions are causing growing congestion at the world’s largest container port. In addition, the strict testing requirements of workers and truckers imposed by the authority at Shenzhen and Tianjin ports has further stressed the already strained supply chain. Sailing schedules into Shanghai have been delayed by about a week. Carriers are expected to start omitting several Chinese ports to avoid congestion and mitigate delays (Source – gCaptain).
- Transhipment ports – Singapore and Port Klang
Due to ongoing congestion at transhipment ports in Singapore and Port Klang, Malaysia, the current delays are at least 4-5 weeks at these hubs. In addition, some carriers are temporarily not offering services ex Port Klang due to limited space and blank sailings coming up for the next couple of weeks.
LCL General Rate Increase from USA to Australia and New Zealand:
We have been advised of a General Rate Increase applied on all LCL shipments coming from the USA to Australia and New Zealand effective 17th February 2022. The increased amount has been advertised as follows:
USD 20 per w/m
Minimum USD 20.
General Rate Increase from the UK to Australia:
From 8th February 2022, there has been an increase to be implemented on all cargo originating from the UK to Australia, as follows:
USD 750 per 20GP
USD 1500 per 40GP/HC
LCL will increase accordingly.
General Rate Increase from South East Asia/India Subcontinent/Middle East to Australia:
From 1st March 2022, one carrier has announced a General Rate Increase for all exports out of South East Asia, India Subcontinent and the Middle East to Australian ports, as follows:
USD 200 per 20GP
USD 400 per 40GP/HC
Overweight Surcharge (OWS) from Indonesia to Australia:
An Overweight Surcharge has been implemented on all 20’ Dry containers with gross weight equal or over 14 tons (including tare) from Indonesia to Australia, effective 15th February 2021. The new surcharge will be:
USD 300 per container
General Rate Increase from Australia and New Zealand to USA:
From 4th March 2022, one carrier will implement a General Rate Increase on cargo originating from Australia and New Zealand to the USA, as follows:
USD 500 per container
General Rate Increase from Australia and New Zealand to Asia:
A General Rate Increase will be applied on all cargo coming from Australia and New Zealand to Asia effective 1st March 2022, as follows:
USD 200 per container
LCL General Rate Increase from Australia to New Zealand:
From 1st February 2022, there was a General Rate Increase implemented on all LCL export cargo from Australia to New Zealand ports, as follows:
AUD 15 per w/m
Minimum AUD 15.
Peak Season Surcharge from Australia and New Zealand to US EC/US Gulf and Latin America:
One carrier has announced a Peak Season Surcharge to be applied to all outbound shipments from Australia and New Zealand to US East Coast/ Gulf Coast and Latin America effective 1st March 2022. The surcharge will be:
USD 1500 per container
Peak Season Surcharge from Australia and New Zealand to North Europe and the Mediterranean:
We have been advised of a Peak Season Surcharge to be applied to all exports from Australia and New Zealand to North Europe and the Mediterranean effective 1st March 2022. The surcharge will be:
USD 1500 per container
Melbourne Port Infrastructure Increase:
Melbourne Port Infrastructure surcharge has increased slightly, effective immediately. The updated Port Infrastructure fee in Melbourne will be AUD 180 per container.
Melbourne Empty Container Park Increase:
Melbourne Empty Container Park surcharge has increased to AUD 85 per container, effective immediately.
Melbourne Time Slot Booking Fee Increase:
From 1st February 2022, we have seen further increases in Time Slot Booking Fee in Melbourne. These increases are implemented by the terminals, which we do not have any control over and therefore have no option but to pass on. The updated Time Slot Booking Fee in Melbourne has been increased to AUD 65 per container after this date.
Side-loader Levy Fee in Melbourne and Brisbane:
Please be advised that Side-loader Levy Fee for FCL trucking in Melbourne and Brisbane where applicable is now ranging between AUD 80-85.
We will keep you updated with any further information.
