Industry Update February – March 2020
Coronavirus and the implications for industry in Australia
Over the past two months, since the first case of “coronavirus” was detected in the city of Wuhan, we have seen the increase in the number of people diagnosed with the virus internationally, not just in mainland China. The health impact is a global concern with many countries joining the effort to manage the situation and find an antidote for the virus.
The fact that this virus outbreak has come at the same time as the Chinese New Year has caused significant global economic and supply chain issues and has resulted in an overall decline in Chinese Exports. Official return to work dates vary from city to city and province to province. Some factories that are open don’t have full staff on board or the raw materials to commence manufacturing. Transport companies are short of staff therefore restricting those wanting to transport their goods. Ports are congested, reefer plugs in many ports are full and containers are being diverted to other ports to remain on power, with additional surcharges being applied by shipping lines for this service.
The “return to the norm” is widely believed to be some months away, some people have even suggested September or longer, until both a full return to productive work and sufficient supply chains are in place. Shelf stocks will slowly start to reduce as companies globally try to source goods from other parts of the world and not all requests being able to be met. There are reports that we will find an acute lack of containers in both American and European ports as the supply chain has been badly compromised. Shipping lines are also introducing surcharges to cover costs associated with severe space restrictions and blank sailings and unfortunately, we will have no choice but to pass these on if applied.
Additionally, Australia has imposed ‘14 days at water’ restriction on vessels coming out of or transiting mainland China and shipping lines had to adjust some of their sailings in order to adhere with this requirement.
It is a very fluid situation but we will continue to keep you updated as we get further information from various industry sources. In the meantime, if you are concerned about any of your orders or shipments, please do not hesitate to contact your customer service representative.
Increase in Shipping Lines BAF and IMO2020 Surcharges:
Due to the rising bunker and Very Low Sulphur Fuel (VLSF) costs, shipping lines have constantly increased their IMO2020 surcharge in the last few months. Some lines which were only implementing a BAF without a separate IMO2020 surcharge have increased their BAF quite significantly in the last few months. This has been the case with almost every shipping line regardless of their service routes and we have no choice but to pass on these charges at cost.
USA East Coast to Australia direct service going Weekly from Mid-March 2020:
Service from US East Coast (New York and Savannah Ports) will be going weekly again after a prolonged period of vessels leaving once every fortnight. This will increase the space availability and the number of sailings per week from US East Coast to Australia.
Europe to Australia Space Situation and PSS:
Due to the recent outbreak of corona virus and reduced exports out of China, majority of shipping lines have announced blank sailings on China to AU trade route. Shipments from Europe on transhipment service via Asia, are greatly impacted due to these blank sailings. Space out of Europe on Transhipment service is becoming an issue due to reduced vessels on the second leg of journey from Singapore/Malaysia to Australia. As a consequence, transhipment carriers out of Europe have increased their prices noticeably and we have also received notices of Peak Season Surcharge (PSS) of 100 USD/20’ and 200 USD/40’ from Direct carriers, effective 15th March 2020.
USA and Canada to AU and NZ GRI:
Effective 1st of April 2020, shipping lines offering direct service from USA and Canada are implementing a general rate increase of:
Rate Restoration ex Asia to AU:
Starting 1st of April 2020, some shipping lines have announced a rate restoration from Korea, China, Taiwan and Hong Kong to Australian ports:
USD 300/20’ and USD 600/40’
Based on past rate increase notices from Asia and given the volatile nature of the prices on this trade route, it will be a wait and watch scenario to see if these will be actually implemented by shipping lines.
Increase to Port Infrastructure Surcharge from March 1st 2020
We have been advised of further increases to port infrastructure surcharges from 1st March 2020. From this date, the port infrastructure surcharge will be increased in the ports of Sydney/Melbourne and Brisbane as follows-
AUD130 per container
Increase to Empty Container Park Fee in Melbourne:
Empty Container Parks in Melbourne have followed Sydney and Brisbane and have increased their charges. The latest fee set out will be as follows:
AUD 45 per container.
DP World Brisbane Terminal Closure 28th and 29th Feb 2020:
Given the lower slot demands associated with various factors, DP World Brisbane Terminal will be closed from 2 pm Friday to 7 am on Saturday. This will be followed by another period of closure from 2 pm Saturday till 11 pm Saturday. More closures are expected during the next week.