News
Industry Update – June 2020
Attention: Shipping Manager
Current Shipping Lines BAF and IMO2020 Surcharges:
Further to previous correspondence in regards to the above, below are current costs for BAF/IMO 2020 surcharges with various shipping lines, from USA to Australia, as a guideline:-
Hamburg Sud – USD241/TEU from West Coast USA to Australia
Hamburg Sud – USD272/TEU from East Coast USA to Australia
From July 1 2020 – CMA CGM – USD0/TEU from East Coast USA to Australia
From July 1 2020 – ANL – USD192/TEU from West Coast USA to Australia
In addition to the above, shipping lines have also reduced their IMO2020 surcharges from Asia to AU due to reduced fuel prices.
COVID 19 and its Impact on International Shipping
With the total number of COVID 19 cases quickly approaching 7.5 Million, countries around the world are trying their best to contain further spread of this virus. Countries like USA, Brazil, Russia, UK and other parts of Europe have been worst hit with USA alone recording close to 2.06 million cases, almost a third of the total global cases. India, which was under a strict lockdown till the end of May, has seen a sharp surge in total number of cases as well. While these countries try to battle the COVID 19, situation in Australia and New Zealand has been a lot better than what was initially anticipated. Australia has flattened the transmission curve with less than 430 active cases whereas New Zealand has managed to completely eradicate this virus.
Apart from the Health Crisis, this pandemic has also affected the Global Economy. Prolonged periods of lockdown in USA, Europe, parts of Asia and New Zealand resulted in a significant impact on International Supply Chains. Container volumes were reduced on almost every trade line with shipping lines adjusting their sailing schedules based on supply and demand levels. There were a lot of blank sailings during April and May between Asia, Australia, USA and Europe. According to Freight Waves America, there was a drop of 17.3% in total container volumes for the month of April at Long Beach Port. Similarly in Australia, we saw a drop in total container volumes with FTA Australia reporting full container imports decline of 10% to 25% at Australian East Coast ports as compared to the last year.
On the other hand, the impact of this pandemic on airlines was devastating. As the number of passenger flights plummeted, airlines across the world started cost cutting by reducing their workforce and fleet sizes. With a lot of aircrafts grounded, they were left with no option but to use their passenger planes as freighters to stay afloat. According to Freight Waves, Federal Aviation Administration in USA recently allowed airlines to carry cargo on passenger seats. This will likely add more capacity to air freights coming out of USA to Australia.
With the pandemic situation in USA slowly improving and the demand starting to increase, shipping lines have reinstated some of the sailings on China-USA trade route. We think that with the improved situation in Australia and New Zealand, shipping lines will start adding more sailings from Asia to AU.
Free Trade Agreement with Indonesia
We have received notification from the FTA (Freight & Trade Alliance) that on 6th May, the Indonesian Government ratified the Indonesia-Australia Comprehensive Economic Partnership Agreement. This is due to commence on 5th July 2020. Please see further information from the FTA below:-
Those involved in international trade will be aware that Indonesia and Australia are both members of the ASEAN-Australia-New Zealand Free Trade Agreement. Under this existing Free Trade Agreement, most imports of Indonesian goods into Australia are entitled to duty free entry. This means that the benefits of the Indonesian Free Trade Agreement will be most strongly felt by Australian exporters and service providers who will see improved market access.
In particular, there will be significantly reduced duty rates for agricultural exporters. However, the existence of the ASEAN Free Trade Agreement does not mean that the Indonesian Free Trade Agreement should be ignored by importers. A significant benefit of the Indonesian Free Trade Agreement is a system for using declarations of origin rather than certificates of origin issued by an official body. An exporter will be able to use declarations of origin after the following occurs:-
- Indonesia notifies Australia that it will implement the declaration of origin system and
- The exporter is registered or certified by Indonesia
The declaration of origin can be made on an invoice, delivery note or other commercial document provided it contains certain mandatory fields. Declarations of origin:-
- can be made after exportation
- can be in electronic format
- do not need to be in any prescribed format
- only apply to a single importation
- are valid for 12 months after the date of issue
The ability for declarations to be issued post importation will facilitate the claiming of refunds where a declaration or certificate of origin was not available at the time of import. We suggest that importers and exporters now review what trade with Indonesia is currently attracting customs duty. Consideration should be given to whether those goods will satisfy the origin requirements of the Indonesia Free Trade Agreement. If the lack of use of the ASEAN Free Trade Agreement is due to the administrative burden of obtaining certificates of origin, the flexibility of the Indonesian Free Trade Agreement may be the answer to this.
APL England:
Last month, APL England Vessel which was enroute from Ningbo to Melbourne, experienced heavy weather off the coast of Sydney and a loss of propulsion for a short period of time. The power was restored but the vessel went through significant rolling, resulting in several containers getting damaged and about 40 containers falling off the vessel. The floating debris and some of the containers drifted towards Central Coast shoreline where authorities were working to inspect and clean up.
The vessel was redirected towards Brisbane port where Australian Maritime Safety Authority are inspecting it for compliance with Australian and International Safety Standards.
Proposed increases to Bio-security fees will not proceed
Further to previous advice in regards to proposed increases to biosecurity and customs entry fees, we welcome the news from the Department of Agriculture, Water and the Environment that these will not proceed. The FTA advises that the activities proposed to be funded by the levy will now be paid for from general revenue.
Reduction in Destination Fuel Surcharge (Australian Cities):
As the global fuel prices have dropped, the fuel surcharge in various Australian cities have also dropped. The new adjusted metro fuel surcharge for Sydney, Melbourne, Brisbane, Adelaide and Fremantle will be 14%.
Reduction in USA LCL IMO2020 Low Sulphur Fuel Surcharge
Due to a reduction in global fuel prices, the cost of Low Sulphur Fuel has also reduced during the last few months. Starting 1st of June, IMO 2020 surcharge for LCL Cargo coming out of US West Coast will be halved. The new rate will be:
LCL = USD 4 per w/m or minimum
GRI ex West Coast USA and Canada
We have been advised of a general rate increase to be imposed effective July 1st 2020 from the West Coast USA and Canada to Australia as follows:-
USD200 per 20GP
USD400 per 40GP/40HC
Increase in US West Coast Terminal Handling Charge
Effective 1st July 2020, shipping lines will increase their Origin Terminal Handling Charge (OTHC) by 50 USD/TEU for cargo leaving through US West Coast Ports to Australia and New Zealand. The new figures will be as follows:
USD 300 per 20 GP
USD 600 per 40 GP/40 HC
LCL = USD 5 per w/m or Minimum
Increase in Panama Canal Surcharge:
Where applicable, the Panama Canal Surcharge has recently increased by 30 USD per container and adjusted levels are:
USD 190 per 20 GP
USD 350 per 40 GP/40 HC
Chassis usage charge increase ex USA:-
We have been advised that the initial charge for providing a Chassis for a merchant haulage move in the USA will now be USD60 per container. This is for shipments arriving/departing on all services.
Rate Restoration/General Rate Increase ex North East Asia to AU:
Starting 1st July 2020, various shipping lines have announced a rate restoration/General rate increase from North East Asia to Australian ports:
For 20’ = USD 200 to 300 Depending upon the shipping line
For 40’ = USD 400 to 600 Depending upon the shipping line.
For LCL = USD 8 per w/m or Minimum
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.
Rate Increase ex South East Asia to AU:
Starting 1st July 2020, some shipping lines have announced a rate increase from South East Asia, South Asia, Indian Sub-continent and Middle East to Australia as follows:
USD 200 per 20GP
USD 400 per 40GP/40HC
LCL = USD 8 per w/m or Minimum
