Industry Update – March 2021
Attention: Shipping Manager
Situation in USA and Canada:
Due to the ongoing surge in USA Import volumes, ports on both USA Coasts are facing severe congestion. There are reports of many vessels waiting to berth, specially at the West Coast ports of Los Angeles/Long Beach. In terms of container volumes, 2020 was recorded as the busiest year with Q4 2020 as the busiest quarter in Los Angeles port history. Additionally, January 2021 was the best January on record with almost 22% surge in container volumes year on year (Source: Freight waves). Such high trading volumes have forced the port authorities in Los Angeles to fully utilize all the anchorage points. There are vessels which have to wait for a few days in order to dock at these ports. For instance, 31 vessels were at anchor near the port waiting to berth on 26th February and the average anchorage time for vessels is now almost eight days (Source: Carrier News). Similarly at Oakland port, there were 13 ships at anchor. These prolonged anchorage times have disrupted the vessel schedules substantially and the ship turnaround times have increased. Some of the carriers are frequently adjusting their sailings and port rotations to minimize the impact of these delays. One such measure is that carriers have now started omitting Long Beach port on the North bound trip with cargo discharging or loading during the second Southbound trip only. Similar omissions are expected to continue till the end of June 2021.
Most of the terminals on the West Coast are understaffed due to COVID related restrictions and outbreaks at port terminals. Restrictions including split shifts, lack of available workers, caps on the number of workers at any given time have limited the port capacity in terms of keeping up with the ever increasing demand. The infection rates among workers at Long Beach port have also risen noticeably. During the recent past, more than 800 workers tested positive and are in quarantine (Source: American Shipper).
Vessel berthing congestion is also being faced at the East Coast ports of New York, Charleston and Savannah. Adverse weather and snow storm at the US East Coast last month further increased the disruptions. Moreover, there has been a constant increase in empty container inventories at the New York port. Increase in import volumes have also contributed to port congestion, with Savannah port having the busiest December ever in 2020 in terms of container volume. (Source: American Shipper). Wait times for vessels to berth on the East Coast are around four days which is not as bad as those on the West Coast ports. Limited work staff at the ports is also reducing terminal’s efficiency in terms of processing the number of containers that can be dropped off and picked up from the ports. As a result, trucking turnaround times have significantly increased, daily appointments have reduced and inter terminal transfers are taking much longer across all USA ports. There are chassis shortages being experienced across USA along with labor shortage.
To bring these schedules back on track, carriers have started adding recovery vessels at their disposal to keep up with the volume but are still finding it hard to catch up with the growing demand. One carrier has noted that their fleet is fully deployed and there simply isn’t any more capacity to add recovery vessels. Therefore, they have to omit occasional port calls to partially mitigate schedule disruptions.
Vessel delays at USA ports have also had a flow on effect on rail schedules across the country. Rail services are experiencing frequent delays and ramp cut-offs are being changed at the last minute. In some areas, rail service providers have implemented limits/embargoes to clear the backlog of containers. The entire situation is very uncertain with a potential for additional costs in the form of redirection trips needed due to last minute rail cut-off changes, extra chassis rental surcharges or split chassis etc. Shortage of trucker availability, constant changes in rail cut-offs and last minute changes are making the entire shipping process difficult. As advised in our previous updates, some of the carriers have also stopped providing ex door moves due to the current environment. We are thus trying to utilize outside truckers/rail services where feasible.
COVID 19 is also effecting staff availability at the warehouses. Reduced staff at the warehouses is resulting in less than optimal levels of productivity. Shortage of drivers and equipment (both containers and chassis) are also adding further pressure to every aspect of the supply chain. Truckers are operating at full capacity due to COVID and a surge in USA imports but the increased terminal turnaround times are reducing trucker efficiency.
Because of all these issues, space is extremely tight. Terminals, rail, trucking companies and all forms of inland logistics have been stretched to their maximum capacity. These are unprecedented times. It is expected that the equipment shortage situation from North America will stay like this for some time as more containers are needed to meet up with the global demand. Huge quantities of containers are stuck in different countries around the world because of the major congestion being experienced worldwide. The demand for new container orders is also pretty high, with manufacturing factories completely booked out till July 2021 (Source: Freight waves)..
There is a slight hope of improvement though on the US East Coast in the coming months as the fortnightly carrier, which operates from New York and Savannah ports direct to Australia, will go back to offering weekly service. This will increase US East Coast to Australia capacity and will help in improving the space situation.
In Canada, the situation is no different. Space is all booked out for almost every shipping line and there are long waiting times in order to get any bookings. Vessels are overbooked and there is a shortage of equipment availability. Schedules are getting delayed every now and then. The issue is getting compounded with occasional strikes at Montreal port. Terminals are also congested and supply chains are severely strained. Some of the carriers are fully booked out till early April.
Given the current situation, please plan your shipments from North America well in advance.
Europe Space Situation:
In Europe, there are major operational challenges being experienced. We have received reports of space and equipment shortages in container depots across Germany, Austria, Switzerland, Italy and other mainland European countries. Some of the carriers are also adjusting their bookings at the last minute in line with their schedule changes/delays. One shipping line has implemented a 72 hour rule for containers delivered by truck at Hamburg port for exports. This rule only allows export containers to be received at the port 72 hours prior to vessel arrival. LCL depots have also restricted accepting cargo only within 72 hours prior to closing for Hamburg port. These measures are introduced to help clear up the backlog of containers.
In addition to Hamburg port, constant congestion and delays in Europe have also affected the port operations in Antwerp, Belgium. Port authorities there have implemented a 7 calendar day export cargo receival window which only allows for export containers to be delivered there 7 days prior to vessel arrival.
In terms of space availability, two of the transshipment carriers from Europe to Australia are fully booked out for March, so the shipping options are quite limited.
South East Asia Space issues:
As advised in our previous Industry updates, space situation from Malaysia and Singapore haven’t improved much over the last month. Ports in both Malaysia and Singapore are still congested and carriers are booked out well ahead in advance. There is a possibility of rollovers for bookings from or via South East Asia as there is a huge backlog of containers waiting to be shipped.
If you have any shipments from South East Asia, please plan these well in advance.
North East Asia Space Issues:
Operational situation is slowly improving in China as carriers are now gradually removing the extra measures applied over the course of last month due to Chinese New Year. These measures included restricting empty pickups to a few days prior to vessel arrival and these have been slowly revoked for majority of Chinese ports. Freight rates are expected to stabilize or gradually decrease in the coming months.
In Taiwan, there are reports of 20’ and 40’ equipment shortages. Additionally, there are space issues with bookings into Fremantle as these transship via Singapore which is quite congested.
NZ Congestion and delays:
As advised in our previous industry updates, Auckland port in New Zealand is still quite congested and there are major delays. Vessels are frequently omitting the port to mitigate these delays caused by the congestion. Vessel waiting times at the Auckland port are about 12 days. These delays have disrupted every step of the supply chain there including terminal operations, empty park operations etc. Terminals are operating at full capacity and some of the ports there have implemented delivery windows for receiving export containers, to limit the effects of this ongoing situation.
Global Air Freight:
As the demand for passenger air travel is still at an all-time low with intermittent lockdowns and travel restrictions globally, airlines are reducing their passenger plane capacity and laying off workers. Recently, Air Canada laid off 1700 workers and reduced capacity by 25% (Source: American Shipper). These reductions in passenger flights add further pressure to air cargo rates as majority of cargo used to travel in lower deck of passenger planes. Demand for the air freight is still high and airlines are constantly trying to add more capacity to their cargo operations. Global air rates are still more than double of what they used to be before the start of COVID pandemic.
According to International Civil Aviation Organization’s latest released report on the Economic Impact Analysis of COVID 19, airline passenger traffic in 2020 dropped by 60% and airlines faced USD 371 Billion loss in gross passenger revenues as compared to 2019 (Source: ICAO). A major portion of this drop was in the International passenger traffic.
In about four month time, new air freight security standards by International Civil Aviation Organization will come into effect which will require the authorities to perform 100% screening for every shipment on cargo aircraft. Currently, this applies to passenger planes but will then also cover freighter aircrafts (Source: Freight Wave). This will likely add more load on airport workers and will require airlines to invest further to comply with these regulations. In the current pandemic environment where airlines are trying to cut costs and there is a shortage of workers due to COVID measures/safe work practices across major airports worldwide, this will turn out to be an additional challenge in the air freight industry.
VICT received temporary industrial action reprieve via the Fair Work Commission
We have been informed by the FTA that an Interim Order has been issued suspending industrial action by the maritime Union of Australia (MUA) effective from 0600hrs Saturday February 20th. The outcome also prevents the MUA from taking industrial action until a mid-March hearing is held. This is welcome news indeed as the industry still tries to recover from the prolonged industrial action towards the end of 2020.
Melbourne Empty Park Congestion issues:
As advised in our previous Industry update, there are reports of delays at empty Parks in Melbourne as some of them have reached capacity and are occasionally stopping acceptance of the empties. The issue was significant at the end of January where carriers ordered redirections to different parks when the assigned park reached its limits. If the global shipping situation improves, it will gradually ease up some congestion at our empty yards but without any significant improvements, this situation is likely to continue further.
Good News – Possible Withdrawal of Sydney Port Congestion Surcharge:
We have heard from a couple of carriers that they will soon be removing the Sydney Port Congestion Surcharge as the situation at Sydney port is expected to improve. Note that this charge was introduced in September last year when there were major strikes and COVID related operational delays at the Sydney port. As the strikes have subsided, it is expected that the situation will return to normal over the coming months and vessel schedules will stabilize.
USA and Canada to Australia and New Zealand Rate Restoration/General Rate Increase:
Multiple carriers have announced Rate Restorations/General Rate Increases from USA and Canada to Australia and New Zealand with different amounts and applicable dates. These are listed below:
MSC Effective 15th March 2021, from USA and Canada to Australia and New Zealand:
USD 200 per 20’ Container
USD 400 per 40’ Container
ANL effective 15th March 2021, from USA and Canada West Coast to Australia and New Zealand:
USD 300 per 20’ container
USD 600 per 40’ container
Hamburg Sud effective 1st of April 2021, from USA and Canada to Australia and New Zealand:
USD 200 per 20’ container
USD 400 per 40’ container
Hapag Lloyd effective 1st of April 2021, from USA and Canada to Australia and New Zealand:
USD 300 per 20’ container
USD 600 per 40’ container
LCL will be applied in line with the FCL rate increases. Estimates as follows:
From US Origins – 8 USD per w/m or minimum
From Canada – 10 USD per w/m or minimum
Increase in IMO2020 Surcharge from USA to Oceania:
As the fuel prices have recovered after the initial COVID related plunge in March 2020, carriers have now slowly started increasing their BAF and Low Sulphur Surcharges on each trade route. For USA to Australia trade route, the updated IMO2020 surcharge for LCL’s is set to increase to 8 USD per w/m or minimum, effective 4th of April 2021.
It is expected that global BAF and Low Sulphur Surcharges will gradually increase over the coming months due to a constant rise in oil prices.
North Europe and Mediterranean to Australia Peak Season Surcharge:
We have been advised by our partners from Europe that the carrier which offers direct Europe to Australia service has announced a Peak Season Surcharge effective 1st of March 2021 for all cargo from North Europe and Mediterranean (Excl. Spain and Turkey) to Australian ports as follows:
USD 200 per 20’ GP container
USD 400 per 40’ GP container
For reefers, this surcharge is higher.
LCL Peak season surcharge/GRI will apply accordingly. For LCL’s from Italy, this is advertised as 10 USD per w/m or minimum.
Equipment Imbalance Surcharge from North Europe (excluding UK/Ireland) and South France:
Further to our previous notice advising of the Equipment Imbalance Surcharge for 40’ containers from Europe, some carriers have now also implemented this surcharge for 20’ containers effective 1st of March 2021. All exports from North Europe (Excluding UK/Ireland) and South France will now also have this surcharge for 20’ container as follows:
USD 200 per 20 GP container.
North East Asia to Australia General Rate Increase:
Shipping lines operating in NEA to Australia trade route have announced General Rate Increase effective 1st of March 2021 for shipments from Korea, China, Japan, Hong Kong and Taiwan to Australian ports as follows:
USD 300 per 20’ container
USD 600 per 40’ container
For LCL, this is advertised as 12 USD per w/m or Minimum
Oceania to United States of America General Rate Increase:
We have been advised by carriers that they will apply a General rate increase for cargo from Australia and New Zealand to USA, effective 1st of April 2021. The advertised amounts are as follows:
USD 300 per 20’ container
USD 500 per 40’ container.
LCL will apply accordingly. Estimated at 12 USD per w/m or minimum.
Rate Restoration in Darwin and Townsville:
One of the carriers operating in Asia to Northern Australia trade route has introduced an inbound rate restoration effective 1st of April 2021, for all inbound shipments to Darwin and Townsville as follows:
USD 280 per 20’ container
USD 560 per 40’ container
Fiji Port Congestion Surcharge:
Due to the ongoing congestion at Auckland port, some of the carriers have also announced Congestion surcharge for import and export cargo from Fiji. This is applicable for USA trade lanes from 22nd of March and for every other route, from end of February. The value set for this surcharge is as follows:
USD 225/20’ container
USD 450/40’ container
Air Freight Arrival Charges:
We have been advised regarding the increases in terminal charges at Australian airports. Effective 1st of March, the following charges have increased slightly:
- Destination International Terminal Fee – Minimum increasing to 90 AUD (No change to per kg rate)
- Destination Airline Terminal Fee – Minimum AUD 65 or AUD 0.62/kg.
Patrick Terminal in Brisbane and Melbourne introduce a Weight Amendment Fee for import containers – “Weight and Adjustment (Pondus)
We have been advised that Patricks in Brisbane and Melbourne have introduced a weight amendment fee for import containers in Brisbane and Melbourne. Patrick reserves the right to weigh a container within the terminal yard utilising a calibrated weighing device, the Pondus Stand. A “Weight Amendment Fee” for import containers (Weigh and Adjustment charge) plus GST will apply to all containers determined by the Pondus Stand to have a weight variance of greater than +/- one metric tonne within the documented weight. Any charges applicable will be charged to the transport carrier and passed on to the client. We have seen this advertised to be anywhere from AUD230 to AUD260.
At this stage, this has only been introduced in Brisbane and Melbourne with dates for Sydney and Fremantle still to be confirmed. It is very important therefore, that you remind your shippers that it is their responsibility to ensure that the correct weight of import containers is provided on their documentation.
Increase to Port Infrastructure Surcharge for Sydney and Brisbane:
We have been advised of further increases to port infrastructure surcharges in Sydney and Brisbane with effect from 1st March 2021. From this date, the port infrastructure surcharge in Sydney and Brisbane will be increased to the following levels:
Sydney – 155 AUD per Container.
Brisbane – 150 AUD per Container.
Long Vehicle Surcharge for Containers in Brisbane and Sydney:
We have been advised of a long vehicle surcharge being introduced effective 1st of March 2021 at Brisbane and Sydney terminals. This is advertised as 30 AUD/container and is applicable for all containers collected/delivered from/to the terminal. The issue of this surcharge has been raised by transport authorities with the Government and it might get revoked but if it applies to any of our containers, we will have to no choice but to pass on the costs.
Brisbane Side Loader Levy:
Another terminal in Brisbane have announced the application of side loader levy effective 1st of March 2021, for side loader containers moving through Brisbane terminal. This fee where applicable will be 75 AUD per Container.
Melbourne Side Loader Levy:
Patricks terminal in Melbourne have announced the application of side loader levy effective 1st of March 2021, for side loader containers moving through its terminal in Melbourne. This fee where applicable will be 75 AUD per Container.
We will keep you posted with any further updates.