Industry Update November 2019
IMO 2020 – Low Sulfur Fuel Recovery
The International Maritime Organization (IMO) has introduced new regulations restricting all sea-going vessels to use fuel with a maximum 0.5 % Sulphur content (Very Low Sulfur Fuel Oil -VLSFO, as opposed to the present High Sulfur Fuel Oil – HSFO) from 1st Jan 2020. This will significantly improve the global carbon footprint of ocean carriers.
Very Low Sulphur Fuel Oil (VLSFO) commands a higher price per tonne & will result in higher operating costs for all carriers. In accordance with IMO 2020, carriers will not be able to carry any non-compliant fuel from 1st January 2020 and as such the switch to new compliant fuel types will have to be effected from end of November 2019 in preparation for this date.
Therefore for cost recovery, carriers will be implementing a Low Sulphur Fuel Recovery (LSFO) with effect from 1st December 2019 (shipped on board date) onwards with periodic reviews.
We expect that the pricing of LSFO will be volatile over the coming months as depending on the carrier used and the tradelane, various different amounts have been advertised. As an example, east coast carriers are quoting upto USD230 per TEU and USD10w/m for LCL. These charges will be passed on at cost.
BAF Q1 2020 charges will also to be affected by VLSFO
In addition, VLSFO will replace HSFO as the price reference for the quarterly Bunker Adjustment Factor (BAF), effective January 1, 2020. The BAF is applied on top of the ocean freight charges and will still be revised on a quarterly basis with a one-month notice.
Increase to Empty Container Park Fees
Empty container parks in Sydney and Brisbane have all increased their fees recently so with immediate effect, the empty container park fee in these destinations will be as follows:-
Sydney – AUD55 per container
Brisbane – AUD45 per container.
Increase to Port Infrastructure Surcharge
The wharves have increased their fees yet again and we have no option but to pass on these increased costs. With immediate effect, the port infrastructure surcharge for all destinations will be AUD89 per container, LCL AUD 4.5w/m, minimum AUD 4.5.
Introduction of CFS facility in Auckland
We have been advised that depots in Auckland have introduced a new CFS Facility Fee on all LCL cargo both into and out of Auckland. This is being implemented to offset their increased warehouse operating costs. This fee is now in place and will be charged at NZD4.00w/m, minimum NZD4.00.
Sideloader Levy Increase
Carriers have advised of an increase to the sideloader levy, so with immediate effect, the sideloader levy (where applicable) will increase to AUD75 per container.
Peak Season Surcharge ex Europe & Mediterranean to Australia & New Zealand
Shipping lines have announced the introduction of the above charge, applicable from November 4th 2019 (date of loading in the origin ports) until further notice. The amounts are as below:-
USD100 per 20’GP
USD150 per 20’Reefer
USD200 per 40’GP
USD300 per 40’Reefer
LCL will increase by USD10w/m as well.
GRI (General Rate Increase) notices- NEA Asia
We have had notifications this month from various shipping lines in regards to a proposed general rate increase, details as follows:-
Ex China, Hong Kong, Taiwan and Korea to Australia, effective 1st December 2019-
US$300.00 per 20’
US$600.00 per 40’/40’HC
LCL will increase by USD12W/M on the same day
It will be a watch and wait scenario to see if this is implemented at the time.
GRI (General Rate Increase) notice- US east coast to Austraila/New Zealand – LCL
We have been advised of an increase in LCL rates from the USA east coast to Australia/New Zealand of USD4w/m, effective immediately.
Space Congestion in Malaysia:
Shipping lines from Malaysia are already over booked and the space is quite congested. If you are planning to import from Malaysia, we recommend to book as early as possible in order to minimise the chances of any delay.