Industry Update November 2020

Attention: Shipping Manager

Port Congestion Surcharge – Auckland

Due to the flow on effect of Sydney port congestion, vessels calling into the ports of Auckland are experiencing considerable delays at the moment and the port is heavily congested. There are reported delays of up to 12 days.  All shipping lines have introduced a port congestion surcharge for Auckland imports/exports, similar to what they did in Sydney, as below:-

Hapag Lloyd 250 / 20’ & 500 / 40’ 18/11/2020
PIL, 210 /20 & 420 / 40’ 15/11/2020
ANL,CMA,CGM 200 / 20’ & 400 / 40’ 17/11/2020
MSC 300 /20’ &  600 / 40’ 9/11/2020
ONE 280 / 20’ &  560 /40 ‘ 16/11/2020
COSCO 300 /20’ &  600 /40’ 17/11/2020
MAERSK 215 /20’ &  430 / 40’ 13/11/2020
HAMBURG SUD 215 / 20’ & 430/ 40’ 13/11/2020

LCL will be USD 10 per w/m or minimum.

Services between Auckland and Australia will also be affected now since there is port congestion at both ends and vessels will occasionally omit port calls in both Australia and New Zealand.


Los Angeles/Long Beach Port Congestion

Despite the extremely high numbers of COVID-19 cases in USA, port of Los Angeles handled just under a Million 20’ Equivalent containers during October 2020, an all-time monthly volume record and almost a 50% increase compared to the initial months of 2020 (Source – Freight Waves). During the last few months, similar increases in container volumes were also seen at the Long Beach port and Port of Oakland. Such extraordinarily high container numbers, coupled with a shortage of chassis equipment, lack of skilled workers to keep up with the increased volumes and shortage of truckers have resulted in severe congestion at Los Angeles and Long Beach ports. This congestion is causing delays for vessel as they wait for space to dock at the terminals, delays for truckers as the turnaround time at the terminals has increased dramatically and equipment and chassis rental additional charges as appointments at the terminals become more difficult to obtain without delays. Some terminals are refusing to accept empty returns which is further affecting the transport of containers in and out of the port terminals. There are some reports of rail delays, extensive queues at terminals and a limited container delivery window before cut-off. It is expected that terminal productivity will decrease, chassis shortages will intensify, drayage capacity pushed to its limits and delays will likely continue into the first quarter of 2021. Given all these challenges, there is a potential for additional costs in the form of prolonged chassis usage/yard storage for cargo moving from/to these ports.  As always, we are working with our carriers and agents to minimise delays wherever possible and will keep you up to date in this regard.

Some shipping lines have announced a Congestion Surcharge (OCS/PCS) for all container types that are utilising truck movement via the ports of Los Angeles and Long Beach.  This includes carrier haulage (door by truck) directly to/from the port of Los Angeles and Long Beach, in addition to carrier’s and merchant’s haulage that require truck drayage between Long Beach/Los Angeles rail yards/truck depots and the port terminals.

Effective December 12th 2020, this will be USD 180 per container until further notice.  If this charge is applied to any of our bookings, we will have no option but to pass the costs on.


UK Port congestion Surcharge

We have received various updates from our partners in UK regarding the heavy port congestion being experienced there, particularly at the London Gateway port and the Felixstowe port. Several factors have contributed to this including increase in the import volumes, bad weather, infrastructure constraints, shortage of hauliers, lack of workers due to COVID-19 and reduced terminal productivity because of the virus containing measures being implemented at the ports. Vessel berthing times and the container turnaround times have immensely increased. Our partners are working on 7 day notice to enable them to arrange the trucking, given the severe shortage of haulage providers. As a result, shipping lines are omitting some port calls and are also adjusting their schedules. It is expected that the situation will not improve this year.

In order to maintain service levels, some shipping lines have introduced a congestion surcharge for UK inbound/outbound cargo, effective November 15th, November 16th (Depending upon the shipping lines) until further notice. The current surcharge announced by various carriers is given below :-

USD 100 to USD 175 per 20GP depending upon the shipping line

USD 200 to USD 350 per 40GP/HC depending upon the shipping line

LCL applied accordingly.

It is expected that other lines will follow suit just like they did for Sydney and Auckland. If you are planning to ship from/to UK, please keep this in mind and plan well ahead in advance to minimize any potential delays.


Regional Comprehensive Economic Partnership Agreement:

Despite the challenges and difficulties posed by COVID-19 crisis, there was a very positive development during last week. Australia, New Zealand, China, Korea, Japan and the Association for South East Asian Nations signed the Regional Comprehensive Economic Partnership agreement. RCEP is a regional free trade agreement of Australia with 14 other countries. According to DFAT, it will be the World’s Largest Free Trade Agreement and will cover trade in goods and services, investment, economic and technical cooperation, rules for e-commerce, competition and intellectual property. Negotiations on this agreement started way back in 2012 and the agreement was finalized last week. This agreement will help boost Australian trade with regional partners and will help support the economic recovery in the post COVID-19 era.


Vaccine underway:

During the past few weeks, multiple potential vaccine candidates have reported achieving preliminary efficacy rates of over 90%. These include vaccines developed by Pfizer and Moderna. If successful, vaccine distribution will start as early as mid to late December, especially in countries like Canada, USA, UK and the rest of Europe. As a result, shipping issues like congestion in different countries, shortage of truckers, lack of warehouse workers and COVID-19 lockdowns will probably improve and will ease off some pressure on the shipping industry globally. It is too early to guess a specific time frame for this but at least, there is some light at the end of the tunnel.


Lack of 40’ High Cube Containers in China and Space Situation from North East Asia:

As advised in our last month’s notice, there is a major shortage of 40’ High Cube Containers across Chinese ports. Some carriers are only releasing bookings for 40’ General Purpose Containers instead of high cubes. Others which have 40’ HC containers available, are charging higher rates for them compared to 40’ GP containers. The situation hasn’t improved much since last month. Recent surge in US imports is a also adding extra pressure on exports out of Asia particularly from China. There is a lack of empty containers in China and the rates out of Asia have increased to unprecedented levels. There doesn’t seem to be any retracement in this upward price momentum for Asian exports. Sky high ocean freight rates and reduced operational costs due to lower oil prices have resulted in strong Q3 growths for multiple shipping lines.

From China, there are frequent changes to sailing schedules with short notices. We have also seen some lines introducing hefty booking cancellation fees and some introducing Equipment Imbalance Surcharges from China/Hong Kong to European destinations. Few carriers have also reduced their detention free time for exports out of China from 10 calendar days to 7 calendar days. Additionally, there are long waiting times being experienced at Shanghai port terminal for container Gate ins. Equipment shortage, space issues, limited trucking capacity are all adding more pressure to the already difficult shipping situation currently being experienced.

In terms of reefer containers destined to Tianjin, there is a severe shortage of reefer plugs at terminals, resulting in vessel delays/berthing schedules. Each reefer shipment there is now being inspected and tested for COVID-19 which is causing additional delays at Tianjin port.

As far as the freight rates from China are concerned, they are in a continuous uptrend. As our agent’s put it, the current situation is ‘crazy/mad’. Those carriers which have containers available are charging very high rates. Last week, a carrier increased its freight rates twice (Almost by 2100 USD/40’) within a single day from Shanghai to European ports. Even after picking up empty containers, loading and delivering them back to the terminal, there were instances of carriers suddenly increasing their rates. Within a span of a few days, November intra-Asia rates from Shanghai to Singapore increased 8 folds as compared to end of October rates. Our partners have never experienced an unstable situation like this.

Space availability in South Korea is also very limited. Multiple carriers are fully booked out till mid to end of December. Rates are also at an all-time high.


Lack of Empty Containers/Space Issues in India and South East Asia:

Throughout the last month, we have received updates from our partners in India and South East Asia regarding the shortage of containers and space availability from these locations to Australia. Major disruptions in key South East Asian ports of Singapore and Malaysia are having a serious impact on space availability and missed connections which are resulting in further delays with increased transit times. Despite the exorbitant rates, it’s very hard to get space particularly from Malaysia. We have experienced frequent booking rollovers on multiple occasions from Port Klang. There were also instances of booking cancellation after multiple rollovers from Malaysia.

From India, carriers are not releasing bookings to Australia and the ones which are doing so, are charging extraordinarily higher rates with no space commitment and subject to inventory availability. There were occasions where carriers even cancelled Guaranteed bookings which were made by paying an extra premium on top of the already high freight rates. Currently, it is becoming very hard to get the desired space/equipment out of India.

In terms of exports out of Vietnam, it is taking a lot longer to even book Priority service with extra premium (USD 700 to 1000 per container extra) as it also tranships via Singapore/Malaysia. Some carriers are fully booked for December, others aren’t accepting bookings to Sydney and some lack 40’ containers.

From Thailand, the situation is no different. It has worsen since our last update. Some of the carriers are fully booked out at the moment. However, a new shipping line ZIM has introduced their service on this route but the rates are very high like all other carriers.

From Mexico, few carriers have now temporarily suspended bookings to Australia. The reason being multiple blank/cancelled sailings from connecting ports of Singapore/Port Kelang to Australian ports and the current congestion being experienced here.

Bookings to Sydney ex Asia are the hardest to get because of the Sydney congestion. Some carriers have limited container bookings to Sydney whereas others have totally stopped bookings on this route. Many carriers are completely booked out for the next month. They are also increasing their rates with little to no notice at all. Some are even introducing booking cancellation fees on all trade routes, increasing the already set fees or are changing the window for cancellation from 3 days before vessel ETD to 7 days. From an operational standpoint, the overall situation from these origins is very turbulent.

In line with the above, demand for LCL’s out of Singapore have also increased dramatically. LCL rates have risen up significantly and space for LCL is quite limited, particularly for Sydney bound cargo. Some depots are simply not accepting LCL cargo anymore. Just like FCL’s, there have been major GRI’s and rate restorations of up to USD 30 per w/m or minimum for cargo from or via Singapore. Frequent delays are also being reported on this route. In the last few weeks, we had a few instances where Sydney bound containers, coming from India via Singapore, were discharged in Melbourne and had to be railed to Sydney as vessels were unable to call Sydney port directly because of the ongoing congestion. In one instance, even rail space was severely limited and the container had to be trucked to Sydney. This resulted in longer transit times and additional costs associated with the on-carriage move. There are also reports of some LCL carriers introducing Equipment Imbalance Surcharges for Australian exports via Singapore. We will keep an eye on these and will keep you updated.


Europe to Oceania Peak Season Surcharge (PSS) and the current situation:

Shipping conditions from Europe to Australia are not very stable either. In Italy, not only the vessels are fully booked but shipping lines are also lacking equipment. As an example, the first available direct service from Italy is in mid-December. Transhipment carriers have space but they can’t guarantee equipment at the right time. From Germany, direct sailings are booked out for almost the next month along with some transhipment services. Our partners are constantly monitoring the current challenges being experienced out of Europe.

In line with the above, some shipping lines have announced a Peak Season surcharge from North European/Mediterranean and Black Sea ports to Australia, effective 16th of November 2020 until further notice, as follows:

USD 200 per 20’ Container

USD 400 per 40’ Container

LCL Applied Accordingly


LCL Peak Season Surcharge from UK, Italy, Sweden and Germany to Australian ports:

We have been advised by our partners regarding a Peak Season Surcharge being implemented for cargo from/via UK, Italy, Sweden and Germany to Australian ports, effective 12th, 13th, 15th of November and 1st of December 2020 respectively as follows:

USD 10 per w/m or Minimum ex UK to Australian ports

USD 4 per w/m or Minimum ex Italy to all Australian ports

USD 10 per w/m or Minimum ex Gothenburg, Sweden to Sydney

USD 6 per w/m or Minimum ex/via Germany to all Australian ports


USA and Canada to Australia and New Zealand – General Rate Increase:

We have been notified by multiple carriers of a General Rate Increase for cargo from USA and Canadian ports to Australia and New Zealand, effective 15th of December or 18th of December 2020 (Depending upon the shipping line) cargo receipt date as follows:

USD 200 per 20’ Containers

USD 400 per 40’ Containers

Another carrier has announced similar General Rate Increase ex USA West Coast and Canadian ports to Australia, New Zealand, Pacific Islands and Papua New Guinea destinations, effective 18th of December 2020 as follows:

USD 250 per 20’ Containers

USD 500 per 40’ Containers

 LCL will be applied for all US origins at a rate of USD 8 per W/M or Minimum.


North East Asia to Australia General Rate Increase/Rate Restoration:

We have received notices from shipping lines advising of a General Rate Increase (GRI) from North East Asia to Australia, effective 1st December, depending upon the shipping line as follows:

USD 300 to 1000 per 20’ container depending upon the shipping line

USD 600 to 2000 per 40’ container depending upon the shipping line

LCL – USD 14 per W/M or Minimum. If max GRI is applied, this will have to be adjusted accordingly.

Some carriers have also introduced a Peak Season Surcharge from North East Asia to Auckland port in New Zealand, effective 18th November, at a rate of USD 250/20’ and USD 500/40’ containers.

In addition to announced general rate increases, we have also experienced sudden rate hikes for both FCL and LCL without much notice during the last month.


South East Asia to Australia General Rate Increase/Rate Restoration:

Shipping lines have also announced General Rate Increases from South East Asia to Australia, effective 1st December, depending upon the shipping line as follows:

USD 150 to 1000 per 20’ container depending upon the shipping line

USD 300 to 2000 per 40’ container depending upon the shipping line

LCL USD 6 per W/M or Minimum. This will vary according to the FCL General Rate Increase and will be more if maximum GRI listed above is applied by carriers. (Also applicable to Transhipment cargo).

In addition to announced general rate increases, we have also experienced sudden rate hikes for both FCL and LCL without much notice during the last month.


Middle East, South Asia and Indian Subcontinent to Australia General Rate Increase:

Shipping lines have announced a General Rate Increase from Middle East, South Asia and Indian Subcontinent to Australia effective 1st of December 2020 as follows:

USD 150 to USD 200 per 20’ Container depending upon the shipping line

USD 300 to USD 400 per 40’ Container depending upon the shipping line

LCL applied accordingly. Very high potential for significant increases out of India.

In addition to above, some carriers have announced a peak season surcharge (PSS) from India to Australia/New Zealand, effective November 16 2020 until further notice, as follows:-

USD 100 per 20’ container

USD 200 per 40’ container

In addition to announced general rate increases, we have also experienced sudden rate hikes for both FCL and LCL without much notice during the last month.


Sea Priority Go Surcharge affecting LCL shipments from Singapore to Australia

We have been advised by some agents that, due to the chaos caused by recent port strikes in Australia and the global shortage of equipment and capacity, some carriers have imposed a Sea Priority Surcharge to have containers loaded to Australia from Singapore, as of November 1st 2020. These surcharges are significant and for LCL cargo, translate to about 20 USD per w/m or minimum. Unfortunately, we will have no choice but to pass this on if this is charged by the carriers.


Introduction of vehicle booking systems in various Melbourne and Sydney depots

We have been advised by carriers in Melbourne and Sydney of several LCL depots implementing vehicle booking slots for all LCL collections.  These commence this week and come in an attempt to streamline their processes, limit waiting time and eliminate futile trips at their depots.

The requirement to pre-book timeslots, with only a limited number available to all transport providers, has resulted in carriers adjusting how they arrange these collections to ensure they can continue to deliver on their service and commitment to their customers.  The main changes are as follows:-

  • LCL Bookings – need to be booked before 3pm on the day prior  (import and export). Any bookings after this time will attract additional costs.
  • Each timeslot can only be secured for 1 Bill of Lading, multiple bills of lading for the one consignee will now require their own timeslots and in turn require an LCL booking for each bill of lading.  At this stage, our selected carriers have advised that they will still be able to bill us as one LCL consolidation booking for shipments where we have multiple house bills of lading, rather than bill separately for each HBL booked.  This may change in the future and if it does, we will let you know.
  • Timeslot fees will, however be applied by the depots for each booking made which will be passed on by the carriers.  These have been advertised at $12 + GST per house bill.  We will have no option but to pass these costs on.

Whilst this is currently being introduced in a select few depots in both Sydney and Melbourne, unfortunately, we anticipate that most depots will follow suit in due course.


Current Situation at Australian Ports:

Due to the delays being experienced at Sydney port, shipping lines are constantly adjusting schedules and changing port rotations in order to maintain their planned schedule or minimize delays. At times, containers are also being discharged at alternative ports in Australia with an option to receive the container there or to pay extra to move it to the final destination. In case of discharge at a different port, shipping lines are demanding to return empties at port of discharge rather than in Sydney, as Sydney container depots are already at capacity.

Delays at Sydney port however are slowly improving with no recent Industrial action at port terminals. Current vessel waiting time/delays are about 4 to 5 days at DP World Terminal and about 10 days for Patrick Terminals. Patrick Terminal and MUA will face each other off again on 1st December at Fair Work Commission when the hearings resume. We will monitor the developments and keep you updated with the latest information.

As advised in our last notice, MUA has now started taking Industrial Action against Svitzer, a major tug service provider to vessels berthing at all Australian ports. If their dispute escalates further, it has the potential to cause devastating impact on Australian shipping schedules.


DP World Fremantle Time Slots Cancelled:

We have received an update from our truckers in Fremantle advising that all Import Pickups scheduled between 6 am to 5 pm today at DP World Terminal Fremantle have now been cancelled. The reason given by DP World Terminal is ‘Unforeseen Circumstances’. Additional slots will be available after 6 pm today.


Air Freight:

 The current air freight situation is still the same as it was just after the start of COVID-19 crisis. Passenger flights are still very limited and freighters are generally being used to move the cargo around. Till now, the rates are extremely high compared to Pre-COVID 19 levels and are fluctuating every day. Airlines across the globe are continuously reporting losses because of a major drop in passenger volumes since the start of COVID pandemic. Some are restructuring/laying off workers whereas others are converting passenger planes in to Cargo only aircrafts to minimize their losses. Emirates recently deployed its massive Airbus A380 planes for cargo only flights to generate freight revenue.

The future of passenger air travel looks grim with IATA forecasting air travel recovery to Pre-COVID 19 levels in 2023.

We will update you with any further information we receive.

Best Regards,