Delays at Transhipment Ports on Australian Traffic

There has been a builds up of traffic transiting Singapore and Port Klang to all Australian ports over the past four (4) weeks.

Higher than anticipated volumes from Far East Asia, South East Asia, Europe and USA in the November peak period have led to a large backlog of containers sitting in the transhipment ports awaiting connection to Australian destinations.

All lines are currently experiencing delays and roll-overs to later vessels as the capacity to move the large volume of containers is simply not available on the Australian trade lane.

At worst, we are generally experiencing a delay of 7 days on our traffic, some other carriers (not supported by GPSM) are advising delays of up to 2-3 weeks in these transhipment ports.

The most affected port appears to be Adelaide, purely due to the lack of carriers that call at that port.

Rest assured that the GPSM team are working extremely hard in liaising with our preferred carriers to ensure earliest uplift of all transhipment containers.

Transhipment Port Delays in Singapore

Please be aware that there are possible delays expected at Singapore for transhipment cargo destined for Australia. We are giving you a “heads up” on the situation as of today, we have noted some traffic from China particularly to Fremantle and Adelaide are facing some delays in Singapore port on some shipping lines.

This situation has been created by peak season traffic volumes, and the collapse of Hanjin Line, where thousands of container slots and vessels have been lost to the trade. In the last week there has been a large volume of traffic from South East Asia, Far East Asia, Europe, UK and USA transiting Singapore port and the volumes involved have quickly created a backlog.

We would expect the delays to continue for the next 2-3 weeks and suggest that everyone takes this situation into account when planning new shipments.

GPSM will keep you updated on further developments as soon as further information is available.

Asbestos Penalties now apply

It is the responsibility of all importers to ensure the goods you import do not contain any Asbestos, Australia policy is Zero Tolerance. We urge you to read the attached fact sheet carefully. It does contain information on your due diligence, and what measures the Australian Border Force (ABF) is taking with respect to testing of goods at time of arrival.

Measures the importer can take to ensure your goods are manufactured without any asbestos are also outlined in this fact sheet, such as

  • Contractual obligations with your supplier specifying NIL Asbestos content
  • Testing for asbestos content prior to shipping goods to Australia by accredited authorities (further details found in fact sheet)
  • Regular risk assessment to determine what raw materials are used, or where they are sourced from, and identifying and therefore minimising any asbestos risk activities at point of manufacture

For all future customs entries we prepare we will not be able to lodge them without a declaration from your supplier stating that the shipment does not contain any asbestos. Without this we are unable to lodge your entry as goods will be deemed to contain asbestos, and the shipment will be held and sent for testing. All costs incurred in the re direction of container to an approved customs depot, testing, storage, and demurrage for late return of container will be the responsibility of the importer.
We need you to confirm that you have read the attached fact sheet as the ABF taking the matter of managing the risk of goods possibly containing Asbestos extremely seriously, and we require you to also take time to read this and be fully informed on what your obligations are as the importer, the penalties attract fines of up to $900,000 and prosecution under both the Customs Act & Crimes Act.

Please also be aware we are having shipments held now and sent for testing.

Far East Asia Ocean Freight Rate Alert

The market from Far East Asia has been extremely volatile of late, rates have been at extremely low levels for most of 2015/2016, despite small increases and reductions over this period, including increases from 1st September, 2016. The driving factor on rates throughout this period has been availability of space of the trade, offering far too many vessels and excess capacity.

In recent months, one international line has been forced to refinance their business in order to survive and in the last 2 weeks, Hanjin Line, the Korean based global carrier (7th largest in the world) has announced bankruptcy. The line is now in the hands of Administrators and many vessels are tied up off international ports or in some cases, under arrest for non-payment of port and associated charges.

GPSM were alerted to their financial situation some 6 weeks ago, there were rumours in the trade that Hanjin were having financial difficulties, so we ceased any support of them immediately, and we are happy to say that we have had no containers tied up on any Hanjin vessel. Many of the LCL consolidators continued their support of Hanjin and have numerous containers detained at present. Most of the slot-charterers on the Hanjin vessels have also managed to obtain release of most of their containers by guaranteeing payment to the various port operators.

The results of the bankruptcy will be an issue for many importers/exporters while the Administrators try and resolve the payments due to various global ports, many traders will have stock delayed for quite some time. The more important situation moving forward is that the Australian trade will lose a large space capacity, it is reported that Hanjin were operating 13 vessels on our trade with capacity of approximately 65,000 container slots.

It will take quite some time to replace this capacity, one carrier has been reported as being interested in taking over the Hanjin vessels but that could take months before the vessels are available and placed into service.

We have been advised to brace for increased freight rates, the demand will be extremely high through the traditional “peak” season of October through December. Already we are seeing notices from lines that rates will increase by USD 500.00/20ft and USD 1,000.00/40ft. Fortunately GPSM have some very close associations with some of the carriers and while we can see rates are expected to increase, we believe that we will be able to negotiate far better rate levels for our clients on the major carriers.

We are not trying to alarm anyone, just reporting the facts as we know them today, so we would suggest that you be prepared for cost increases, something we have not had to consider in any great amount over the past couple of years.

GPSM will naturally keep you updated with latest developments as soon as possible.

Hanjin Line Receivership

As advised by our industry body, CBFCA, the following article has been written by Sohee Kim & Kyunghee Park for Bloomberg and is forwarded for your attention.

“As reported in Bloomberg today Hanjin Shipping Co. will apply for court receivership after lenders decided to halt all support to South Korea’s biggest container shipping line.

The Hanjin board decided unanimously on the move at a meeting in Seoul Wednesday and will file for receivership this afternoon, a spokesman said. The restructuring proposals submitted by Hanjin Shipping weren’t enough to address a cash shortage, main lender Korea Development Bank said Tuesday, dealing a blow to the revival efforts by a firm that’s been trying to reschedule debt under a voluntary creditor-led program since May.

Hanjin is among shipping lines grappling with a slump in global trade since the 2008 financial crisis and the slowest pace of economic growth in China in a quarter century. The industry worldwide has been forced to sell assets, cut jobs and idle some operations to bolster finances as the slowdown coupled with overcapacity eroded freight rates.”

In other places such as Canada, service providers in rail and road, for example CN Rail, has put a 24 hour “pause period” on all Hanjin containers and is waiting for further information from Hanjin. The CBFCA is aware that containers that are on the train are being moved but Hanjin containers not on trains are not being loaded to rail. In addition, in terminals, Hanjin containers are not being released during the “pause period”.

It is not improbable that such actions could occur within Australia, and the CBFCA recommends members review consignment issues in Hanjin carriage and inform clients of issues which have arisen in other places and could arise in Australia.

GPSM will continue to monitor the situation and advise any updates as received. We are currently checking all shipments that are on the water and booked to move to Australia to check that none of our routed containers are on Hanjin vessels, they may have been booked on anther shipping line but due to the consortiums operating from Far East and South East Asia, carriers do slot charter on other lines vessels as required.

New Packing Declaration Formats

Under the Biosecurity Act 2015, there have been changes made to the Packing Declaration, in particular to Q.1. whereby Department of Agriculture & Water Resources (DAWR) has removed the “Prohibited Packaging Material Statement” and replaced it with the “Unacceptable Packaging Material Statement”.

DAWR will continue to accept the Prohibited Statement up till 16 June 2017, new forms are attached, and we recommend you inform your suppliers / packers of the change to ensure they comply with the new Biosecurity requirements.

Australian Customs Trusted Trader Program Goes Live

The Australian Border Force has implemented a Voluntary trade facilitation initiative, which is open to all Australian Business active in the International supply chain, that have an ABN, with a two year trading history and that are financially solvent.

This programme recognises businesses with a secure supply chain and have compliant trade practices, once a business is accredited, they are rewarded with a range of trade facilitation benefits. To become accredited, your business must firstly complete an expression of interest, followed by completion of a self-assessment questionnaire. Depending on the size of your business the Australian Border Force (ABF) suggest this could take between 20 hours and 200 hours , an ABF officer will also visit your business premises to conduct an Onsite validation, the purpose of which is to verify the information provided in the Self-assessment questionnaire (SAQ) .

The SAQ asks for information relating to:

  • Structure, operations, and personnel.
  • Organisational governance.
  • Trade compliance.
  • Financial Standing.
  • Commercial record keeping.
  • Communications and Information Communication technology (ICT) environment.
  • International supply chain security.

The benefits of becoming an accredited trusted Trader are :

  • A dedicated Account manager, will assist with ATT process.
  • Priority Trade services , specifically to do with rulings, valuations, drawbacks, refund of duty.
  • Differentiated examinations, accredited ATT will be formally recognised as low risk by the ABF.
  • Mutual recognition arrangements, namely customs to customs agreements made between Australian government and trading partners.
  • Use of the Australian Trusted Trader logo.

Once your business has been validated, your business might be offered the opportunity to enter into an ATT agreement and become a trusted Trader. There will be ongoing obligations for your business will need to meet in order to access the benefits of the programme, and once accredited you will be assigned a dedicated Account manager , who will be your single point of contact between your business and the ABF.

At a recent seminar we attended a figure of $32000 was quoted as the costs incurred by business to complete the SAQ and on site validation process. We believe that the ATT is designed for large business with a corporate governance that may require them to have ISO accreditation , our view is that programme would not suit smaller to medium size business when you consider the cost recovery versus the benefits offered by the programme.

Current China Rate Situation

Dear Clients,

Our International Business Manager, Bob Bulmer, has just returned from a trip to Shanghai China during which time he met with quite a number of the major shipping lines.

This is his second trip in the recent weeks following up on negotiations held in early July with lines to try and finalise global contracts for our global forwarder network, IASA-International Air and Shipping Association. These negotiations are expected to lead to more advantageous rates for all GPSM clients, not only on China to Australia trade, but on all global trade lanes to Australia and the major global ports.

Because the concept we have presented is something totally new that none of the lines have ever been involved in before, the negotiations have been protracted and varied, each shipping line have their rules and regulations and varying requirements in order to finalise an agreement. There are some further requirements that we need to fulfil and we are working on those issues at present and we hope to have this new concept contract in place as soon as possible.

On a more general note, during the meetings in Shanghai, we were advised that more capacity is being introduced into the Japan, Korea, Taiwan, China and Hong Kong to Australia trades from late September 2016 through new shipping line alliances, expected to start operating from 1st October, 2016. The new alliances have come about as lines China Shipping Line, Neptune Orient Line and American President Lines have all be taken over by larger lines, there will be new faster services from some ports and possible twice-weekly services from some major ports when all the alliances are finalised.

The general view in the market at present is that rates in the next 4-8 weeks may increase slightly as lines try and grab back some of their lost income over the past couple of years while rates have been at record all-time low levels. These slight gains may well be short-lived when more space becomes available, all the lines will be vying for whatever business they can gain in order to fill their allocations under the new alliances.

GPSM will as always, keep all clients appraised of any further news as soon as same comes to hand.