Baltimore Bridge Collapse

FTA / APSA on Sky News – Baltimore Bridge Collapse

Implications for International Trade

Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) continues to lead our sector’s coverage in mainstream media explaining supply chain disruptions and its contribution to inflationary pressures.

Further to yesterday’s member notice outlining the operational impacts emerging from the catastrophic incident in the Port of Baltimore, Tom Jensen (Head of International Freight & Logistics – FTA / APSA) spoke to Ross Greenwood (Sky News).



Tom Jensen (FTA / APSA) interview on Business Now Sky News – 27 March 2024

Preliminary member feedback suggests this incident will create another “bull whip effect” for importers from the USA east coast to Australia in about 4-6 weeks’ time – refer HERE

“The scale of the volumes coming from the east shouldn’t be underestimated. Global manufacturing is weak including China but the USA is the best of a bad bunch at the moment.”

“Highlighting the fragility of the supply chain is essential, all it takes is one BIG thing (or lots of little things at once) for it to come crumbling down.”

Paul Zalai – Director FTA | Secretariat APSA | Director GSF

Updated Costs

Increase in Adelaide Port Charges:

Flinders Terminal in Adelaide have followed all the other ports Australia wide and will increase their Port Infrastructure Levy from 1st April, 2024 to AUD 245.00 per container.

The revised costs will be added to GPSM rate portal.

Motorway Toll Charges:

Tollway charges have all increased again in February as part of the regular 6 monthly price review process in Sydney, Melbourne and Brisbane.

GPM have been absorbing those regular cost increases for the last 2-3 years but regret we cannot continue doing so, rates are being progressively updated through March and April 2024 in our trucking rate module on the web.

We trust you understand these costs are out of pocket expenses and we need to recoup those outgoings to remain as a viable and reliable transport operator.

Delays in processing customs entries

*Update* ICS Messaging Delays

ABF Cargo Support confirms there are issues at the moment with ICS messaging and have issued the following notice:

Please be advised that we are currently experiencing delays with EDI messaging.

Clients should expect to experience delays with EDI messages responses.

The issue is being investigated as a matter of priority.

ABF apologises for any inconvenience caused.

DP WORLD INDUSTRIAL DISPUTE

BREAKING NEWS:

DP World Secures Four-Year Agreement with Maritime Union, Ending Industrial Action

DP World has reached a significant in-principle four-year agreement with the Maritime Union of Australia, facilitated by the Fair Work Commission, marking the end of all industrial action.

This development comes as a relief to the logistics and shipping sectors, promising stability and improved operations.

The agreement replaces the previous contract that expired in September 2023. It includes key provisions aimed at ensuring fair compensation, enhanced safety measures, effective fatigue management, along with guarantees of job security and work-life balance for employees.

Nicolaj Noes, Executive Vice President at DP World Oceania, expressed his satisfaction with the outcome: “This agreement is a testament to our commitment to our workforce and to providing uninterrupted services to our customers. We are now focused on moving forward, restoring the supply chain operations, and working collaboratively with our employees to rebuild confidence among our customers and make a positive impact on the national economy.”

DP World expresses its appreciation to the Fair Work Commission, various government entities, industry groups, small and medium-sized enterprises, and its customers for their backing during the negotiation phase, underlining its commitment to revitalising and improving supply chain functions across Australia.

SHIPMENT INSURANCE UPDATE

Shipment Insurance Update:

We have bee notified by a few clients over the last 24 hours that their Insurance Underwriters have notified them of a change in their Marine Insurance coverage on any shipments moving near the Red Sea or the Suez Canal.

We would recommend that all clients check with their Insurers to see if they could be impacted by a change in coverage. It is important to note that GPSM are not involved in Marine Insurance coverage nor do we have any control over actions taken by shipping lines who despite advising that most of their services are avoiding the Middle East conflict area and transiting to/from Europe via Cape of Good Hope, may at any time decide to alter that decision and divert vessels via the Red Sea or Suez Canal.

Please note that GPSM will not be liable for any claims, damages or losses as a result of the change in policy by insurers or shipping lines during the current conflict.

Australian Port Infrastructure Levy Charge:

Terminal operators have announced an increase in the Port Infrastructure Levy charge as advised in an earlier GPSM Newsflash, from 1st February 2024 the new cost for Sydney, Melbourne and Brisbane will be $ 245.00 per container, the GPSM rate portal will reflect the new charges from that date.

General Update

DP World Status:

No change to the current status at DP World Terminals, the Maritime Union of Australia has however advised of on-going Protected Industrial Action now extended until 3rd February, 2024.

Government is still insisting it will not get involved in the dispute in an attempt to broker a deal, instead again advising both parties to seek a resolution via Fair Work Australia.

How much longer does industry need to put up with this strike action and work bans, it has been ongoing now for some 18-20 weeks and neither party appear prepared to make any compromises to their demands?

 

VICT Terminal Melbourne:

Protesters have forced the complete closure of VICT Terminal in Melbourne over the weekend and since, due to security concerns.

Police are still present at the scene whilst a ZIM Line vessel remains at berth, however VICT’s CEO Bruno Porchietto has advised that they are hopeful they will be able to open the gates at some point today subject to conditions.

 

Airfreight Arrival Charges:

Cargo Terminal Operators have announced another cost increase effective 1st February, 2024, the airline handling fee will increase by AUD 0.02/kg and the Airline AWB fee will increase by AUD 4.00 per shipment. The new charges have been uploaded to the GPSM rate portal and will appear on all invoices from 1st February, 2024.

 

Panama Canal Update:

Services from USA and Canada East Coast ports remain disrupted, both Maersk Line and Hapag-Lloyd have announced the following routing change to NZ and Australia to avoid the now long delays for Panama Canal passage:

From US West Coats, containers will ship by vessel to Manzanillo, Panama, be offloaded and railed or trucked to Bilbaoin Colombia where they will load to NZ and Australian ports. Naturally transit times will be impacted by around 10-14 days being added to the journey but better than the possible 2-3 week delays via Panama Canal, albeit with restricted Canal access

 

Red Sea Update:

Rebel attacks are continuing in the Red Sea, last weekend another tanker was targeted by a missile attack. Commercial shipping is generally avoiding the Suez Canal and transiting via Cape of Good Hope, the change in route is adding some 10-14 days to transit times from Europe, Scandinavia, UK and Mediterranean ports to Australia and NZ.

AUSTRALIAN WATERFRONT

The situation at Australia’s Port Terminals is far from resolved, both DP World and The Maritime Union have been calling for Government to intervene in the dispute but Government have not been willing to get involved to date, rather suggesting the two parties should negotiate a settlement via Fair Work Australia.

The Protected Industrial Action have now been in place for almost 5 months, the fact the dispute is still unresolved clearly highlights a sad reflection on our Industrial Arbitration system.

The cost of the disruptive action to the Australian economy is estimated at $ 84 million per week.

 

DP World Update:

The MUA has notified DP World of additional Protected Industrial Action (PIA) at each of its terminals through to 30 January 2024.

The PIA continues the 2-hour stoppages three times every 24-hours through to 30 January 2024 at all of DP World’s terminals.

It also includes bans on loading trucks and trains at every DP World terminal from 0600, this Friday, 19 January through to 0600 Saturday, 20 January 2024 (0700 to 0700 in Fremantle).

The 2-hour stoppages effectively turn into 3-hour stoppages as no slots are being allocated in the hour time-zone beforehand to try to ensure that all trucks are serviced before the gates close for each stoppage.

Even then, there are reports of futile trips with trucks being escorted from terminals before being serviced in the time-zones leading into the stoppages.

Federal Industrial Relations Minister, Tony Burke, is scheduled to meet with Nicolaj Noes and his management team at DP World this Thursday morning to discuss the dispute.

At that meeting it is anticipated that DP World will urge the Minister to use his powers under the Fair Work Act to terminate the industrial action and order the dispute into arbitration within the Fair Work Commission (FWC) on the grounds of the economic damage being imposed on the Australian economy.

However, the CFMEU, of which the MUA is a division, has urged the Minister to stay out of the dispute, saying that to do so would be “dangerous territory”, and that DP World “could afford to pay” the union’s demands.

We will keep all clients updated on developments as further news comes to hand.

PANAMA CANAL UPDATE & DP WORLD UPDATE

Panama Canal Update:

Water levels remain extremely low in the Gatin Lake that feeds the Panama Canal due to drought conditions in the area, this is adversely affecting the lock system that operates and has led to restrictions in draught and vessel size able to transit the Canal.

Following a further review of the Canal booking system by The Panama Canal Authority, Maersk Lines and Hapag-Lloyd joint OC1 service that links Oceania to the USA East Coast will avoid the Canal and instead land-bridge containers by rail across Panama in an effort to avoid the lengthy delays being encountered at present.

The vessels that previously utilised the Panama Canal will now use the existing Panama Canal Railway to transport containers across Panama. The usage of the Panama Canal Railway is already a standard product for several other connecting services and the lines have confidence that OC1 cargo will continue to move seamlessly through Panama.

 

DP Word Update:

We are advised this morning that the Maritime Union of Australia has withdrawn some of the Protected Industrial Action (PIA) work bans and stoppages. Despite the withdrawal of some bans, there are still multiple protected industrial actions that remain ongoing, including *partial work bans, associated with the PIA for the period Monday 15 January to Tuesday 23 January 2024.

GPSM will continue to update the situation as further developments come to hand.

Air strikes in Yemen – impacts on global shipping

Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have received the following from James Hookham, Director Global Shippers Forum (GSF), proving a reaction and expectations of the impacts following the air strikes in Yemen over-night.

The latest event that have dramatically shifted the calculations on the Red Sea situation – while avoiding commentary on the political and military aspects, James has provided the following points as to what it could mean for shippers and supply chains reliant on this route :

  1. The risks of retaliatory strikes on merchant shipping in the Red Sea area are now extreme, and all carriers can be expected to divert their ships away from the Red Sea and Suez Canal route, if they haven’t already;
  2. A working assumption must be that avoidance of the Red Sea and diversions around the Cape of Good Hope will now be the rule rather than the exception, unless or until there is a political settlement which specifically includes the cessation of actions against merchant shipping in the Red Sea;
  3. Therefore, all else being equal, shippers (i.e. importers in North America and Europe) should expect a one-off adjustment to schedules and port calls over the next few weeks but after that service patterns should settle into the new longer routes and adjusted port calls, with some stability returning to predicted arrival times of ships and delivery of containers;
  4. The same will apply to east-bound sailings, which may affect the availability of empty containers in Asia in the short-term. But, again, this should stabilize over time;
  5. Rates on affected trades will inevitably adjust to the higher costs incurred, bearing in mind the greater fuel burn, additional crewing time, insurance and chartering costs. But offsetting these to some extent will be the very substantial savings made in Suez Canal transit fees. These are of several hundreds of thousands of dollars for a typical container ship and these savings should be accounted for by shipping lines when justifying their surcharges and higher rates;
  6. The narrative now being heard is that because the Red Sea is effectively closed to shipping, Asia-Europe/USEC shipping rates are going to repeat the sustained spike of 2020-22 (and, by implication, shipping lines will get another big profit windfall). GSF does not believe this is supported by the circumstances. There is no chronic shortage of shipping capacity in the way there was during the Covid pandemic, and there is substantial new capacity expected to be delivered throughout the first half of 2024. Demand for shipping space is also stable, if not declining;
  7. Furthermore, the cost increases that will be incurred by shipping lines diverting around Africa are known and finite and should not be talked up into a second shipping crisis on the scale of the first one in 2021. Shippers should check demands for payment of additional surcharges, given that the first vessels affected by the diversion are only just arriving at their destination ports. (The first diversions commenced between 13-15 December, and not every vessel immediately diverted);
  8. There have already been substantial increases in quoted spot rates on Asia Europe/USEC trades, but it is important to distinguish between rates that are quoted in hope by carriers and those that are actually being paid in cash by shippers; and
  9. Shippers commencing contract renewal negotiations over the next few weeks should avoid being ‘locked-in’ to rates based on currently quoted spot prices. Following a satisfactory resolution of the situation, costs and rates on affected trades can be expected to ‘normalise’ even quicker than they did in 2022. Although it may seem a dim prospect today, this eventuality should be provided for in any agreements made with carriers for 2024-25.

The next few days are critical in whether the Red Sea situation is contained or develops into a much longer-term regional conflict, which would have much wider and profound consequences for international trade. GSF will continue to report and interpret events from a shipper’s perspective.

 

Paul Zalai – Director FTA | Secretariat APSA | Director GSF

Copyright © 2024 Freight & Trade Alliance (FTA) Pty Ltd, All rights reserved.

DP WORLD TERMINALS

DP World Terminals Update:

MELBOURNE

At 7.00am AEDT this morning, DP World Port Botany released the following detail :

Due to protected industrial action DPW WST will not open for road operations on Friday 12th Jan from 0600hrs, until Friday 12th Jan 1400hrs.

Slots in these zones will be cancelled.

The road is proposed to reopen at 1400hrs Friday 12th Jan.

Further updates will be provided this afternoon as information becomes available, please check the daily 1-Stop Notifications. We are actively working to reduce service disruptions and will keep you updated.

 

SYDNEY

At 6.50am AEDT this morning, DP World Port Botany released the following detail :

This morning DPW has attempted to engage employees in full R&D operations, this has not been accepted by CMMFEU members who have refused to work as required by DPW.

DPWA management apologises for impact this has on our customers’ business and we appreciate your patience as we actively try to resolve this situation.

GPSM will continue to keep all clients updated with latest information on the Protected Industrial Action instituted by The Maritime Unions.