Containers out of northern China are becoming increasingly hard to get hold of, report forwarders. A surprisingly strong market, plus lower vessel capacity due to the Red Sea crisis, is creating a shortage of both ships and containers.

“There is a very real shortage of 40’ HC containers in China – we are all running out,” said Hans-Henrik Nielson, global development director at CargoGulf.

“Containers are barely arriving at any PRC or Malaysian port (or Singapore) before they are out laden again. The disruptions (port omissions, congestion) are playing total havoc with equipment planning.

“When I say it’s week-to-week scrambling, I’m really not exaggerating. Right now there are way too many empties in Colombo for instance and the upper Gulf ports. No amount of sophisticated equipment software can fix a “cut and run port omission.”

Ligentia confirmed the shortage today in a message to customers. “Equipment stock, particularly in North China, is tight and varies daily based on vessel arrivals and the discharge of empty containers.”

It added that in Shanghai, “almost all carriers are lacking empties, especially CMA and ANL”. Vessel waiting time at the port is now three to 14 days, it added, due to port congestion. “Across almost all carriers we are seeing schedule delays.”

It also noted that carriers are struggling to obtain containers across many more Chinese ports, including Maersk and Hapag-Lloyd in Yantian; Cosco, HMM, Hapag-Lloyd and MSC in Ningbo, Hapag-Lloyd and Maersk in Tianjin, and Cosco and CMA CGM in Qingdao. Xiamen, meanwhile, has sufficient containers, Ligentia said.

“The market remains strong and carriers continue to be increasingly selective about bookings.

“Some BCOs are seeking additional quotes from carriers to handle expected excess volume in the upcoming months. Carriers have also announced blank sailings for June, leading to a significant capacity reduction of 15-20%, exacerbating week-to-week capacity fluctuations,” it added.

Metro Shipping said that there were “increasing equipment challenges in more origins, and it would be prudent to expect more of the same”. Mr Nielsen added: “The current market demand defies all projections from six to nine months ago.

“We are close to what I call “covid19 shipper capitulation” – ie, there is no point fighting this. Just book space forward to ensure transport.

“It’s pure Kirkegaardian existentialism. You don’t see this too many times in a professional shipping career,” he said referring to 19th century Danish philosopher Soren Kirkegaard.

One of his most celebrated ideas is the “leap of faith” – when someone is faced with two choices but no rational way of deciding which is the better option, their decision will have no basis in reason and instead literally be a leap of faith.

Rates from Asia to Australia:

There has been a sharp escalation in ocean freight rates from China, Taiwan, Japan and Korea to Australia over recent weeks.

Shipping lines announced a general rate increase effective from 15th April, then additional rate increases have been implemented from 1st May and again from 15th May, 2024, mainly to East Coast Australia ports. One major line has already announced another rate rise from 1st June 2024 but we will need to monitor the market to see if others follow.

These cost increases are certainly not normal as traditionally the cargo volumes drop in May and June as we approach the end of financial year.

That is definitely not the case in 2024, and the reasons are a little baffling but we do note that large volumes of unexpected bookings are also being seen on the Asia to USA and the Asia to Europe trade lanes.

In discussing the reasons with shipping lines, we are advised that most ocean carriers are heavily booked for May with strong demand already in June, and with the shortage of space and empty equipment following on from the Red Sea terrorist issues, longer transit times via Cape of Good Hope and resultant congestion at tranship ports, that maybe exporters and importer are concerned that later in the year the situation may get worse.

Rates from South East Asian/Indian sub-continent ports to Australia have also increased but at a much slower pace than from North East Asia.

It is noted that rates from Europe and USA/Canada have remained stable for the last three (3) months and we are expecting those rates levels will remain in place for the immediate future.

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

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.

*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.

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:

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.

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.

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.