November 2022
16th November, 2022
In a very brief period, the sea freight rate environment has shifted significantly on several trade lanes, particularly ex Asian ports to Australia. The reductions are huge and whilst very much appreciated by all after the never-before-seen rate peaks during Covid it is does come with an underlying knowledge that volumes are decreasing. The key drivers for decreased volumes are high levels of inventory, increasing interest rates globally, reduced consumer spending, higher energy costs and with government stimulus no longer in play consumers are having to spend from their own wallets.
China rates
From the main ports of China including Shanghai, Shenzhen and Ningbo 40’ container rates are either side USD1000.00, that is a reduction of USD11000.00 from the covid peaks. The savings for Australian importer’s is however being slightly offset by the strong USD. It is fair to say though that the rate reductions are greater and will be showing a very good saving in the per unit cost for imported goods. Rates as always do need to be considered in line with the ability to secure a booking, is it a direct or indirect sailing and what is the first port of call to Australia.
China Covid Zero
For the time being the Chinese Government continues to adopt a covid zero policy. We are seeing some localised lockdowns affecting the movement of goods, the impact however is currently not having a significant impact on bookings. It is encouraging to see the Chinese Government making some changes with their covid policies, for example International travellers are required to quarantine for 5 days, this was previously set at 7 days. There is indication that changes to other covid rules are being considered. With many importers now considering reducing their reliance on China the need to make changes to the covid policies will only increase.
USA Challenges
Ocean freight from the USA continues to suffer delays, congestion is still an issue albeit not as bad as a few months back. A particular issue to highlight is that containers are on their way to USA ports before notification of vessel delays are made available, this results from many USA manufacturers being inland and using the rail system for transit to the ports. With the vessel being delayed the containers cannot be delivered to the port and the rail yards are not accepting containers back until a new cut off has been declared for the nominated vessel. Costs are being incurred as a result. Similarly, if inland transport is via truck extra charges are being incurred as the containers are being left on the chassis for longer than the quoted period. We are receiving advise that this is a daily and ongoing problem and will only exasperate unless the FMC makes an immediate intervention.
Tugboat Chaos
An ongoing dispute between Maersk owned Svitzer and the Maritime Workers Union (MUA) is set to escalate this Friday. Svitzer has given notice of an indefinite lockout from Friday to all harbour towage employees covered under its 2016 National Towage Enterprise Agreement and their union representatives. Both parties have not bene able to come to a new workplace agreement since 2019.
Svitzer are Australia’s largest tugboat operator, managing services in 17 key ports. Svitzer management advises it has been left with no option but to respond to the damaging industrial action underway by the union with over 2000 hours of stoppages having already taken place. For Australian importers and exporters there is never a good time for such actions, however the timing into Christmas will no doubt cause chaos in the supply chain.
We will monitor this situation very closely and ensure that all customers are made aware of any impact to their important shipments.
Landed Costings
If you have not already taken advantage of our landed costing reports, we’d love to be able to share the data with you. As part of managing your imports we capture all the necessary data to produce landed costing reports by shipment for you. In addition, we are also providing to some customers a monthly consolidated report by supplier. For more details on this please contact at sales@sccargo.com.au and we will do some sample reports for you to review.
DAFF Charges
The Department of Agriculture, Fisheries and Forestry (DAFF) has announced an increase in their cost recovery charge for sea freight consignments in response to the growing risk of hitchhiker pests such as Brown Marmorated Stink Bug (BMSB) and Khapra Beetle.
From 16 January 2023 their cost recovery charge will increase from the current $49 to $58. The cost recovery charge is charged on the Customs Declaration along with the Customs Duty as “Quarantine Processing Charge”. This will have the effect of increasing the total cost of Government Declaration Charges from the current $201 to $210.
Please do not hesitate to contact our Customs team on customs@sccargo.com.au should you require any further detail.
Travellers
With the world well and truly back open for business we are very pleased to be welcoming some of overseas business partners from China and the UK during November and December. For SCC these are both very strong trade lanes, and our time together will enhance our offerings to customers in 2023.
Vietnam
Some interesting commentary from the Vietnam Textiles and Apparel Association recently, they are expecting a decline in orders over the next few quarters, this does fall in line with our earlier comments and volume decreases. They express that high inflation in many of Vietnams key markets including the USA and EU has hurt demand. Many local companies are reporting that production is down 10-15% and thew workforce is being reduced as a result of this. If you are considering new manufacturing relationships it is worth the time to have a look at options in Vietnam, we do expect they will be very keen for new business given this commentary. At SCC we have seen an increasing volume of business from China, we are working with fantastic freight partners there. In addition, we do have access to market specialists that can cut through the myriad of manufacturing partners and provide a refined list of who will be the best options for you to consider. For more details on our freight services and manufacturing relationships in Vietnam please contact sales@sccargo.com.au
New Team Member
We are very pleased to advise we have added to our customer service team recently. We welcome on board June Naea who will be taking care of all thing’s customer service for our wonderful customers. Whilst on staff we have a few high achievers in our midst, huge congratulations to our bearded staff member Aaron De Luca who recently with his team won the 2022 QLD Endurance Karting Championships. Great job guys.
And another huge congratulations to Ange who this week has graduated from her SES training – the personal effort you have expended in learning everything and undertaking the training for this hugely important volunteer service is amazing!
Fundraising
Each year at SCC we select a month to support some wonderful charities. For the month of November we will be fund raising for two charities, both of which have been selected from staff at SCC. Our donation will be $5.00 for every shipment we register throughout November. Our first charity to support this month is Ozharvest. Founded in 2004 they are Australia’s leading charity for the better distribution and management of food waste. Food waste costs Australia $36.6 billion a year, while five and half million people experience food insecurity every year. Feeding hungry people and stopping good food from going to waste underpins everything they do. Ozharvest rescues and redistributes food to those who need it most, especially during times of increased need. We will detail separately tomorrow the 2nd charity we will be supporting throughout November.
https://www.ozharvest.org/
We are very pleased to share details of the 2nd charity we are supporting throughout the month of November. The Dayamani Foundation is a school located in Tenali India, it was established to assist disadvantaged children, who have few, if any options. One of our Director’s daughter’s (Lauren McKillop) is studying Primary School teaching at Notre Dame Uni in Sydney, she has been selected to attend this school for 3 weeks in January 2023. The Notre Dame students attending will be educating the students and themselves. They will each be raising funds and will decide together on how the monies raised can best serve this wonderful school.
The Foundation was started in 2014 by staff and students from the University of Notre Dame Australia after a trip to Tenali, India to volunteer at an orphanage. The organisation in Australia is run entirely by volunteers with 100% of all funds donated towards supporting and providing for the children and staff of DJEMS.
https://lnkd.in/gbKnxGkB
