Carrier Reliability hits a 2014 high
Global box line schedule reliability reached its highest level of 2014 in November, despite the impact of increased congestion on the US west coast.
The latest figures compiled by maritime analysts SeaIntel, compiling data from more than 10,800 vessel calls, shows that box line reliability climbed to 76% last month from 74.4% in October.
SeaIntel partner and chief operating officer Alan Murphy said that to focus solely on the development of reliability in 2014 would be good news for shippers and for carriers. However, he noted that if you compare last month’s schedule reliability with that recorded in November 2013, performance has fallen nearly five percentage points. “Every month of 2014 has been below the 2013 level, an unsatisfactory development for both shippers and carriers,” he said.
In terms of individual carriers it was a case of as you were, the top three carriers holding onto their positions for the third consecutive month. The world’s largest shipping line, Maersk, was crowned the most reliable carrier in November once more followed by Hamburg Sud and CSAV, with schedule reliability of 86.4%, 84.8% and 83.4%. Meanwhile, at the other end of the spectrum, SeaIntel’s figures show that Pacific International Lines, Hyundai Merchant marine and Evergreen were the least reliable.
PIL’s vessels called on time 69.8% of the time, HMM 70.9% and Evergreen 72%. PIL’s vessels called on time 69.8% of the time, HMM 70.9% and Evergreen 72%. From a trade lane perspective, with congestion rife at ports on the US west coast schedule reliability and container delivery on east bound transpacific services continued to deteriorate. Ocean carrier schedule reliability on the route slipped by 4.4 percentage points to 53.6% in November, and container delivery reliability stood at just 40.7%.
Improved reliability on a global scale was driven by an improved performance on the Asia-north Europe and the Asia-Mediterranean trades, which rose to 82.5% and to 76.9%. On the Asia-north Europe this was the highest figure it has reached this year, and more importantly the first time it has improved on-year.
Perth Freight Link takes major step forward
A business case study for the Perth Freight Link has been released paving the way for a procurement of tenders in January 2015, leading to beginning of construction and the highway in 2016 and the first leg open to traffic in 2017. According to the Port of Fremantle’s most recent Truck Productivity Study, the Freight Link should have “a significant impact on trucking efficiency” once it is completed.
“Faster and, equally important, reliable transit times will improve fleet efficiency. The possibility of high productivity vehicles (capable of carrying four TEU as opposed to the current maximum of three TEU) being permitted on this route will also confer benefits, such as the promotion of greater use of hubs with high productivity vehicles providing efficient line haul operations to distribution centres.
“It could, however, adversely affect port rail services and will need careful consideration to ensure the best overall outcome is achieved,” the report said. Bypassing 14 traffic lights, the freight corridor is expected to remove 500 trucks per day from Leach Highway by 2031. Forecast to cost $1.5bn, part of the cost will be recovered by a “per kilometre charge” on heavy vehicles using the freight route between Muchea and Fremantle once the entire link is up and running.
But business should not be penalised to fund projects that benefit all road users, Chamber of Commerce and Industry chief Deidre Willmott warned government. “The link will mean a more efficient, less congested road system for all users, so it is extraordinary that government is only asking business to contribute to the cost,” Ms Willmott said. “Truck tolls will be a blow to all businesses whose supply chains involve transporting goods to and from the Port of Fremantle.”
Tasmania signs up with Swire Shipping
Tasmania’s Liberal government signed a memorandum of understanding with Swire Shipping to negotiate a direct international container shipping service from the island state. Minister for infrastructure Rene Hidding said Singapore-based Swire was selected after careful consideration from a range of expressions of interest and much work with the shipping industry. The government expect to see company representatives in Tasmania in the coming weeks for face-to-face discussions covering the next steps, Mr Hidding said.
A direct service will assist many Tasmanian businesses with both import and export freight. It will also provide direct port access to important Asian markets, he added. Lloyd’s List Australia reported last week that many Tasmanian exporters, though welcoming the policy, believed an extension of the Tasmanian Freight Exchange Scheme (TFES) to cover all exports would be more beneficial.
“From day one, the Tasmanian government has been lobbying the Australian government for an extension of the TFES to all north-bound freight at the current rates of assistance,” said Mr Hidding. “This would cost the Australian government around $25m extra per annum but [it has] made it clear that no new money is on the table.”
Japan free-trade deal will come into force January 15, 2015
Entry into force of the Japan-Australia Economic Partnership Agreement (JAEPA), a free trade agreement, will take place on January 15, 2015 Federal trade minister Andrew Robb has announced. Diplomatic notes were exchanged in Canberra on December 15, signifying that both countries had completed all their domestic legal and administrative procedures, which brings the treaty into force 30 days later.
“JAEPA will deliver substantial benefits for the Australian economy and the deal means that our exporters will benefit from an immediate round of tariff cuts by Japan on January 15, followed by a further round of cuts on April 1, 2015,” Mr Robb said. “Like the back-to-back tariff cuts provided by the Korea-Australia Free Trade Agreement, this will deliver immediate benefits for exporters and significantly enhance their competitive position in the Japanese market,” he added.
Key benefits of the treaty include 99.7% of Australia’s exports of resource, energy and manufacturing products will enter Japan duty-free. Total two-way trade between Australia and Japan was valued at $70.75bn in 2013, which is more than 10% of Australia's total trade. Australia’s total exports to Japan stood at $49.53bn while total imports stood at $21.22bn.
Merchandise trade values were, of course, slightly lower. Australian exports to Japan last year were worth $47.5bn, imports from Japan were worth $18.91bn, while total two-way merchandise trade was worth $66.41bn.
Australia's top 5 exports to Japan (2013)
1. Liquefied natural gas – $14.38bn (Japan Ministry of Finance data; cost, insurance & freight basis)
2. Coal – $13.68bn
3. Iron ores and concentrates – $9.57bn
4. Beef – $1.43bn
5. Copper ores and concentrates – $1.37bn
Australia's top 5 imports from Japan (2013)
1. Passenger motor vehicles – $6.70bn
2. Refined petroleum – $3.40bn
3. Goods vehicles – $1.24bn
4. Transport services – $938m
5. Rubber tyres – $669m
Australia-Korea free trade agreement kicks off
The Korea-Australia free trade agreement (KAFTA) came into force on December 12, 2014 and immediately set South Korean tariffs at zero for 84% of Australian imports and Australian tariffs at zero for 86% of Korean imports. Within ten years, zero tariffs will cover 95.7% of Australian exports to South Korea and 99.8% vice-versa.
Once KAFTA is fully implemented there will be no tariffs either way, within eight years. Only goods originating in either country and accompanied by a certificate of origin (COO) will enjoy duty preference. The rules of origin are designed to prevent transhipment, whereby goods from a third country are redirected through either nation to avoid import tariffs.
However, goods from Korea or Australia that are transhipped through a third nation, for instance Singapore, won’t lose their originating status if they do not undergo any changes and are only stored, repackaged, relabelled, or divided for transport. These goods must remain under Customs control through the duration of their journey. Goods that are not in compliance with the rules of origin are subject to the general rate of duty instead of the preferential rates under KAFTA.
Basically, if a good is wholly obtained or produced entirely in either Korea and/or Australia, it will qualify. If a good is manufactured in either country using parts from other countries but meets certain product specification rules, then again it will qualify. Andrew Hudson and Viv Lister of Gadens Lawyers, Melbourne explain that agreeing to kick-start KAFTA before the year’s end will result in exporters and importers benefitting from ‘year 1’ and ‘year 2’ tariffs reductions in quick succession.
“Export to Korea of some products such as unwrought aluminium, titanium dioxide, crude petroleum, natural gas, cherries, some types of tuna and asparagus for example will be immediately ‘tariff free’. Australian beef, dairy, seafood and some fruit and vegetable producers in particular will benefit from two stages of tariff reduction in quick succession,” Mr Hudson said.
It is important for importers, exporters and service providers to assess export-readiness to take advantage of reduced tariffs and improved market access, he said. This will require a review of the form of COO, which should be prepared by the exporter or the producer or obtained from an authorised body such as the Australian Chamber of Commerce and Industry or the Australian Industry Group.
The way in which goods can be shipped without losing preferential status should be assessed by any affected importers and exporters and it is important, Mr Hudson believes, to ensure they keep up to date. Complying with product labelling, safety standards and phytosanitary requirements is also essential, he said. On December 3, Australia’s ambassador in Seoul and Korean government representatives exchanged diplomatic notes confirming all requirements had been met and agreed on December 12 as the commencement date for KAFTA.
Federal trade and investment minister Andrew Robb said KAFTA is expected to result in an annual boost to the economy of close to $650m when fully implemented and is projected to create “many thousands of jobs over the next decade”. Korea is Australia’s fourth-largest trading partner – with bilateral trade worth over $34bn in 2013/14.
Exporters warned on missing opportunities in FTAs
Shippers and consignees could be missing out on hundreds of thousands, to millions, of dollars in unclaimed customs duty refunds. This is owing to importers prioritising the clearing of goods through the Australian border over claiming entitlements granted by Free Trade Agreements (FTAs). Trade law expert Russell Wiese, of Melbourne-based law firm Hunt & Hunt, said that duty could be saved if a preferential origin of the goods were claimed under a free trade agreement.
He believes customs brokers are conservative, rather than negligent, by not encouraging a FTA concession when there is doubt the imported goods qualify under rules of origin. “Nothing jumps out at me as an occasion where a broker has ignored a certificate of origin or where it was clear he just claimed the concession,” he said.
“It is more a case of inquiries not being made to the supplier and most times I would say that is the actual importer’s role rather than the broker.” However, Mr Wiese did point out that not enough brokers have revisited their clients with a financial update on rolling consignments. For example, an importer may request the broker forego claiming a $5000 duty on a single shipment. But the unclaimed entitlements granted under FTAs could account for around $50,000 after an additional five shipments.
“There should always be a cost-benefit analysis undertaken of making rule of origin assessments. The supplier is often knowledgeable about whether the goods qualify, so you need to get their cooperation.” Mr Wiese said importers tend to look at shipments, and the duty payable, on a shipment-by-shipment basis.
When viewed that way, the administrative cost of complying with origin certification requirements may seem quite high, or not worth the effort, Mr Wiese said, adding that a degree of administrative work is required before a business can claim a preferential rate under an FTA. Generally a business has to certify that the goods meet the rules of origin for the relevant FTA.
“Given that the duty rates Australian exports tend to be subject to are much more than the 5% duty we impose on our imports, I imagine that it would very quickly become a prudent business decision to undertake the work to assess whether the goods meet rules of origin,” Mr Wiese said.
“Of course in most cases it will be the overseas customer – the importer – who will pay that duty. So ultimately what an Australian supplier is doing is making their cost of importing cheaper.
“Suppliers will probably not increase their own profit margin or the amount that they receive, but naturally the cheaper their good is in terms of landed cost overseas, the more competitive it will be.”
“Unfortunately, until the agreement is actually signed, the industry won’t see the rules of origin for each particular type of good under the China Australia Free Trade Free Trade Agreement (ChAFTA).
“So all we can go on at the moment is the existing FTAs Australia has with other countries as a guide.
“But now is the time to start checking whether you meet those rules of origin. If exporters are only a little bit off in terms of local content requirements then now is the time to look at changing any sourcing of materials.”
Mr Wiese told Lloyd’s List Australia that importers need to determine what duty they are currently paying on Chinese imports, because it may well be down to zero already due to various other concessions.
Exporters to China also need to find out what duty they are paying.
Importers should also find out if their suppliers export to either New Zealand or any of the ASEAN countries with whom China already has FTAs.
Additionally, the question of whether or not imported goods satisfy the rules of origin under those agreements needs to be assessed.
If both queries return an affirmative, Mr Wiese said importers are already three-quarters of the way to being comfortable that those goods will qualify under ChAFTA. And if exporters assess whether their goods satisfy the rules of origin under the seven Australian FTAs already in force, and find that they do, then those exporters are well positioned to take advantage of ChAFTA.
“If an exporter hasn’t made such an assessment, now is a good time to do it,” Mr Weise said.
He also argued that Australia’s free-trade agreements have traditionally been under-used. This view was backed up by a recent survey.
Global bank HSBC commissioned London-based research and analysis company, the Economist Intelligence Unit, to research internationally-oriented companies’ perceptions and use of free-trade agreements.
About 800 companies were surveyed in the first quarter of 2014 across Asia with annual revenues between US$50m-US$10bn including: Australia, China, Hong Kong, India, Indonesia, Malaysia, Singapore and Vietnam (100 from each country).
Of the surveyed businesses, 80% have annual revenues between US$50m-US$150m; while 20% have revenues
in excess of US$150m. The HSBC-Economist Intelligence Unit survey showed that Australian exporters have been slow to take advantage of the business benefits of FTAs.
Surveyed businesses operate in a range of sectors including IT and telecoms, consumer goods, retail, financial services and manufacturing, among others.
The survey found that on average, each FTA signed by Australia is used by only 19% of Australian exporters, compared to an average of 26% among Asian exporters using their respective market FTAs.
The survey also found half of the Australian respondents had limited, or no, understanding of one or more of Australia’s FTAs, citing complexity of trade terms, a lack of understanding of benefits, and deals with non-strategic markets, being the key factors behind the subdued uptake.
Among the Australian companies who use an FTA as part of their business strategy, 75% of HSBC’s survey respondents experienced export growth with the main competitive advantages being access to new markets (nominated by 40%), access to a wider client base (39%) and the creation of new business opportunities (37%).
HSBC head of commercial banking in Australia, James Hogan, said all the effort Australia has made in negotiating free-trade agreements will be in vain if businesses are not using them.
“Clearly, there is a knowledge gap among Australian businesses on how to make the FTAs work for their business,” Mr Hogan said.
“Australian exporters that invest the time and resources to understand FTAs and imbed them within their business strategy are seeing clear business benefits” he said.
“However, greater focus in making FTAs more accessible to Australian businesses – particularly among smaller and resource-constrained businesses – is also key,” Mr Hogan argued.
FSC Certification [SEC=UNCLASSIFIED]-ILLEGAL LOGGING
Under the due diligence provisions of the Illegal Logging Prohibition Regulation, anyone importing regulated timber products into Australia is required to take steps to reduce the risk that the timber that they place onto the Australian market came from illegally logged sources. This process is known as due diligence.
The due diligence requirements have been designed to be as flexible as possible. This means that as long as you carry out the key steps described in factsheet 2.1 – Due diligence – Guidance for importers, you have considerable freedom in how you design and manage your due diligence system. To maintain this flexibility, and in light of the large number of businesses that are regulated, the department will not be endorsing individual documents or accrediting individual due diligence systems.
Step 2 in the due diligence process concerns the use of timber legality frameworks and Country Specific Guidance materials. The Australian Government has assessed a number of timber legality frameworks as providing a high level of rigour and robustness in verifying timber legality. These schemes are listed in Schedule 2 of the Illegal Logging Prohibition Amendment Regulation 2013. A copy of the Regulation can be found at www.comlaw.gov.au/Details/F2013L00883. Factsheet 2.3 – Due diligence – Use of Timber Legality Frameworkscan also provide you with further information on using these timber legality frameworks as part of your due diligence system.
You may choose to assess the risk of the product being illegally harvested using a timber legality framework that is listed in the Regulation; however, it is up to you to check the information you are receiving from your suppliers is correct and that you are following the requirements in the Regulation.
Source: Australian Government Department of Agriculture
ANL to launch new three-ship NZ service
Effective February 2015, ANL will be mounting a new dedicated three-vessel service linking major east coast Australia ports and both the New Zealand North and South Islands.
The new service will operate under ANL’s Tranztas branding and will be a major part of the company’s multiple service options across the Tasman.
In announcing the new service, ANL managing director John Lines commented: “The bilateral trade between Australia and New Zealand is a major part of the broader economy of both countries and is too important to be left to crossover vessels plying the Tasman as part of a bigger route.
“The Tasman is really ANL’s backyard; we know it well and work hard to provide a range of services so the trade can grow.”
According to the Department of Foreign Affairs and Trade (DFAT), NZ's main merchandise export markets were China (20%), Australia (19%), and the US (8.5 %).
NZ’s main sources of merchandise imports were China (17.5 %), Australia (13.3 %), and the US (9.4 %).
Merchandise trade exports to NZ from Australia are worth $7.4bn; imports to Australia from NZ are also worth $7.4bn, according to DFAT.
Major Australia exports last year to NZ were computer parts and accessories $276m; passenger motor vehicles $271m; Medicaments (incl veterinary) $248m and edible products and preparations $217m.
Major Australian imports from NZ last year included crude petroleum $1.3bn; alcoholic beverages $395m; and edible products and preparations $363m.
We understand from ANL that the company is keen to keep a direct service on the trade once the vessel sharing agreement with MSC expires at the end of January. Accordingly, the new service will begin in February.
One of the vessels deployed will be the ANL Benalla (IMO 9334519) and the other two will be sourced by ANL – either by seeing if CMA CGM has surplus vessels in the fleet, or from long-term charter.
The new Tranztas service will call Sydney, Melbourne, Auckland, Lyttelton, Nelson, Wellington, Tauranga, Sydney on a fixed day weekly basis and is likely to predominantly carry mixed cargoes of consumer goods and timber products.
