SOLAS
Despite publicity about the amendment to SOLAS (International Convention for the Safety of Life at Sea) requiring that all packed containers have verified gross mass (VGM) stretching back at least five years, many parts of the industry have waited to the eleventh hour before putting individual and collaborative minds to the issue of implementation. With less than five months to mandatory global enforcement on 1 July 2016, it is critical for all stakeholders to engage now.
Recent weeks have - perhaps inevitably - seen a surge in interest and comment on the forthcoming mandatory requirements for container shippers to obtain and communicate VGM as a precondition of every packed container being loaded on board a ship. It is somewhat galling that this fundamental step-change, which has been regularly discussed over at least five years, is now often giving rise to more 'heat' than 'light'.
A packed container will no longer be allowed to be loaded on board vessels unless its Verified Gross Mass (VGM) has been provided by the shipper named in the Bill of Lading, to the ocean carrier and/or the terminal representative.
With the new regulation:
- The shipper will be the responsible party for providing the VGM
- There will be two permissible weighing methods for determining the VGM
- The terminal operator will be obliged to ensure that only containers with a VGM are loaded on the Vessel
In Australia, the enforcement of the SOLAS requirements is governed by AMSA (Australian Maritime Safety Authority). AMSA is currently finalising the draft Order for the amendment of Marine Order 42 (Cargo, stowage and securing) 2014 (M042) to reflect the SOLAS amendments. The draft Order will be ready for consultation and publication on the AMSA website within the next couple of weeks.
Method 1 - The loaded container can be weighed at an approved weighing station or using calibrated and certified weighing equipment .
Method 2 - The weight of separate items in the container can be added to the net weight of the container. Weighing all packages and cargo items, including the mass of pallets, dunnage and other securing material to be packed in the container and adding the tare mass of the container to the sum of the single masses
1) The weight verification is to be carried out using equipment meeting the requirements of the Australian National Measurement Act 1999, or an equivalent standard accepted by AMSA. Initially a suitable standard for the weighing device accuracy could be based on NMI guidelines.
a) Must be an approved weighing device used for trade. i.e. a trade measurement machine used for calculating freight charges.
b)There must be no tolerance allowed for the container verified weight, under method 1 or 2. in Europe there has been discussion around a 2% or 5% tolerance allowance in the CWV. AMSA says the tolerance built into the approved weighing device calibration will be permitted, only.
c) Tare mass marked on the side of the container is permitted for calculating CWV by method 2.
d) Method 2 - Shippers will need to have an approved weighing device used for trade to accurately weigh the contents of the container - goods, dunnage and other packing material.
2) The shipper is responsible for verifying the weight of the container on the shipping documents.
- Where PRAs are used to submit containers at the wharf, (all major ports) the PRA will be used to advise the verified weight of the container to the shipping line and stevedore.
- 1-stop will adjust their PRA software fields to include the CWV and signatory name on the PRA.
- AFIF emphasised to the meeting that effectively under the new rules, the forwarder submitting a PRA on behalf of a shipper will be responsible for the verified weight. AMSA advised that if subsequently there is a discrepancy in the weight provided by the actual shipper (using method 1 or 2) to complete the PRA, then AMSA will investigate the circumstances to determine the responsible party.
- The forwarder will need to keep proper records to protect themselves from any audit discrepancies if an incident arises later.
DP World's two UK container terminals at London Gateway and Southampton are to offer shippers container weighing services - to overcome what it said could be "a significant logistics barrier for UK exports". The new rule had " the potential to cause significant disruption to export supply chains", and to help avoid this the port had decided to provide the service.
However, in many ports in the 170 countries that are signatories to the UN IMO SOLAS amendment, there has been an alarming lack of similar initiatives, and there could be a chaotic start to the mandatory weighing law.
Containerisation - or rather the lack of it - hammers another nail in air cargo's coffin
Containerisation - or rather the lack of it - continues to plague the air freight industry, delegates heard at Air Cargo India in Mumbai this week.
Falling fuel prices and overcapacity have seen rates drop across the board making air freight at least marginally more affordable. But rising reliability from shipping lines - and the inherent benefits of containerisation - continue to mean that air freight appeals only to the few.
"The sea mode is becoming more efficient and quicker," said FIATA's vice presedent, Keshav Tanna. "There are weekly schedules and it's exceedingly difficult to market just air freight."
Samir Shah, chairman of the Indian Freight Forwarders' Association (FFFAI), agreed that the container was a key advantage for sea.
"I can't take an air container to the factory for stuffing. The air industry hasn't worked it out with Customs. It's not just the data transfer, it's the physical process itself.
"In air, the transport, handling, and airline all need to transfer the shipment correctly. The ease of handling sea cargo cannot be matched."
It is something that has been noticed, and even could be addressed by Boeing. In December it patented a design for an aircraft which drops down and locks on to a standard sea freight container, although the execution of this idea is likely to remain many years away. if appearing at all.
Others argued that the price discrepancy between sea and air would always be the main factor.
"Air prices are coming down and it's becoming more attractive. But sea reliability has only been improving. Quality is very important, and transit times, but at the end of the day it comes down to price," said Peter Scholten, CEO of Fast Logistics Solution Group, which specialises in the African Market.
"In the Middle of Africa it's easier to sell air freight than sea freight - but it's more expensive, and we are seeing more activity in sea freight."
A supply chain consultant delegate noted that "the supply chain doesn't add any value to the product. It just protects the product Value. The value created in the factory must be maintained. So shippers want to spend the least amount of money [while maintaining the value]."
While the air cargo industry was called upon to ensure quality and smoother processes, Des Vertannes, Former chief of IATA Cargo and Etihad Cargo, pointed out that most airlines - many of which this year are making record profits from passengers - didnt have the incentive to do so.
Will 2016 be the year of eAWB?
IATA report that global eAWB penetration as at end December 2015 stood at 36.4%. Whilst this fell short of IATA's target of 45% by the end of 2015, it is still a significant improvement over the 2014 figure (24.9%), with 2015 seeing the strongest annual growth rate since the eAWB program began.
At a recently held 1st IATA eCargo Workshop Asia held in Singapore, it was asked why Australia and New Zealand rank so low in global eAWB penetration. Australia currently ranks at number 20 in the top 50 countries, with New Zealand ranking at 44. whilst the current performance from Australia & New Zealand is less than desirable, thankfully the fundamentals are in place for a high level of compliance once the airlines fully implement their programs. For many years, Australia & New Zealand have enjoyed what is arguably one of the highest levels of export FWB submission by forwarders prior to cargo lodgement across the industry. With FWB compliance here running well above 95% for all exports, the fundamentals are firmly in place for Australia & New Zealand to rank highly in global eAWB penetration, if not lead the entire industry.
Smarter reefer boxes
Shipping lines are embarking on a reefer box buying spree to keep up with rising demand for refrigerated transport.
Maersk line, Hamburg Sud and hapag-Lloyd, among others, are investing heavily in new reefers with cutting-edge atmosphere control and monitoring systems.
This is allowing new cargo categories to be transported via ocean freight for the first time, with more perishable products now able to stay fresh over extended distances.
In 2015, Maersk Line added 30,000 new containers from factories in China and Chile to its reefer fleet.
The new reefers are capable performing the cold treatment process required for transporting grapes and citrus products, as well as ambient loading, and the ability to freeze commodities inside the container, a practice used for transporting cheese and tuna.
Henrik Lindhardt, head of reefer research and support at Maersk Line said: "We are committed to constantly finding improved and sustainable ways to match our customers' expectations. For example, commodities such as berries and flowers which used to be air freighted require new and innovative technologies when transported by sea."
Maersk Line rivals Hamburg Sud and Hapag Lloyd have invested in the latest reefers manufactured by Carrier Transicold. In September, Hamburg Sud purchased 400 containers equipped with Carrier's XtendFRESH atmosphere control system, which helps to slow ripening and preserve produce quality by removing ethylene and managing oxygen and carbon dioxide levels.
Martin Schoeler, Hamburg Sud's senior manager for logistics technology, said the reefers would serve avocado exporters shipping from west coast South America to Asia. North America and Europe.
This month, Hapag-Lloyd announced it had enhanced its fleet with 3,000 new reefers from Carrier. The shipping line said investing in controlled-atmosphere technology was crucial to maintaining produce quality (such as with banana and mangoes), as changing shipping patterns are bringing longer transit times.
"Now being deployed in support of the south America harvest season, the new containers improve our capabilities with sensitive fruits and vegetables by helping to assure optimal produce quality for our customers," said Niklas Ohling, head of container steering at Hapag-Lloyd.
Shipping lines will continue to buy or lease expensive new reefer boxes so long as shipping demand remains robust. Reefer freight rates have generally performed better than dry cargo in recent years, and with a growing global market of perishable trades,reefer shipping is one of the few bright spots for container carriers blighted by overcapacity and dwindling volumes.
According to Dynamar, whose recent analysis confirmed the overwhelming trend towards the use of reefer contianers over conventional reefer ships for seaborne perishables, 2015 reefer box production is estimated to have reached 175,000 units, with 40ft high-cubes accounting for more than 90% of orders.
"We think it all fits with the estimated 4-5% annual growth of perishable cargo, along with the expected further fragmentation of order sizes, for developing countries in particular." said Dirk Visser, Dynamar's senior shipping consultant.
"Also, the refrigerated carriage of other goods, such as chemicals, medicines and pharmaceuticals, is continuously on the increase, for which the competition from the conventional segment is diminishing."
Dynamar's analysis shows that other known reefer orders by container carriers in 2015 include those from Zim )1900 40' high cube reefers, due to be deployed in 2016): UASC (5,500 units); and NYK Line (5,500 units).
Forces joined in port purchase
A tussle over who will buy Australian port and rail operator Asciano continues, with two big players looking at a joint bid. A consortia headed by the multinational Brookfield Infrastructure Partners and Australian logistics group Qube Holdings has put in an all-cash bid for Asciano, and reports say it is being look at favourably.
Asciano has confirmed it received a proposal for a $9.28 a share all cash bid from the Brookfield/Qube alliance, and chairman Malcolm Broomhead has told News Corp that the potential transaction "is likely to be attractive to shareholders. The news comes just days after Asciano dumped its backing for Brookfield's earlier bid in favour of one from the Qube consortium worth $9.24 a share. Brookfield has returned to the table by joining with Qube to offer an all-cash bid of $9.28 a share. Reports say Brookfield may even go without Qube, if it is unable to finalise the joint bid. The joint bid would see Qube, Brookfield and smaller consortium members buy the Patrick container terminals for $2.92 billion. The Brookfield Consortium would also pick up Asciano's half shares in Melbourne's ACFS and automotive terminals ventures, as well as 100 per cent of the bulk and automotive ports services businesses at a cost of $925 million
The deal would allow Qube's backers - Global Infrastructure Partners, Canada Pension Plan Investment Board and sovereign wealth fund China Investment Corp - to buy the Pacific National rail business. Brookfield chairman Sam Pollock said the groups are talking through options " as expeditiously as possible" to finalise the joint bid.
Solving headaches from suppliers in developing countries
AUSTRALIA'S Department of Foreign Affairs and Trade (DFAT) is setting up an industry reference group under the Global Alliance for Trade Facilitation, a multi-country Initiative, involving the Worlds Economic Forum, which is designed to improve the ability of developing countries to trade with Australia and other countries.
Following a meeting with DFAT in Canberra last week, we are looking to identify the challenges faced by the overseas suppliers of our member in trying to export to Australia. These might include technology, skills and bio-security constraints. The focus at this stage is on developing countries in the pacific Island and Asia including Sri Lanka, Bangladesh, Philippines, Pakistan.
The initiative is designed to examine specific local barriers and breakdowns in the value-chain. Take, for examply, the villainous Giant African Snail (GAS) from the Pacific Islands.
If a pacific Island nation or an exporter from that country recieved funding to build a wash facility to mitigate the risk of GAS, at the point of origin, would it open up new markets and make it easier for that exporter to do business with Australia?
The power of the initiative is to deal with specific value chain issues, addressing the barriers through funding and reform and bringing together private and public stakeholders.
This is a great programme and DFAT should be applauded.
FTA, which has been invited by the DFAT to be part of the industry reference group, is looking at utilising this initiative to identify efficiencies at the supplier end in developing countries that might deliver downstream commercial or operational efficiencies for the local importer, customs broker or freight forwarder.
All goods are a theft target says TAPA
The Transported Asset Protection Association (TAPA) says reported crimes in the Europe, Middle East & Africa (EMEA) region reached a five-year high in 2015, with 1,515 freight thefts representing a 37.4 percent increase year-on-year.
The association says that 2015 data reflects growing awareness of cargo crime among law enforcement agencies in the EMEA region, plus the willingness of police forces in major European countries to share data to help its manufacturing and logistics sector members increase the security of their supply chains.
TAPA says all goods moving in a supply chain are now at risk of theft. Last year the association captured cargo crime information in 29 countries across EMEA, including 70 incidents with loss values in excess of 100,000 euros. Five countries saw product losses of more that 1 million euros, including Italy which recorded the biggest single loss in 2015 when thieves broke into a warehouse close to milan and stole pharmaceuticals worth 3 million euros.
c stakeholders Thorsten Neumann, chairman of TAPA EMEA commented: "The real trend we are seeing is that cargo thieves are now prepared to target virtually any product. When TAPA was launched in EMEA 15 years ago, it was to help manufacturers of high value technology products and their logistics partners to combat losses from their supply chains. High value technology is still a target - but, now, so is everything else.
"Products with a low unit value can be just as attractive because of the high volumes they move in. And, these products are often easier to dispose of and harder to trace. This includes food and drink, cigarettes, cosmetics and hygiene. clothing and footwear products. 2015 also saw a number of high value losses of Pharmaceuticals." Neumann continued.
Japan-Australia free trade agreement reaps benefits for Aus, says Trade Minister Robb.
Trade Minister Andrew Robb laid out some of the benefits in the federal Parliament of the Japan-Australia free trade agreement earlier this week.
Responding to a question from Queensland MP Michelle Landry (Capricornia), Mr Robb told the house that "on its first anniversary, the Japan-Australia Economic Partnership Agreement has already delivered exceptional gains for farmers and exporters."
The Trade Minister told the House that the export values for both chilled and frozen beef grew by more than $250m and that export sales of bottled wine increased by 11%. Bulk wine exports tripled in growth while exports of frozen shrimps and prawn rose 90%. Other increases included 77% growth in the export of oranges and a 44% growth in exports of asparagus.
"These are remarkable increases from established markets, across the board. we have seen similar gains through our FTA with Korea," Mr Robb told the House
