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Supply chain news: Roundup for April

If your inbox is anything like ours you have been overwhelmed with information about the changes the COVID-19 pandemic is wreaking on your day to day business processes. This post is a digestible summary of supply chain news and events we think are the most significant from the last few weeks. As usual, if you need further clarity on anything – get in touch.

International Freight Assistance Mechanism (IFAM)

On 1 April, the Australian Government announced measures to help secure freight access for Australian agriculture and fisheries exporters. The new $110 million International Freight Assistance Mechanism (IFAM) will assist Australia’s agricultural and fisheries sector by helping them export their high-quality products into key overseas markets, with return flights bringing back vital medical supplies, medicines and equipment. Exporters wishing to access the mechanism can register their interest or call the Department of Agriculture, Water and the Environment on (02) 6272 2444. https://www.austrade.gov.au/news/news/novel-coronavirus

Increased funding for the Export Market Development Grant (EMDG)

On 1 April, the Government also announced increased funding for the Export Market Development Grant (EMDG). Funding for the scheme will increase by $49.8 million in the 2019-20 financial year, allowing exporters and tourism businesses to get additional reimbursements for costs incurred in marketing their products and services around the world. This supplements the additional $60 million already committed by the Government and brings EMDG funding to its highest level in more than 20 years at $207.7 million for the 2019-20 financial year. For details about the full range of programs, the Australian Government has launched in support for Australian businesses go to https://www.austrade.gov.au/exportgrants/

The “new normal” – Importers making direct statutory import charge payments

Customs brokers are no longer accepting the cash-flow imposition of making upfront import statutory charge payments and recouping costs from importers on a disbursement basis. 

Business models have rapidly evolved. The “new normal” leaves importers to either make upfront payments to customs brokers or to register via the Integrated Cargo System (ICS) to make direct EFT payments of import statutory charges.

Deferred GST (DGST) scheme

Data collected indicates that GST payments is the most significant component of import statutory charges. While details of any enhanced arrangement are yet to be outlined and clearly require further government consideration, it has been a strong recommendation by industry bodies to register for DGST taking into consideration:

  • the unique timing opportunity presented for existing quarterly reporters; and
  • to be “first-in” to take advantage of any enhanced COVID19 relief measure associated with the scheme.

NOTE: In the current economic crisis, the ATO confirmed receipt of significantly increased number applications for DGST registration. The ATO has significantly increased automated capabilities, that should process up to 500 DGST applications per day.

Current benefits of deferred GST

Importers registered for DGST are required to lodge their Business Activity Statement (BAS) monthly and electronically. Once approved, the import GST otherwise payable at the border is deferred until the 21st of the following month. That is, importers registered under DGST will defer the payment of GST on any importation occurring throughout the month of April, until the 21st May. The payment of GST on any importation occurring in the month of May will be deferred until the 21st of June. And so on, every month. 8 days remain to lodge a DGST application (as of today, 22 April 2020). Given previous member feedback indicating wait times for DGST registration have been up to 30 days, FTA advocacy efforts have focussed on the need for immediate relief for importers seeking registration under DGST.

For information about and to apply for DGST:

First flight takes off under the $110 million freight initiative

In the first partnership struck under the international freight assistance mechanism, Australian seafood producer Tassal Operations will commence twice-weekly flights, packed full of seafood into popular Asian markets.

Importing PPE Equipment

A lot of Australian businesses are looking for alternative businesses models to sustain them through the shutdown and support our community by providing sought after items. For many, this has meant the importation of PPE for medical and other use. There are a number of supply chain complexities you should consider.

Australia braces for container storage crisis as more imports arrive

Australia’s coronavirus lockdown and collapse in consumer demand could trigger a container storage crisis. As reported by The Loadstar, boxes are piling up at ports and container freight stations around the world, most notably in India as import cargo goes uncollected as economic activity grinds to a halt. In Australia, transport and logistics firms expect a storage shortage “within a month”.

A surplus of empties is also a problem. Brendan Bourke, chief executive of Port of Melbourne, said container yards were full of empties which would have been carried back to China, but for the huge amount of withdrawn capacity by shipping lines, totalling about 20 vessel calls so far. With more imports arriving over the coming weeks, a backlog of cargo ordered before the coronavirus crisis began, Mr Bourke said the port was urgently searching for backup sites to store the overflow. As a result, some shippers and transport operators are concerned about possible detention and demurrage (D&D) charges, should they be unable to unpack and return containers to shipping lines.

Idled containership capacity is expected to reach a record high of 3m teu within weeks in the “worst capacity crisis the industry has ever seen”

According to new data from Alphaliner. With over 250 sailings already withdrawn in the second quarter, the consultant forecasts that the lay-ups will push the idle fleet to a level twice that was seen during the 2009 global financial crisis. While larger ships will be cascaded to replace smaller units on the remaining strings, carriers will be forced to idle a large part of their operated tonnage. This will affect all size segments in the coming weeks.

Australian Stevedores Return to Work With Greater COVID-19 Protection

After a 10-day shutdown, workers at Hutchison Ports Australia Sydney Terminal have returned to work after stringent COVID-19 measures have been put in place.   

With retailers closed, parcel carriers struggle with B2C volume surge

Spiking e-commerce volumes are putting private and public parcel carriers under strain resulting in long last-mile delivery lead-times and no small amounts of consumer frustration. Australia Post is redeploying some mail staff to parcel operations and reducing mail deliveries to every second day.

COVID-19 brings a heightened risk of fraud

Criminals thrive in chaos, and today’s world is undoubtedly chaotic, with supply chain operators having to work remotely, operate with fewer resources and staff and highly unpredictable business levels. New advice published by logistics and transport insurer TT Club identifies four main types of rising crime – mandate fraud, CEO fraud, cargo theft and procurement fraud – operators should be aware of.

The threat of another ‘Hanjin’ grows

Shippers and forwarders are increasingly concerned over counterparty risk, as a new study finds that several the world’s leading container lines face a ‘very high’ risk of potential insolvency.

World Health Organisation Releases Guidance on PPE While Handling Cargo

The World Health Organization (WHO) has issued recommendations for the use of personal protective equipment (PPE) during cargo handling. The document assesses the current disruption in the global supply chain and outlines considerations for decision-making during severe shortages of PPE. An experimental study conducted in a laboratory evaluated the survival of the COVID-19 virus on different surfaces and reported that the virus can remain viable up to 72 hours on plastic and stainless steel, up to four hours on copper and up to 24 hours on cardboard. To date, there are no data to suggest that contact with goods or products shipped from countries affected by the COVID-19 outbreak have been the source of COVID-19 infection in humans, says the WHO.

Sources: https://theloadstar.com/ https://gcaptain.com/ https://www.maritime-executive.com/ http://www.maslogistics.co.uk/ https://www.who.int/

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DECLARATION FOR MANUFACTURED WOODEN ARTICLES

As of the 11th of September the Department of Agriculture and Water Resources has increased the allowable time between treatment and export from 21 days to six calendar months for treated manufactured wooden articles. As a result, DAWR will now require an additional declaration for manufactured wooden articles that have been treated offshore by heat, fumigation or irradiation methods depending upon how they have been stored after their treatment.

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Brown Marmorated Stink Bugs – shipping lines on notice

It’s that time of year again.  The Brown Marmorated Stink Bug is spreading throughout Europe and Department of Agriculture and Water Resources is now monitoring all cargo originating in Europe.

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G20 China dates announced – implications for Australian importers

Following the release of the summit dates the G20 control measures have also been announced for 2016.  This year’s summit will be held in Hangzhou on the 4th and 5th of September.  Hangzhou is within 2 hours drive of Ningbo and Shanghai ports.

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Become an Australian Trusted Trader

The Australian Trusted Trader is a voluntary program that recognises Australian businesses that meet international supply chain security and trade compliance standards.  The program has been designed and developed in partnership between the Australian Government and industry with the aim to create a fast and seamless trade experience for Trusted Traders.

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Magellan Expands Again – this time it’s Brisbane

Magellan has recognised the opportunity that exists in the Brisbane market to both broaden services to our existing clients who already ship direct to Brisbane, as well as to offer the same high service standards to Brisbane based businesses.

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Freight forwarder in New Zealand takes off

One year on from the official opening of our Auckland office Magellan Logistics New Zealand is going from strength to strength.

The reason we entered the New Zealand market – to both broaden our services to our existing Australian clients who ship direct to New Zealand, as well as offering the same high service standards to New Zealand based businesses has been borne out.  Magellan NZ has set an enviable 12 month benchmark in retaining 100% of the business it handled as an agent and growing consignment numbers by some 500% in 10 months.  No wonder we’re hiring!

Due to this recent, impressive growth Magellan NZ now also provides customs brokerage and operations to complement its freight forwarding services and as such is well poised to continue its expansion in the years to come.

Paul and his new team enjoy a reputation for the responsive and agile service they provide to agents, exporters and importers alike.  This service is characterised by excellence and the Magellan values that underpin the way we conduct all our business – integrity, professionalism, transparency, respect and quality.

Located on Auckland’s growing North Shore, Magellan is ideally situated close to the city – the heart of Auckland’s thriving fashion district – and Auckland port.  Many of our growing list of clients are located within the North Shore business community, and our close proximity aids us in providing our superior levels of customer service.  This location is also convenient to West Auckland and Paul and his team are never too far away from the airport and South Auckland based customers.

Agents looking for improved service levels and local on the ground knowledge should refer their freehand cargo and any sales leads to Paul Knight at paul@maglog.co.nz or on +64 9 974 4818 or +64 9 974 4817, or via mobile on +64 (0)21 497024.

We look forward to assisting our growing base of existing customers and future New Zealand based and Australian clients with their freight forwarding, customs clearance and 3PL needs, into and out of New Zealand.

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SOLAS VGM NEW DRAFT MARINE ORDER 42

The following information has been provided by the Australian Maritime Safety Authority (AMSA) concerning the industry consultation on Marine Order 42.

“New Draft Marine Order 42” (Carriage, stowage and securing of cargoes and containers) 2016 is open for consultation until 30 April 2016.

Background: The current Marine Order 42 deals with carriage, stowage and securing of cargoes and includes requirements for loading of freight containers and blending of bulk liquid cargoes. The Order gives effect to Regulations 2 (Cargo information), 5 (Stowage and securing), and 5-2 (Blending of liquid bulk cargoes) of Chapter VI of the International Convention on Safety of Life of at Sea 1974 (SOLAS).

In November 2014, the Maritime Safety Committee (MSC) of the International Maritime Organization (IMO) adopted amendments to SOLAS chapter VI contained in IMO Resolution MSC.380 (94), which come into force internationally on 1 July 2016. The amendments provide new regulations for the verification of the gross mass of a packed container.

Marine Order 42 (NNF 2016/019) reflecting the SOLAS VGM amendment is amended to:

  • give effect to the new SOLAS regulations for verification of gross mass of containers
  • move existing requirements on weighing gross mass of containers from Marine Order 44 to this Order
  • move existing requirements of SOLAS Chapter VI Regulation 5-1 for material safety data sheets (MSDS) from Marine Order 21 to this Order
  • include SOLAS Chapter VI Regulation 4 on the use of pesticides on ships and for fumigation of cargo transport units
  • rename the Order to make it more appropriate to the subject and contents.

AMSA looks forward to comments and contributions from shippers that will assist AMSA in developing best regulation.

Should you wish to make submissions to AMSA, please visit the AMSA Consultation page.

The consultation process runs through to 30th April 2016.

Magellan’s submission to AMSA will be done though our representative industry bodies.

AMSA’s responsibility in the compliance of the new SOLAS regulations covers vessels and associated operations within Australian territory, and in particular are of interest to Australian Exporters, Shipping Lines, Terminal Operators and Freight Forwarders requiring compliance.

For information about your obligations under the new marine order and the amendments to the Safety of Life at Sea (SOLAS/VGM) Convention please contact Magellan on 1300 652 888 or download a copy of our SOLAS/VGM presentation.

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G20 Shanghai – why is China’s presidency so significant?

In 2016 the Group of Twenty (G20)*, finance leaders and government heads from the twenty major economic countries of the world, will meet in the ancient Chinese city of Hangzhou in the Eastern region of the People’s Republic of China (PRC). With world leaders like U.S. President Barack Obama and other Western dignitaries in attendance the eyes of the world will fall on this vast region of high tech and textile manufacturing near the Eastern coast. While the G20 is principally an economic forum the relationship between economics and climate change will be on show.

Textile Industry Closure

The Chinese government is considering temporarily closing the nearby Province of Zhejiang’s textile manufacturing to reduce air contamination during the G20 summit. This action could possibly idle over half of the textile dyeing industry in China.

While it is too early to say for sure whether the Government will order the shutdown, it has been rumoured that the closure could be three months in length, just before the beginning of the summit. Local government sources quickly stated that it would be impossible for a closure of that length to be achievable given the massive amount of goods that the region produces. Yet experts note that the situation would be quite an opportunity to show how much air pollution could be reduced within the province. This may prove a game changer for the entire region as Beijing had also made agreements during international climate talks in December 2015’s Paris Climate discussions.

China is still somewhat of a closed society for gauging public and international reaction, particularly when large scale events like closing down entire manufacturing regions are concerned. But, one can imagine that complete closure, even for a short period of time, will cause market and industrial disturbances on a significant scale. And it isn’t difficult to imaging the flow-on impact of these on the Australian TCF and retail industries.

China’s G20 Presidency

China’s G-20 presidency in 2016 is themed to help lay the groundwork for a world economy that is more “innovative, invigorated, interconnected, and inclusive.” and that office, China is set to become even more of a major player on the world’s financial and environmental stage.

China’s recent willingness to pursue trade agreements and the imminent inclusion of the reminbi in the group of currencies that determine the value of the IMF’s reserve asset, Special Drawing Rights, China’s capacity to help the world (especially emerging-market economies) cope with market volatility will be greatly enhanced.

This bodes well for China’s capacity to help counter the global slowdown in growth, trade, and investment. And not a moment too soon: The ongoing slowdown is among the greatest risks the world currently faces, because it could compound instability in already-fragile countries, while compelling more robust economies to turn inward, rather than address growing crises.

With a binding greenhouse gas agreement in the works at the United Nations, it behoves China to work within the framework of its own country to solve the issues that industrialisation has brought to the country. If closure of Zhejiang’s textile industry can demonstrate measurable environmental results and throw a spotlight on the problem, then it is possible, with help from other G-20 partners and technological advancement, that the PRC as a whole can work towards improving its air quality, as well as find new ways to grow their industrial might.

With the right mix of realism and power sharing, China’s G-20 presidency has the potential to catalyse important progress to strengthen the foundation of a new global economic structure for the twenty-first century … and to further underscore the importance of environmental commitments in the attainment of this.

*Collectively, the G-20 economies account for approximately 80% of the gross world product (GWP), 80 percent of world trade (including EU intra-trade), and two-thirds of the world population. They furthermore accounted for 84% of the world’s economic growth by nominal GDP from the years 2010 to 2016, according to the International Monetary Fund (IMF).

Sources and more information:
http://schema-root.org/region/international/government/g20/
http://news.xinhuanet.com/english/2015-11/16/c_134822759.htm
http://www.thechinamoneyreport.com/2016/01/02/china-in-2016-fewer-jobs-lower-consumer-confidence/
http://www.weforum.org/agenda/2015/12/how-will-china-use-its-g20-presidency/
http://www.chinatexnet.com/textile-news/2016-02-03/554832.html

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VERIFIED GROSS MASS INDUSTRY FAQS (SOLAS / VGM)

A SOLAS / VGM FAQs document has been compiled by TT Club in collaboration with World Shipping Council, Global Shippers’ Forum and ICHCA International in response to the many questions that have been raised by the industry in relation to the revised SOLAS / VGM regulation.   The amendments to this regulation have substantial impact on practices of parties in the international supply chain involved in the movement of containers by sea.

While the SOLAS / VGM convention relates to the safety of ships at sea, it is also concerned with shore based activities relating to the presentation of cargo that are fundamental to safe outcomes at sea.

These FAQs relate to new rules, effective from 1 July 2016, and provide considerable detail concerning the requirement for shippers to verify the gross mass of a container carrying cargo. The rules prescribe two methods by which the shipper may obtain the verified gross mass of a packed container:

Download a copy of the SOLAS / VGM FAQs document from our site.

Or get in touch with the Magellan Customer Service team on 1300 651 888 or via www.magellanlogistics.com.au of you have specific question in relation to this.

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