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:
- deferred GST, see http://ato.gov.au/dGST
- additional support the ATO is providing during COVID-19 visit https://www.ato.gov.au/General/COVID-19/
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.