Skip to Content

Blog Archives

Chinese New Year 2018 – Plan Ahead

Happy New Year and of course, Happy Chinese New Year 2018!

China’s most important festival, also known as Spring Festival will be here before you know it. Most businesses in China and Hong Kong (as well as many other Asian nations) close for a week and sometimes longer in order for staff to travel to be with their families for the celebrations. This can cause delays in obtaining Customs Clearance documentation for Australian businesses importing cargo from China and elsewhere in the region.

0 Continue Reading →

China’s Comeback: Destination Hong Kong

As fashion executives around the world reported in the first BoF- McKinsey Global Fashion Survey, the year 2016 can be summarised in three words: uncertain, changing, and challenging. But in spite of this, fashion remains one of the key value-creating industries for the world economy.

0 Continue Reading →

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. Based on previous experiences such as the 2014 APEC, 2010 Asian Games and 2008 Olympics, we expect similar control measures to be introduced which will have a significant impact on the export and import cargo flows, causing fluctuations before and during the event.

These controls will be implemented both by the National and Local Governments. We have been able to confirm the following, but we believe further restrictions are still to be announced and we also expect there will be a degree of “unannounced” restrictions that only become evident in the immediate lead up to the summit.

We strongly urge you to discuss these restrictions with your China suppliers to identify any impact it may have with the supply of product to your business during this time. Our suggestion is that wherever possible you take advantage of shipping early, well before any impact of restrictions, and definitely before the dates indicated below.

The following G20 control measures affecting production and traffic to meet air quality and security requirements have been announced:

Shanghai: 24th August – 6th September

  • Jinshan Zone will shut-down all chemical and associated factories
  • Chemical Zone and Fengxian Zone will identify factories that either need to control production or close-down
  • Shanghai Port will have the available port power reduced by 30%, Jinshan Port will have the port power reduced by 50%
  • All factories in the region will need to meet specific operating and pollution standards, those that do not meet the standards will be shut down
  • High polluting motor vehicles from Shanghai will not be allowed to enter Hangzhou
  • The main production and traffic restrictions will generally only be applied to the southern part of Shanghai, this will mitigate some of the effects of exports moving through Shanghai Port.

Ningbo Hangzhou Bay New Zone: 24th August – 6th September

Factories in Ningbo Hangzhou Bay New Zone will either be shut down, or forced to reduce productivity by 50%.

Shaoxing, Zhengjiang: 24th August – 6th September

  • All dye factories will be closed in the two weeks prior to 6th
  • Since March, the Shaoxing Government has been regulating all the high pollution printing factories, so far 64 factories have been shut down, and can only reopen once they meet the required pollution control standards.

Declared Holidays

Public holidays have also been declared from Thurs 1st–Wed 7th September in the below districts.

  • Hangzhou Economic Zone
  • West Lake Scenic Area
  • Shangcheng
  • Xiacheng
  • Jianggan
  • Gongshu
  • Xihu
  • Binjiang
  • Xiaoshan
  • Yuhang

Sun 28th August, Sat 10th Sept and Sun 11th Sept will be working days.

Magellan Logistics is working closely with our Chinese Agents to ensure we have the timeliest information about how this year’s G20 control measures will impact on shipping from China.  Please get in touch with me via lechae@maglog.com.au or your usual Magellan Customer Service Representative on 1300 651 888 or +64 9 974 4817 / 18 for New Zealand based enquiries.

0 Continue Reading →

Tips for avoiding customs delays due to late Chinese Certificates of Origin.

As we work through some of the new processes associated with ChAFTA we are experiencing a spate of late Certificates of Origin.  Our focus is always on avoiding delays at customs and not receiving these certificates in a timely manner has knock-on effects for our clients that include avoidable delays to customs clearance and in some instances paying duty unnecessarily and incurring professional services fees for refund processing once the certificate is received.

We are doing everything in our control to minimise or avoid delays completely and we would like to alert you to some steps you can take to facilitate the receipt of the Certificate of Origin in a timely manner.

1). Remind your supplier not to delay applying for the Certificate of Origin on the basis of unknown means of transport or routing;
2) Changes to vessel or flight details will not affect the eligibility of the consignment to obtain reduced duty rates provided the goods are still destined for direct shipment to Australia;
3). Advise your supplier to forward the certificate ASAP. There is no need to forward the original certificate as copies are acceptable.

A couple of refresher points that will also help with avoiding customs delays by ensuring certificates are issued as quickly as possible and are valid for use:

Origin criteria

The origin criterion listed on the certificate indicates how the goods listed on the certificate comply with the regulations of the ChAFTA.  The criteria indicate how much of the raw materials or manufactured goods was obtained or manufactured within Australia and or China.  Some goods will be ineligible to use some origin criterion due to their nature, for example manufactured goods would be unlikely to qualify for reduced duty rates under ChAFTA via the Wholly Obtained criterion as this is intended for use for raw materials such as minerals.

Whereas, manufactured goods which are entirely produced from components made within Australia or China or a combination of both would more than likely qualify via the Wholly Produced (WP) criterion; and manufactured goods that are made in China from components made within Australia and or China and other countries would more than likely qualify via the Product Specific Rule (PSR).

  • WO (Wholly Obtained) – for goods such as minerals, agricultural products and animals born in China. Would not apply to products that are further manufactured.
  • WP (Wholly Produced) – for goods that are produced entirely from Australian or Chinese originating materials.
  • PSR (Product Specific Rules) – for goods produced from Australian and/or Chinese goods and goods that have been manufactured in other countries and satisfy the applicable product specific rules relating to the classification of the good to be exported.

 

Should you need clarification on this or another freight movement or customs clearance question please contact me via email or on 1300 651 888; or your usual Magellan Customer Service Rep.

0 Continue Reading →

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

0 Continue Reading →

China: Plan well ahead for Chinese New Year in 2016.

Christmas probably seems all encompassing right now, but Chinese New Year (CNY) in 2016 will be upon us before we know it. Next year the Chinese holiday for Chinese New Year is from 7 Feb to 13 Feb, 2016 (week 6).

To minimise the rush and avoid potential disappointment in the movement of your freight from China, please take some time to consider your shipping needs well in advance of the holiday.   Please see below for details

 

FCL Shipments

Most factories shut down between 7 Feb and 22 Feb and some for even longer.  While the factories make every effort to process as many orders as possible before the holiday, we recommend booking shipments at least 14 days in advance to avoid disappointment.

As there is already one cancelled sailing in January before CNY, space will become very tight in the two weeks leading up to the holiday.   During this time, ports will become congested and some shipping lines may accept container bookings in excess of the capacity of some ships, and roll these over to the next available vessel resulting in delayed movements.

For Pearl River Delta ports (PRD) – such as Guangzhou, Huangpu, Foshan, Rongqi, Beijiao…etc, the last feeder sailing before CNY will depart on or round 2 February.  Again we recommend booking this at least 2 weeks before sailing.

 

LCL Shipments

As for above FCLs, however please add a further week.

 

China Customs

The duty schedules of Chinese Customs during CNY will only be announced by the Government around 1 February 2016.  Typically, Chinese Customs arranges a skeleton staff or half day duty during the CNY holidays, so processing delays with export Customs clearance should be expected.  Also, most customs brokers and LCL warehouses will close. Therefore, we suggest the following:

  • All shipments must be handled and customs clearance completed before CNY.
  • For PRD ports origin, the customs office will be closed during CNY, all Customs clearance processes must be completed before 30 January.
  • For emergency or special cases which may be encountered during the holiday, advance notice (including full and complete customs documents) will be required to determine feasibility.

 

Trucking Service 

Most of the transport companies will stop services one week before the CNY.  As with the ports, the trucking companies will be at capacity in the two weeks leading up to CNY.  During this time, trucking arrangements will need to be booked at least 10 days (FCL) & 7-10 days (LCL) in advance of requirements.

There will also be increases in trucking costs during and before CNY.

Last dates for trucking services before the holiday:

Last dates for trucking services before CNY

If you have any queries or would like more information, please call me or one of our Customer Service team members on 1300 651 888 or send me an email.

0 Continue Reading →

ChAFTA Update

Now that the Federal Opposition Leader Bill Shorten says he has reached a compromise with the Government and will now support the Chinese Free Trade Agreement it is worth going over a few of the key points as we see them.

A COUPLE OF KEY POINTS AS WE SEE THEM:

Hong Kong is not part of China  Hong Kong is classified as a different customs territory to mainland China and is a Freeport.  For the purpose of ChAFTA goods shipped via Hong Kong will not retain their status as Chinese originating goods unless the goods remain under customs control at all times (this was also the case for the China-NZ FTA).

The implications of this are profound for the many organisations that operate distribution centres and warehouses (that are not bonded warehouses) in Hong Kong as the goods entering Hong Kong will lose their China Preferential status.

Phasing of Duty  At present for items originating in China that have a duty rates of 5%.  It should not be assumed that from implementation of the FTA the duty rate will simply drop to 0%.  Although it is the aim to reduce all items to 0%, this will be phased in for some items over a period of some years (up to 5 years in some circumstances).  Clothing is one of these items where under the first year of the CHAFTA operation the duty rate will not be changed at all.

WHAT YOU CAN DO:

Whilst the agreement has been signed and now has bipartisan support in the Parliament, there is still a lot of detail to be finalised in order to provide greater certainty to industry. This process has already taken some time and is expected take a couple more months before implementation (we are expecting Dec 2015 or early 2016).  If you have any questions about how the ChAFTA will impact your imports please get in touch with Magellan 1300 651 888 or by email.

 

0 Continue Reading →

China – Australia (ChAFTA) – Now what?

The China–Australia Free Trade Agreement (ChAFTA) is a bilateral Free Trade Agreement (FTA) between the governments of Australia and China. Since the announcement of a joint feasibility study in early 2005, 21 negotiating rounds have been completed and the announcement of the conclusion of negotiations was made by Australia’s Prime Minister Tony Abbott and Chinese President Xi Jinping on 17th November 2014.

The long-awaited agreement was signed by Trade Minister Andrew Robb and Chinese Commerce Minister Gao Hucheng last Wednesday in Canberra.  The agreement is expected to open the vast Chinese market for Australian investment, primary products and services.

The agreement will ensure 85 per cent of all Australian exports will enter China tariff-free, rising to 93 per cent within four years and 95 per cent when it is in full force.

China is Australia’s largest trading partner, with the two-way flow of goods and services exceeding $160 billion last year.

Now that both sides have completed the legal review and translation of the text of the Agreement the signature of the Agreement;

What happens next…

  • The text of the Agreement, accompanied by a National Interest Analysis, will then be tabled in the Australian Parliament for 20 joint sitting days;
  • Following tabling, the Joint Standing Committee on Treaties (JSCOT) will conduct an inquiry into the Agreement and will report back to Parliament;
  • Legislation will be introduced to make any necessary amendments to existing legislation and will be considered by the Parliament;
  • Relevant Regulations would also be amended in due course;
  • During this time, the Chinese Government will undertake its own domestic treaty-making processes;
  • When Australia and China have completed their domestic processes, both countries will exchange diplomatic notes to certify that they are ready for the Agreement to enter into force;
  • 30 days after this exchange or on a date otherwise agreed, ChAFTA will enter into force.

Because it is expected that the above processes will take some time, the agreement is not anticipated to take effect until sometime in early 2016.
If you’d like some more information in this topic, please get in touch with Magellan on 1300 651 888.

0 Continue Reading →

Chinese May Day Holidays

Chinese May Day Holidays are one of the major holiday periods across China. Most businesses and Government agencies will close during the period 1st May thru 3rd May inclusive (excluding Hong Kong).

Magellan’s China offices will be either closed or on skeleton staff during this time.

Please note the following when planning shipments.

SHANGHAI

Holidays from 1st May, returning  4th May.

AIR Cut off 30th April  (for both freight and documents).

SEA Cut off as follows:

ETD: 1st May , Cut-off: 27th April 18:00

ETD: 6th May , Cut-off: 29th April 18:00

Most other China offices will also be closed in line with Shanghai.

QINGDAO

Holidays from 1st May, returning 4th May.

AIR Cut off 30th April  (for both freight and documents).

SEA no change,  schedules remain unchanged.

HONG KONG

Holidays 1st May only.

AIR Cut off 30th April (for both freight and documents).

SEA no change, schedules remain unchanged.

Should you need clarification, or options available for freight movement around this holiday period, please contact the Magellan Customer Service team on 1300 651 888 or info@maglog.com.au

0 Continue Reading →

Chinese New Year 2015

What does the celebration represent and how might this national holiday impact your shipments?

Chinese New Year (CNY), also known as the Lunar New Year or the Spring Festival, is the most important of the traditional Chinese holidays.

CNY is based on the Chinese calendar and usually begins on a different date each year. It is based on the moon’s orbit around the earth.  The festival traditionally begins on the first day of the first month in the Chinese calendar and ends on the 15th of the month. Each CNY is symbolized and named after one of 12 particular animals (Rat, Ox, Tiger, Rabbit, Dragon, Snake, Horse, Goat, Monkey, Rooster, Dog and Pig) and consists of a 12 year cycle. 2015 is the year of the Goat.

The holiday for CNY is officially recognized by the government as 7 days, with typical CNY celebrations lasting for 15 days. In 2015, holidays start on 19th February until 25th February.

Within China, regional customs and traditions concerning the celebration of the CNY vary widely. People will pour out their money to buy presents, decorations, material, food, and clothing. It is also the tradition that every family thoroughly cleans the house to sweep away any ill-fortune in the hope to make way for incoming good luck. Windows and doors will be decorated with red colour paper cut-outs and poems with popular themes of “happiness”, “wealth”, and “longevity”. On the Eve of CNY, supper is a feast spent with family. Food will include pork, duck, chicken and sweet delicacies. The family will end the night with firecrackers. Early the next morning, children will greet their parents by wishing them a healthy and happy new year, and receive money in red paper envelopes. The CNY tradition is a great way to reconcile by forgetting all grudges, and sincerely wishing peace and happiness for everyone.

Effect on your imports / exports during Chinese New Year

As is the same every year, CNY has a massive impact on sea freight and transportation to and from Australia. During the holiday, most areas of government, construction and factories shut down, while ports and customs usually operate with a skeleton staff focusing on perishable priority items that are time-sensitive only, such as fresh produce.

Manufacturing plants across China typically shut down and tens of millions of workers make long trips back to their home towns from the industrial cities where their jobs are based. It has a huge impact on all global supply chains originating from China and it’s not always back to business as usual, before and after the 15 day celebration. The celebrations are also expected to affect port operations in terms of loading, barging schedules and possibly product availability. It can have a considerable effect on your supply chain during the celebration and should be planned for.

When the New Year approaches, factories kick into high-gear in an attempt to ship as many orders as possible before officially shutting down for the holiday.  Major retailers tend to plan ahead to accommodate for the manufacturing shutdown in China during the CNY. Planning and coordination are key to ensuring your supply chain continues to run smoothly during this period and you have enough merchandise for your customers. Importers and exporters will also need to make changes to their production and shipping schedules to ensure they have enough goods to get them through the downtime caused by the factory closures. Stocks are also at times kept in storage until factories are up and running again. China’s entire transportation system is practically at capacity during this time, and it is common for issues with container and truck availability when shipping goods close for CNY.

The shipping lines often introduce GRI (general rate increase) in January for peak demand before CNY, and space becomes tight as all suppliers struggle to ship their cargo before the holidays, as well as considering blank sailing programs with shipping lines.

The container shipping lines servicing the North East Asia-Australia trade lanes are moving to cut back on capacity and skipping a series of sailings. This Blank Sailing Program with shipping lines from all 9 consortiums, participate in managing the available space in the off peak period to combat the over-supply of tonnage in the shipping trade. Particularly during the two weeks of CNY, in preparation of volume lulls following the start of the holiday on February 19th, 2015, capacity will be cut by 35 – 42% which will mean less available space on the berth. Trade will be slow due to factories closing over the CNY Period and the traditional off peak period commences. Port capacity is limited and congestion is increased weeks before and after CNY that can lead to delays at the ports limiting the availability of goods in the supply chain. In China and its mainland ports, the celebrations are also expected to affect port operations in terms of loading, barging schedules, etc

chinese-new-year-2015

Timeframes to consider & planning

Shipments must be at port at least 10-14 days before Chinese New Year to ensure shipment before the break starts. Shipments must also be booked at least two weeks in advance because space quickly fills up. If you ship a large amount around that time, then congestion will likely bump at least one of your shipments to a later ship date, often a week after CNY if you do not manage your shipments in time. Most ports open again for normal shipping about one week after CNY. Filling containers and preparing customs declaration documents well in advance of the holiday are advisable steps to take. Ports will have major congestion the week leading up to and after the New Year as factories gear up for the shut down and return to work.

In summary, when planning for peak season, be sure to have a buffer for CNY – Two or three weeks for bookings and then another week for ETA in case of delays.

This annual celebration should be a part of your yearly supply chain planning.

Here are the dates of Chinese New Year for the next 6 years for your reference:

chinese-new-year-6-year-dates

We hope this article provides insights on how Chinese New Year may affect your shipping and the necessary steps to take to prevent facing supply chain and shipping delays at this time of the year.

For more information please contact your Magellan account representative, email info@maglog.com.au or our customs team on 1300 651 888.

0 Continue Reading →