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TPP11 starts December 30 – what it means for you?

The TPP11 comes into force for the initial six ratifying countries on 30 December 2018 immediately lowering the 5% tariff on most goods from Mexico and Canada and providing tariff relief by eliminating 98% of tariffs in the TPP11 region with the goal that by the end of 2021 the majority of products will be duty-free under the agreement.

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ChAFTA – All duty free from 2019

As of 1 January 2019, duty rates for all tariff categories covered under the ChAFTA agreement will be duty free.

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12 signs you’re suffering from freight & logistics stress

How do you know if your Freight Forwarder is giving you the best possible service? There are a number of symptoms of freight & logistics stress. To get to the bottom of them you need only ask a few simple questions:

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Magellan Logistics is on the move

After almost 10 years in the MIAC Centre Magellan is delighted to be making the move to brand new premises.  And we don’t have to travel far; just across the road (Tullamarine Freeway).

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The State of Global Fashion 2017 – Uncertain, Changing and Challenging

Looking back at 2016 — one of the toughest years on record for global fashion

As fashion executives around the world reported in the first BoF-McKinsey Global Fashion Survey, 2016 can be summarised in three words: uncertain, changing, and challenging.

Indeed, this has been one of the toughest years ever for the global fashion industry. Terrorist attacks in France, the Brexit vote in the UK, and the volatility of the Chinese stock market have created shocks to the global economy, which has not been this volatile since the depths of the financial crisis of 2009. Meanwhile, consumers have become more demanding, more discerning, and less predictable in their purchasing behaviour, which is being radically reshaped by new technologies. But the shockwaves have not only been external. Fashion companies have also been looking inward, implementing changes to their core operations—from shortening the length of the fashion cycle to integrating sustainable innovation into their core product design and manufacturing processes—re-evaluating the entire fashion system itself.

Perhaps unsurprisingly then, 67 percent of the executives surveyed reported that conditions for the global fashion industry have worsened over the past 12 months, a fact that is clearly borne out in the industry’s financial performance this year. Sales growth is on track to slow to just 2–3 percent by the end of 2016, with stagnating profit margins. Speculation and uncertainty over the impact of the outcome of the election in the United States could further impact sales if consumer sentiment dampens. This is in stark contrast to the fashion industry’s performance over the previous decade, which saw the industry grow at 5.5 percent annually according to the McKinsey Global Fashion Index, outpacing overall GDP growth.3

It is important to note that industry performance in 2016 has not been even across all market segments and categories. This year was particularly difficult for the luxury and mid-market players, who were hit by the slowdown in China and the US and are expected to grow at rates below the industry average at 0.5-1% and 2-2.5%, respectively. One category that is experiencing significant deceleration is watches and jewellery. While it was the fastest growing category between 2005 and 2015 – having enjoyed a compounded growth rate of 11% according to the MGFI –watches and jewellery is expected to grow just 1.5-2% this year. The luxury end of the category suffered an especially hard blow.

But in spite of these and other challenging circumstances, fashion remains one of the key value-creating industries for the world economy. If it were ranked alongside individual countries’ GDP the global fashion industry would represent the seventh-largest economy in the world.4

Moreover, 2016 also saw many exciting changes: the advance of digital, the launch of “see-now, buy-now”, and a thorough creative shake-up at fashion houses.

Outlook for 2017: Glimmers of recovery

In 2017 we expect the global fashion industry to see the glimmers of a rebound.

This recovery has several foundations. First macroeconomic indicators, including GDP growth forecasts, are projected at 3.4 percent compared with 3.1 for 2016, however these have not been adjusted to reflect the ongoing impact of important political shifts in the United States and the United Kingdom.

Second, the investment community and the fashion brands themselves forecast improvement across the industry next year. Some 40 percent of executives we interviewed for this report expect conditions for the fashion industry to improve in 2017, compared with the 19 percent who reported

improving conditions in 2016. This is particularly true for the major players within each of the market segments and product categories. Many of them have already undertaken significant cost-cutting and restructuring exercises, and are now primed to capture the benefits. All things considered, we fashion industry growth could increase from 2–2.5 percent in 2016 to 2.5–3.5 percent in 2017, although the days when the industry outpaced GDP growth by more than 1–2 percentage points, as it has done over the past decade, seem to be over.

Performance will vary according to the individual dynamics of specific market segments and categories. Value and affordable luxury are likely to be the big winners, both outpacing the industry average at a projected 3.0-4.0 percent and 3.5–4.5 percent growth, respectively; however, all of the market segments—except for the discount market—should see a slight sales growth improvement of 0.5–1.5 percentage points.

Product categories are expected to grow in line with the overall industry average, but the biggest winners will be those companies with coherent channel strategies and clear value propositions. Athletic wear is positioned to be the absolute category winner, maintaining 6.5–7.5 percent sales growth, albeit no longer growing at a double-digit rate overall. The affordable luxury segment seems likely to continue benefitting from consumers “trading down” from luxury, while signs point to the continued growth of the value segment in line with the international expansion of large global players.

In short, the industry now has the opportunity to stabilise and reset. Next year’s success stories are most likely to come from those that are already planning for the year ahead. They should do this in the context of the following trends that we believe will shape the fashion industry in 2017.

DOWNLOAD THE FULL REPORT HERE

10 TRENDS THAT WILL DEFINE THE FASHION AGENDA IN 2017

INTENSIFYING VOLATILITY

Volatility is the new normal. Geopolitical instability, terrorism, Brexit, and stalled trade deals will all increase a pervasive sense of uncertainty in the global economy.

CHINA’S COMEBACK?

China’s fundamentals, including growth of the middle and upper classes, remain strong and the government’s new fiscal policies are expected to improve conditions in 2017, but uncertainty remains.

URBAN ENGINES

City-based strategies trump country-based strategies: a new class of rapidly growing wealthy cities in newly influential markets are becoming central to the evolution of fashion.

SHREWDER SHOPPERS

Working harder to keep up with smarter shoppers: “always-on” consumers are becoming ever more sophisticated, more technology-driven, and harder to predict.

GENERATION CORRELATION

Opportunities to serve the young and the old better: fashion companies should consider how to fine-tune and diversify the way they approach both retired and millennials consumers.

THE WELLNESS DIVIDEND

Feeling good is the new looking good: more fashion players can start profiting from the wellness movement rather than competing with it.

CHANGING THE RHYTHM

Disruptions to the fashion cycle: expectations set by the faster pace of fashion and consumer desire for instant gratification must be addressed to deliver fashion immediacy.

ORGANIC GROWTH

Investing more to nurture local clientele: 2017 has the potential to be the year of organic growth based on deeper relationships with existing clients rather than geographic, channel,and store network expansion.

UPSTREAM TECHNOLOGY

Digital innovation goes behind the scenes: digitisation is a key to supply-chain efficiency, lower procurement costs, and enhanced sourcing opportunities.

OWNERSHIP SHAKE-UP

Emotionless reappraisal of brand portfolios: fashion conglomerates can be expected to further intensify their focus on big brands, creating space for other brands and industry outsiders such as private equity and family owners to acquire targets.

The Business of Fashion and McKinsey & Company © 2016

DOWNLOAD THE FULL REPORT HERE

Source: McKinsey

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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. With the recent opening of direct international flights into Gold Coast Airport, Magellan envisions replicating the great success and growth experienced around Australia in this important and growing marketplace.

With the opening of our new office at Banyo, Magellan Logistics is pleased to announce its expansion into Queensland which will be led by Business Development Manager, Tania Nicolson.

Starting out as a travel consultant fresh out of high school Tania quickly learned there was a similar need for her keen attention to detail and ability to tailor travel itineraries in the freight sector and after jumping ship (so to speak) she has not looked back.

Sixteen years on, Tania has accrued considerable experience in the freight and logistics industry both in Brisbane and internationally in roles spanning operations, customs, transport and more recently business development.  With exposure across most industries, Tania has enjoyed immense success working with clients in the textiles, footwear and clothing sector, across both imports and exports.

Her wealth of experience has given Tania the appreciation that freight forwarders do more than simply move freight – they are business partners who provide a service which directly impacts a client’s business success in terms of response and delivery time. For Tania, understanding each client’s unique requirements has been the single most important factor in providing excellence in service and building enduring relationships.

Describing her role to industry outsiders as like being a ‘travel consultant for your freight’, Tania was instantly struck by ‘Magellan’s lateral approach to logistical solutions and customer centric focus’ saying ‘I can see from the way Magellan prioritises their customers’ needs that we will make a great fit, that and the opportunity to work with a fabulous team of people!’.

We are delighted to welcome Tania to the Magellan team and the positive and responsive approach she brings.

Our Brisbane office contact details:

Unit 16, 14 Ashtan Place, Banyo QLD 4014

We extend a warm invitation for Brisbane specific enquiries. Please contact Tania directly at tania@maglog.com.au or on the phone via on 1300 651 888 or 0431 575 220

Alternatively, you can reach our customer service team in our Melbourne head office on info@maglog.com.au or 1300 651 888.

We look forward to assisting our existing and future Queensland clients with their freight forwarding, customs clearance and 3PL needs into and out of Brisbane and Gold Coast.

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Fun and Innovative Uses for Retired Shipping Containers

While we take the import and export of our clients’ goods seriously, we’re not all business here at Magellan Logistics. In fact, we’re fascinated with the myriad fun and innovative ways to repurpose all those retired steel shipping containers that we once had a hand in shipping around the globe. We’re super impressed when someone creates something new and functional out of just one container.

Texas architect Jim Poteet helped Stacey Hill, who lives in a San Antonio artists’ community, wrangle an empty steel shipping container into a playhouse, a garden retreat, and a guesthouse for visiting artists.

Texas architect Jim Poteet helped Stacey Hill, who lives in a San Antonio artists’ community, wrangle an empty steel shipping container into a playhouse, a garden retreat, and a guesthouse for visiting artists.

But there are a number of great ways to reuse one or several of these containers. One of the most common is to use retired containers as the skeleton of a residential building, and it’s a great way to recycle these containers for additional use. Many families might even use a single shipping container as the shell for a lovely holiday home somewhere, as it’s a far sight less expensive than having a fully-featured residence built to spec. Of course, old shipping containers aren’t just ideal for single-family homes either; the world’s first shipping container hotel, located in London, is proof positive that you don’t need to limit your imagination to small structures.

Bedding down for the night in an old shipping container not your speed? There are plenty of other uses for a retired shipping container. The size and shape of these containers make ideal swimming pools, for instance.shipping container architecture  Additionally, if you prefer to stay dry, you can take a smaller intermodal shipping container and modify it into a studio or workshop. A collection of larger containers can be used to put together bigger buildings as well as to build storefronts, fitness centres, or even entire shopping malls.

Boxpark Shoreditch - London's first pop-up shopping mall made completely from shipping containers.

Boxpark Shoreditch – London’s first pop-up shopping mall made completely from shipping containers.

There’s also a growing movement to repurpose shipping containers in order to provide cheap and easy infrastructure for developing countries. From portable restrooms that are more permanent than chemical toilets, self-contained powered classrooms created by fitting the roof of a shipping container with solar panels, compact gardens or nurseries complete with hydroponic growing racks, or miniature emergency medical centres fitted out in ways similar to an oversized ambulance, there’s all sorts of ways to turn a retired shipping container into something that can make a real difference.

infrastructure container

Including one impressive gravity defying art installation!

Installation called WOW Westminster by Brazilian artist José Resende. Part of the Vancouver Biennale.

Installation called WOW Westminster by Brazilian artist José Resende. Part of the Vancouver Biennale.

 

 

 

Here at Magellan, we love everything to do with shipping your cargo all over the world, and that includes what to do with shipping containers that have outlived their primary usefulness. If you’re interested in learning more about what Magellan can do for you and your import and export needs, contact us today and we’ll be happy to show you the Magellan difference.

 

Sources:

http://webecoist.momtastic.com/2009/04/05/15-awesome-ways-to-reuse-shipping-containers/

http://www.marineinsight.com/marine/environment/top-26-innovative-uses-of-shipping-containers/

http://news.bbc.co.uk/2/hi/uk_news/england/london/7176594.stm

http://inhabitat.com/boxpark-londons-first-pop-up-shipping-container-mall-opens-in-shoreditch/

http://blogs.vancouversun.com/2015/11/23/used-shipping-containers-turned-into-art-in-new-westminster/

http://www.dwell.com/great-idea/article/what-you-can-accomplish-single-shipping-container#1

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Major changes in the international seafreight shipping market – UPDATE

Largely in response to stagnant import market conditions (see my post from September this year) and a lack of profitability in the containerised seafreight market, the industry is seeing some changes beginning to emerge.

As a follow up to my earlier article here are the updates:

  1. China Shipping and Cosco – two major carriers participating in North Asia to Australia trading are working on a merger agreement;
  2. NYK will cease to operate within the Australian containerised market effective from Quarter 2, 2016;
  3. Acquisition of APL is currently being considered by several lines including Giants, Maersk and CMA-CGM;
  4. Two major services (CKA and NEAX) from North Asia, key ports for the Australian trade will be combining into one service, the members in these two consortiums will re-allocate their capacities for the new service. This is set to take effect in Quarter 2, 2016.  As a result:
    • CKA Service will be suspended;
    • A 10% or 3500 TEU (twenty-foot equivalent units) capacity per week reduction.

What does this mean for importers?

  1. While the merger between CSCL and Cosco, pending acquisition of APL, NYK’s withdrawal and the combined service clearly indicates a lack of performance in the Australia trade, some industry wisdom view this as a positive change;
  2. Shipping lines are optimistic that the containerized shipping market may gradually swing back and become “vendor’s market” rather than a “buyer’s market” as it is at present;
  3. Seafreight rates are likely to increase over the course of the year and will probably fluctuate less than what has been experienced since the GFC in 2008.

With the potential for higher freight rates next year this will impact importers who are already struggling with the impact of the weakening Australian Dollar, making some imports unviable.  However, as most of my customers say, the freight rates are not really influential on purchasing product from overseas, rather they consider it to be an additional cost. This just makes the need to ensure competitive freight rates even more crucial to their bottom lines.

For a confidential discussion about freight rates and all your logistics needs, please get in touch with me via email or call 1300 651 888.

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HOW TO: Choose a freight forwarder

How to choose a freight forwarder?  On the face of it, it would seem pretty simple.  But in my experience, those who embark on the process of buying product from overseas can find it a bit of a challenge to select the right freight forwarder and customs broker for their business.  In many instances the intricacies of the logistics and supply chain process is not a core skill.

In general, as an importer you will – rightly – devote most of your attention to sourcing the right product, negotiating with overseas suppliers, obtaining product samples by international courier and/or visiting the overseas supplier abroad to meet with product managers, visit and inspect their site, quality control and obtaining an understanding of their manufacturing process.

When the overseas supplier assures you that they have their own forwarding agent with whom they regularly ship on a CFR (Cost of Goods and Freight) basis the challenge of the supply chain process and selecting a forwarding agent may seem to be alleviated.

So, job done – right?  Couldn’t be simpler to have the supplier handle the exporting too.  While this might seem like a big relief and a streamlining of a seemingly cumbersome process, there are often services and deals to be had by working with an Australian based freight forwarder and customs agent for two main reasons:

  1. The overseas supplier will book with their preferred agent, usually not to meet the needs of the importer, but to suit their own,
  2. CFR (Cost of Goods and Freight) is not the end of the story and often by the time the importers receive the invoice from the local receiving agent in Australia, a lot of unnecessary cost has been incurred which is often be due to the supplier’s handling of the negotiation. This is especially prevalent with LCL (Less than Container Load) cargo where, a whole system of rebates between the load port forwarding agent and the destination port forwarding agent are available.

How to choose a freight forwarder checklist:

  • Find your own freight forwarder and import on an FOB (Free on Board) basis to ensure control of costs, visibility and flexibility.
  • Understand and extrapolate what it is you really want and what your logistics needs are now and in the future. Ask the appropriate questions to qualify your freight forwarder candidate.
  • Select a forwarder who specialises in the market or industry you participate in. For instance, if you are importing clothing or footwear, find a forwarder that specialises in this.  There are a number of players in the marketplace that specialise in apparel logistics – large, medium and boutique.  It can be a good idea to match your business size relative to your industry to that of your forwarder.  For example, if you are a medium sized or boutique business you will have specific needs and may require a bespoke service to meet them.  Forwarders that serve a niche market tend to be more agile, flexible and adapt quickly to sudden changes to your freight requirements.
  • Pricing is important and it is imperative to not leave your money on the table, it is also important to find a forwarder that has good systems and processes and a good reputation amongst your peers. Your industry networks and social media can help you find a reputable company.
  • Ensure you understand what you will pay for your consignment and beware of extra or hidden costs.
  • Seek full transparency and integrity from your forwarder.
  • Choose a forwarder with an appropriate reporting or tracking system for visibility.
  • And finally, many forwarders in Australia have a wealth of knowledge about your origin country and markets and in many instances can provide you with the benefit of this to save you time, money and anxiety at all stages of the importing process.

 

If you would like a confidential discussion about your  importing and freight forwarding needs please call Edi Lenkic on 1300 651 888,  or if you’re in New Zealand call Paul Knight (09) 974 4818.  Alternatively visit www.magellanlogistics.com.au for more information.

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PROTECTING YOUR SUPPLY BASE

Most companies do not regard their supply base as intellectual property but they do so at their peril. Protecting your intellectual property is essential in this day and age as it provides a company or individual with a competitive advantage over other players in the industry.  Exposing your supply base to your customers can have dramatic consequences – the worst of which is the danger of your customer going directly to your supplier.

Australian retailers are well placed to deal directly with offshore manufacturers and indeed most of them have some direct supply in their product offerings. If you are currently supplying the larger retail chains with product you source from overseas you will have noticed an increased pressure to provide that product on an FOB basis rather than the traditional free into store approach. One of the dangers of agreeing to provide product on an FOB basis is the potential exposure of your supplier information to your customer – who could then quite realistically become your competitor.

Normally, when shipping goods from, say, China to Australia a bill of lading is cut with the consignor and consignee details listed on the bill. In normal circumstances the consignor would be the offshore manufacturer and the consignee would be the name of the entity that is to take delivery of the product. In the above FOB scenario the consignor would be your supplier and the consignee would be your customer. So it is easy to see that in this case your supply base is exposed. However, Magellan Logistics can help you with protecting your supplier information by manipulating the documentation to provide you with comfort that your valuable IP is being hidden.

The export documentation will be produced as normal and used for clearing the goods through the offshore Customs authority. However, once export formalities have been completed Magellan Logistics will raise a separate house bill of lading to indicate that you are the consignor and your customer is the consignee. Further, the invoice accompanying the shipment will be the FOB invoice raised by you on your customer. This documentation will be used to clear the goods through Customs in Australia. In this way, your supplier information is hidden from your customer and should go some way towards providing you with peace of mind.

As this is an extremely commercially sensitive area of concern we suggest that a Standard Operating Procedure (SOP) should be developed to ensure that all stake holders are fully aware of their obligations at each step of the way.

If you would like to discuss this issue further please contact Jeff Kershaw on 0418 543 994 or at jeff@maglog.com.au

AS ALWAYS – MAGELLAN LOGISTICS IS HERE TO HELP

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