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Typhoons Affect Shipping from China and SE Asia

Heavy rain and thunderstorms in recent weeks have caused havoc across China, with floods along major rivers destroying bridges, blocking roads and railways and forcing thousands of residents to evacuate. As a result, waiting times in impacted ports, including Shanghai and Ningbo, have increased considerably.

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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.

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HOW TO DECIDE THE RIGHT SHIPPING METHOD FOR THE GARMENTS YOU IMPORT

Garments imported from Asia and elsewhere represent a large percentage of clothing sold in Australia’s $30 billion fashion industry. Retailers are always looking for ways to gain an advantage over their competition.  With continuous pressure on margins and emerging technologies shaping customers’ demands for speed to market and garment presentation, the need to do so has never been more urgent.  An obvious place to find opportunities to optimise for a competitive edge is in the supply chain. Importers can remove considerable time and cost from their supply chains by reviewing their decision-making around garment shipping methods.

As anyone who is in the business of importing garments for retail sale will tell you, one of their most crucial supply chain considerations is how to ensure that their merchandise remains in the very best condition. Consistency from origin to destination is critical, while not losing sight of the all-important speed to market.

Most importers opt to transport their garments by the traditional flat pack method where the supplier folds and packs the garments in boxes. It is cost effective, and entirely appropriate for high volume fashion.  However, flat packing higher-quality garments made from delicate or sensitive fabrics, may lead to less than ideal outcomes. Packing garments made from delicate fabrics for transit can cause crushing and creasing requiring reworking (pressing or steaming) before the retailer can display them for sale.  This may add significant cost and time into the supply chain.

Because of this, many importers of mid-market to higher-end or delicate garments prefer to use Garments on Hangers (GOH) shipping.  The various GOH methods ensure greater consistency of garment condition with reduced creasing, minimising (in some cases to nothing) preparation and reworking time in-store.  This has the knock on effect of lowering costs, as in some cases all the supplier can complete all the garment preparation at origin.

There are two different GOH garment shipping methods:

String system – In containers prepared using the string system, pieces of knotted ‘string’ run from the top of the container. Factories then hang garments in bundles by inserting hangers into each knot of the string.

garment shipping string system

aigo DC-V728

Bar system – Factories load the garments directly onto bars set up in the container – similar to a wardrobe.
garment shipping bar system

The up-front container preparation cost for both systems is usually the same. However, more garments can be shipped using the string system, effectively reducing the per-unit price. However, while the bar system carries fewer garments, there is even less potential for creasing and therefore further reduces reworking.

There are many factors to consider when deciding between the string and bar systems, including type and fabrication of garments, volume and how the retailer prefers to display the garments. The pay-off really happens in-store, when garments are unloaded direct to racks ready for the shop floor in perfect order – no further preparation needed.

Whether you need a GOH container or if flat-pack is more appropriate is not a one size fits all decision.  Sometimes the right solution will vary from shipment to shipment, volume and season.

Magellan Logistics has been navigating global fashion and retail supply-chains for 20 years.  We can advise you on the best garment shipping method for your business and arrange the forwarding and customs clearance.  Contact us today on 1300 651 888 or via www.magellanlogistics.com.au to see how we can help you stay ahead in this complex and changing environment.

Download our handy e-Guide 10 QUESTIONS TO ASK BEFORE YOU IMPORT CLOTHING BY THE GARMENTS ON HANGERS (GOH) METHOD

Exactly how are containers prepared for GOH?  Watch our video here.

Sources:
http://www.abcosystems.net/why-goh-is-a-necessity-for-better-garment-distribution/
http://shippingandfreightresource.com/what-is-a-garment-on-hanger-container/

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CHAFTA DUTY RATES TO COME DOWN IN 2017

The nature of retailing is continually changing.  If it’s not the recent growth of online retail and rapidly changing consumer preferences that is keeping you on your toes; then it will be the need to stay on top of distribution chain productivity improvements to remain competitive that’s keeping you up at night.

Although the cost structure of retail goods has been broadly stable over the last 10 or so years, this is in spite of an upward trend in the prices of inputs to the retail supply chain; in particular, those involved in distributing goods.  With roughly half the cost of getting goods from factory to the consumer attributable to distribution, any relief on this front is good news.

The good news – ChAFTA duty rates to come down

As of 1 January 2017, there will be a change in duty rates for most tariff categories covered under the ChAFTA agreement.

For simplicity, we have summarised the tariff classifications as follows:

chafta duty rates

To take advantage of the new reduced tariffs on your imported cargo you will need to lodge entry after 1 January next year.

With this in mind, now might be a good time be thinking about the cost of goods sold in your upcoming shipments and your available options.  Moving your goods into bond until after the New Year might be worth your while.

When the time is right, talk to us to find out if it is the right solution for you.

Magellan Logistics has been navigating global supply chains for Australian fashion, footwear, textiles and retail businesses for 20 years.

We have your back on this and any other customs or freight-forwarding topic.  If you would like to discuss the ChAFTA duty rates reduction and how you can take early advantage of them with me further please get in touch on 1300 651 888 or via alex@maglog.com.au.

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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. 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.

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Your obligations when importing timber products into Australia from China

All imported timber, wooden articles, bamboo and related products (whether for commercial or personal use) must comply with the Department of Agriculture and Water Resources Biosecurity Import Conditions system (BICON).  It should be noted that this includes timber packaging and pallets. The types of timber, wooden articles, bamboo, and related products page has definitions and links to the applicable import conditions in BICON for different types of timber, wooden articles, bamboo and related products.

In order to ensure a smooth importation process, importers of timber products from China that require fumigation prior to entry, must provide a Chinese Fumigation Certificate to Magellan Logistics on customs@maglog.com.au or your customs broker.

We have prepared a useful guide to outline the types of timber products and treatments required with links to the relevant information on the Government’s site as well as the process around the application for and provision of Chinese Fumigation Certificates.

If you would like some more information on importing timber products from China and Chinese Fumigation Certificates, please contact me or a member of our customs team at Magellan on 1300 651 888 or via email alex@maglog.com.au

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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.

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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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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.

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ChAFTA Update – latest news

After much speculation, we have received confirmation originating from the office of The Hon Andrew Robb AO MP – Minister for Trade and Investment, that final notes were being exchanged yesterday (9 December 2015) and ChAFTA is set to enter into force on 20 December 2015.

A couple of key points to note include:

Certificates of Origin

The following Chinese Authorities will be the only powers able to issue Certificates of Origin [COO]:

– AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine)

– CCPIT (China Council for the Promotion of International Trade: (China Council for the Promotion of International Trade).

Please note: COOs will not be issued prior to the commencement date of CHAFTA.

Duty free or 5%?

For further information regarding the change in duty rates and confirmation of whether your duty rates will or will not change on this date please feel free to call on 1300 651 888 or email me daniel@maglog.com.au

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