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It’s that time of year again – Peak Season and I thought I’d share some of the tips and strategies we use at Magellan to get through it.

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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.

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SOLAS / VGM – Understanding your obligations

From July 1 2016 the International Maritime Organization (IMO) will enforce the amendments to the Safety of Life at Sea (SOLAS/VGM) Convention that require a packed container’s gross mass to be verified prior to stowage aboard a ship.

From this date, the new regulations, effective as global law, prohibits loading of a packed container in absence of the verified gross mass (VGM) declaration.

This applies to all packed containers which are to be loaded onto a vessel under the SOLAS convention in international maritime traffic.

It is the primary responsibility of shippers to ensure that the gross mass of containers is verified, but other suppliers and importers have a role to play to ensure they are not severely impacted by non-compliance.

A packed container, for which the verified gross mass has not been obtained will not be loaded on the vessel. Loading of a packed container without VGM on to a vessel is an offence against an existing SOLAS regulation.

You can download a copy of the presentation here or get in touch with you Magellan contact on 1300 651 888.



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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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Container Weight Verification legislation from July 2016

The United Nations’ International Maritime Organization (IMO) has decided to make compulsory the container weight verification or the gross mass (weight) of loaded containers before their sea transportation, effective 1 July 2016.

The purpose of the regulation is to ensure the safety of the ship, workers both aboard ships and ashore, the cargo and overall safety at sea. The International Convention for the Safety of Life at Sea (SOLAS) requires that packed containers’ gross mass (weight) is verified prior to stowage aboard ship.

The shipper will be legally responsible for the verification of the gross mass (VGM) of a container carrying cargo and also responsible for ensuring that the verified gross mass is communicated in the shipping documents sufficiently in advance to be used by the ship’s master or his representative and the terminal representative in the preparation of the ship stowage plan.

Identifying the processes by which the verification will take place is a work in progress in Australia, and most exporting countries still. The entire supply chain will be impacted by the amendments.

The exact weight, called the verified weight (VGM), can be declared in two ways….

Method 1 – The loaded container can be weighed at an approved weighing station or using calibrated and certified weighing equipment (ie a licensed weighbridge, or similar method).

Method 2 – The weight of separate items in the container can be added to the net weight of the container. This method must be individually approved and certified by the regulatory body responsible in the exporting country. (Weighing all packages and cargo items, including the mass of pallets, packaging, dunnage and other securing material to be packed in the container and adding the tare mass of the container to the sum of the single masses.)

The introduction of the new requirement has raised questions as to the reliability of current documentary evidence of weight verification by Shippers globally and evidence of standards of testing of weighing equipment.

It has also raised questions as to the availability of suitable infrastructure to undertake large scale container weighing at high volume export ports overseas (method 1).

The Australian Maritime Services Authority (AMSA) will have overall control and powers to act in Australia in regard to contravention of the new laws regarding any cargo received for shipment at any port in Australia.

Similar origin country regulatory bodies will be responsible for the application of the new global regulations in origin ports overseas. It would appear that many countries, whilst they are signatories to these new requirements, have yet to publicly release how they will be applying these new regulations.

We strongly recommend that all Australian importers now take this matter up with their suppliers overseas to identify how they (the suppliers) will be complying with these regulations at their origins, from 1st July 2016.

The team at Magellan Logistics is here to assist and guide our Customers regarding this compliance, however it must be stressed that this is essentially an issue for shippers to now understand and agree on what methods of certification will be used by them, for any shipments originating and received for shipment from an overseas port from 1st July 2016.

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