IMO 2020 – Low Sulphur Surcharge (LSS)
The International Maritime Organization (IMO) has passed new regulations that require all shipping lines to switch to cleaner fuel with a maximum Sulphur content of 0.5%.
Effective from January 1st, the new IMO 2020 Low Sulphur Regulation will come into force, requiring all sea-going vessels to comply.
In order to sufficiently comply with the regulation, sulphur in fuel oil must be reduced from 3.50% to the new target of 0.50% in addition to the 0.10% sulphur limit already enforced in Emission Control Areas (ECA).
The objective of this regulation is to reduce the amount of sulphur oxide emissions which is expected to deliver major health and environmental benefits, including improvement of air quality and reducing risks of acidification in the oceans.
The new IMO 2020 Low Sulphur Regulation will impact the shipping industry globally, with shipping costs set to increase worldwide, as the cost of the Very Low Sulphur Fuel Oil (VLSFO) is expected to be significantly higher than the present High Sulphur Fuel Oil (HSFO).
The Lines intend to recover the cost of complying with the Regulation by way of a Low Sulphur Surcharge (LSS), or by an increase to current Bunker Adjustment Factor (BAF) Surcharges.
The implementation dates range from 1st December 2019 to 1st January 2020.
To keep this as simple as possible while remaining transparent, we intend to pass the Surcharges for the BAF and new LSS charges at cost at the amount that we are charged.
As these costs are floating monthly and applied at different rates by different Shipping Lines/Vessel Operators, dependent on routes & port parings, we will confirm the applicable costs at the time of quoting for both FCL & LCL, as the shipping lines publish during the implementation process.
Further information can be found on the IMO website in the following link – http://www.imo.org/en/mediacentre/hottopics/pages/sulphur-2020.aspx
Hutchinson Port, Sydney has released the following notice advising of proposed MUA Protected Industrial Action, on Thursday 29th August 2019, for 24 hours, commencing 6am.
MUA Industrial Action Hutchison Port 29.8.19
All employees of Sydney International Container Terminals Pty Ltd t/a Hutchison Ports Australia Pty Ltd who will be covered by the proposed enterprise agreement, who are employed at its operations at Port Botany, and who are members of the Construction, Forestry, Maritime, Mining and Energy Union – The Maritime Union of Australia Division, will engage in the following actions:
- A stoppage of work of 24 hours duration, commencing 6am Thursday 29th August 2019
The Employee Claim Action of which you are being notified is being taken for the purpose of supporting or advancing claims made in respect of the proposed Enterprise Agreement.
During this period of Industrial unrest Hutchison Ports Australia will endeavour to minimise any delays where possible.
Please plan your trips accordingly without this 24-Hour period
We thank you for your Understanding.
We will be monitoring this situation, and notifying any customers regarding delays this may cause to vessels, and/or container retrievals/deliveries from or to Hutchinson Port Botany terminal, which will impact shipment deliveries.
ICC prepares to launch Incoterms® 2020
The International Chamber of Commerce (ICC) is preparing for the publication of Incoterms® 2020, an update of the renowned regulations that define the responsibilities of buyers and sellers operating in the international trade system.
The Incoterms® rules and ICC
Facilitating trillions of dollars in global trade each year, the “international commercial terms,” or Incoterms® rules, are a commonly accepted set of definitions and rules governing commercial trade activity.
Following a series of studies conducted in the 1920s, ICC discovered discrepancies in the interpretation of commercial trade terms used by traders from different countries. Based on these findings, ICC concluded that there was a need for the creation of a common protocol for importers and exporters everywhere. The first set of Incoterms® rules was published by ICC in 1936. Since then, ICC has periodically revised the Incoterms® rules to reflect changes in the international trade system.
Incoterms® 2010 (see Incoterms 2010 Table) is the most current version of the rules to date. This latest edition of the Incoterms® rules included an increased obligation for buyer and seller to cooperate on information sharing and changes to accommodate “string sales.” For the past decade, Incoterms® 2010 has provided critical guidance to importers, exporters, lawyers, transporters and insurers across the world.
In its Centenary year, ICC is preparing for the official release of Incoterms® 2020 later this year.
ICC’s Incoterms® rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms® rules are there to guide you. The Incoterms® rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.
The development of Incoterms® 2020 has seen extensive consultation among economists, lawyers and trade experts, as well as insight from ICC’s global network of national committees.
The participating national committees, as well as ICC’s Knowledge Solutions Department, have provided substantial contributions to the new Incoterms® rules, and the final draft to receive approval by the ICC Executive Board, which will be published in 2020.
You can keep up to date with the latest information on the ICC dedicated site: Incoterms® 2020 web page.
We will continue to update our website as further information & updates come to hand.
FYI – The Australian Chamber of Commerce & Industry has announced its national roll-out of workshops in September to address the new set of international trade rules in the Incoterms® 2020 by the International Chamber of Commerce.
More information can be found on the Australian Chamber of Commerce & Industry website
NEW, HEFTY FINES FOR MISDECLARED CARGO
Following several high-profile incidents recently, such as the Yantian Express fire in January, several ocean carriers have announced introducing heavy fines for misdeclaring hazardous cargo.
Hapag-Lloyd have recently announced it would levy a US$15,000 fine for misdeclared hazardous cargo, and said it would hold the shipper liable for all costs and consequences related to violations, fines, damages, incidents, claims and corrective measures resulting from undeclared or misdeclared cargoes.
A statement from the company said it was in the overall interest of safe operation on-board vessels.
“Failure to properly offer and declare hazardous cargoes prior to shipment is a violation of the Hazardous Material Regulations,” the statement said.
“Such violations may be subject to monetary fines and/or criminal prosecution under applicable law.”
TT Club (international transport & logistics insurance company) has welcomed such initiatives. The international transport insurer said it had growing concerns about the lax cargo packing practices and erroneous, sometimes fraudulent, declaration of cargoes.
TT Club risk management director Peregrine Storrs-Fox said it was clear the shipper has primary responsibility to declare fully and honestly, so the carriers are able to take appropriate actions to achieve safe transport.
“Since this is not always the case, carriers have to put in place increasingly sophisticated and costly control mechanisms to ‘know their customers’, screen booking information and physically inspect shipments,” he said.
“Equally, carriers have the opportunity to review any barriers to accurate shipment declaration, including minimising any unnecessary restrictions and surcharges”.
“Penalising shippers where deficiencies are found should be applauded. Furthermore, government enforcement agencies are encouraged to take appropriate action under national or international regulations to deter poor practices further.”
Along with the “Chain of Responsibility” introduction, there is more responsibility being placed on Shippers & Importers to ensure the correct information is being declared for each shipment, whether it be by Sea or Air.
Please find the link for our Export document processing pack to assist shippers when completing the Export documentation, and SLI (Shippers Letter of Instruction) as follows S.A.L. Global Export Processing Requirements and Instructions
Brown Marmorated Stink Bug (BMSB) Risk Season 2017-18 Mandatory treatment for containerised goods from Italy
Mandatory BMSB treatment for containerised goods from Italy
We have received advice from the Department of Agriculture and Water Resources (DAWR) informing us that the department has found significant numbers of Brown Marmorated Stink Bugs (BMSB) on arrival in Australia in various types of containerised goods arriving from Italy.
DAWR advise that these detections indicate that BMSB are sheltering in a range of containers and goods outside of those captured by existing measures.
“To manage the risk posed by these goods, all containerised goods shipped via sea cargo (FCL, FCX and LCL) from Italy that arrive in Australia between 17 January 2018 and 30 April 2018 which includes those shipments already on route to Australia (including new and unused goods), will require treatment on arrival using methyl bromide, or another approved treatment for BMSB.
Goods already treated offshore with one of the approved BMSB treatments, and where a valid treatment certificate is presented to the department, will not require further treatment.
These measures apply to all target goods originating in Italy during BMSB season. This includes goods that may subsequently be loaded/transhipped to Australia through other countries in Europe for goods originating in Italy.
Exceptions from treatment apply to goods that fall within one of the excluded tariff groups: Fresh produce, including nursery stock and live plants, live animals, food for human consumption and seeds for sowing.”
The department has also published the following Import Industry Advice Notice “04-2018 – Brown Marmorated Stink Bug (BMSB) Risk Season 2017-18 Mandatory treatment for containerised goods from Italy” which can be found via the following link for your information http://agriculture.gov.au/import/industry-advice/2018/04-2018.
It is expected that cost for treatment of any LCL shipment will incur costs of approx. AUD 18.00 Per W/M to cover the costs for the fumigation/treatment of the full container loads.
We will be liaising with all customers affected by this situation, and communicating action required for all shipments either already in transit or due to depart ex Italy.
Should you require any additional information, please do not hesitate to contact us.
Further to the last round of Infrastructure Charges in April this year, DP World Australia (DPWA) have informed the industry that they will be increasing the “Infrastructure Charges” for import and export containers in Melbourne, Sydney and Brisbane.
The increases, scheduled to commence from 1st January 2018, will result in the following changes to the DPWA Infrastructure Surcharges:
• Melbourne: $32.50 to $49.20
• Brisbane: 32.74 to $38.75
• Sydney: $21.16 to $37.65
The Surcharge applies to full containers received or delivered via road or rail.
FYI – The DPWA Notice(s) to Customers can be downloaded below for your reference:
• Notice to Customers – Melbourne Terminal
The industry associations have advised the ACCC that such charges should be paid by DPWA customers being the “shipping lines” not transport operators and freight forwarders on behalf of importers / exporters, due to the lack of commercial relationship and inability to enter into commercial negotiations.
However, either way, we would expect this cost would be passed on to the end customer, whether via the Shipping Lines or Transport/Freight Forwarder operators.
Recently, ACCC issued the 2016-2017 Annual Container Stevedoring Monitoring Report which noted that the ‘new infrastructure charges’ raise issues for the port supply chain and will be interesting to see if ACCC will start to monitor such increases in infrastructure charges.
We will continue to keep you updated of this situation, and if any there are any changes to the above.
Please feel free to contact any one of our staff should you require any additional information.
The following information has been received today, and has been provided by the Australian Border Force, and is forwarded for your attention.“The implementation of GST on low value imported goods was discussed at the CAG meeting on 20 June 2017 after the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 passed the Senate. We can now advise that the legislation has passed Parliament and will come into force once it receives Royal Assent. The Bill is likely to receive Royal Assent before the end of July.Please find below an extract of advice Treasury has recently provided to stakeholders who had participated in the consultation conducted on the Bill. You will note the strong advice from Treasury that the vendor collection model is not conditional upon the outcome of the Productivity Commission review, and that businesses should start preparing for the changes now.Dear stakeholders,As you may be aware, the federal Parliament today passed the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 with amendments. See the Treasurer’s Media release.Under the legislation passed by the Australian Parliament, from 1 July 2018, suppliers, online marketplaces and re-deliverers with an Australian GST turnover of $75,000 or more are required to register, charge, report and remit GST on sales of low value goods to consumers in Australia (vendor collection model). High value goods (with customs value greater than $1,000) will continue to be taxed at the border.As per the legislation, the vendor collection model will commence on 1 July 2018 and is not conditional on the outcome of a Productivity Commission Inquiry that is required to report on 31 October 2017. The Treasurer, the Hon. Scott Morrison, clarified in his speech to Parliament today that the Government’s policy is to implement the vendor collection model as legislated and that businesses should take the actions needed to implement it on the basis of the vendor model. The Treasurer went on to say the Government will not look kindly on businesses that in 6 months’ time say it is too difficult to implement because they have not prepared for compliance by 1 July 2018.With regard to the ICS changes, the additional fields and GST exemption code are available in the test environment and have been for some weeks. While the additional fields are also visible in the production environment, the GST exemption code of “already paid” will not be available in the production environment until the commencement of the legislation in 2018.Given the availability of the fields in the test environment, and the advice from Treasury above that businesses should start preparing for the vendor collection model now, the Department encourages you to commence work on your required preparations for these changes and advise your members, where applicable, of this advice.
Less than three months after the announcement of an Infrastructure Surcharges imposed on container transport operators by DP World, rival stevedore, Patrick Terminals, has announced increased Infrastructure Surcharges in Melbourne, Sydney, Brisbane and Fremantle from 10th July 2017.
The Patrick Surcharges will be as follows:
Sydney: $25.45 per container
Fremantle: $4.76 per container
Brisbane: $32.55 per container
Melbourne: $32 per container
The Infrastructure Surcharges will be applied to both road and rail transport operators for all full container movements, both import and export.
Patrick’s announcement is as per link: http://www.patrick.com.au/documents/NewDocuments/Infrastructure-Notice-to-Customers-final-June-2017.pdf
In relation to these Infrastructure Surcharges, The Forwarding Industry is of the opinion that:
• The relevant Infrastructure Surcharge will not result in a net public benefit
• The VBS, being a mandatory and monopolistic arrangement for terminal vehicle access, is not the appropriate manner for any Infrastructure Surcharge cost recovery and its implementation
through the VBS. Noting access to the VBS is by way of a commercial arrangement between transport operators and 1-Stop, and these contracts have individual and cumulative downstream
effects on third party users
• There is a lack of transparency as to the determination of cost and the rationale for the Infrastructure Surcharge
Take it or Leave it
The Various Transport Alliances believe additional stevedoring competition on the east coast of Australia has naturally led to highly competitive market negotiations for stevedoring contracts, and a commercial reluctance by the stevedores to negotiate higher prices with Shipping Lines to cover their rising costs of doing business.
Perversely though, it seems that this doesn’t faze Patrick or DP World, because they can offset these costs with impunity by imposing Surcharges on other parties in the chain who can’t push back.
Seemingly too, regulators such as the ACCC and governments have abandoned the container logistics sector and are allowing the market to bear, even though it is clear that the stevedores have unfettered power to impose these charges on a “take it or leave it” basis.
The latest announcements by Patrick has been brought to the further attention of the ACCC and asked them again to intervene. Will the ACCC do so? That is a matter for the Competition Watchdog, but if it doesn’t, it’s a clear sign that the system of cost recovery and revenue generation in the container logistics chain in Australia is broken.
Service Level Agreements / Performance Measures:
The existing Carrier Access Arrangements have again been exposed during these last months as being wholly inadequate to underpin the relationship between the stevedores and transport operators into the future.
Transport Alliance companies will pursue dialogue with each stevedore to establish proper Service Level Agreements (SLAs), including agreed performance measures, and appropriate mechanisms to have a say in how the millions of dollars collected through these “taxes” are spent to improve landside container logistics efficiencies and productivity.
We will monitor any progress regarding these charges, but expect these will be implemented irrespective of any opposition raised.
Should there be any further information required, please do not hesitate to contact us.
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Japan’s big three container shipping companies have agreed to establish a new joint-venture company to integrate their container shipping businesses.