Coronavirus (COVID-19) Update – 06th March
Interesting insights from China
Our sources have provided us with some information on what is happening on the ground, with indications trade and freight movements are slowly recovering.
Reports are indicating 70-90% of factories have re-opened, depending on province, and are gradually ramping up production.
A quick breakdown is as follows:
- Most of the eastern provinces such as Zhejiang, JiangSu, Fujian, Guangdong, Shanghai, Shangdong are back to work. However due to travel restrictions, most of the manufacturers are still not operating normally at this stage due to staff shortages. Some of the provinces have started using charter flights to get workers back to work. Henan province has announced 16 March as the return to work date.
- Most nationally owned manufacturers are at 80% productivity and logistics companies back to running around 95% (not full productivity at this stage).
- Zhejiang 99% of companies and manufacturers are back to work. However, the productivity is around 50%, will expect 80% by mid / late March
- Guangdong 99% companies and manufacturers are back to work. Productivity for many companies is around 50%, will expect 80% by late March. However the top 300 companies are running at 91% productivity. The province is using high speed trains and charter flights to get workers back from inner Chinese provinces
- Furniture industry in Guangdong province is now back to 80% productivity and the car parts industry in Shangdong province has been fully operational since 15/02/2020 under Government guide.
- The textile industry in Zhejiang province is now back to 80% productivity since 29/02/2020.
- In Jiangsu province 78.7% companies and factories are back to work, worker numbers are at approx. 6.25 million which is 76% of the normal requirement.
- Measures are also being taken to ensure that any factory / business that is re-opening has met all requirements for cleaning of their facility and equipment.
- Chinese government encouraging use of trains to carry containers rather than rely on trucks between cities and provinces
- Most provinces have reduced their control restriction from level one to level two, this means other provinces’ workers if healthy are able to travel into most of the provinces.
- It is also understood that there are reasonable stocks of export goods in storage that should be able to enter the supply chain immediately those places open back up.
It is expected the Chinese government will provide assistance to ensure a full return to economic stability is achieved as quickly as possible.
This may include financial support and/or promotion of internal markets. That said there is still real concern for the short term, and maybe some companies may not survive.
We have continued to note a significant number of blank sailings impacting scheduling & movement of available shipments from China. This is also affecting various port rotations on routes calling ports in other countries along the way to Australia.
Blank sailings for direct voyages are creating a peak demand for continuing services, an outcome that was not anticipated for this time of year and before the coronavirus outbreak.
Also affected is the through movement of the sailings which would continue onto New Zealand, creating delays & tightening of capacity on this trade-lane.
As a result of the change in supply and demand of shipping services, it is noted that some shipping lines have this month introduced a Peak Season Surcharge of up to USD $100 per container to all cargo moving from Australia (generally to all regions except USA and Europe).
There have also been reports of some Shipping Lines looking at introducing an “Equipment Imbalance Surcharge” (EIS) on lanes where there is a critical container shortage, due to high volumes of containers stuck in China following the extended Chinese New Year shutdown. Indications have been up to USD 1,000 for Reefer containers & USD 400 for general containers.
With passenger flights in/out of China being suspended, approx. 85% of the air cargo capacity has been wiped out.
Airfreight market rates to all routes have been affected, and we have seen pricing increases based on capacity on various trade-lanes.
Northern Italy / South Korea
With increased outbreaks becoming more widespread across the globe in particular Northern Italy, South Korea and Iran.
The various shipping lines advise that at present there are no issues impacting vessel or aircraft movements of cargo in these areas at this point in time.
It is worth noting that any vessels arriving into an Australian Port that report ill persons will be required to undergo health inspections before being allowed to have dealings with local Ports, which may cause delays to local berthing.
ABF and Biosecurity officers remain responsible for border clearance processes. Vessels that report ill persons will undergo a human health inspection by a Biosecurity Officer on arrival in Australia, and before the vessel is granted pratique.
Crew who have left or transited through Italy or the Republic of Korea on or after 2100 AEDST 5th March 2020, may be subject to enhanced health screening measures on arrival into Port.
See current live global reported cases updates at: Coronavirus COVID-19 Global Cases by Johns Hopkins CSSE
To stay abreast of all developments and general information concerning the Novel Coronavirus we suggest members maintain a watching brief on the Department of Health website
We will continue to monitor issues surrounding the coronavirus situation and keep you updated.
The International Chamber of Commerce recently published the new Incoterms® 2020, international trade terms for the sale of goods, which became effective from 1st January 2020.
Our Incoterms® 2020 table can be found here for ease of reference.
Incoterms communicate the responsibilities between a seller and buyer in terms of costs and risks associated with the global transportation of goods.
WHAT ARE THE CHANGES?
Many of the existing Incoterms are still included, however some have been slightly amended, and new terms added –
FCA (Free Carrier – named place of delivery) has been amended slightly to allow the seller to require the buyer to procure an on-board bill of lading.
Historically, a seller of a containerised shipment under FOB (Freight on Board) terms lost control of the goods on their arrival at the export container port, but still remained liable until the container was loaded onto the ship. This exposed the seller to potential cost and risk. FCA now answers this problem and allows the parties to agree for the buyer to direct the carrier to issue the on-board bill of lading to the seller.
CIF (Cost Insurance Freight) and CIP (Carriage and Insurance Paid to) require the seller to provide a basic level of insurance for the buyer equivalent to Clause C (Institute of Cargo Clauses).
However, these two terms usually apply to different classes of goods which call for different levels of insurance coverage.
In Incoterms® 2020, the ICC has sought to clarify this distinction.
CIF now keeps the same insurance requirements (i.e. Clause C) but CIP has increased the level of insurance required to Clause A (Institute of Cargo Clauses).
DAT Replaced by DPU
DAT (Delivered At Terminal) will be replaced by DPU (Delivered at Place Unloaded). The ICC says this change was made primarily to eliminate confusion between DAT and DAP (Delivered at Place) in terms of where and how delivery takes place.
DPU is now the only Incoterm where the seller has the responsibilities and costs of unloading at final destination. Import Customs clearance and related costs, however, remain the buyer’s responsibility.
RULES FOR ANY MODE(S) OF TRANSPORT
The seven rules defined by IncoTerms 2020 for any mode(s) of transportation are:
- EXW – Ex Works (named place of delivery) The seller makes the goods available at its premises. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included.
EXW means that a seller has the goods ready for collection at their premises (works, factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. The seller doesn’t load the goods on collecting vehicles and doesn’t clear them for export. If the seller does load the good, they do so at buyer’s risk and cost. If parties wish the seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale.
- FCA – Free Carrier (named place of delivery) The seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place. The seller pays for carriage to the named point of delivery, and risk passes when the goods are handed over to the first carrier.
- CPT – Carriage Paid To (named place of destination) The seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier.
- CIP – Carriage and Insurance Paid to (named place of destination) The containerized transport/multimodal equivalent of CIF. The Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.
- DAT – Delivered at Terminal (named terminal at port or place of destination) The seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.
- DAP – Delivered at Place (named place of destination) The seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.
- DDP – Delivered Duty Paid (named place of destination) The seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer.
RULES FOR SEA AND INLAND WATERWAY TRANSPORT
The four rules defined by IncoTerms 2020 for international trade where transportation is entirely conducted by water are:
- FAS – Free Alongside Ship (named port of shipment) The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. This is suitable only for maritime transport, but NOT for multimodal sea transport in containers (see IncoTerms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.
- FOB – Free on Board (named port of shipment) The seller themselves must load the goods on board the vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel (this rule is new!). The seller must clear the goods for export. The term is applicable for maritime and inland waterway transport only, but NOT for multimodal sea transport in containers (see IncoTerms 2010, ICC publication 715). The buyer must instruct the seller on the details of the vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. This term has been greatly misused over the last three decades ever since IncoTerms 1980 explained that FCA should be used for container shipments.
- CFR – Cost and Freight (named port of destination) The seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel. Maritime transport only and Insurance for the goods is NOT included. This term was formerly known as CNF (C&F).
- CIF – Cost, Insurance and Freight (named port of destination) Exactly the same as CFR, except that the seller must in addition procure and pay for the insurance. Maritime transport only.
SHORTER Incoterms® 2020 DEFINITIONS:
Rules for ANY MODE of Transport
- EXW = Ex Works (Named Place of Delivery)
- FCA = Free Carrier (Named Place of Delivery)
- CPT = Carriage Paid To (Named Place of Destination)
- CIP = Carriage and Insurance Paid To (Named Place of Destination)
- DAT = Delivered at Terminal (Named Terminal at Port or Place of Destination)
- DAP = Delivered at Place (Named Place of Destination)
- DDP = Delivered Duty Paid (Named Place of Destination)
Rules for Sea and Inland Waterway Transport
- FAS = Free Alongside Ship (Named Port of Shipment)
- FOB = Free On Board (Named Port of Shipment)
- CFR = Cost and Freight (Named Port of Destination)
- CIF = Cost, Insurance and Freight (Named Port of Destination)
Every effort has been made to ensure the accuracy of definitions however this document should be used for reference only and is not intended as legal advice. Customers can also seek specific guidance from Incoterms® 2020, available through the ICC at www.iccbo.org
Incoterms® 2020 is a registered trademark of the International Chamber of Commerce.
Coronavirus Update – 11th February
Following up on our previous notices, as a result of the Coronavirus outbreak emanating from Wuhan in Hubei Provence, Chinese authorities had extended the Chinese New Year Holiday through 10th February for the majority locations in the hope of containing the situation.
Whilst there may be directives being issued regarding work nationally, it seems many provinces / cities / corporations are erring on the side of caution and suggesting that a slower return to work may be appropriate given the scope of the virus and the concern in the community.
All this is due to the continued efforts to limit the spread of the Coronavirus as there are a number of uncertainties, and related restrictions in each province and across China that will become clearer in the coming days.
In general, many provinces/cities are being advised to manage the return to work in the best interest of their employees, and it is worth noting that some businesses still remain closed, often with work from home arrangements in place.
This however does not assist with the start of production and/or physical movement of cargoes destined for Australia or to receiving into China.
Our contacts have indicated that the “return to work” for Hubei province is now scheduled for 17th February, with a number of business also advising their expected re-start date of 17th February as well.
The feeling within the community is that any return to work and full capacity will be a slow build and the lower volumes of cargo moving may extend into early / mid-March.
It is estimated a national employee downtime of about 20 percent, and this will be higher the closer the factory is to Hubei.
Factories are expected to return to a minimum of 80 percent capacity by 24th February – provided their immediate work force, suppliers, and distributors are not located in or in close proximity to Hubei Province.
However, currently, a growing number of businesses have suspended their production and shipping operations, due to halts in business operation and curbs on transportation, which have weighed heavily on the retail, manufacturing, and trading sectors.
In response to these challenges, China is now offering more support to businesses and bolstering its online administrative channels to establish a more coordinated link throughout its industry chains.
The focus is first on the supply of essential products, and then on the resumption of work for existing enterprises to resume full production. In this article, we provide a more holistic look at some of the measures the government has put forward, just last week, to assist businesses and reduce the loss suffered by them where possible.
Some links / facts that members / industry may find of interest into the broader issues of the virus and the impacts are shown below;
- Schools are not going back till end of February
- Corporations are encouraging anyone with a laptop / remote access, to work from home
AUD – Australian Dollar
OFX this morning advised that “The Australian dollar sank to its lowest level in over a decade on Monday (10th Feb), touching 0.6656, as demand for risk and the economic exposure to China sapped investor demand. Sustained fears the coronavirus will hamper the global economic recovery and dampen Chinese GDP escalated through trade on Monday as the number of confirmed cases pushed through 40,000 and the World Health Organisation issued an ominous warning.”
This is a definitely a continually evolving situation, and we will continue to monitor the situation and update on this medium.
Latest updates – 5th February
- The coronavirus has now infected 20,629 and caused 427 deaths globally, with 20,483 infections reported in China as of Tuesday morning. This is an 18 percent overnight rise, a lower rate than a week ago when infections were spreading at 29 percent.
- Coronavirus mortality rate is currently 2.1 percent, consistent with normal influenza.
- Hong Kong has reported its first coronavirus death.
- Hong Kong government closes 10 of 13 border crossings with mainland China; further reduces mainland flights.
Currently, the Ocean Carriers have not advised of any changes to their current scheduling ex China to Australia.
However it has now been confirmed that there are restrictions being applied to the arrival of vessels from China into AU, and advice from the Australian Border Force (ABF) has indicated a formal advice will be issued shortly regarding .
In the interim, we have noted on the website for the Maritime Industry Australia Ltd (MIAL) commentary as follows; (the full article can be seen HERE)
- In brief, the advice for ship’s crew is the same for anyone else – if they have joined a ship, or been ashore in mainland china and returned to the ship from 1 February they will not be permitted to come ashore in Australia within the 14 day window from last being in China.
- If any individual member of the crew meets these requirements, the entire crew will be treated as requiring the 14 day quarantine period.
Information from Ports Australia indicate the scenario that if crew have been at sea for 14 days before arriving on our shores, then the coronavirus is deemed to be no longer a threat.
For example, if a vessel heads from mainland China to Australia and the voyage takes 12 days, then the vessel will have to sit offshore for 2 days before a pilot will meet them.
We understand that Ports Australia have been working with government officials (Health, ABF and Agriculture) and that a formal advice will soon be released.
We will continue to monitor this situation & keep you informed of further updates.
Latest updates – 3rd February
Over the weekend (Saturday 1st February 2020), Prime Minister, Scott Morrison, has applied DFAT’s recommended border measures, which include heightened restrictions for entering Australia from mainland China.
The level four “do not travel” advice warning also recommends Australians do not travel to China.
DFAT had recommended the implementation of additional border measures, which would deny entry to Australia for people who have left or transited through mainland China from today. Exceptions will be made for Australian citizens, permanent residents and their immediate family, as well as air crews who have been using appropriate personal protective equipment.
Qantas has confirmed that they will suspend their two direct services to mainland China (Sydney-Beijing and Sydney-Shanghai) from 9th February until 29th March 2020. This follows entry restrictions imposed by countries including Singapore and the United States, which impact the movement of crew who work across the Qantas International network.
There is no change to Qantas services to Hong Kong as it’s exempt from current travel restrictions.
For the full notice – refer to QANTAS UPDATE ON CHINA SERVICES
Noting that the majority of airfreight to and from Australia is carried in the belly of passenger aircraft, which will have a major impact on the movement of any airfreight & courier volumes between China & Australia.
It indicated that airfreight would be limited, and therefore pricing would climb. It is even warned that global warehousing will come under strain as companies look to build up inventory.
At this stage Cargo flights will be expected back into China during the latter part of February once the factories start-up again.
Supply chains would be affected as truckers, warehouse staff, cargo handlers, manufacturing staff would not be able to return to work for longer than expected.
Points of interest:
- February 3rd – more than 2,000 new overnight confirmed infections, bringing the total to 14,557, as the overall death toll passed 300. According to a study published on Saturdayby scientists from the University of Hong Kong, the virus may have infected as many as 75,815 people in Wuhan, the epicentre of the outbreak.
- Chinese New Year Holidays extended until 2nd February to prevent mass movement of citizens. Shanghai, Suzhou, Guangdong Province, Zhejiang Province, Jiangsu Province, and Yunnan Province extended until 9th February. Other provinces and cities likely to extend this further; Chongqing municipality announced that non-essential enterprises in the administrative area will remain closed till 9th February.
- Jiangxi Province, Shandong Province, and Anhui Province are delaying resumption of work for non-essential enterprises to February 9. Hubei Province announced that enterprises in the province will be closed till 13th February.
- Chinese staff may not be able to return to work immediately.
- Serious interruptions and cancellations of transport reported across China, expect this to continue for the next two weeks.
- China’s financial regulators have prepared an emergency package, including an RMB 1.2 trillion (US$173 billion) boost of liquidity, to support companies and markets as they brace for a sharp stock sell-off on Monday in response to the deadly coronavirus outbreak, according the Financial Times.
- UK withdrawing staff from China Embassies.
- British Airways, Air France, Lufthansa and American Airlines, along with numerous other airlines have suspended flights to China. Whilst United Airlines, Cathay Pacific and Air Canada are amongst the other airlines that had already announced plans to reduce flight numbers. Italy has also suspended flights to China.
- Air New Zealand suspends flights to Shanghai until 29th March.
- All direct flights to China from Russia halted from 9 pm GMT on Friday, except the national airline, Aeroflot.
- US issues travel ban on all foreign nationals arriving in the country who have visited China in the past 14 days – will not permit entry. Returning US citizens to be quarantined for two weeks.
Update on Special work arrangements, China and HK Offices due to Novel Coronavirus
According to China Central and Local Government notice issued, it is advised that all companies to extend the Lunar New Year holiday.
Hence, our China and Hong Kong offices will resume normal operation as below –
Resume Operation Date
10 Feb 2020 Mon
10 Feb 2020 Mon
10 Feb 2020 Mon
03 Feb 2020 Mon
10 Feb 2020 Mon
10 Feb 2020 Mon
10 Feb 2020 Mon
10 Feb 2020 Mon
10 Feb 2020 Mon
03 Feb 2020 Mon
Work at home until further notice from local Government
10 Feb 2020 Mon
10 Feb 2020 Mon
Majority of senior staff from all our China offices will be working from home over the extended , and we are in communication where necessary for the continued movement of current & pending shipments.
We will be continuing to work with any effected customers regarding shipments currently underway, and/or due into Australia over the extended, as well as pending movements/orders.
FYI – It is expected with the delayed return of the workforce for the majority of China businesses, that new shipments will be postponed, with space tightening once manufacturing returns to full or even partial production.
We will continue to monitoring and notifying any customers regarding delays this may cause to vessels, and/or container retrievals/deliveries at each location, which will impact shipment deliveries.
China’s State Council officially announced on Monday that the Lunar New Year / Spring Festival holiday will be extended to 2nd February across the country.
The holiday week was originally from January 24th to 30th January. (The official notification can be accessed here).
However, Shanghai has announced that all enterprises will remain closed till 9th February. (See official notification from the Shanghai municipal government here)
Similarly, Zhejiang Province announced it is delaying return to work and school to 9th February. (See official announcement here)
Guangdong Province also announced Tuesday evening that it will delay resumption of work and school to after 9th February and February 17th-24th, respectively. (See official announcement here)
The move to extend the New Year break has been expected as government and healthcare authorities double down on efforts to contain the Novel Coronavirus outbreak by restricting public movement and large gatherings.
There have been cases reported in all 60 provinces in China and around the world, with 106 people reported to have died as of this morning, and close to 4,200 reported cases.
Hence, our China and Hong Kong offices will resume normal operation as below.
Resume Operation Date
3 Feb 2020 Mon
3 Feb 2020 Mon
3 Feb 2020 Mon
3 Feb 2020 Mon (for HK Public Holiday is 29 Jan 2020)
10 Feb 2020 Mon
10 Feb 2020 Mon
3 Feb 2020 Mon
10 Feb 2020 Mon
10 Feb 2020 Mon
3 Feb 2020 Mon
Work at home until further notice from local Government
3 Feb 2020 Mon
10 Feb 2020 Mon
There have already been immediate global impacts, which includes general falls in the United States and Australian stock markets.
However, there are a number of possible impacts on trade and the industry which implements that trade.
Some examples of the impact of the current “Coronavirus” can be summarised as follows:
- There are likely to be additional biosecurity measures at the airports adding to travel times which will apply to all travellers. Crew on ships originating in China or passing through affected areas may be confined to quarters. Those biosecurity measures may then extend to goods originating from China if it believes that those goods may somehow have been infected.
- The extension to the “Lunar New Year” will further extend the “low season” conditions in sea freight and may well further delay shipments of goods to Australia. That may affect the manufacturing industry needing Chinese inputs to manufacture or affect those awaiting ordered finished products, especially consumers or retailers.
- There is bound to be a significant impact on travel between Australia and China. Not only will this affect tourism and the provision of education for Chinese students in Australia. The likely reduction in air services may also have an unexpected effect on Airfreight shipping. It is less known that during the cancellation of air services during an Icelandic volcanic event years ago, the shipping trade was held up as original bills of lading, which usually were moved by air services were delayed at point of origin. Of course, with the reliance on such original bills of lading, containers and other goods could not be unloaded.
- The most immediate impact is in Wuhan, the capital of the Hubei province which could amplify the wider effect in China as it is one of the country’s main manufacturing, transport and logistics centres. The effect on the wider economy could be very damaging with production and supply chains being affected throughout China and therefore throughout the world.
- The extent of the wider effect is currently hard to calculate. While there is a larger world economy and more personal international travel than at the time of SARS, it appears that medical intervention here and overseas may be quicker and more sophisticated. However, unlike 2003, the services economy is now a major part of the Chinese and Hong Kong economies, so the inability to move people will have a bigger impact than before.
Australian suppliers to Chinese customers may find demand for their goods and services reduced by the combined effect of the “phase one agreement” with the US and reduced domestic demand in China.
We expect to start to see adverse impacts in the near future, and wish to warn our clients, customers and others in the supply chain, that things may take time to recover, and some immediate impacts will be shipments arriving into Australia without prior documentation or Telex Releases/Original Bill of Ladings being received to date.
We will be monitoring and notifying any customers regarding delays this may cause to vessels, and/or container retrievals/deliveries at each location, which will impact shipment deliveries.
Importing hydrochlorofluorocarbon (HCFC) equipment
Please note the below changes from 1st January 2020 as advised by the Department of the Environment & Energy, International Ozone Protection & Synthetic Greenhouse Gas Team.
Rules for importing hydrochlorofluorocarbon (HCFC) equipment are changing on 1 January 2020.
- From 1 January 2020 importing all types of HCFC equipment (including, for example, HCFC aerosols and HCFC fire protection equipment) will be banned, except in certain circumstances. This includes all equipment that uses HCFCs, even if it does not have gas in it at the time of import.
- From 1 January 2020, an equipment licence may be granted for import of HCFC equipment only in limited circumstances.
- From 1 January 2020 low volume imports of HCFC equipment without a licence will no longer be allowed.
Hydrochlorofluorocarbons (HCFCs) are ozone depleting substances, and are chemicals that are mainly used as refrigerants.
Unfortunately, releases of HCFCs deplete the Earth’s protective ozone layer and contribute to climate change. R-22 is an HCFC refrigerant that is often used in air-conditioning equipment.
Production and import of HCFCs is being phased out globally under the Montreal Protocol on Substances that Deplete the Ozone Layer (the Montreal Protocol).
Australia has implemented an accelerated phase-out of HCFCs under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 (the Act), and phase-out schedule has been implemented by allocating HCFC importers and manufacturers a limited quota.
As of 01st January 2020, the above ban on importing of HCFC equipment is being implemented, and further details can be found on the Department of the Environment & Energy website: environment.gov.au, or contacting or on +61 2 6274 1373.
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