Good Day All,
Welcome to the last blog & newsletter of 2022. What a rollercoaster this year has been!
This blog will be a tad longer as it will be our wrap-up for the year.
Let's get into it...
Simply put the Chinese-Australian trade lane has crashed. Freight rates are the lowest we have seen in many years. They are so low it's not sustainable for the shipping lines to maintain. If you have stock ready or are thinking of orders for the start of 2023, now is the time to ship. In saying that, we will see an increase in blank sailings, sailing omissions/rollings, swapping out the larger vessels for smaller ones, and reallocating to the US trade lane.
If your consignments are under no time constraints, it would be crazy not to take advantage. We have heard rumbles of a possible GRI in the last week of December heading into January, however, it's tough to read the market as it is reacting directly to demand and not following any sort of trend.
Fresh waves of COVID outbreaks have again sent Chinese ports & large manufacturing hubs into lockdowns. Currently, these areas have been affected the most over the last few weeks: Ningbo, Shanghai, Tianjin, Zhengzhou, Chengdu, and Dalian. In the last week, Guangzhou, Beijing, and Chongqing have been flagged as COVID hotspots. It's reported that more than one-fifth of China’s total gross domestic product (GDP) is currently under strict lockdowns.
We have watched the news over the past week following the Zhengzhou Foxconn protests and covid riots. China’s zero covid policy and harsh lockdown processes have decreased the national export average and will have long-term industrial effects heading into the new year.
The US market is following the global trend and is softening. Not to the extent of the CN-AU lane, however, enough to clear the severe congestion in the ports and with domestic trucking services. Port of Los Angeles is reporting softening of volume as the market shifts. Industrial action could also be to blame, as negotiations between the International Longshore & Warehouse Union and Pacific Maritime Association stall and threats of freight rail disruptions continue.
The California State Transportation Agency announced at the end of October that the Californian Government would be funding a $1.2 billion dollar upgrade project to the ports of Los Angeles and Long Beach.
Large US retailers are struggling heading into 2023 as they did not predict the softening of the market so early in the year. Amazon is cutting jobs to respond to the softening conditions. Retailers are overstocked, and combined with inflation and low consumer demand, the focus will be on the Black Friday and Cyber Monday sales ahead of the Christmas season to move products.
MSC Air Cargo is launching, with some flights out of the States scheduled for December. The carrier will have services connecting Mexico City, Indianapolis, Frankfurt, and Hong Kong. Amazon Air has also added to their services, with ten freighters being added to their fleet being operated by Hawaiian Airlines. The airfreight market has seen its eighth consecutive month of volume decline, with experts stating that peak season will miss the airfreight market in its entirety.
The week of the 14th saw a very intense situation transpire that could have put our supply chain industry into turmoil. Svitzer, the company that owns most of Australia's tugboats, planned to bring seventeen of our major container ports “to a standstill” by preventing its tugboat crews from working. This was an escalation to a three-year battle with unions over employment agreements.
Australia’s Fair Work Commission had to step in to prevent the lockout from proceeding. It's impossible to put into words the devastating economic impact this would have had (a national standstill of receiving vessels, forcing all ports to a standstill!). These actions stress the need for intervention and reforms. This is unfortunately not the end of this issue, with the lockout only suspended for six months. We will be watching this ongoing situation as develops transpire.
The Australian Government has appointed a new taskforce to guide the establishment of Australia’s Maritime Strategic Fleet. The fleet will consist of Australian-flagged and Australian-crewed vessels. It is estimated that up to 12 vessels will be included in the fleet. This is a quote from Catherine King, Infrastructure, Transport, Regional Development, and Local Government Minister, “...It is essential that we make sure Australia continues to have a robust supply chain, so we get food, fuel, medical supplies and other critical cargo to support Australian industries, the community and protect our national interest...". It will be interesting to see how a national fleet will fare.
In summary, here is an excellent quote from Ali Ashraf, the director of ocean product at C.H. Robinson. "...While rates across trade lanes are trending downward and capacity is healthy, global schedule reliability is still far from normal, and shippers should be mindful of their expectations of on-schedule deliveries heading into 2023...".
https://theloadstar.com/carriers-in-panic-mode-as-recession-bites-offering-crazy-ocean-rates/ - Time to take advantage of pre-covid freight rates!
- Australia's FWC vetoes Svitzer tugboat lockout to avoid economic damage - Sam Whelan - https://theloadstar.com/australias-fwc-vetoes-svitzer-lockout-to-avoid-economic-damage/
- Inside the Failure of Australia's Ports - ATN - https://www.fullyloaded.com.au/industry-news/2211/inside-the-failure-of-australia%E2%80%99s-ports - Fascinating read - I like this statement, "...that they are what economists call a natural monopoly. So, there is no way to encourage competition once they have been privatised...".
- SHIPPING AUSTRALIA ATTACK ON THE ROAD TRANSPORT SECTOR ADDS MOMENTUM FOR TERMINAL ACCESS CHARGE REFORM -Paul Zalai - https://www.ftalliance.com.au/news/27948 - The transcript is very interesting. The importance of regulating landside charges is being highlighted.
- Black Sea grain deal extended for four months - Adis Ajdin - https://splash247.com/black-sea-grain-deal-extended-for-four-months/
- Record Chinese covid cases spark concern - Sam Chambers - Splash247 - https://splash247.us9.list-manage.com/track/click?u=d9cd6e3c7ddb7a9f609caa158&id=8cd594733c&e=e15298794c
- NHVR Prosecutes Three Directors for Primary Duty Offences - Fully Loaded -
https://www.fullyloaded.com.au/industry-news/2211/nhvr-prosecutes-three-directors-for-primary-duty-offences - A good reminder that suppliers need to ensure they are declaring accurate container weights to meet our stringent heavy vehicle legislation.
- Wet weather, road closures disrupt livestock trade, transport industry - Youssef Saudie and Sarah McConnell - https://www.abc.net.au/news/2022-11-25/road-closures-and-rain-disrupt-livestock-trade/101698754 - What a year we have had with the weather domestically.
Steve is participating in a charity boxing match against one of his army mates. The fight is raising funds for the Black Dog Institute. Every dollar raised will support vital mental health research and support services that help Australians impacted by mental illness and suicide. Steve has been training all year, and we are incredibly proud of his commitment and dedication. If you would like to read about the fight or make a donation, please follow the link.
We have finalized our Brisbane dates. Bianca will be visiting clients in QLD between 18/01/23 to the 20/01/23. If we have not yet been in touch and you would like to catch up, please reach out so we can secure a time. We will be visiting Sydney clients at this stage in May, with dates to be confirmed closer to the time.
We will be operating half days over the Christmas holiday period (19/12/2022 - 02/01/2023), between 08:30 - 12:30. Should you have anything urgent, please don't hesitate to call Bianca directly for assistance.
We wish everyone a fantastic end to the year.
Looking forward to being on service in the new year.
All the best,
Bianca & Steve