It’s May Day!
Welcome back to the OSCL newsletter and blog.
We missed publishing a blog/newsletter last month, so here is a fun and chunky one to catch you up.
I wanted to kick the blog off by saying that the support I had over the last few weeks from our clients was amazing. I took some time off to be with my old man over east, and I appreciate everyone sending their best wishes, he is well underway in his recovery. We are now back in the office, and what a month April was :)
Let's jump into it.
Chinese Market Update:
The freight forwarding and supply chain market is constantly evolving, and it has been a roller coaster of a market to predict and try to forecast. Towards the end of April and heading into May, we have been presented with market rates that are the lowest we have seen in roughly twenty years.
While we are insanely competitive on the rates, the industry is still struggling with shipping line blank sailings and vessel rollings. We recommend planning for longer transit times as we are doing our best to navigate the turbulent market.
As mentioned in the previous newsletter, we are booking with well-established lines to mitigate the risk of delays, short free-day allowances, and offloads. Currently the most stable lines for us are Cosco and ZIM line.
In terms of the market, Chinese exports surged in March. It is stated that this is most likely due to suppliers catching up from national holidays and COVID disruptions. Analysts are not expecting the trend to continue as the rest of the global markets decline due to external pressures such as inflation.
China's cabinet has issued a plan to assist in stabilising its vital trade sector as the global recession that is looming threatens its export market. It's estimated that the Chinese export market provides over 180 million people jobs and would be a disaster to the local economy if the market was to constrict at an accelerated pace.
There has been talk of large Chinese companies moving manufacturing operations to Southeast Asia countries such as Vietnam, Thailand, Malaysia, and Indonesia. What an interesting move! It will be fascinating to see if this strategy will pay off and reduce the risks around supply chain challenges and the developing global political environment.
It's worth noting that the Chinese Labour Day Holidays commence from the 29 April 2023 to 03 May 2023. Please push and assist your suppliers in getting all required commercial shipping documents to us before they close.
India Market Update:
We have been saying this is a hot trade lane to watch. The UN projected that India would overtake China as the most populous country in the month of April. On a recent visit to the US, the Indian finance minister Nirmala Sitharaman stated, "...India seeks to be more involved in world supply chains and serve as an alternative to China through output-incentive plans and the growth of its domestic consumer market...".
The Indian government has stated they wish to hit a target of $2 trillion USD annually, in overall exports by 2030. This is a very ambitious target, however, if we see sectors such as car manufacturing and electronics shift across to India, they could achieve their goal.
The government is in full development mode to strengthen the infrastructure to handle the expected increase in volumes. The Vizhinjam Port located in Kerala, is a deep-sea water port and will be India’s first Mega Transshipment Container Terminal. This project is expected to be completed by September 2023. The port's location is prime as it's predicted that roughly 30 percent of sea traffic happens on the route that the port is situated along. Inventors are already developing plans to build large commercial hubs around the vicinity and road infrastructure is underway.
This will be a very competitive trade lane for Australia once volumes increase and freight pricing stabilizes with market demand. The Australia-India Economic Cooperation and Trade Agreement was a very smart move and will see 96 percent of imports from India tariff-free, rising to 100 percent within four years. Please get in touch with us if this is a market you would like to explore.
USA Market Update:
Freight pricing has started to stabilize, with the slightest increase in the Asia-US trade lane. It's been over a year since the shipping lines introduced a GRI, which is a healthy sign heading into the US peak summer season. It's a very hard market to predict with a recession looming and a reduction in consumer spending.
The White House released new emissions standards for gas-powered cars made between 2027 and 2032. It's expected this new reform will reduce carbon emissions by 10 billion tons over three decades. China currently is the leading manufacturer of minerals and batteries utilized in the production of electric vehicles and may push the US to rely more on this trade lane.
The California Port Data Partnership is officially underway with the ports of Los Angeles, Long Beach, Oakland, San Diego and Hueneme signing a Memorandum of Understanding on Wednesday. The agreement is centralizing the advanced data-sharing to facilitate better freight movements and enhance supply chain resilience. Visibility into cargo movements was one of the compounding factors that caused huge congestion issues over the past three years. This is a very interesting move and I wonder if it would have the same benefits if applied to the Australian port system.
There have been some major developments from US-based service companies delivering AI programs and apps to assist in strengthening supply chain operations. There is currently a research project underway developing what is being dubbed an intelligent supply-chain analyst that will be able to interpret data with reasoning factors. This opens the door to unlimited possibilities of what AI can be used for across global supply chains. This is certainly a big interest area for us at OSCL, as we strive to incorporate advancing technologies to enhance systems to deliver exception service.
Australian Domestic Market Update:
It is not surprising we start May with a notice of Increased Port Infrastructure Fees from Hutchison Ports. As mentioned in the previous blog, we continue to see landside fees increase. If you are interested, we recommend taking a look at what FTA is doing in regard to advocacy with the government in this space.
Read more here:
In terms of infrastructure developments, construction has started on the Lumsden Point Project at Pilbara Ports. The WA Government allocated $78.1 million in its 2022-23 State Budget for the construction of seawalls and a causeway to connect the wharf to warehouse hubs. Very exciting news for the region and industry as this will promote hundreds of jobs and could be developed into a strategic logistics hub for WA. Brisbane Airport Corporation has released plans to start building its largest industrial warehouse to date for Aramex Couriers. This is the first stage of the development, which is expected to span over 100 hectares.
The Australian import market has seen a reduction in volume through the border and its very much due to the similar external and economic factors that other countries are currently experiencing. Experts are predicting a tough few months ahead. The domestic refrigerated market is still reeling from the collapse of Scotts and many small businesses are struggling to meet domestic contracts and find alternate distribution service providers with the Australian Logistics Council suggesting it's due to a lack of truck drivers.
- Liner profits smash all records, Sam Chambers, Splash247:
- Lumsden Point, Pilbara Ports Authority:
- Maritime CEO Forum: Cyber security masterclass, Splash247:
- Retail sector grapples with shifting consumer behavior, Ashley Coker, FreightWaves
- FEDERAL GOVERNMENT AND ARTC RESPOND TO INLAND RAIL REVIEW, FULLYLOADED:
As mentioned, it's been a crazy month for us, and we feel very blessed.
Here is a quick snapshot:
We undertook our first training courses for our ISO 9001 accreditation and have started to roll out improved internal processes in line with the standards.
OSCL became a member of the Canberra Chamber of Business, and we hope to be more involved in this space, assisting local importers and exporters to reach new markets and develop robust supply chains.
OSCL moved its very first overweight heavy container, and we are pleased to say it was a fantastic success. Shout out to the team at Owens Transport in Brisbane.
We got to be onsite for the delivery of one of our Canberra-based client's first-ever container! I honestly couldn't contain my excitement — another shout-out to the team at Canberra Sideloaders.
What's on the agenda for May:
I will be attending the FTA NSW CPD Conference between 04/05 - 05/05 to obtain my required annual professional development points. I will have the capacity to visit a few clients in Sydney on Monday 08/05, if you would like to schedule a catch-up, please give me a bell.
We will be attending a few networking events and some amazing talks. I'll be sure to include some highlights in the next blog.
I have unfortunately not managed to get out of Jury duty for the 3rd time and will be attending court from the 10th of May. Emails will be monitored and will ensure the service level continues.
Thanks again for your continued support.
As always, we look forward to assisting you with all things supply chain.
Bianca & Steve
A few snaps of the last few weeks...
Photo from Parliament house - sourced from Freight & Trade Alliance.