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Important Shipping Update

Table of Contents

Auckland Port Booking Fee Increase 

Ports of Auckland (POAL) have gone to market with a significant vehicle booking service (VBS) increase effective as of the 1st of January 2023. Many transport providers approached POAL regarding the timing and size of the increase however they were unreceptive to negotiate with any VBS users.

Empty container depots are now also charging on an average of NZD 50.00 per container if transporters are 5 minutes late, regardless whether they are sitting in a queue outside the depot waiting to dehire containers. 

LCL Terminal Handling Increase 

Among much turbulence and the many challenges facing the global supply chain, cost inflation has emerged as a considerable day to day issue for everyone. The increase in costs due to inflation has had an impact nationwide on co-loader depots from services to materials to labour costs.

As a result majority of co-loaders will be increasing the origin and destination charges to recuperate losses as of the 1st of January 2023. Origin and destination terminal fees will increase on an average by NZD 7.50 / WM. 

Ocean Network Express implements Compensation for Breach of Agreement 

Effective as of the 1st of January 2023, Ocean Network Express (ONE) will implement a new surcharge, Compensation for Breach of Agreement (CBA), for all shipments being misstated.

The new surcharge will be applicable on all trade lanes. 

Port of Lyttelton implements Emergency Dredging Surcharge

Effective as of the 1st of January 2023, Lyttelton Port Company (LPC) will be implementing an Emergency Dredging Surcharge. This fee will be passed on to importers and exporters through the shipping lines.

Most shipping lines will recover this cost by increasing the Port Additionals / Port Dues fees. We are still waiting on the exact amount all shipping lines will be passing this cost on, however, based on information received to date, the cost will be around NZD 50.00 – NZD 60.00 / TEU.

Maersk New Zealand Terminal Handling Increase 

Effective as of the 1st of January 2023, Maersk shipping line will be increasing their Terminal Handling Service fee – Origin / Destination (OHC/DHC) for New Zealand (except Napier). The increase will be NZD 10.00 / TEU. 

Ocean Freight Market Update & Forecast for 2023 

Freight rates fell 21% in the month of November, its lowest level since December 2020, as demand continued to slow, and congestion levels decreased.

This rate is 72% lower than a year ago, though still double its 2019 level. Despite increases in blank sailings, spot rates fell significantly for all ex- Asia lanes in November as volumes declined and congestion eased at some key ports.

Congestion levels at the ports of LA/Long Beach – as measured by the absence of any vessels waiting for a berth, at least – returned to normal this month. Backlogs are also improving at NY/NJ, though congestion remains significant at Southeast US ports and in Houston.

We expect to see a steady decrease in freight rates leading into Quarter 1. 

Airfreight Update 

More passenger capacity is returning to the market, in addition to the resumption of more freighter schedules. International air travel is expected to return to close to pre-pandemic levels in 2023.

While rates are still above pre-pandemic levels, they remain soft. Unless there is an uptick in demand, rates are expected to decline in Q1 2023. 

Demand remains low with no signs of a peak-season surge, as inventories and sales are down due to low consumer demand. This trend is likely to continue into early 2023.

Trade restrictions involving China, the United States, Russia, Ukraine, and Europe will further constrain and disrupt global supply chains. Suppliers are beginning to look for alternative sourcing locations outside of China and Southeast Asia and South Asia. 

Transatlantic capacity is reduced as airlines transition to winter schedules. The low demand is keeping the market relatively stable for U.S. and EU exports. 

All markets are experiencing a very low peak with capacity remaining volatile. Additional service rotations to the region have been announced for January, so the market is expected to stabilize further. 

Ocean Freight Update 

Demand for ocean freight in most trades continues to decrease or remain flat, with shipping rates following the same pattern.

Traditionally, volumes and rates increase in advance of the Chinese New Year as market demand increases, particularly for spring commodities. However, this year, market demand remains uncharacteristically soft, with no significant volume or rate increases for trades in and out of Asia.

As such, the typical frontloading effect is not expected to take place this year. 

Steamship lines will continue to rationalize services and use blank sailing to adapt capacity to demand in an attempt to slow or prevent rate decreases. 

Despite an early January 2023 Chinese New Year, December 2022 is not showing a significant uptick in demand or rates out of Asia. Rates on all trades remain the same or minimally decreased.

Shipping lines are rationalizing services, applying ad hoc blank sailings to remove excess supply. Despite these capacity reduction efforts, spot rates continue to decline. 

As a result of the Russia-Ukraine war and winter energy limitations in Europe, expect export and import demand to slow down.

Meanwhile, ocean rates are holding for the most part, as congestion at origin ports and at U.S. East Coast (USEC) and U.S. Gulf Coast (USGC) ports continue to absorb capacity, and cause rotation disruptions and delays. Steamship lines are allocating more capacity to this trade. 

Watch for potential labour strikes in Europe around the holidays. 

North America
The increase in vessel capacity has resulted in significant congestion at USEC and USGC ports. Vessels are experiencing serious delays, waiting for berths.

The current vessel schedule delays are removing an estimated 7–10% of capacity from the market. By contrast, congestion at the Los Angeles/Long Beach port has been improving with less than 10 vessels on average waiting outside to berth.

Since volume dropped after early May, the current level of congestion is expected to remain stable at the U.S. West Coast (USWC). 

Average vessel berth times: Norfolk: 3 Days
Savannah: 13 Days Houston: 12 Days 
Oakland: 6 Days 

South Asia, Middle East, and Africa
Ocean space for exports out of the Indian subcontinent (ISC) continues to be generally available.
Demand remains soft with no sign of an imminent rebound.

Due to local congestion, schedule reliability remains low for lanes to and from the Mediterranean area.

Space to the ISC and Middle Eastern markets is very tight across all U.S. ports, and most readily available from USEC ports with more direct services, such as New York and Norfolk.

Currently, book at least four-to-five weeks in advance on this trade.

Meanwhile, several carriers announced they plan to reopen space and service into this market, so space availability should greatly improve by Q1 2023. 

Significant space issues continue on the USEC to Oceania with direct carriers. Space from the USEC is generally available 5–6 weeks in advance.

Service out of USWC ports continues to be solidly booked, with vessels reporting full manifests for 5–6 weeks out.

Direct carriers have dramatically reduced the frequency of their port calls in New Zealand from USWC ports, due to the persistent congestion at the Auckland port and also in an effort to better align vessel schedules. 

Inland Drayage Update

Fuel rates dropped slightly in Q4, but remain high, contributing to higher overall transportation costs compared with last year.

The COVID-19 outbreak impact to surface transportation is easing, as the national epidemic prevention policy loosens.

Customs clearance between Shenzhen and China is speeding up for imports and exports. Congestion time in Pingxiang Port from China to Southeast Asia is around 2–3 days. 

North America
The U.S. railway worker unions completed voting on November 21. Eight of the unions ratified the agreement, while four, including two of the three largest unions, rejected the deal and planned to strike by December 8.

However, deeming the economic harm of a strike too great, the Biden Administration successfully introduced back-to-work legislation. The U.S. Congress passed the legislation, which Biden signed into law on December 2, averting the strike for the time being. 

Expected rising fuel costs continue to impact fuel levies in Oceania and will remain into the New Year. Terminal operators are set to increase all wharf terminal fees through January and February 2023. 

Importance of Maritime Insurance 

Shipping freight overseas almost always goes smoothly, with cargo being safely delivered on-time in most cases.

However, in a small number of instances, cargo can be damaged or lost due to theft, fire, natural disasters, and this could be detrimental to your business.

Importers mistakenly believe that loss or damage to their shipment will be covered by the freight carrier, forwarder, or supplier, but this simply isn’t the case.

Billions of dollar’s worth of cargo is damaged or stolen every year, and insurance will mitigate your loss in the event of an incident. International laws require shipping companies to carry a certain minimum amount of cargo insurance.

However, this insurance covers a meager dollar amount, making it insufficient for most shippers. Sudden loss of cargo can immediately and dramatically cut into profits and cause a domino effect on business operations for months to come.

Purchasing additional cargo insurance is the best way to protect shipments, as it can cover the full cost of the cargo regardless of carrier liability. 

If an importer has purchased under CIF basis, they may only be covered to the Port/Arrival CFS. We recommend importers look at purchasing further insurance to cover them from the Port or CFS to Door (and especially when devanning & loose delivery is applicable). Importers should always consult with their Insurance Broker on all insurance matters. 

We will continue to evaluate all market options and work with you to provide individual solutions for your business. 

For more details on any of these articles please contact your Henning Harders Key Account Manager. 

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