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Important Shipping Updates

Table of Contents

Market – Trends

The Russia-Ukraine conflict and the ensuing sanctions imposed on Moscow are adding to inflationary pressures globally and raising fears of a possible recession. The situation is adding pressure on central banks to tighten monetary policies including increasing interest rates.

Key to the outlook for trade is how consumers and businesses react to the elevated uncertainty, higher prices, and policy changes. In the near-term, global expansion will continue, supported by pent- up demand and the reopening of economies. But longer-term, substantial monetary policy tightening will increasingly weigh on economic activity with additional concerns about the outlook for China which has COVID-19 led economic consequences. Potential scenarios depend heavily on the path of inflation and the geopolitical fallout from the war in Ukraine.

Shanghai Situation

With Shanghai gradually returning to normal after the two-month city-wide lockdown in April and May, factory production is picking up and demand rebounded nicely in July with positive signs of a seasonal peak on many trades.

Trucking in the city area has also been fully restored. Intra- provincial trucking is also back to
pre-lockdown levels although truckers are subject to local testing requirements.

Port Congestions

Terminal congestion, especially in North America and Europe, is continuing to adversely affect schedule reliability. Strikes in Germany, especially at Bremerhaven, Hamburg and Wilhelmshaven, have exacerbated the disruption caused by vessel delays.

Key Market Outlook Across Trade Lanes

Asia Pacific – North Europe
North European trade is stable, but networks are facing severe pressure due to port congestion. High yard density and holiday season labour shortages are adding to congestion issues. The situation is further worsened by labour strikes, particularly in Germany.

Asia Pacific – Mediterranean
Demand is stable from long-term customers and flat for spot cargo. We forecast the network will be marginally full for Q3. Vessels are being delayed by congestion at both origin and destination ports.

Israel and Algeria have reopened for short term acceptance. Constanta (Romania) has
resumed operations after a short term closed up due to yard density in Mid of July.

Asia Pacific-North America
Overall, the Asia Pacific to North America overflow issue is gradually improving. Export volumes in the second half of July and August are expected to increase.

North American port congestion is worsening, increasing the likelihood of more missed sailings. USEC port congestion delays vary from port to port although the overall waiting time is 0-3 days, At Savannah, congestion is 10-15 days and Houston congestion is up to 14 days.

Los Angeles and Long Beach waiting time slightly reduced to 15 days.

Vancouver waiting time reduced to 7 days, however congestion is still severe with yard density increased to 113% and rail dwell time increased to a minimum of 10 days.

We do not expect the North American ports situation to improve in the coming months, we are seeing more overflow in the network due to strong demand and missed sailings, we would kindly suggest our customers prepare more lead time between ETA and actual departure.

Asia Pacific-Latin America
Overall market demand on the Latin America trade is very strong in Q3 from the traditional peak season.

East Coast South America – Rates have increased quickly for July and rates are forecast to continue to increase in August with demand remaining strong.

West Coast South America – Rates are trending slightly softer in July due to extra loaders in the market especially to Mexico, but rates and demand are forecast to be stable in August.

Asia Pacific-Oceania
AUS market is expected to be soft due to increased capacity, ASL is about to launch a new service from GCA-AUEC at the end of August, adding additional pressure to the existing situation. Destination ports face severe delays impacting Sydney and Brisbane, further worsening the situation.

The New Zealand market is expected to hold in August, however Auckland port productivity is impacted due to labour shortages and vessel bunching, expect waiting time to be 7- 10 days.

As China slowly returns to pre-lockdown operational levels, extra airline capacity has led to freight rates to fall across all origin airports into Oceania. There is still a cargo backlog at Shanghai which is lengthening the transit times between international airports.

The Trans-Tasman markets remain challenging for consumers as airlines continue to hold off releasing new capacity.

Indonesia Foot and Mouth Disease Outbreak

MPI have announced additional measures for all containers from Indonesia in an effort to prevent Foot and Mouth Disease (FMD) outbreak in Indonesia from entering New Zealand.

Effective immediately, all containers are subject to an external inspection/6-sided and supervised unpacking required. Unpacking of containers are to be completed under direct supervision of an MPI inspector by an Authorised Person. Containers are not to be opened until the MPI Border Clearance Inspector is present. MPI have confirmed importers will not be charged for MPI attendance.

Lyttelton Port Terminal Adjustment Charge

From the 1st of August, Lyttelton Port will be implementing an additional fuel surcharge (TAC) which will apply to every laden and empty container that crosses Port of Lyttelton wharf including but not limited to Dry, Reefer and Special Equipment. The TAC Levy will be charged at NZD 50.00 / 20’ and NZD 85.00 / 40’.

Operational Woes at Northport

Operational woes continue with the recent influx of vessels calling Northport in order to avoid the congestion issues at Auckland Port.

With the Antwerp Bridge recently discharging at Northport under Force Majeure, the lack of infrastructure at Northport has been more evident than ever.
Trucks are being turned away by Northport due to the port being unable to keep up with the backlog of trucks waiting to collect containers.

Importance of Maritime Insurance

Shipping freight overseas almost always goes smoothly, with cargo being safely delivered on-time in the vast majority of 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 dollars worth of cargo is damaged or stolen every year, and insurance will mitigate your loss in the even 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.

Container Detention on the Rise –
What are the causes and Where does it end?

The high demand for containerised freight over the last two years has brought many international and landside logistics challenges. One of the most insidious is high container detention charges levied by shipping lines for the late return of import empty containers, and detention charges if an exporter holds onto the export empties too long before packing and shipment.

Since the post- COVID shipping surge begun, shipping lines have struggled to keep up with the high demand for empty containers. As a result, they drastically reduced the number of free days offered under both contract and spot rates. Pre-COVID, shippers could regularly enjoy anywhere from 14 to 21 free days before detention charges begun, now it’s a luxury to secure 10 free days with majority sitting around 7-8 days.

The issue has now been exacerbated with the struggling landside transport industry that is facing numerous and worsening challenges.

Each month there are fewer and fewer trucks on the road due to the long wait times for replacement parts and tyres as well as the excessive lead time on any orders of new trucks. Additionally, as we enter the middle of Winter, COVID cases are soaring once again whilst influenza and other illness are at an all-time high meaning that on any given day, trucking carriers may have up to 10-20% of their workforce absent and unwell for an extended period.

Unlike office workers, truck drivers do not have the luxury of working from home so any time they return a positive result, they are off the road for a minimum of 7 days, adding further strain to the landside transport sector.

In Summary

Customers are continuing to face a raft of challenges as the Russia-Ukraine conflict weighs on the longer-term outlook for the global economy amid concern that inflation and higher energy prices will lead to lower consumer demand, damaging international trade.

The short-term, however, is more positive. Cargo volumes through Shanghai are returning to
pre-lockdown levels and demand from US consumers is pulling forward the peak shipping season on North American trades.

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

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

The Henning Harders NZ Team. E&OE

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