The traditional supply chain method of overseas supplier packaged and delivered product is evolving. The pace of change is rapid and importers need to adapt or suffer competitive pressures through loss of sales and local sorting and distribution costs.

Historically, Australian importers have maintained local distribution facilities, either in-house or 3PL, in order to deliver product domestically. In today’s environment this can be an expensive solution when compared to options available off-shore.

3pl-sorting-labelling-pick-and-pack-magellan

There is an increasing trend of transferring labour intensive activities, such as Pick and Pack, to low cost countries closer to the supply source. For example, Magellan Logistics can provide a Pick and Pack solution in Hong Kong or Shanghai, that shortens the supply chain and provides significant cost savings to its customers. All orders are processed at a SKU level and packed for ultimate store delivery. The goods are then shipped directly to the customers designated outlet or warehouse. This enables Magellan’s customer to eliminate double handling and freight cost duplication, as well as reducing the physical cost of distribution.

If your company is not currently utilising an off-shore distribution solution then it is imperative that research be undertaken to examine the feasibility to do so.

3PL-pick-and-pack-sorting-scanner3pl-pick-and-pack-sorting-labelling-magellan

Magellan Logistics can assist you with this through the provision of expert advice and consultancy.

If you would like to discuss this further please contact our experienced sales and development team on 1300 651 888 or info@maglog.com.au

usa-magellan-news

The protracted West Coast US Ports dispute has now been resolved, U.S. Labour Secretary Perez announced Friday night, after the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) reached an agreement on a new five-year contract.

U.S. Labour Secretary Thomas Perez announced that the parties had reached an agreement on a new five-year contract, saying that container ports up and down the West Coast will resume working but did not know how long it will take to work off the backlog in container traffic that has severely disrupted the movement of both import and export cargo.

The agreement comes after 10 months of negotiations, slowdowns and congestion at West Coast ports that have resulted in dozens of ships sitting at anchor or circling off shore. Details of the agreement have not been released.

If you are have any questions relating to your U.S shipments, please contact our Customer Service or Customs teams on 1300 651 888.

United-States-west-coast-Container-gridlock-Backlog

Source: Monica Almeida, The New York Times

Cargo containers are banked up at Los Angeles and Long Beach Ports, and along the West Coast of the United States, due to a labour dispute between an association of the major shipowners of the West Coast and the union of longshoremen who unload those ships. The negotiations cover operations at 29 ports, including the largest in Southern California; Oakland in Northern California; and the Puget Sound. Collectively they bring in half the United States’ imported cargo.

The congestion is said to be the “worst-ever on record, according to one shipping analyst (Source: Jane Wells, CNBC)

Magellan-United-States-West-Coast-Ships-Backlogged

Source: Tyler Durden, www.zerohedge.com

 

Magellan-United-States-West-Coast-Transport-Truck-Backlog

Source: Tyler Durden, www.zerohedge.com

The New York Times reports that “American retailers, the U.S. Chamber of Commerce and agricultural exporters said they have already lost hundreds of millions of dollars because of mounting port congestion, with spare parts and consumer products from Asia not arriving on time and exports like oranges and apples left to rot.”

There is grave concern that failure to reach an agreement between the disputing parties will lead to devastating consequences for the US retail industry, and logistical nightmares for American exporters, manufacturers and retailers dependant on an efficient supply chain, of which the effects are already being felt.

Out of concern for the economic consequences of further delay, President Obama has taken action and requested, Thomas E.Perez, the secretary of labor, to travel to California to “meet with the parties to urge them to resolve their dispute quickly at the bargaining table,” according to a statement issued by Eric Schultz, a White House spokesman. Mr. Perez will try to mediate a settlement between the two parties. (Source: Erik Eckholm, The New York Times)

Pending a resolution, exporters and importers into Australia and New Zealand, should expect delays for goods going in and coming out of the West Coast.

For more information relating to the labour dispute:

http://www.nytimes.com/2015/02/15/us/politics/obama-to-intervene-in-dispute-at-west-coast-ports.html?_r=0

http://www.cnbc.com/id/102384907#.

http://www.zerohedge.com/news/2015-02-12/catastrophic-shutdown-americas-supply-chain-begins-stunning-photos-west-coast-port-c

 

For more information relating to your import or export shipments, please contact our Customer Service or Customs teams on 1300 651 888.

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Please note our office operating hours over the Christmas and New Year period

______________________________________________________________________

2014:

Wednesday 24th December

Closing at 2pm

Thursday and Friday 25th & 26th December

Closed Christmas & Boxing Day holiday

Mon & Tue 29th/30th December                       

Normal Business hours 8.30am – 5pm

Wednesday 31st December                              

Closed at 2pm

2015:

Thursday 1st January                                        

Closed New Years Day holiday

Friday 2nd January                                             

Resume of normal business hours 8.30am – 5pm

______________________________________________________________________

Due to our staff Christmas function, we will have limited staff available on Friday 19th December
from 1-5pm.

Thank-you for you understanding during this time.

We appreciate all the support shown to us by our clients, agents and friends throughout 2014 and we wish you all the best for the year ahead.

The team at Magellan Logistics

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(Below information provided by CBFCA – Customs Brokers and Forwarders Council of Australia Inc.)

Further to NNF 2014/169 Quarantine Fees and Charges Guidelines (the Guidelines) the Customs Brokers and Forwarders Council of Australia Inc. (CBFCA) has been advised that the Department of Agriculture (the Department) will apply specific  increased fees and charges over the Christmas/ New Year period.

Members should note in  particular  the overtime charges, and the prescribed times that are considered as overtime in Section 8.5 of the Guidelines.

It should be noted that overtime rates will  be applied for any transactions that are performed during the period 27 December to 31 December of each year.  This period is considered as a Departmental holiday.

As  service starts outside of ordinary hours, it is considered as non continuous overtime, with a minimum number of hours to be charged.

Therefore any inspections, or AIMS entries required to be processed during this period will attract the normal fee for service, plus overtime of $288.00 per service provided.

In addition on other issues the Department has  also confirmed that in accordance with Section 8.6 of the Guidelines , reprints of directions involving a change to the direction will incur a $40.00 per quarter hour unit fee from the 25th of November 2014.  Where a reprint of a direction occurs during the Departmental holiday period, the fee will be $40.00 plus $288.00.

Reprints of directions where no changes have occurred are considered as part of the initial payment, and will therefore not incur any additional costs.

Where an inspection is booked with the Department, and subsequently  cancelled with 24 hours notice or more, there will be no fees payable.  However where less than 24 hours notice is given, a fee of a 15 minute service fee unit will be charged for manned depots, and 30 minute service fee for unmanned depots.  Please refer to Section 8.7.8 of the Guidelines .

As bookings are made as AM or PM only, the cancellation must occur more than 24 hours before the corresponding AM or PM slot, for no fees to be charged.

Members should clearly note and understand the implications of this provision  implemented for the Departmental holiday period, as if less than 24 hours notice is provided, the cancellation will also attract $288.00 in overtime fees.

Further information

Refer to below Quarantine Fees and Charges Guidelines link or download attachment.

www.agriculture.gov.au/biosecurity/import/general-info/fees-charges-import/quarantine-fees-and-charging-guidelines

CBFCA – National

Download Quarantine Fees and Guidelines November 2014

For more information please contact the Magellan Logistics customs team on 1300 651 888.

What does the celebration represent and how might this national holiday impact your shipments?

Chinese New Year (CNY), also known as the Lunar New Year or the Spring Festival, is the most important of the traditional Chinese holidays.

CNY is based on the Chinese calendar and usually begins on a different date each year. It is based on the moon’s orbit around the earth.  The festival traditionally begins on the first day of the first month in the Chinese calendar and ends on the 15th of the month. Each CNY is symbolized and named after one of 12 particular animals (Rat, Ox, Tiger, Rabbit, Dragon, Snake, Horse, Goat, Monkey, Rooster, Dog and Pig) and consists of a 12 year cycle. 2015 is the year of the Goat.

2015-chinese-year-of-the-goat-magellan-logistics

The holiday for CNY is officially recognized by the government as 7 days, with typical CNY celebrations lasting for 15 days. In 2015, holidays start on 19th February until 25th February.

Within China, regional customs and traditions concerning the celebration of the CNY vary widely. People will pour out their money to buy presents, decorations, material, food, and clothing. It is also the tradition that every family thoroughly cleans the house to sweep away any ill-fortune in the hope to make way for incoming good luck. Windows and doors will be decorated with red colour paper cut-outs and poems with popular themes of “happiness”, “wealth”, and “longevity”. On the Eve of CNY, supper is a feast spent with family. Food will include pork, duck, chicken and sweet delicacies. The family will end the night with firecrackers. Early the next morning, children will greet their parents by wishing them a healthy and happy new year, and receive money in red paper envelopes. The CNY tradition is a great way to reconcile by forgetting all grudges, and sincerely wishing peace and happiness for everyone.

Effect on your imports / exports during Chinese New Year

As is the same every year, CNY has a massive impact on sea freight and transportation to and from Australia. During the holiday, most areas of government, construction and factories shut down, while ports and customs usually operate with a skeleton staff focusing on perishable priority items that are time-sensitive only, such as fresh produce.

Manufacturing plants across China typically shut down and tens of millions of workers make long trips back to their home towns from the industrial cities where their jobs are based. It has a huge impact on all global supply chains originating from China and it’s not always back to business as usual, before and after the 15 day celebration. The celebrations are also expected to affect port operations in terms of loading, barging schedules and possibly product availability. It can have a considerable effect on your supply chain during the celebration and should be planned for.

When the New Year approaches, factories kick into high-gear in an attempt to ship as many orders as possible before officially shutting down for the holiday.  Major retailers tend to plan ahead to accommodate for the manufacturing shutdown in China during the CNY. Planning and coordination are key to ensuring your supply chain continues to run smoothly during this period and you have enough merchandise for your customers. Importers and exporters will also need to make changes to their production and shipping schedules to ensure they have enough goods to get them through the downtime caused by the factory closures. Stocks are also at times kept in storage until factories are up and running again. China’s entire transportation system is practically at capacity during this time, and it is common for issues with container and truck availability when shipping goods close for CNY.

Shoes-Clothes-Store-Magellan-Logistics

The shipping lines often introduce GRI (general rate increase) in January for peak demand before CNY, and space becomes tight as all suppliers struggle to ship their cargo before the holidays, as well as considering blank sailing programs with shipping lines.

The container shipping lines servicing the North East Asia-Australia trade lanes are moving to cut back on capacity and skipping a series of sailings. This Blank Sailing Program with shipping lines from all 9 consortiums, participate in managing the available space in the off peak period to combat the over-supply of tonnage in the shipping trade. Particularly during the two weeks of CNY, in preparation of volume lulls following the start of the holiday on February 19th, 2015, capacity will be cut by 35 – 42% which will mean less available space on the berth. Trade will be slow due to factories closing over the CNY Period and the traditional off peak period commences. Port capacity is limited and congestion is increased weeks before and after CNY that can lead to delays at the ports limiting the availability of goods in the supply chain. In China and its mainland ports, the celebrations are also expected to affect port operations in terms of loading, barging schedules, etc

chinese-new-year-2015

Timeframes to consider & planning

Shipments must be at port at least 10-14 days before Chinese New Year to ensure shipment before the break starts. Shipments must also be booked at least two weeks in advance because space quickly fills up. If you ship a large amount around that time, then congestion will likely bump at least one of your shipments to a later ship date, often a week after CNY if you do not manage your shipments in time. Most ports open again for normal shipping about one week after CNY. Filling containers and preparing customs declaration documents well in advance of the holiday are advisable steps to take. Ports will have major congestion the week leading up to and after the New Year as factories gear up for the shut down and return to work.

In summary, when planning for peak season, be sure to have a buffer for CNY – Two or three weeks for bookings and then another week for ETA in case of delays.

This annual celebration should be a part of your yearly supply chain planning.

Here are the dates of Chinese New Year for the next 6 years for your reference:

chinese-new-year-6-year-dates

We hope this article provides insights on how Chinese New Year may affect your shipping and the necessary steps to take to prevent facing supply chain and shipping delays at this time of the year.

For more information please contact your Magellan account representative, email info@maglog.com.au or our customs team on 1300 651 888.

Trade and Investment Minister Andrew Robb has announced that Australia’s Free Trade Agreement with South Korea will enter into force on 12 December 2014.

The Korea-Australia Free Trade Agreement (KAFTA) was signed in Seoul, South Korea, on 8 April 2014 and KAFTA will enter into force when both Korea and Australia have completed their domestic legal procedures.1

Below is an outline of top imports from Korea into Australia in 2012-2013.2  For Magellan customers, this agreement may also affect those importing textiles or other similar products from Korea.

KAFTA-Korea-Australia-Free-Trade-Agreement

There are a range of products that will have reduced duty rates under this agreement, and to get access to these lower rates, suppliers will have to provide importers a KAFTA certificate.

Four steps to using KAFTA

Step 1: WHAT goods am I exporting or importing? (tariff classification)

Step 2: HOW are these goods treated under KAFTA? (tariff treatment)

Step 3: WHERE are my goods produced? (rules of origin)

Step 4: CERTIFY your goods with a Certificate of Origin

For further information on what items will have reduced rates and the detail behind the KAFTA stepped process above please refer to this media release and/or speak to your friendly Magellan Logistics Customs Broker who can provide more detail on 1300 651 888.

To read more about Free Trade Agreements and how they help Australian exporters, read our recent blog

 

Sources:

1 Customs Brokers & Forwarders Council of Australia Inc. – CBFCA

.2 Department of Foreign Affairs and Trade http://www.dfat.gov.au/fta/kafta/

 

usa-magellan-news

Thanksgiving update

Last Thursday 27th November was Thanksgiving in America which is usually followed by a holiday for many companies on the following Friday.

The traditional holiday began in the American colonies almost 400 years ago as a feast of thanks to celebrate the successful Autumn Harvest. Moving cargo is quite difficult at this time as many suppliers are closed until Monday December 1st. Bear in mind that some deliveries may be delayed to due this holiday break.

West Coast Delays

Currently the U.S West Coast Ports (Long Beach/Los Angeles) are suffering severe delays stemming from a shortage of trucking equipment, called Chassis. This problem alongside the outstanding labour negotiations were causing trucks standing in mile long queues as stacks of unmoved containers wait for pick up at the complex that handles 40% of U.S. containerised cargo. The Port of New York and New Jersey are also affected but not as severe.
We will continue to monitor the situation and keep you advised as a West Coast Port Congestion Surcharge is likely to be implemented.

Bunker Adjustment Factor (BAF) changes

Changes to Bunker Adjustment Factor (BAF) will be made ex US ports to Australia effective December 15, 2014. The change will be to cover the cost of lowering the cap on Sulphur Oxide emissions to 0.1%. This requires a switch to cleaner more expensive marine gas oil therefore the existing BAF will be decreased and a new Low Sulphur Fuel Surcharge will be applied as follows:

NEW BAF EFFECTIVE DECEMBER 15, 2014

SIZE TYPE LEVEL (USD)
20′ ALL TYPES $794.00
40′ ALL TYPES $1588.00
40’HC ALL TYPES $1588.00

NEWLY IMPLEMENTED LOW SULPHUR SURCHARGE EFFECTIVE DECEMBER 15, 2014

SIZE TYPE LEVEL (USD)
20′ ALL TYPES $47.00
40′ ALL TYPES $94.00
40’HC ALL TYPES $94.00

For more information please contact our customer service team on 1300 651 888.

Jawaharlal-Nehru-Port-congestion-magellan-logistics

Jawaharlal Nehru Port (JNPT), also known as Nhava Sheva, is the largest container port in India, located south of Mumbai in Maharashtra.

According to a Trade Notice issued by the Chief Manager Traffic of JNPT, JNPT is replacing the existing three old Rail Mounted Quay Cranes (RMQCs) with new three Super Post Panamax RMQCs at the Main Container Berth, and shifting the old RMQCs from the Main Container Berth to the Shallow Draft Berth at JNPCT.

During the current installation / commissioning of these new RMQCs alongside the Main Container Berth and the further mechanization of the Shallow Draft Berth, the normal operation alongside the Main Container Berth is likely to be hampered through to 16th December 2014.

Similarly, operations at the Shallow Draft Berth are likely to be hampered through to 12th December 2014.

The shallow draught berth will be available for normal operations equipped with two old RMQCs from 10th November to 30th November 2014, while third old RMQC is expected to be available for operations by 12th December 2014.

While JNPT is making appropriate arrangements to handle the maximum number of vessels within the constraints due to non-availability of adequate operational berth length in accordance with the LOA of the vessels calling the Port, it will not be in a position to handle at least 22 vessels during the current period to 16th December 2014.

According to the trade notice, JNPT has requested both Nhava Sheva International Container Terminal (NSICT) and Gateway Terminals India (GTI) to handle 22 vessels which JNPCT cannot handle during the commissioning period of the new RMQCs.

During this time, further congestion and delays are expected to be experienced by vessels using the port of Nhava Sheva.

Should you need further information, please do not hesitate to contact our Customer Service team on 1300 651 888.

 

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Increasing the ratio of Customs Inspections for Export Cargo in China.

The export cargo inspections ratio from Customs in China, and in particular at Xiamen and Huangpu have been increasing during this year for export shipments to all international ports. When cargo is held for pre-export inspection, this affects the export clearance process, to the extent that shipments may not meet the intended booked vessel. We have noted that pre-export inspections by Chinese Customs can take up to 3 days. It is a random process that is done within the complete control and direction of Chinese Customs.

We recommend a further allowance when delivering export cargo to the receival depots and wharf terminals of 3-4 days before the closing date for FCL & LCL shipments.

Single Buyer Consolidations from various suppliers in different provinces

In the case of buyer consolidations (BCN) that may involve various suppliers from different Chinese provinces, we need to allow longer transits for the domestic transfer to the receival depot. We recommend instructions are given to your suppliers to allow at least 4 days prior to vessel close-off to cover any delays, to ensure adequate time to stuff the container and lodge it at the wharf terminals for export.

For more information please contact your account manager or the customs team on 1300 651 888.