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The Global Shippers’ Forum has used the current disruption in supply chains to renew its call for the removal of the consortia block exemption regulation.

Chief executive James Hookham said that shippers were bearing the brunt of the broken supply chain.

“We are not happy is the bottom line,” he told a webinar following the release of the latest quarterly market review by the GSF and MDS Transmodal, which seeks to monitor the box shipping sector in order to inform regulators of its performance.

“Clearly we are the victim of circumstances in this terrible pandemic, but shippers have long been dissatisfied with the shipping industry’s apparent magical ability to co-operate in ways that would land any other business owner in jail.”

The real crunch point for shippers was that the service performance, the predictability of delivery of boxes so that shippers can collect boxes and get goods to consumers, had plummeted.

This was leaving a “very nasty taste in the mouth” for shippers who were paying record freight rates for a service that was increasingly declining in performance, Mr Hookham said.

“Supply has appeared to match demand a bit too closely and the co-ordination that is permitted by the block exemption has clearly allowed the lines to manage capacity such that pre-pandemic capacity was running slightly ahead of demand. It has now dropped behind.”

The demand for space was now exceeding what was available. While that may correct itself as demand eases, the broader picture was that if demand stayed high there was no short-term fix.

He warned that this could lead to inflationary pressures on recovering markets.

“If this is going to continue, not only will consumers see product shortages, but it will start to lead to higher prices.”

Shippers and exporters were feeling “frustration and anger”, particularly in Asia, at not being able to get reliable and predictable accommodation of their goods onto services, and then having to pick up the bills for demurrage and storage because goods cannot be shipped.

What frustrated shippers was the ability of lines to work as one entity, he said.

“The industry does not exhibit any great distinguishing features in the service it offers,” said Mr Hookham. “It is a commodity service and if it is a commodity, then the feeling is it should be regulated as a utility would be, a utility that provides a unique commercial and national interest provided by, effectively, one supplier.”

That would provide greater oversight, increased transparency and a restoration of confidence in the markets that rates and costs were the product of fair competition and not the construct of a “special privileged arrangement that, on the face of it, just appears to be enriching the shipping lines”.

He called for a system closer to that which regulates airline code-sharing agreements.

“Effectively, they are vessel-sharing agreements for the aviation industry, but they are able to do that through the development of specific agreements between the lines, which are regulated, reviewed and transparent,” he said. “It is understood what information is exchanged.

“Rather than give a blanket block exemption, we should actually get some visibility over what information is going to be shared and passed between them, and have that more regularly scrutinised.”

The current exemptions that were provided, not just by the European Union, but by jurisdictions all around the world were unprecedented, he added.

“There is a presumption in favour of renewing the block exemption — not just in Europe — but a number of jurisdictions have started to look hard at exactly why the shipping industry has behaved in the way it has.”

Source: Lloyds Loading List


Background

A new digital upload service to apply for a repayment or remission of import duties (C285) will be introduced later this year. It will replace the current process of sending your completed C285 and relevant documents by post or email.

  • It will allow you to upload documents to support your claims.
  • The service is designed to be intuitive, so no training is required.
  • Beta testing started on 26 May 2021.

What we need

  • Additional agents to agree to participate in private beta
  • Agents to provide feedback as part of user research and allow system developers to observe using the service

Why we need additional agents and feedback?

  • To carry out rigorous testing (stress test) of the system to allow us to move into public beta

What we will do to facilitate this

  • Fully support all participants through the testing process
  • Provide guidance and links to the new system

With your help, we can ensure that the service fulfils some key benefits to all traders:

  • A straightforward way to send documents for customs checks
  • Improved security when sending your documents
  • More efficient communication if we have any queries

What to do next

If you’re interested in testing the new system, please email us at betatesting@hmrc.gov.uk by 11 June 2021. Please include a contact name, email address and phone number in this email. We’ll then send you further details.


The Shanghai Containerised Freight Index (SCFI) hit new highs on Friday. For many months now people have been questioning how much higher spot rates can go. It’s a tricky one, as there are so many unknown variables in play.

First, the obvious one. We are now so far into uncharted black swan territory that no-one speaks from a position based on experience, data, or models, we’re all just throwing stuff at the wall and seeing if anything might stick. A year ago – or anytime in the past 60 years of container shipping – anyone suggesting spot rates of $20,000 per feu would have been laughed out of the industry.

Secondly, there’s not enough empty containers and slots, so it’s a game of musical chairs, where the music is money. Shippers with low-value-to-volume goods are being crowded out by three other types of shippers: A) High-value shippers that have greater margins to eat into, B) shippers with goods with little to no friction in passing on the costs up through the supply chain, and C) shippers who are able to enforce their contracted space and equipment guarantees, although I hear they are referred to as unicorns in this market.

Another important stat to keep an eye on is the ratio of goods ready to ship versus placing new orders. If you have $500,000 in a box, but it is worth nothing in a yard in China and rapidly decreasing in value (fashion apparel, high-tech, seasonal products, automotive parts, perishables, pharmaceuticals, etc) you are willing to begrudgingly pay an awful lot of money to ship, if the alternative is spoilage or other type of massive value loss. On the other hand, if you are considering placing an order for 20 boxes of $500,000 of perishable goods, you will very likely consider whether you can postpone such an order, to a time of more reasonable freight. What is this ratio, no-one knows.

The contract versus spot ratio of course also plays a role. As do the limited substitution options in air, rail, or near-sourcing. As does the contagion of equipment shortages across trades: Asia-Europe is experiencing quite anaemic demand growth, but rates are through the roof because there’s no boxes to move the cargo that has to move, due to the transpacific soaking up all the empty boxes. All trades are up from last year, but the SCFI is a weighted average of nine different trades, and many trades are far from as high as Asia-Europe and transpacific, and in theory they can go much higher, but how high and what’s the ratio? These ratios are all unknown generally, and even more so in terms of how the ratios are split across different value classes of container shipments.

High freight rates are driven by equipment and space shortages, which in turn are driven by a confluence of unprecedented US demand (due to pandemic shifts from services to goods) and supply-side disruptions: Port congestion, Covid infections and quarantines in ports (e.g. Yantian) and terminals, vessels being grounded due to quarantines, and the challenges of vessels getting stuck in canals, dropping boxes, or catching on fire. In the past 10 years, vessel incidents would be terrible for those immediately impacted, but they would not have any systemic impact, as the unaffected boxes and boxes waiting to be loaded would just go on the next half-empty ship, but all of the ships are full now. Meanwhile, European consumers have not increased their spending on goods during the pandemic, but are rather holding back until lockdowns are lifted, so once the US consumers can shift their consumption back to services, the Europeans might take over. On top of that, there have been massive drawdowns of inventories worldwide which will need to be replenished, and with US consumer demand for same-day and next-day shipping, we will need bigger inventories than in the past. Oh, and the traditional peak season is starting now.

When demand is strong and rate levels are as crazy as they are now, vessels don’t need to be full to be profitable. In the current stressed environment, I would wager that few shipping lines would be foolish enough to forgo cargo they have space for, in an attempt to keep rates high, but once this dies down a little, shipping line executives will start to seriously question why we’re the only industry that can only be profitable at full occupancy. The core product being sold – time-perishable capacity, i.e. you can’t sell the space after the vessel has sailed – is not unique to container shipping, we share that with not just all other freight modes, but with airlines, hotels, taxis, restaurants, cinemas, grocery stores, newspaper advertising, etc, and an endless stream of liberal professions that sell their time. All of these industries start to be profitable at 30-70% utilisation, but we can only be profitable at 90+% utilisation? Why is that?

When will all of this end? Only a fool would guess, so being a fool, I’ll say it is unlikely to end during this year, and likely to run well into next year.

Can rates go further up in the coming weeks? Certainly! Can they go down a little? Also possible! Will they go to $30,000 per feu? Not impossible. Will they go down to half of where they are now, in the near future? Unlikely. Will they ever go back down to long-term averages again? Very unlikely, carriers should have learnt their lesson. Will we ever see a return to 2015-16’s Asia-Europe spot rates of $200 to $300 per teu? No, but if we ever do, both I and the liner execs causing it, should find another industry to ruin.

Source: Splash247.com


As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted, all comparisons to follow are to April 2019 which followed a normal demand pattern.

  • Global demand, measured in cargo tonne-kilometers (CTKs*), was up 12% compared to April 2019 and 7.8% compared to March 2021. Seasonally adjusted demand is now 5% higher than the pre-crisis August 2018 peak.

  • The strong performance was led by North American carriers contributing 7.5 percentage points to the 12% growth rate in April. Airlines in all other regions except for Latin America also supported the growth.

  • Capacity remains 9.7% below pre-COVID-19 levels (April 2019) due to the ongoing grounding of passenger aircraft. Airlines continue to use dedicated freighters to plug the lack of available belly capacity. International capacity from dedicated freighters rose 26.2% in April 2021 compared to the same month in 2019, while belly-cargo capacity dropped by 38.5%.

  • Underlying economic conditions and favourable supply chain dynamics remain supportive for air cargo:

    • Global trade rose 4.2% in March.

    • Competitiveness against sea shipping has improved. Air cargo rates have stabilized since reaching a peak in April 2020, while shipping container rates have remain relatively high in comparison. Meanwhile, longer supplier delivery times as economic activity ramps up make the speed of air cargo an advantage by recovering some of the time lost in the production process.

“Air cargo continues to be the good news story for the air transport sector. Demand is up 12% on pre-crisis levels and yields are solid. Some regions are outperforming the global trend, most notably carriers in North America, the Middle East and Africa. Strong air cargo performance, however, is not universal. The recovery for carriers in the Latin American region, for example, is stalled,” said Willie Walsh, IATA’s Director General.

April 2021
(% chg vs the same month in 2019)

World share1

CTK

ACTK

CLF
(%-pt)2

CLF
(level)3

Total Market

100%

12.0%

-9.7%

11.2%

57.8%

Africa

2.0%

29.2%

-2.3%

12.3%

50.4%

Asia Pacific

32.6%

5.4%

-13.7%

11.5%

63.3%

Europe

22.3%

11.5%

-18.1%

18.1%

68.1%

Latin America

2.4%

-31.0%

-47.2%

10.7%

45.7%

Middle East

13.0%

15.3%

-9.9%

13.1%

59.8%

North America

27.8%

23.7%

5.8%

6.9%

47.3%

¹% of industry CTKs in 2020   ²change in load factor vs 2019   ³Load factor level

April Regional Performance

  • Asia-Pacific airlines saw demand for international air cargo increase 9.2% in April 2021 compared to the same month in 2019. This was a significant improvement in performance compared to the previous month. International capacity remained constrained in the region, down 18.7% versus April 2019. As was also the case in March, the region’s airlines reported the highest international load factor at 77.5%.

  • North American carriers posted a 25.6% increase in international demand in April 2021 compared to April 2019. This strong performance reflects the appetite of US consumers for products manufactured in Asia. North American carriers have also been able to grow their market share, notably on routes between North and South America, owing to the large freighter fleets they have available. International capacity grew by 5.5% compared with April 2019.

  • European carriers posted an 11.4% increase in demand in April 2021 compared to the same month in 2019. This was a significant improvement compared to the previous month. Improved operating conditions and recovering export orders contributed to the positive performance. International capacity decreased by 17.5% in April 2021 versus April 2019, remaining unchanged from the previous month.

  • Middle Eastern carriers posted a 15.3% rise in international cargo volumes in April 2021 versus April 2019. This was a significant improvement compared to the previous month. Seasonally adjusted volumes remain on a robust upward trend. International capacity in April was down 17.5% compared to the same month in 2019.

  • Latin American carriers reported a decline of 32.7% in international cargo volumes in April compared to the 2019 period. This was the worst performance of all regions and a decline in performance compared to the previous month. Drivers of air cargo demand in Latin America remain relatively less supportive than in the other regions, and airlines in the region have lost market share to other carriers due to financial restructuring. Despite this, volumes on several routes in the region (such as Europe and Central America, and North and South America) performed well. International capacity decreased 52.5% compared with April 2019.

  • African airlines’ cargo demand in April increased 30.6% compared to the same month in 2019, the strongest of all regions and the fourth consecutive month of growth at or above 25% compared to 2019. Robust expansion on the Asia-Africa trade lanes contributed to the strong growth. April international capacity increased by 0.6% compared to April 2019.

Download the complete Air Cargo Market Analysis for April 2021 (pdf)


BIFA Director General, Robert Keen, says that UK importers that took advantage of the scheme at the beginning of this year, now have until June 25th to complete customs formalities for declarations delayed from early January, and many are looking for help from a BIFA member that has a CFSP authorisation to make a supplementary declaration under the scheme.

“We are reminding members that if they take on this work, it is their CFSP authorisation being used and they may have to pay any duties and VAT on behalf of the importer. So, it is essential that they ensure that their customers’ paperwork is in order and completely accurate, and if it is not, our advice is to not accept the responsibility.”

The UK Government introduced the Delayed Declarations scheme following the end of the Brexit transition period, giving businesses importing into the UK up to 175 days to complete their customs declarations.

Any business that took advantage of this opportunity at the start of January this year, now has a deadline of June 25th (or 175 days from the original import) to make the declaration.

Keen adds: “Whilst the Government has extended the scheme to defer declarations to 31 December 2021 on a rolling basis, it is important that any BIFA members undertaking this work on an importer’s behalf remains vigilant and ensures that they have all the information required to make an accurate supplementary declaration and that they don’t miss the first and subsequent deadlines.

“Any mistakes could be costly as, despite the ability to use direct representation, the authorised agent is still considered to be the owner of the procedure and responsible for a timely submission of correct declarations.

“Finally as payment will need to be made against the Deferment Account of the CFSP authorisation, we are reminding our members to consider the impact of potentially large sums that become due and the ability of the client to meet their obligations.”


Office Of Destination Reminder

If your transit movement is ending in the UK

You can end a transit movement in the UK by presenting your goods with all accompanying documentation to:

  • an authorised consignee location (this may be your own or an agent’s premises)

or.

  • a UK office of destination

When moving goods under CTC, goods must be accompanied by a paper TAD. When arriving at the destination country this must be presented to the customs office of destination or authorised consignee so that the New Computerised Transit System (NCTS) can be updated to indicate that the goods have arrived.

The CTC is a customs facilitation that allows for the movement of goods between the UK, the EU and a number of neighbouring countries under a financial guarantee. Putting goods into CTC transit suspends customs checks and payments of duties until the goods reach their destination.


BIFA would like remind Members that, following the UK’s departure from the Single Market and the Customs union on 31.12.2020, HMRC have opened a number of Inland Border Facilities in order to facilitate import and export road traffic, the list of which can be found below. BIFA encourage their Members to make use of these facilities in their daily operations in order to streamline their flow of goods and optimise delivery times.

Inland Border Facilities


As per the picture below, you will see two changes in IPAFFS:

Delete -ipaffs

1: ‘Manage trade partners’ which will only be relevant for plant imports; please do not use if you import anything other than plants

2: This message relates to future plant (CHEDPP) functionality so please ignore, this will not impact any import notification

If you have any questions or concerns, please get in touch with DEFRA's import / export team via the following email address:

DefraTradeSystems@defra.gov.uk

 


A number of significant lower-value commodities such as furniture and large electrical and electronic appliances are becoming ‘priced out’ of major intercontinental ocean freight markets because of the elevated freight rates facing importers currently, new analysis by Sea-Intelligence has revealed.

8_HMM_Algeciras _Suez

In its latest Sunday Spotlight briefing, the Copenhagen-based container shipping consultant looked at the impact on importers of a variety of different consumer goods of the current elevated freight spot rates on the Asia to US West Coast and North Europe trade lanes.

Its analysis took the average values of consumer goods held within a 40’ container based on data from OECD, compared to an average of four of the more well‑known spot rate indices (XSI, SCFI, FBX, and WCI) for spot rates. It then placed these freight rates in the context of the retail value of the cargo, followed by adding in the carriers’ newer surcharges related to equipment availability and space priority.

To read the complete article click here

 


 

 

 
 
 
 
 
 

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