bunker surcharge

CMA CGM group announce raise to emergency bunker surcharge from December 1st

CMA CGM Group, which includes ocean carrier APL, has raised its emergency bunker surcharge (EBS) to $100 per teu for all deepsea cargo movements from 1 December.

Introduced by the French carrier and a number of its peers on 1 June, in response to higher fuel prices, the controversial EBS was initially set by CMA CGM at $55 per teu.

The charge varied between carriers, for instance Maersk Line’s EBS was $60 per teu, while MSC did not publish its EBS and referred to it as a “temporary measure”.

Shippers expressed anger about the attempt by carriers to impose similar surcharges, which they suggested could be construed as price signalling, and also questioned the validity of the word “emergency”, alleging the container lines were attempting to claw back compensation for the gradual rise in bunker costs over the past quarters.

Indeed, the European Shippers’ Council (ESC) complained to the European Commission, saying: “The application of any emergency surcharge should be reserved for events that cannot be foreseen (such as a crisis influencing the availability of oil). In those situations, it would be unreasonable to have the carrier bear alone the impact on the price of bunker fuel.”

In practice however, many shippers had contracts that were inclusive of bunker surcharges and were therefore unaffected, while for spot business the EBS was gradually rolled up into the freight rate.

It is surprising therefore after the failure of carriers to make their EBS notices stick to see that CMA CGM is persisting with its surcharge.

CMA CGM justifies its EBS hike based on the historical average price of Brent crude in October. However, from its high of $86 a barrel last month its price has fallen to a six-month low of $72, due to supply and trade war concerns.

Meanwhile, most of CMA CGM’s peers are focusing on preparing shippers for a surcharge to compensate for the higher cost of low-sulphur fuel after the IMO’s new 0.5% sulphur cap regulations commence on 1 January 2020.

Equally controversial, given the opaque nature of the carriers’ various low-sulphur fuel surcharge formulae, many shipping lines are proposing to roll out their new bunker surcharge recovery mechanisms from 1 January next year – some 12 months before the IMO regulations come into force.

Currently, heavy fuel oil (HFO), which ships consume in the main legs of their voyages, is at around $450 per tonne,, whereas low-sulphur marine gas oil (LSMGO) is $200 -$250 per tonne more expensive.

Some analysts predict the ‘spread’ could double come January 2020, but equally there are a few experts that suggest that the gap could eventually be much narrower, given that in terms of supply and demand, the majority of ships will need to consume low-sulphur fuel, with perhaps only 5% fitted with exhaust gas cleaning scrubbers still requiring HFO.

They also put forward an argument that the higher demand for low-sulphur fuel will induce more refiners to produce more, leading to long-term decline in prices.

Source: The Loadstar

air freight

Space issues causing trouble for shipping routes

Unusually tight capacity for the time of year is leading to rising rates, booking restrictions and backlogs for European exporters needing to ship from Europe to the Middle East and Asia.

This is in part attributed to exceptionally high levels of post Chinese New Year shipping cancellations, which have meant price increases for Europe to Asia container rates.

At this point, all bookings are being honoured, even though there seems to be a perception that this isn’t the case.

Hapag-Lloyd have introduced a US$200 peak season surcharge (PSS) for containers from Europe North Continent to East Asia, effective for sailings as of 15 March and valid until further notice. Many forwarders are recommending at least 3 weeks advanced notice of bookings.

The bankruptcy of the Hanjin shipping line last year has had a knock on effect from when it ceased to accept new cargo. Hanjin was the 7th largest container shipper in the world and the news has meant that their cargo has had to be distributed amongst an already nearly full to capacity fleet. Other shipping lines eventually took over their cargo, but at a price, with vessels already operating at high capacity.

Patrik Berglund, CEO of containerised ocean freight data specialist Xeneta said that data indicates that the current short-term rates for 40’ containers from North Europe to Asia averaged US$969. This level of pricing started in November and December ahead of Chinese New Year and had stayed high – and slightly continued to move upwards, Berglund said.
He said it was difficult to give a precise and short answer to the reasons for the current unexpected capacity crunch and high prices, but suggested it was due to a combination of carriers extracting more capacity than predicted demand and re-routing of capacity onto other corridors.

Xeneta had indicated in the lead-up to Chinese New Year that container lines operating on Asia-Europe trades were taking stronger measures than usual to maintain the recent recovery in ocean freight prices by making major cuts to capacity in the weeks after Lunar New Year. Since towards the end of 2016, the market has experienced a strong and sustained recovery, with container rates around 125% higher than they were around this time last year for Asia-Europe routes, Xeneta said. Xeneta’s sources had indicated that carriers were “taking stronger measures to deal with overcapacity to make sure the market stays up”, indicating that lines were attempting to prop up prices by reducing westbound sailings by 33% in the week immediately after Lunar new year and by around 43% from full capacity the following week. Xeneta noted at the time that this behaviour from carriers may mark a distinct difference compared with this period normally in previous years, when rates traditionally slide in the aftermath of Chinese New Year.

china uk

First rail freight service to China has departed from the UK

The first rail freight service from the UK to China departed on its 17 day, 7500 mile journey on April 10th.

British goods including soft drinks, vitamins and baby products are in the 30 containers carried by the train, which will be a regular service.The DP World locomotive left its terminal in Stanford-le-Hope, Essex, for Zhejiang province, eastern China. It will pass through France, Belgium, Germany, Poland, Belarus, Russia and Kazakhstan. It is cheaper to send goods by train than by air and faster than by sea, according to its operators.

The first rail freight service in the opposite direction, from China to the UK, arrived three months ago, the link to the news article we wrote is here. The new service is linked to Chinas One Belt One Road initiative, something we discussed in our news post here.

International trade minister Greg Hands said: ‘This new rail link with China is another boost for global Britain, following the ancient Silk Road trade route to carry British products around the world.‘It shows the huge global demand for quality UK goods and is a great step for DP World’s £1.5 billion London Gateway port as it also welcomes its first regular container ships from Asia.’

The train finally arrived in China on the 29th April (2 days later than the predicted 27th) and was greeted by traders and shipping company officials when it arrived at Yiwu West station.

MOL Triumph

The worlds largest container ship takes its maiden voyage

The worlds largest container ship, the MOL Triumph, set off on her maiden voyage from Xingang, China on the 10th April. With a gross tonnage of 210678, deadweight of 197500 tonnes and length and breadth of 400m x 59m it certainly does pack a punch – with the ability to carry 20,150 twenty foot containers.

MOL will sail to Dalian, Qingdao, Shanghai, Ningbo, Hong Kong, Yantian and Singapore, before it transits through the Suez Canal. It will then continue on to Tangier, Southampton, Hamburg, Rotterdam and Le Havre before calling back at at Tangier and then Jebel Ali on the return voyage to Asia.

The new 20,000 TEU-class container ships are equipped with various highly advanced energy-saving technologies. These include low friction underwater paint, high efficiency propeller and rudder, Savor Stator as a stream fin on the hull body, and an optimised fine hull form. According to MOL, these technologies can further reduce fuel consumption and CO2 emissions per container moved by about 25-30% when compared to 14,000 TEU-class containerships. Additionally, the vessel has also been designed with the retrofit option to convert to LNG, in view of the implementation of the International Maritime Organisation’s new regulation to limit emission in marine fuels, which will come into effect in 2020.

MOL will take the delivery of the second 20,000 TEU-class vessel in May 2017. Eventually there will be six 20,000 TEU-class containerships unveiled, and they will be phased in gradually on the existing trade routes of MOL.

MOL Triumph takes the title as the world’s largest containership from the 19,224 TEU MSC Oscar and her three sister ships. The four vessels were delivered to Mediterranean Shipping Company in 2015 by South Korea’s DSME. They measure 395.4 meters in length and have a beam of 59 meters.

At this time, we are anticipating the ship arriving into Southampton on roughly the 11th May, and we will keep you updated with its progress.

one belt one road

China’s One Belt One Road Initiative – how will it affect global trade?

Since 2013 China have been advertising the One Belt One Road initiative, a scheme to join a network of roads, ports, railways and other links from East China through Southeast and South Central Asia to Europe.

This belt of land based links is paired with the Maritime Silk Road, which stretches from Australia to Zanzibar. The initiative involves developing six economic “corridors”: 1. a China-Mongolia-Russia corridor; 2. a new Eurasian “Land Bridge”; 3. a corridor from China to Central Asia and Western Asia; 4. a China-Indochina peninsula corridor; 5. a China-Pakistan economic corridor; and 6. a Bangladesh-China-India-Myanmar economic corridor.

Back in 2011, US President Barack Obama launched the Trans-Pacific Partnership (TPP) trading bloc across the Pacific region. The TPP is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (until January 23, 2017) and Vietnam.

Now that Obama successor Donald Trump has carried out his pledge to withdraw from the TPP, the expectations are that Chinese-backed strategies like the OBOR will gain momentum. China experts say that this is a positive development, but there is scepticism over whether Beijing will follow through with the large amount of funding needed, whether big debt-financed projects bankrolled by China will benefit the recipient countries, and whether those projects will actually make sense in the long run.

China experts and economists say that the initiative makes sense and that it will accelerate as the U.S. turns more insular under Trump. “It is unfortunate that many U.S. diplomats and members of the previous administration worked for nearly a decade to push toward the TPP and now it is torn apart,” says Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong. The U.S. is turning its back on the rest of the world at a time when the world needs an open and engaged America, he says. “It is very likely and understandable that China … will try to fill those gaps with this initiative, and that is very logical — it’s something the U.S. will later deeply regret,” Kuijs says.

One of the main factors driving the OBOR effort is the slowdown in China’s own economy. With this in mind the policies are seeing a drive to create new markets for Chinese goods, political influence in the region, and security for the country’s natural resources supply chain. The initiative is part of the larger plan to shift Chinese goods to markets and to create jobs for Chinese companies. The infrastructure also means that products can get from China to Europe in days rather than weeks – a significant reduction in cost and time.

It seems that moving forward without relying on trade from the US and other larger countries, and also Great Britain post Brexit, China is moving to become even more of a global trade super power. Realising that there has been a shift in the global trade agreements in recent years means that China is reacting proactively to an ever changing market. Forecasts show that the OBOR project may take half a century or more, but ultimately is more than likely to succeed.

china uk

6 Top Tips for importing goods from China

In the current economic climate post Brexit, leaving the EU means that foreign relations have become more important than ever. Here are our 6 top tips for importing goods from China…

1. Ensure that the goods are permitted in your country, and that they are correctly classified. International trade is heavily regulated, and Supreme Freight can make sure that all your goods have the correct classifications, such as CFSP, IPR, OPR and warehousing entries, not forgetting BTI classification.

2. Do you need an import license? Do you need to pay VAT and Duty? This is dependent on the classification of the goods. Here at Supreme we can give expert advice to help simplify the process for you to make sure that the correct documentation is in place for your shipment.

3. Choose the right method of transportation. When importing from China the usual methods are either sea or air freight. If there are no time restraints and larger quantities, then sea freight may be preferable. If you would like your goods quicker and with higher levels of security, then air freight would be recommend. If you choose sea, then we can handle all types of cargo including full container load (FCL), less container load (LCL) and NVOCC groupie shipments. If air is your preference our team at Heathrow Airport offer a range of direct and indirect shipment services. Choice and flexibility are paramount and we work closely with both our client and supplier to design a schedule and transit time that will suit your requirements.

4. Track your cargo. Make sure you choose a forwarder who can track your goods. Our tacking page offers detailed information and insight to the status and progress of your shipment, for both sea and air freight. [link to tracking page]

5. Arrange collection of your shipment. We offer a door to door service if required which is convenient and flexible, and also offer container and cargo storage which is a crucial aspect of the supply chain.

6. Don’t forget the Chinese New Year! How can you avoid delays?! By making sure that your order is placed in plenty of time, November at the latest.

Happy importing!
进口快乐

London gateway

Big changes in shipping alliances open the door to the world for London Gateway

New London Gateway services are now available to and from the Far East in the wake of big changes in shipping alliances.

The recent changes are affecting the location and timing of many international shipments, one of the notable benefits however is that the London Gateway now has deep seas connections for the first time. The Alliance will be using London Gateway for two transatlantic loops and 2 Asia – Northern Europe.

Supreme customers looking to import their shipments to London and the surrounding area can take advantage of this.

Interested in London Gateway arrivals? Please contact our import team to discuss your requirements, we’d be happy to help.

 

airfreight-offer

Free customs clearance on any air freight bookings this month!

For this month only, we would like to offer our loyal customers free customs clearance on any air freight bookings made!

We have electronic links to all UK airports. This means that our team can skilfully arrange customs clearance for your cargo. With knowledge of all customs clearance procedures, home use, CFSP, IPR, OPR and warehousing entries we can also organise BTI classification for your goods.

Our team of highly skilled experts at our office at Heathrow Airport have extensive knowledge of handling all aspects of air shipments, with daily nationwide collections and an air freight consolidation service. We are able to offer a range of direct and indirect shipment options from any airport worldwide.

Contact us now to take advantage of this great offer! Call 02380 337778 or email enquiries@supremefreight.com 

 

 

pot-hole

Lorry pothole claims rejected by road transport group

The poor state of Britian’s roads does not lie with the logistics industry say the Freight Transport Association (FTA)

According to the Local Government Association (LGA) there are more potholes and wear of the roads because of the 5% rise in lorries on British roads since last year, an increase of 1.7bnt.

LGA transport spokesman Martin Tett said…

“Our local roads network faces an unprecedented funding crisis and the latest spike in lorries could push our local roads network over the edge. Lorries exert massively more weight on road surfaces than cars, causing them to crumble far quicker.”

According to the Department of Transport’s road freight statistics the food and drink industry accounted for nearly a quarter of the road traffic in the UK in 2015. However, the FTA refute this, instead calling the lack of government spending on repairs the real issue. The FTA insist that the cuts to local insfrastructure have caused a repair backlog on a national level.

The FTA’s head of policy Christopher Snelling said the LGA’s report was an attempt to escape responsibility for the problem…

“The real issue is the need for increased funding from central government to address the potholes problem nationwide, local authorities are facing large bills – one-off costs of approximately £69M per council – to bring their roads up to a reasonable condition.”

Snelling continued…

“The transportation of essential goods on our roads is crucial to the continued health of the economy. To claim that lorries are the cause of the potholes across the country is simply not true. Larger lorries do not cause increased damage to the road surface – in fact, they have more axles which spread payloads more evenly. When combined with road-friendly twin tyres and road-friendly suspension, this reduces the impact of road usage by lorries.”

When responding to a recent RAC survey on potholes, Martin Tett had this as his response…

‘’Councils are fixing more potholes than ever – one every 15 seconds – and keeping roads safe is one of the most important jobs we do. However, councils face a £12 billion backlog of road repairs, which would already take councils more than 10 years to clear. Over the remaining years of this decade the Government will invest over £1.1 million per mile in maintaining main roads and motorways, which make up just three per cent of all total roads. However, it invests £27,000 per mile in council-controlled local roads, which make up 97 per cent of England’s road network. This difference in funding puts the country’s businesses at a competitive disadvantage and provides poor value for money’’

The state of Britain’s roads has long been a source of contention, but with increased usage and little money to make improvements, unfortunately our industry will always be under scrutiny.

air cargo

2016 ends on a positive note for Air Cargo

According to official data released by The International Air Transport Association (AITA), global freight volumes showed a growth in demand of 3.8% freight tonne kilometres (FTKs) compared to 2015.

This was nearly double the industry’s average growth rate of 2% over the last five years. Freight capacity also increased by 5.3% in 2016. With the exception of Latin America, all regions experienced positive freight growth in 2016. Almost half of the total annual increase in demand came from Europe.

In terms of demand, 2016 was a good year for air cargo. That was boosted by solid year-end performance. Looking ahead, strong export orders are good news. However, there are headwinds. The most significant is stagnant world trade which also faces the risk of protectionist measures. Governments must not forget that trade is a powerful tool for growth and prosperity,” said Alexandre de Juniac, IATA’s Director General and CEO.

“The air cargo industry must also improve its competitiveness. We know that the way forward is defined by digital processes which will drive efficiency and improve customer satisfaction. We must use the momentum of renewed demand growth to drive the important innovations of the e-cargo vision,” said de Juniac.

Asia-Pacific carriers held the highest market share in terms of FTKs at 37.5% followed by Europe 23.5%, North America 20.7%, Middle East 13.9%, Latin America 2.8% and Africa at 1.6%.