A Beginner’s Guide to Importing

As the eCommerce market grows, buying and selling goods online is fast becoming the norm for consumers. With this increase in popularity, businesses are more committed than ever to keeping their costs to a minimum. A top way to stay cost effective is to import goods from China, India or Taiwan. Importing your goods from as far as Asia can be a daunting prospect to a first timer. If you are a business looking to import from Asia for the first time, remember these 8 easy steps for a smooth process:

1. Follow your Market
2. Find your Product
3. Understand your Shipping Terms
4. Get your Quote
5. Track your Shipment
6. Prepare for Customs
7. Pay your Invoice
8. Plan your Delivery

Let’s take a closer look!

1. Follow your Market

When purchasing goods from abroad it is important to research the market you are looking to buy in. Just like purchasing things at home, it is not wise to invest in something you do not know anything about.

You will need to consider the following:

• Is your product in high demand? If so, you will need to ensure that you order enough to last you until you are able to purchase more. Keep in mind that it can take up to 6 weeks for shipments to arrive.
• Are you buying the right quantity? Shipping costs per unit are low when buying bulk but importing too much at once can be costly. Ensure you are being as cost effective as you can when considering quantity.
• Will you ship your goods via sea or air? Fast moving markets could benefit with the convenience and speed of delivery that air freight offers.

2. Find you Product

When sourcing a product, make sure that you know where it’s coming from. Some of the most common ways of sourcing products are through:

• Alibaba and Made in China. These companies are extremely popular with companies.
• Sourcing and inspection agencies. As a first-time importer, you may find it beneficial to use these.
• Visiting factories and trade fairs. This can be a great option if you are unsure of a particular company and want to see how they operate.

3. Understanding your Shipping Terms

It is important companies know what they’re paying for, what transport costs they are responsible for and when you have to pay. Top tips include:

• Try to negotiate importing your shipment on Free on Board (FOB) terms. This generally works out cheaper for the buyer.
• Try to avoid CIF/CFR shipping terms.
• Ensure you know exactly when and how your supplier wants to be paid for the shipment. This could include pay upfront in full or part payments at various points of the journey.
• Research the price of importing your product so that you know whether you are getting a good deal.

4. Get your Quote

Contact a Supreme Freight for a quote and ensure you familiarise yourself with the following costs:

• Duty and VAT. A lot of shipping companies are happy to advise on the duty and VAT costs.
• Insurance. Supreme Freight will quote you to insure your shipment whilst it is in transit. It may not seem essential at the time but is it worth the risk?

5. Track your Shipment

When we say track, we don’t just mean checking the location of your goods. We mean staying on top of your shipment. Before you start the process with a shipping company, ensure you know how long your shipment is going to take to get to you. Production and transit times are good things to know. If your product is going to take 6 weeks to make and then another 6 weeks to ship to you, you’re going to want to know in advance!

Be sure to ask your shipping company for:

• Estimated departure and arrival date into the UK
• Name of the vessel to enable you to track it yourself
• Estimated delivery date for your address

6. Prepare for Customs

When your goods are in transit, you will need to prepare the following for your shipment to clear customs:

• Commercial Invoice from your supplier to present to customs when your shipment arrives.
• A Bill of Lading – This proves that you are the legal owner of the shipment.
• An EORI number – This will vary depending on whether you are a VAT registered business. Most shipping companies will arrange this for you, the most you will need to do in this case is to send the form to HMRC.
• Commodity codes so that HMRC are aware of what the shipment is.

7. Pay your Invoice

Once your goods have arrived into the UK, we would advise settling your invoice as soon as possible as your shipping company would have paid a significant amount in Duty and VAT on your behalf. You will generally receive your invoice between customs receiving your goods and delivery and it is generally paid via bank transfer.

8. Plan your Delivery

When planning for your delivery, consider the following:

• Delivery address – Does the delivery address of your shipment have sufficient storage solutions for your goods? If not, you may need to consider renting a storage space.
• Size and weight of shipment – If your cargo is bulky or heavy you may need a tail-lift delivery or extra man power to help with unloading.
• Time of delivery – Plan ahead and ensure that your goods are delivered at a time when your storage facility is open.
• If you are delivering directly to an Amazon warehouse, you may need your supplier to label the cartons to ensure it can be identified.

sea freight china

A Guide to Sea Freight Shipping from China

Sea freight is the largest method of shipping for international import and export business. Competitive prices and multiple options make sea freight the first choice for global trade. When it comes to shipping from China, businesses need experienced freight forwarders like our team at Supreme Freight who are familiar with transporting for companies of differing sizes as well as to a wealth of countries. As a China freight agent, we hope that you are able to gain something from the knowledge and experience shared in this article.

Trade Terms

Get accustomed to all the codes and terminology with our simple breakdown:

Incoterms – A term given to one of the common terms of trade. When applied to buying goods from China, there are four incoterms. Each of the incoterms are assigned a code relating to how far the suppliers transport the shipment to. The codes of these incoterms are as follows:

EXW – Transport as far as the factory/manufacturer

FOB – Transport as far as a nearby port in China

CIF – Transport to a nearby port in your country

DAP/DDU – Transfer to your place of business

The codes can be split into two further categories:

  • EXW/FOB Category – The buyer can utilise your own freight agent and liaise with them directly regarding payment.
  • The Other Category – The buyer uses their own freight company and your company subsidises that.

When looking for a freight forwarder, it is important that you understand these terms and codes to enable them to know your requirements when shipping your goods to China.

Container Types

It is important to know the following commonly used container types:

  • 20’GP – Allows for 20ft of storage. 20’GP is designed to carry more weight than voluminous cargo. E.g. Minerals, metal and machinery
  • 40’GP – Allows for 40ft of storage. 40’GP is designed to carry more voluminous cargo than heavy cargo. E.g. Furniture, tyres, and toys
  • 40’HC – Allows for 40ft of storage for shipments of a great height.

Although the volume of the 40’ containers are double the volume of the 20’, they are still bound to the same weight restriction that China applies to its exports which is no more than 27-28 tons. The ocean rates for a 40’ container shipped from China are less than two 20’ containers and it is no extra cost from a 40’ container for a 40’HC.

Freight forwarders are also knowledgeable of these commonly used container types. Knowing this information upfront will allow the freight forwarder to help and advise you with the right service.

Shipment Type

Shipment types come in the following two categories:

  • Full Container Load (FCL) – In which a company fills a whole container with their own goods. Containers can be from 20 – 45 feet long.
  • Less than Container Load (LCL) – Where different companies share the same container and load their shipments into it. This would then get split once it reaches port.

In order to ascertain what shipment type is best for your business you need to consider the packaging that your shipment requires whilst being transported, if you select an LCL, would it be better for your shipment to use a courier or decide whether it is possible to use an FCL.

Major Ports

Each port has a different charge for FCL and LCL containers. The breakdown of the Chinese ports are as follows:

  • Shanghai – This major city enjoys the most economically developed of everything. From where it is located, it serves interior provinces via river ports along the waterway that extends from it.
  • Shenzen – This port is accessible to Hong Kong and the Pearl River Delta making it another key port for the South of China.
  • Ningbo-Zhousan – This port serves both Ningbo, which has good connections with Central and Western China and Zhejiang, a wealthy region with a manufacturing industry.
  • Hong Kong – Fastly expanding into the ‘international shipping service hub of the Far East,’ Hong Kong provides 340 container liner services per week, connecting to around 470 destinations worldwide.
  • Guangzhou – Historically, a key centre of trade in China, the port is striving to be the international shipment hub for the Maritime Silk Road component. It is a port that provides options for importers, exporters, third party logistic companies and ocean carriers with its reduced port and berthing fees.
  • Qingdao – The most important port of Northern China. It is located next to the Bohai Bay region of which it serves.
  • Tianjin – This port is second only to Qingdao port in capacity in Northern China. The port’s container handling business are developing additional domestic and international routes.
  • Xiamen – The port is located at the mouth of the Jiulongjiang River and has over 68 shipping routes to over 50 countries including Kaohsiung in Taiwan.
  • Dalian – This port is located at the most northern ice-free port of China and is the largest port in North East China serving seaports in East Asia, North Asia, and the Pacific Rim.

Researching into the port that best serves where your shipment will be transported to, will enable your freight forwarder to connect you with our most suitable partners.

For a consultation and advice on your shipment, get in touch with us and we will do our best to help.

 

Air-Freight-vs-Sea-Freight

Air Freight vs Sea Freight

When shipping goods internationally, there are many factors to consider. One of the biggest, is what mode of transport you are going to use to get your goods there.

No matter the reason of what and why you are shipping, deciding between sea and air freight is extremely important. Contacting an experienced freight company like the team at Supreme Freight can help you make this choice using our industry experience to get you the most suitable freight solution. Both methods have advantages and disadvantages to them, some of these may apply your needs, so before making a decision, doing your research is strongly advised. Today, we are looking into the differences and the benefits between sea and air freight to help you make that all-important choice!

Considering the Factors

When trying to make the important decision between shipping your items by air or sea freight is dependent on the following four variables:

  • Cost – No matter your budget or your circumstances, cost will have an influence over your decision making. It is typically thought that sea freight being the cheaper of the two and while that may be the case in a lot of situations, it’s not for all. Ensure that you shop around and get quotes for both modes of transport with different companies.
  • Speed – If you have a time restriction on when you need your goods to get to their final destination then we would strongly advise that you consider air freight. Sea shipments can take as long as a month, whilst air freight can be there in a day or two. If you are shipping for business, the time and convenience of your goods getting there in such a quick timeframe, may more than make up for the cost of air freight. If you don’t require a quick timeframe it could make a lot more sense to send it via sea freight.
  • Reliability – When we’re deciding on the right company for their services, we want them to be reliable and it is no different here. When it comes to air and sea freight, ocean sea freight companies have had a much longer history and time to perfect their processes; however, airlines are very keen to stay on top of schedules with much fewer delays and cancellations, it comes out at the most reliable.
  • Environment – With the ever-increasing issue of climate change pressing on the world, there’s no better time than now to make more environmentally friendly choices to help preserve our planet. As social awareness is growing, companies are trying to do their bit to provide more eco-friendly business solutions. When looking at both, it appears sea freight would surely win hands down as it releases far less CO2 emissions; however, with oil and chemical spills and sea freight impacting on water ecosystems that might not be so clear cut after all.

What are the Advantages of Sea Freight and Air Freight?

Still not completely sure with which to go for? Read up on the benefits of each:

Sea Freight

  • Cost Effective – For businesses looking to import large quantities of goods. Sea freight has been known to be 4 – 6 times cheaper than air freight. Additionally, duty and VAT are calculated at a cheaper rate than air freight keeping the costs down in other ways.
  • Flexibility – There are a lot of options to sea freight as mentioned above. This flexibility could suit a number of businesses. Sharing containers spreads the cost between companies.
  • Less Restrictions – Sea freight importing does not have as many restrictions of what companies can import, in terms of size and amount as other methods do. Bigger items such as furniture or vehicles isn’t going to be so much of a problem by sea as it would by air.
  • Accessibility – Sea freight is pretty much accessible from anywhere in the world. Sea freight importing is much better for the environment than other methods.

Read more about our Sea Freight services.

Air Freight

  • Efficiency – Air freight is quick, particularly if you use a direct service. You can expect goods to be at its intended destination within days of sending it whilst sea freight can take several weeks.
  • Good Value on Smaller Deliveries – Air freight is charged based on weight as opposed to volume which makes it more cost effective to send smaller deliveries via air freight than by sea.
  • More Options – Shipping companies are able to offer more options to the importer with air freight, including consols and direct routes.
  • Less Potential to Damage Shipment – Providing the goods are correctly packaged, air freight is usually a better way of shipping fragile items as damage is less likely compared to sea freight.
  • More Traceable – As flights are tracked, shipments are more easily traceable which can give businesses more peace of mind.

Read more about our Air Freight services. 

Contact us today to see which solution is the best fit for your shipment.

HMRC

UK Tariff Changes announced from 1st January 2021

From 1 January 2021, the UK will apply a UK-specific tariff to imported goods.

This UK Global Tariff (UKGT) will replace the EU’s Common External Tariff, which applies until 31 December 2020.

The new tariff is tailored to the needs of the UK economy. It will support the economy by making it easier and cheaper for businesses to import goods from overseas. It is a simpler, easier to use and lower tariff regime than the EU’s Common External Tariff (EU CET) and will be in pounds (£), not euros.

The UKGT also expands tariff free trade by eliminating tariffs on a wide range of products. The UKGT ensures that 60% of trade will come into the UK tariff free on WTO terms or through existing preferential access from January 2021, and successful FTA negotiations will increase this.

This will lower costs for businesses, ensuring they can compete on fair terms with the rest of the world, as well as keeping prices down and increasing choice for consumers.

The Government is maintaining tariffs on a number of products backing UK industries such as agriculture, automotive and fishing. This will help to support businesses in every region and nation of the UK to thrive. Some tariffs are also being maintained to support imports from the world’s poorest countries that benefit from preferential access to the UK market.

The UKGT was designed following widespread engagement with businesses across the UK. As it will come into force on 1 January 2021, it’s important that businesses can familiarise themselves with the new tariff regime ahead of this date.

The Government are backing UK industry by:

Maintaining tariffs on agricultural products such as lamb, beef, and poultry.
Maintaining a 10% tariff on cars.
Maintaining tariffs for the vast majority of ceramic products.
Removing tariffs on £30 billion worth of imports entering UK supply chains. 0% tariffs on products used in UK production, including copper alloy tubes (down from 5.2%) and screws and bolts (down from 3.7%).

UK consumers will also benefit from more choice and lower costs on numerous goods thanks to zero tariffs. These include, for example:

Dishwashers (down from 2.7%).
Freezers (down from 2.5%).
Sanitary products and tampons (down from 6.3%).
Paints (down from 6.5%) and screwdrivers (down from 2.7%).
Mirrors (down from 4%).
Scissors and garden shears (down from 4.7%).
Padlocks (down from 2.7%).
Cooking products such as baking powder (down from 6.1%), yeast (down from 12%), bay leaves (down from 7%), ground thyme (down from 8.5%) and cocoa powder (down from 8%).
Christmas trees (down from 2.5%).

The Government will promote a sustainable economy by cutting tariffs on over 100 products to back renewable energy, energy efficiency, carbon capture, and the circular economy. The following are all dropping to zero tariffs:

Thermostats (down from 2.1%).
Vacuum flasks (down from 6.7%).
LED lamps (down from 3.7%).
Bike inner tubes (down from 4%).

Almost all pharmaceuticals and most medical devices (including ventilators) are tariff free in the UKGT. However, some products used to fight COVID-19 maintain a tariff. To ensure those working on the frontline can access vital equipment easily, the UK has introduced a temporary zero tariff rate on these products. This relief waives the tariff and VAT for personal protective equipment (PPE), medical devices, disinfectant and medical supplies from non-EU countries.

The UKGT will apply to all goods imported into the UK unless:

An exception applies, such as a relief or tariff suspension
The goods come from countries that are part of the Generalised Scheme of Preferences
The country you’re importing from has a trade agreement with the UK

It only shows the tariffs that will be applied to goods at the border when they’re imported into the UK.

It does not cover:

Other import duties, such as VAT
The precise details of trade remedies measures
Other restrictions on imports, such as anti-dumping, countervailing or safeguards

Goods covered by a tariff-rate quota:

Some products are covered by a tariff-rate quota. This allows a limited amount of a product to be imported at a zero or lower tariff rate.

The limit may be expressed in units of:

weight
volume
quantity
value

If this limit is exceeded, a higher tariff rate applies.

If there is a tariff-rate quota on your product, you can apply to import a limited amount at a reduced rate of customs duty.

Some tariff-rate quotas are only applicable to products imported from a specified country.

Please follow the below link to check the tariffs that will apply to goods you import from 1 January 2021.

https://www.gov.uk/check-tariffs-1-january-2021

If you need any help or support please contact us.

NHS charter

PPE Equipment to arrive today for the NHS

We are very proud to announce that we have arranged a full charter of vital PPE equipment directly for the NHS to arrive today. Flight number F79540 landing into London Heathrow at 13.30 from China.

Our thanks as ever go out to the NHS and all those working to keep us safe.

 

china trade

Top 10 Things to Know When Importing from the UK to China

China is now the UK’s eighth largest export market. In 2017, the UK sold nearly £17 billion worth of goods and services and that figure is only going to increase.

As China’s economy grows and its middle class consumer base expands, the country will be an even more important market for the UK. For companies shipping goods to China, it can be a complex process with many things to consider. Whether you’re an experienced trading partner or expanding your business, these are the top tips to consider when exporting to China.

 

  1. Research Shipping Methods – When deciding to ship goods, companies need to consider whether they will handle the logistics themselves or enlist the services of a company to do it on their behalf.

 

  1. Transport Options – Deciding on the mode of transport that you choose to ship your items will depend on several factors; what your goods are, how much time you have, what sort of budget you have and whether you need to take special requirements into consideration.

 

  1. Sea Freight Benefits – If you are looking to ship bulky items of a high weight, sea freight is one of the cheapest options for you. If you are looking for advise on what the best option of transport would be for you, a freight forward company would be the best people to talk to.

 

  1. Cost – Before you ship your goods, it is important to know upfront the cost to do this. There are lot of potential hidden costs that you may not be aware of if you are not experienced in exporting goods overseas. Surprise costs may prevent your goods from arriving at its final destination and companies can potentially lose a lot of money.

 

  1. Declaring Goods – When importing goods from overseas, all companies must declare them with HMRC. This is done by completing a C88 form.

 

  1. Customs Charges – It is important for companies to familiarise themselves with UK Duty and VAT charges when importing goods into the UK. It is their responsibility to check and pay the correct charges for their goods. Any discrepancy could lead to delays and penalty fees which could be extremely detrimental.

 

  1. Shipping Terms – To avoid confusion, it is important for companies to understand basic shipping terms when transporting goods overseas. The following terms outline of the suppliers and buyers:

 

  • FOB (Free on Board) – Where the supplier pays all the charges at the the shipment’s country of origin which effectively makes it ‘free’ for the buyer to have goods transported by ship.

 

  • EXW (Ex-Works) – Where the buyer is responsible for all charges along the journey of the shipment.

 

  • CIF (Cost, Insurance and Freight) – Where the supplier pays all costs to get the shipment to the UK. Once it is in port the shipment then becomes the Buyer’s responsibility.

 

  1. Commodity Codes – When trading with China, companies must understand and find the correct commodity code. This is a 10 digit code that is required on all imports coming from outside the European Union.

 

  1. Import Licence – Depending on what you are importing, companies may be required to hold an import licence. Companies need to be familiar on what goods are restricted or banned. There are certain import controls on goods such as food, textiles and firearms.

 

  1. Consider a Freight Forwarder – Shipping to and from China is a complex process that has many steps. A freight forwarding company will not only be able to take you through the process, they’d be able to handle all documentation and have local knowledge to ensure that your shipment gets to its final destination smoothly.

 

Why do Businesses Use Freight Forwarders?

Freight forwarders are seen as a necessary extension to many businesses. Mistakes made in shipping processes can be costly and delay goods getting to the places they need to go.

The wealth of knowledge and expertise they have on the process of importing and exporting is invaluable to companies and saves them both time and money. Even large Beneficial Cargo Owners such as Marks and Spencer work with freight forwarders in parts of their businesses. They are seen as a necessity and even regarded to some as an outsourced shipping department.

 

What Can you Expect from a Freight Forwarder?

Supreme Freight will listen to the shipping needs of your business and be able to tailor those to a logistically sound plan at every step of the way. From your budget and time requirements they will be able to recommend you the best method of transportation, whether by road, air or sea. As well as this a Freight Forwarder will be able to make recommendations on:

  • Customs Clearance– From origin to destination, forwarders should be able to deal with all customs processes. This includes handling all paperwork and fees on your company’s behalf.
  • Shipping Documentation– Forwarders should be able to deal with all shipping documentation including Bills of Lading, Certificates of Origin, letters of credit or any documents required by banks before payment is released.
  • Insurance – A reputable freight forwarder will be able to recommend insurance services that will cover a shipment for loss or damage.
  • Logistics and Supply-Chain Management – Which can include but is not limited to fulfilment, customs consultancy and contract logistics services.

If you are interested in importing goods to the UK from China, please get in touch.

 

 

 

sea freight

What is Sea Freight Import?


If you are considering the logistics of Importing goods into the United Kingdom for your business, sea freight will naturally be an option you will consider. Sea freight is a good choice for those businesses that are looking to import a large amount of consumer goods and is most often used when importing from Far East Asia. One of the main reasons for this is because sea freight is a cost-effective option that has been a preferred method for many industries for decades.

Sea freight is the method of transporting a large quantity of goods using cargo ships. These come in the following forms:

  • Full Container Load (FCL) – In which a company fills a whole container with their own goods. Containers can be from 20 – 45 feet long.
  • Less than Container Load (LCL) – Where different companies share the same container and load their shipments into it. This would then get split once it reaches port.
  • Roll On Roll Off (RORO) – Where lorries or other vehicles are packed with shipments, drive onto the cargo ships and drive off once they have reached their destination.
  • Dry Bulk Shipping – Where materials such as metals or aggregates can be poured into the ships hold rather than being loaded into containers.

What are the Advantages of Sea Freight?

The advantages of importing using sea freight include:

  • Can be highly cost effective for businesses looking to import large quantities of goods. Sea freight has been known to be 4 – 6 times cheaper than air freight. Additionally, duty and VAT are calculated at a cheaper rate than air freight keeping the costs down
  • Supreme freight can also organise container sharing for smaller loads that can keep costs down for their clients.
  • Sea freight is a global business and is accessible from most countries around the globe.
  • Sea freight importing is much better for the environment than other methods.

What Will you Need to Pay for?

When importing into the UK, businesses not only need to consider the cost of the goods and the fee they are going to pay to the shipping company to transport them, they must also consider the duty and the taxes incurred on the goods as they pass through customs processes.

The price of these costs depends a lot on where the shipment is coming from. Currently, importing from the EU typically costs less than from outside as there normally isn’t duty to be paid. This may change as the United Kingdom goes through the process of leaving the European Union and businesses will need to consider this when pricing up their shipment.

Shipping costs depend a lot on the size of the shipment and what it is. Other costs excluding the shipping cost could include:

  • Cost of goods
  • UK import duty
  • UK VAT (There are some cases where businesses can claim this back.)

How Sea Freight Works

Arranging a shipment can generally be done using these steps:

  • Contact Supreme to discuss your logistic requirements and agree a plan.
  • The goods will be collected by the shipping company from the supplier.
  • The shipment will be transported to the port and proceed through customs.
  • Goods are loaded into an FCL or LCL container and loaded onto a cargo ship.
  • Once the shipment has arrived into the UK, the shipment is met by customs and released when duty and taxes are paid.
  • Goods are delivered to your business.

When you work with Supreme you will be working with a reputable, cost effective shipping company who will ensure that the process runs smoothly. Planning and organisation will be key as shipments can take a long time to reach their final destinations especially if delays occur. To discuss your sea freight needs or any other freight requirements contact the expert team at Supreme Freight on +44 (0)23 8033 7778.

emissions

IMO have a lack of urgency to clear up shipping

The IMO has decided on a goal-setting approach by member states to decarbonise shipping, rather than progress the proposals put forward by some members for a mandatory speed reduction on vessels.

The strategy, decided last week in London, not to opt for speed restrictions has angered the members of the Clean Shipping Coalition (CSC) who blasted the IMO for its “bureaucracy” and “lack of urgency”.

An IMO working group agreed a draft text that will be put forward to the next Marine Environment Protection Committee (MEPC) meeting in March.

The text urges member states to develop and update a voluntary national action plan, which includes an improvement in the domestic and legislative implementation of existing regulations and a commitment to develop activities to further enhance the energy efficiency of ships, along with initiating the research and the uptake of alternative low- and zero-carbon fuels.

The IMO said that during the working group sessions “a number of proposals were discussed”, including an Energy Efficiency Ship Index (EEXI), mandatory power limitations on ships, measures to optimise speed on a voyage and speed limiters.

According to the UK Chamber of Shipping,“after lengthy discussions it was clear that there was no appetite for prescriptive speed reduction regulation”.

However, the UK Chamber, which is against the implementation of speed restrictions on shipping, arguing among other things that it would require more ships to be built with ‘old’ technology to take up the slack, said there was a “positive outcome” from the meeting.

Shipping policy director Anna Ziou said: “The progress made sets the right direction of travel and is a good foundation for the IMO’s work to put the strategy into action.”

Meanwhile, the CSC said measures were “urgently needed” if the IMO’s plan, agreed in April last year to half emissions from shipping by 2050 was to be met.

Bill Hemmings, shipping director of CSC member, transport & environment, said: “Time is running short but that’s not the feeling you get inside the room. The commitment last April to agree and implement in the short-term immediate emissions reduction measures has fallen foul of procedure, bureaucracy and delay spearheaded by countries that were never really on board.”

Mr Hemmings named the key member states as the US, Saudi Arabia and Brazil that “spearheaded” the movement against mandatory speed restrictions.

And John Maggs, senior policy advisor at fellow CSC member Seas at Risk, was equally damming of the IMO’s decision not to implement vessel speed restrictions at this time.

“Ships have deployed slow-steaming over the past decade in a way that has seen dramatic reductions in emissions. The world is not blind to this,” said Mr Maggs.

He said that the speeds of ships “must initially be capped” and “then progressively lowered” and suggested that the “commitment of many at the IMO to genuinely reduce ship emissions” was absent.

Nevertheless, several shipowners and operators The Loadstar has spoken to in recent weeks argued that they were already operating their vessels at the lowest speeds recommended by engine manufacturers, in order to conserve fuel and cut voyage costs to the bone.

Indeed, one executive from a major container carrier said: “Our masters are under strict instructions not to ‘put their foot down’ unless it is a matter of safety; if we miss a berth window so be it, we have a network that can adjust to that and it is generally cheaper than burning the extra fuel.”

Source: The Loadstar

air pollution

Decarbonisation and greener fuel an important issue

Decarbonisation is now the second most important issue for the shipping industry, according to a report released today by the Global Maritime Forum.

The Global Maritime Issues Monitor 2019, which surveyed respondents from 46 countries, ranked only the “global economic crisis” ahead of “decarbonisation of shipping” as the issue to have the greatest impact on the industry over the next decade.

“And the pending 2020 IMO low-sulphur regulation appears to be on senior leaders’ radar,” said Global Maritime Forum chair Peter Stokes. “They see ‘new environmental regulation’ as most likely to occur in the next ten years, and deem that issue to have the third-highest impact.

“Worryingly, they perceive the maritime industry as relatively unprepared for the issue, close to the deadline for the new fuel requirements,” he added.

The report says the availability of zero-carbon vessels and fuels is seen as a major barrier to shipping’s decarbonisation.

Johannah Christensen, the forum’s head of projects, added: “Commercially viable zero-emission vessels powered by zero-emission fuels must start entering the global fleet by 2030, and their numbers need to be radically scaled through the 2030s and 2040s if international shipping is to meet the [IMO] target of reducing greenhouse gas emissions by at least 50% by 2050.”

Yesterday, Maersk, which has set the bar higher than the IMO with its goal of eliminating its carbon emissions by 2050, announced it would develop the use of ‘LEO’ fuel, a blend of lignin and ethanol.

Maersk has formed a ‘LEO coalition’ with Norwegian ro-ro carrier Wallenius Wilhelmsen, Copenhagen University and shippers BMW, H&M, Levi Strauss and Marks & Spencer.

Søren Toft, Maersk’s chief operating officer, said: “Shipping requires bespoke low-carbon fuel solutions which can make the leap from the laboratory to the global shipping fleet. Initiatives such as the LEO Coalition are an important catalyst in this process.”

Meanwhile, the IMO 2020 sulphur fuel cap and subsequent decarbonisation push could be a “blessing in disguise” for container carriers, according to Parash Jain, global head of shipping and ports equity research at HSBC.

He said the industry was unlikely to experience the kind of speculative ship ordering seen during previous supply and demand cycles, since decarbonisation would “ensure older assets become obsolete much faster.”

“In my view, there will be restraint from carriers and secondhand vessels will become more liquid. Those who need supply will tap into that market rather than make a call on what kind of new ship they should order for the next 25 years,” he said at the TPM Asia conference in Shenzhen this month.

McKinsey partner Steve Saxon agreed, noting the industry’s decarbonisation targets were “incredibly aggressive.”

“So shipping lines will need to find a way to decarbonise and the dominate technology is not out there yet. In the meantime, we’re going to have a difficult transition period, and, during the late 2020s or so, I would agree we may well see new ordering drop back quite substantially,” said Mr Saxon.

Source: The Loadstar

MSC

MSC tipped to overtake Maersk as the worlds biggest box carrier

MSC is on course to overtake alliance partner Maersk as the biggest ocean carrier by capacity within the next two years.

A new order for five 23,000 teu ULCVs from the South Korean Daewoo yard will take the Geneva-based carrier’s orderbook to 16 vessels, for a massive 305,352 teu, according to Alphaliner data.

A disclosure from Daewoo this week valued the order at $152m per ship, with delivery of the five by August 2021.

This will propel MSC’s fleet, including current chartered tonnage, to just under 4m teu, a capacity level Maersk has said it wants to stick at.

During the second-quarter earnings call in August, Maersk chief executive Soren Skou confirmed this, adding: “We want to remain disciplined on capacity and stick to our guidance of around 4m teu of deployed capacity because it helps us drive utilisation up and unit costs down.”

Currently the Danish carrier’s fleet stands at some 4.2m teu, however Mr Skou attributed the above-guidance figure to be due to a number of ships dry-docking for scrubber installation, obliging a higher than normal level of chartered-in tonnage.

Unlike its 2M partner, Maersk has for some time taken a bearish view on ordering, and currently has an orderbook of just 45,000 teu. It has long since ceased to be the ocean carrier operating the biggest  box ship; MSC is the current leader with its 23,765 teu scrubber-fitted MSC Gulsun, in service between Asia and North Europe.

With MSC threatening to end its long reign as the industry’s biggest carrier, Maersk’s board could be put under pressure to reconsider its capacity strategy, which in turn could lead to it identifying new acquisition targets in order to support its growth.

In contrast, MSC’s family-influenced strategy to only grow its liner business organically means it needs to be more aggressive in its markets to underpin the injection of additional capacity.

Teaming up with Maersk in the 2M alliance in January 2015 has seen stronger growth organically for MSC than its VSA partner has managed via acquisition, and there are some concerns emerging that it is lagging.

Source: The Loadstar