How has the Hanjin crisis impacted on the market for sea freight forwarding between North East Asia and Australia? Why and how is this year’s peak season so different to previous years? What future dates should you be aware of to not be hit by excessive freight forwarding bills? Numerous influences are currently exerting leverage on North East Asia to Australia trade lane, especially on sea freight from China, South Korea and Japan to Australia. The marathon towards Christmas has long begun but this marathon very likely won’t end with the Christmas holidays.

Read on to learn more details on rate rises, carrier capacity, delays and important dates for early 2017. Find out how you can prepare your business for these rate peaks and the Christmas Holidays.

Welcome to the November edition of the BCR Global Market Update. In this edition, we focus specifically on North East Asia to Australia trade as this lane is where we are currently seeing the most volatility. Especially sea freight from China, South Korea and Japan to Australia is exposed to these instabilities. This year peak season is unlike previous years in that it looks likely to extend past the traditional end. Peak season could possibly extend into early 2017 based on factory shutdowns in China due to Chinese New Year.

North East Asia to Australia

Low sea freight shipping rates from China and other North East Asia origins to Australia are a thing of the past. Import rates have doubled from July/August and are still climbing. We are also seeing tremendous space pressure from all carriers from China to Australia and a steady backlog of cargo with some containers being delayed by 3-4 weeks.

There are also equipment shortages especially 40’ high cubes due to increased demand for this equipment from China to Australia. Further, we have received notices of an additional GRI effective 15 November. This GRI is the last attempt by shipping lines this year to capitalise on these current market conditions which may enable them to finally achieve and maintain traction with a high percentage of these rate increases. The question on everyone’s mind is will this last and for how long?

So what has happened to allow these drastic increases?

  • Reconfiguration of consortiums as a consequence of the Hanjin crisis which has led to carriers having reduced space allocations which are variable week to week
  • NEAX consortium operating with 5 vessels while a replacement for the 6th vessel is still being discussed with existing partners which affects available space
  • A backlog of cargo from Chinese National Holidays in October that is still to be expected in Australia
    Triple the demand from high volume importers for last-minute shipments and high demand for quick transit schedules to meet Christmas deadlines
  • Major weather issues including Typhoons which are negatively impacting schedules, bypassing ports which in turn adds to the backlog of sea freight cargo

Upcoming 2017 dates of interest that will impact suppliers and freight

  • 26 January is Australia Day
  • 27 January to 2 February is Chinese New Year which is an official holiday in China. The majority of factories will likely close the week prior to Chinese New Year and their capacity to complete orders and dispatch will most likely be affected.
  • 3 February some factories may reopen. Some factories may stay closed till Monday 6 February. Factories are notorious for slow startups after Chinese New Year, as they often face significant challenges in having enough staff returning after the national holidays.

What can you do as a shipper to be prepared?

  • Be in close consultation with your suppliers. Place orders early and be in contact to confirm cargo ready dates
  • Forecast shipments to your sea freight forwarder at least 4 weeks in advance.
  • Try to ensure your suppliers are able to meet your deadlines in order to plan sailing schedules around achievable timelines for your sea freight from China, South Korea or Japan to Australia.
  • Be prepared to pay a premium for specific sailing schedules
  • Seek close monitoring of your shipment from your appointed sea freight forwarder to request priority discharge on urgent orders.
  • Ensure that additional free time on empty container de-hires are in place at a destination with the designated carrier via your freight forwarding specialist in order to avoid additional detention fees on late returns over the holiday season.
  • Look for alternative routes and longer transit options if you don’t want to run the risk of your shipment arriving over this Christmas Holiday Period.

The end of 2016 has delivered an extended peak season especially for cargo from China to Australia. As mentioned, we do believe that the pressure on space and rising rates will continue through December and quite possibly through to after Chinese New Year.

For more than a century, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including Brisbane, Sydney, Melbourne, Adelaide and Fremantle (Perth).

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