Dear Clients
We have been notified that there are increases in the following costs to Imports and Exports in Australia.
1. Ocean Freight
The current freight rates have had major increase from some ports ex Asia.
An example is Shanghai with the current rates of USD$1475.00 per 20ft and USD$2950.00 per 40ft which are significant increases.
Unfortunately it is a supply and demand situation with the lines continually changing the volume of vessels and size of vessels to obtain the most efficient and cost effective setup for them.
The freight rates are being set on a monthly basis so we will keep monitoring the rates over the future months.
2. Low Sulphur Surcharge
As part of the International Maritime Organisation (IMO) directive all shipping lines must work towards a greener and cleaner shipping industry.
The bottom line is they will introduce a Low Sulphur Surcharge to cover the extra costs associated with this compulsory directive.
In response to the demand for ever greener and cleaner shipping, the International Maritime Organisation (IMO) has developed a binding global Sulphur cap.
Entering into force on 1 January 2020, the Sulphur cap will ensure cargo vessels use fuel with a maximum Sulphur content of 0.5%, reducing caps from the current permissible 3.5%.
Currently, all modern commercial ships run on fossil fuels such as MGO (Marine gas oil), MDO (Marine diesel oil), IFO (Intermediate fuel oil), MFO (Marine fuel oil), HFO (Heavy fuel oil) and all these fuels have a high content of Sulphur.
Shipping Lines React To Low Sulphur Regulation
The new regulations mean ship-owners will have to invest in compliant fuels, LNG or scrubber technology.
An increasing number of ships are using gas as a fuel, as when ignited the result is it leads to only minor SOx emissions. Methanol is another alternative, currently used on some short sea services.
Ships can meet there SOx emission obligations by implementing exhaust gas cleaning systems or "scrubbers", these systems clean emissions before they are released into the atmosphere.
The Bottom Line
Based on industry estimates, over 90% of the global vessel fleet will rely on compliant fuels when the Sulphur regulations are in force.
MSC and Maersk expect the extra fuel costs and required changes to their vessel fleet, will cost the shipping lines an estimated USD 2 billion. Estimates for the wider global container shipping industry are closer to USD 15 billion with some estimates quoting USD 25 billion.
Scaling compliance obligations will inevitably be accompanied by scaling costs. Unfortunately, all signs are pointing to the bill being footed by importers and exporters and in turn by the end consumer.
Shipping lines, even at this early stage are looking to recoup costs or taking a more cynical view, profiteer from the changing regulation. Some lines have already implemented Low Sulphur Surcharges (LSS) on certain trade lanes.
How the IMO 2020 Impacts You
Over the next year we anticipate gradual increases in the price of shipping to cover the costs of the new requirement for Low Sulphur Fuel. At times this cost will be visibly displayed in the Bunker Adjustment Factor (BAF) price listed in your rates. The BAF rate is an additional charge added to the base rate ocean freight cost reflecting the cost of fuel (called bunkers) to be used for the voyage. This charge can be separated from the base rate freight cost because fuel costs are more frequently subject to fluctuations. However, in rates valid for a short period of time (one month or less), the BAF charges may be grouped with your freight rates and therefore you will witness an increase to your entire freight cost, caused by the IMO 2020 initiative.
3. Terminal Access Charges
The container terminals and empty parks around Australia are continually adjusting their Infrastructure Fees, Timeslot Fees and Empty Park de-hire Fees.
Terminal Access Fees for 2020.
- Brisbane – Vehicle Booking wharf/empty - $100.00, Terminal Access Fee (Infrastructure) - $130.00 – Direct Terminal de-hire – 20" - $75.00, 40' - $130.00.
- Fremantle – Vehicle Booking wharf/empty - $100.00, Terminal Access Fee - $60.00,
- Sydney – Vehicle booking wharf/empty - $110.00 Terminal Access fee - $115.00.
- Melbourne – Vehicle Booking wharf/empty - $110.00 , Terminal Access – DPW/Patricks - $120.00 VICT - $145.00 - Direct terminal de-hire 20' -$85.00, 40' - $120.00.
