May 2024 Newsletter

Welcome to our May 2024 Newsletter

China shipping updates

Unfortunately, as many of our customers would be well aware, we’re experiencing a lot of delays with shipments from China along with some other ports in Asia.

Although its currently the slack season or the quieter half of the year, there are a number of factors causing continual delays with most vessels to Australia.

One of the primary causes of these delays is the ongoing practice of carriers implementing regular blank sailings. This is a tactic used by carriers to control the market and push up demand for space and equipment, ultimately leading to increased rates. In April alone, it was reported that around 27,000 TEUs (20-foot container size) of capacity were cancelled by carriers, resulting in a significant backlog of containers waiting to be shipped.

Port congestion is another major factor contributing to the delays, with an increase in container movements required to clear the backlog of containers, vessels are being held in port longer than usual, loading and unloading cargo at a slower pace. This has resulted in a ripple effect throughout the supply chain, with many shipments being rolled and offloaded each week.

The situation is particularly challenging for businesses reliant on regular imports from China, such as those in the manufacturing and retail sectors. Delays can lead to stock shortages, missed deadlines, and increased costs, all of which can have a significant impact on a company’s bottom line.

In addition to these factors, recent weather events, such as heavy fog, have also played a role in the delays. The recent holiday period in China and Asia has also contributed to the congestion, as ports and logistics networks have been slowed down.

The current situation in the Middle East, with the Suez Canal and Red Sea being bypassed by most carriers, has also severely impacted shipping worldwide. Vessels to and from Europe and the Middle East are having a much longer transit now, which is adding to the backlog of containers on the wharf in China, further delaying vessels and causing even more port congestion.   

Overall, we’re finding that most services to Australia are being delayed, whether its by a few days or even weeks in some circumstances and we don’t expect to see any real improvement to this situation in the near future. Previously the majority of the delays were caused by our ports here, especially before Christmas with the industrial action at DP World, but now it seems that the majority of these vessel delays are being caused by the carriers themselves.

Freight Rate update

Carriers continue implementing a strategy of regular blank sailings to control the market and push up demand for space and equipment, therefore successfully driving up demand and leading to significant increases in freight rates.

In recent months, we’ve been receiving rate increase notices from carriers on a regular basis, with rates increasing from the 1st and 15th of each month. This rate hike regime is expected to continue through to June at the current stage. The strategy is simple: by limiting the available capacity, carriers are able to drive up demand and increase rates.

As soon as vessels started to reach capacity due to the lack of sailings, rates began to increase. This trend is likely to continue until there is a drop in demand or more capacity enters the market. This is reminiscent of the situation during the COVID, where rapid rate increases were common as carriers struggled to meet demand.

The below article from our industry newspaper provides further insight into this situation, highlighting the impact of these rate increases on shippers and the potential for further disruptions in the supply chain. Rate Restoration Gathering Momentum

Credit Card Payments

We’ve recently signed up to a new service that allows for us to accept credit card payments from our customers for any Australian dollar invoices. Payments can be accepted using the following credit cards – Visa, Mastercard, AMEX and Diners cards.

Not sure if this is of interest or not, but here is a link to the CFL payment site for these payments CFLB2BPAY and we’ve also recently added a link to the bottom of our invoices for credit card payments as well.

Please let your usual CFL representative know if you need any further information of this new payment feature.

BMSB (Brown Marmorated Stink Bug) Season

The good news is that the BMSB season has finished now, so anything shipped from Europe, USA and Canada won’t need to be treated for the next few months.

But before we know it, the season will start again with shipments departing from the 1st of September requiring treatment.
Also, from next season The Department of Agriculture, Fisheries & Forestry are introducing a new scheme to cover these requirements and it will be known as AusTreat. This just appears to be a new name for this program and there doesn’t appear to be any other changes expected at this stage.