Good morning All
Trust you all had a good Christmas break and took a break from the day to day challenges of importing from Asia, or anywhere else for that matter. We've been keeping a close eye on the market as always and it seems that the large rate increases which were imposed mid-December 2013 (around USD 900-1000/TEU) are, as they say in the trade, sticking.
The increases hit the market at USD 600/TEU, driving the market rate from Shanghai to USD 1586, a 61% increase on the November level.
After 2 weeks, they've dropped only around 10% and now stand at USD 1511 so in
terms of the big picture, we have moved from a cost of around USD 600/TEU in
the low point June 2013 to a market rate now of over USD 1500 (3 x June level),
so we're talking about USD 3000 for a 40 foot container. Serious money.
We have now heard through our contacts that the shipping lines plan yet another large increase in early-mid January as space tightens leading up to Chinese New Year at the end of January. If you're not on top of this situation at the moment, please do take action as your costs could spiral yet again and be heading towards USD 4000 for a 40 foot container.
The rates are clearly being propped up by a shortage of container space on vessels as lines withdraw sailings
(i.e. capacity) and place importers at risk of "rollovers".
These are when a container, booked to sail on a certain vessel, is not loaded (or off-loaded) and then re-booked on
a later sailing, naturally causing delays and inconvenience for the importer,
who will still be expected to pay the full freight rate!
From our side, we have only seen one client rollover from Asia in
2013 which I firmly believe is
a result of our careful management and monitoring of service (and rate) levels, meaning that we step
in early with any service issue to get to the root cause.
As always, we're only too happy to speak with any companies who would like to
make their import supply chain leaner, more responsive and more customer
centric (and let someone else manage it for them!). We have just had two more
clients renew for 2014 and have also been appointed to two brand new clients
for 2014 so we're really pleased that we're offering a service which is truly
valued by existing and new clients.
Good afternoon All
Many of you may know from the bulletins in the logistics press that the shipping lines who operate services from Asia to Europe and the UK were planning a hefty USD 950-1000/TEU (20 foot container equivalent) increase on Asia-Europe for December 15th which has actually settled in at USD 600/TEU, so in terms of the big picture, we have moved from a cost of around USD 600/TEU in the low point June 2013 to a market rate now of over USD 1500 (3 x June level), so we're talking about USD 3000 for a 40 foot container - big money.
To add to the woes of UK importers, not only have they suffered large rate increaes, but the lines have withdrawn sailings (i.e. capacity) to help their rate increases to "stick" but the result of this is a big increase in what's called "rollovers".
These are when a container, booked to sail on a certain vessel, is re-booked on a later sailing, naturally causing delays and inconvenience for the importer, who will still be expected to pay the full rate!
From our perspective, we have been either very fortunate, or our customers' containers are treated with some priority as we have only seen one rollover in 2013 (1 x 40HC from of Jakarta, transhipment via Singapore) which I believe is also related to our close monitoring of service (and rate) levels and we step in early with any service issue to get to the root cause.
As always, we're only too happy to speak with any companies who would like to make their import supply chain leaner, more responsive and more customer centric (and let someone else manage it for them!). We have just had two more clients renew for 2014 and have also been appointed to two brand new clients for 2014 so we're really pleased that we're offering a service which is truly valued by existing and new clients.
Merry Christmas to All and have a great Christmas break with your families and put logistics to the back of your mind for a few days!
Kind Regards
Andy Cliff
Thought I'd drop this one into the blog. If you're a UK importer, you have responsibilities to HMRC as the importer. 99% of UK importers will use a freight forwarder or Customs clearance agent to get their air and ocean shipments cleared through Customs so they can take delivery and either get it into production, or out to their customers - job done!
Just a word of advice. When you use a freight forwarder to carry out the Customs clearance for you, they're (99 times out of a 100) acting as a Direct Representative. So what the heck is that? It means that although they declare the goods to Customs and sign the Customs Entry (C88), you're liable as the importer for the accuracy of the entry.
That means some fundamental things such as:-
1 - Correct tariff classification (which affects the duty rate payable)
2 - Correct value declaration
3 - Correct currency code
4 - Declaration of marine insurance (dutiable)
5- Declaration of correct freight charges (dutiable)
6 - Correct/appropriate Customs regime (home use/IPR/OPR)
7 - Value declaration (is the value on suppliers invoice correct)
8 - Application of any duty concession which may be applicable
There are others too but these are the main ones.
HMRC have issued leaflets to remind customers of their responsibilities in this area (see below photo) however they're not well publicised and the wording inside may be confusing to the average UK importer (who has most likely never completed a Customs entry in their life!).
We carry out Customs Compliance work for many of our import customers so they know they're compliant, they're paying the right amount of duty, the correct tariff codes are being applied for the different products they import and they're taking advantage of any Customs duty reliefs which are available. The other big benefit is the obvious one - peace of mind, it's being managed, if we get a Customs visit, we can show we carry out a compliance process to ensure any errors are picked up and corrected.
http://www.straightforwardconsultancy.co.uk/
This was how we uncovered a £ 26,000 duty overpayment for a Warrington customer earlier this year, importing catering equipment from the US. The mistake went back 7 years but we can only reclaim 3 years worth of overpaid duty (127 Customs entries).
Please let us know if you need any advice regarding compliance as well as any general freight or logistics advice it's what we do (and what we're really good at).
Kind Regards
Andy
Good afternoon All
It seems that the EU have finally decided to act on concerns in the European logistics marketplace that ocean carriers have been colluding regarding the level of General Rate Increases (GRIs).
I think this is long overdue, because many would agree that these increases seem to be timed to take effect on the same dates and at remarkably similar levels. An example would be the November 2013 GRI from Asia to Europe, where the increases were all in the USD 950-1000/TEU (20 foot equivalent unit) and previous increases over the past 2 years have followed a similar vein.
It will be more than interesting to see how this evolves and also, how the lines handle the latest proposed increase of around USD 750/TEU due to be implemented from Dec 1st. It will be a really interesting one to watch!
See below link.
http://theloadstar.co.uk/ec-opens-formal-container-shipping-antitrust-investigation/
Kind Regards
Andy
Andy Cliff
Director
Straightforward Consultancy Ltd
4, Beckett Drive
Winwick Park
Warrington
Cheshire
WA2 8XJ
Tel : 07934 443492
Email : andy@straightforwardconsultancy.co.uk
Web : www.straightforwardconsultancy.co.uk
Blog : http://straightforwardconsultancy.blogspot.co.uk/
Twitter: @AndyCliffSCL
Linkedin: http://uk.linkedin.com/pub/andy-cliff/1a/43/72
Skype: andy.cliff1@skype.com
