Welcome to the July Newsletter for the clients and friends of SCI Australia. This newsletter is designed to be an informational source about the company and the general industry and includes news, forthcoming events and the lighter side of the people who work for SCI.



 

Rate Restoration
 
Korea, China, Taiwan, and Hong Kong - Australia Trade

OOCL would like to advise that there will be a Rate Restoration of US$300 / 20’ and US$600 / 40’ from 1st of August 2019, for both dry and refrigerated cargoes in the base ocean freight for cargoes from Korea, China, Taiwan and Hong Kong to ports and points in Australia.   

This increase will be applied in full on top of existing ongoing market rates to all shipments based on shipment onboard date and will be subject to ancillary surcharges applicable at the time of shipment.

Rate Restoration
 
China, Hong Kong, Korea, Taiwan, and Southeast Asia - Australia Trade

MSC Mediterranean Shipping Company wishes to advise clients that a Rate Restoration programme will be implemented for all sailings from Bangladesh, Cambodia, China, Hong Kong, Indonesia, Korea, Malaysia, Myanmar, Philippines, Singapore, Taiwan, Thailand and Vietnam to Australia.

With effect from 1st August 2019 (Proforma sailing date), the following increase is to be applied:

• USD 300 per TEU

Please be guided accordingly.

The Australian Border Force (ABF) has issued duty demands of more than $15 million to combat duty evasion on aluminium from China. The ABF announced these results as part of an ongoing two-year investigation into the dumping of aluminium extrusions, mostly used to mount solar panels, in the Australian marketplace.

Dumping occurs when an exporter sells goods to Australia at a price that is below the normal value of the goods and undercutting Australian providers.

ABF officers have recently executed warrants on four solar entities across Sydney and Brisbane and issued the duty demands in response to that. The related operational activity has also occurred on vessels arriving into Fremantle in Western Australia.

ABF Assistant Commissioner Erin Dale said the ABF was committed to protecting Australian businesses by ensuring the integrity of duty measures was not undermined by dumping activity.

“Customs and trade enforcement are key priorities for the Australian Border Force, and we work closely with our national and international counterparts. This investigation aims to detect and deter the dumping of aluminium extrusions into the Australian market, undercutting Australian providers,” Assistant Commissioner Dale said.

“As a result of this ongoing operation, more than 60 containers have been examined resulting in more than two million dollars of revenue collected. Multiple companies that were deliberately created to deceive the ABF have also been shut down and several visas have been referred for cancellation.

“This investigation is very much live and ongoing – and we would like to send a strong message to those attempting to smuggle these items into Australia while avoiding duty. The ABF is aware of these attempts and is working very hard with industry and partner agencies to combat them. When you are caught, you will face the full force of the law,” Assistant Commissioner Dale said.

The attempts have allegedly included transhipping aluminium to Australia via third countries that do not attract dumping duties such as Indonesia and Singapore. Further action against those involved in this activity is likely, with the investigation continuing to uncover information on those smuggling, evading duty and providing false statements.

Anyone with information about possible illegal activity at the border is encouraged to report it to ABF’s Border Watch program by visiting www.Australia.gov.au/borderwatch. Information can be given anonymously.

Chain of Rules

The laws governing heavy vehicle road safety in Australia have been amended to make directors responsible for managing road freight risks in their supply chains. 

Changes to the chain of responsibility (CoR) laws governing heavy vehicle road safety in October 2018 place a new onus on directors to proactively identify and manage road transport risks in their supply chains, even if they don’t operate the vehicles. The amendments significantly increase fines for breaches.  For a category 1 offence – recklessly engaging in conduct exposing an individual to a risk of death or serious injury or illness – the penalty is up to $3m for a corporation and $300,000 and/or five years jail for an individual. They also add vehicle standards and maintenance to CoR compliance requirements, which already include the size of the truck, its load, speed and fatigue.

"Executive officers must apply all due diligence to ensure compliance," says Andy Mulcaster, managing director of fleet manager SG Fleet Group Australia, which has developed to a transport safety management tool called Inspect365. "They must ensure they have safety systems and risk management processes in place so they know whether they’re working or not."

The CoR laws already make all parties within the supply chain responsible for ensuring there are no breaches of the Heavy Vehicle National Law, which regulates road transport. Thus, responsibility extends to a business that consigns/receives goods to/from heavy vehicles "if they exercise control or influence over any transport task," the National Heavy Vehicle Regulators says. A business that received goods and didn’t ensure the trucks were in safe working order, or put pressure on a driver to rush to meet a deadline, could be liable.

The major change is that the legislation is now forward-looking rather than based around an incident such as an accident, says Nathan Cecil, a partner at Holding Redlich Lawyers, who works in transport and logistics. Previously, if nothing went wrong, companies were effectively complying with the law; regulators would only investigate and prosecute after an incident.

The new laws mean regulators could, in theory, check at any time what the organisation is doing to identify and manage its CoR risks. Even if the company had been operating for 50 years without an incident, they could still be prosecuted for not managing those risks, says Cecil. "That’s a big change. It requires businesses even if nothing has gone wrong in the past." He adds that while boards can rely on WHS executives within the organisation, they cannot delegate responsibility. "They must have more active management and reporting line."

Directors should ask for a briefing on new CoR laws to ensure they’re properly aware of their scope and impact on the business. "Many boards are not fully aware of the application of the new laws to their business, in particular, ‘internal’ functions such as procurement/receiving goods, materials, supplies and the potential requirement for oversight over third parties such as suppliers and subcontracted transport service providers," says Cecil. They should conduct a CoR compliance gap analysis to assess the adequacy of any existing compliance framework—and require periodic CoR compliance performance reporting.

Like other companies with large transport fleets, building materials manufacturer Boral is prepared for the changes. It is already compliant with CoR laws, says Boral Logistics compliance manager Craig Guthrie – the big change is in the focus on safety and compliance in its external supply chain.

"For other contractors, there’s an opportunity to understand their transport activities and reduce pressure all the way through other supply chains than just their own," he says.

Non-transport operators need to ask their transport partners how their own decisions affect the operator. "There are some things they wouldn’t understand, such as how a decision made by a business might affect the ability to get that truck maintained and serviced when it needs to be."

Mulcaster says it is more likely to be non-transport businesses, without the same focus on trucking and safety, that run afoul of the new laws. "You can’t contract your way out of your obligations. You can mitigate your risk by ensuring the people you’re dealing with understand and are compliant with the obligations as much as you are," he says.

The unintended outcome of the US China Trade war – Australian manufacturers accuse US exporters of unfair trade practices

In the trade war between the US and China, it is the Chinese that is painted by the US as not playing by the rules. In an ironic turn of events, the Australian Government is now investigating claims that in response to the US-China trade war, US suppliers of plastics are engaging in unfair trade practices that are causing harm to Australian manufacturers.

The Australian Anti-Dumping Commission (ADC) has commenced an investigation into the alleged dumping of high-density polyethylene exported to Australia from the US, Singapore, Korea and Thailand. The claim is that the HDPE is being sold to Australian customers at dumped prices, being prices that are less than the price at which the same goods are sold in the exporter's domestic market. The Australian industry is seeking dumping duties of 28% on HDPE exported from the US.

So what has caused US exporters to allegedly dump goods in Australia? The Australian industry claims that this is a fall out from the US-China trade war. As part of the trade dispute, China has increased tariffs on certain US HDPE to 25%. Naturally, this causes a decrease in Chinese demand for US HDPE. At the same time, US levels of production of HDPE increased due to new production facilities coming online. Lower demand and increased production mean lower prices.

The Australian industry claims that US suppliers with excess stock are targeting the Australian market as the Australia US Free Trade Agreement both lowers the costs of US imports (no 5% duty) plus there are less non-tariff barriers.

It is also alleged that imports are not merely coming directly from the US. Some US HDPE is claimed to be exported first to Singapore where it is repackaged for export to other markets.  It is alleged that US exports to Singapore have increased by 300%. It is not known whether Singaporean exporters are hiding the US origin of goods when repackaging and exporting to third countries.  We are aware of Chinese exporters seeking to have goods repackaged in Australia for export to the US without disclosure of the Chinese origin of the goods.

It will not be surprising if the claims of the Australian industry prove to be true.  Raising tariffs to 25% will distort trade flows from China to other countries. For Australian importers, this has resulted in lower prices but has allegedly caused loss to the Australian manufacturers.  If dumping duties are imposed US exporters will need to look for another market for HDPE or hope that President Trump can quickly resolve the trade war.

What to do Now

Supply contracts - Australian importers need to manage the risk of massive dumping duties being imposed with very little notice.  This can mean not committing to long term supply contracts or at least having the right to terminate those contracts if dumping duties are imposed.

Customs Compliance - Importers should also obtain assurances as to the origin of goods.  If dumping duties are imposed there will be an even greater motivation for suppliers to hide the true origin of any goods subject to those duties.  Importers need to consider what actual proof they have as to the origin of the goods.  As the importer of record, it is the importer that will be liable for any underpaid dumping duty.  The Australian Border Force is becoming much more sophisticated in its monitoring of trade flows, increasing its ability to detect likely false origin claims.

Dumping investigation - Exporters of HDPE from the US, Singapore, Thailand and Korea need to properly manage the current Australian HDPE dumping investigation. For most exporters, this will mean lodging exporter questionnaires and submissions regarding the claims made by the Australian industry.  If this is not done, the exporter may be treated as uncooperative and be subject to the highest possible dumping duty rate.  Importers should also consider lodging importer questionnaires and challenging the claims that any dumping has caused loss to the Australian industry.

Questionnaires and submissions are due by 31 July 2019. In respect of questionnaires, this is a very strict deadline.

Shipping lines urged to provide detention relief

Shipping lines have been urged to waive detention and related charges caused by the escalation of industrial action at DP World Australia terminals this week.

The Maritime Union division of the CFMMEU has confirmed action around the country as enterprise bargaining has so far failed to reach an agreement with the stevedore.

In a joint statement the Freight & Trade Alliance, the Australian Peak Shippers Association and Container Transport Alliance of Australia appealed to the lines for some relief with containers stranded in DPWA terminals nationally.

FTA/CTAA/APSA has called on the shipping lines to extend free time on container detention.

FTA director Travis Brooks-Garrett said while DPWA previously tried to reduce the impact on shippers, shipping lines also needed to be sympathetic.

“Shipping lines need to do more to protect their customers,” Mr Brooks-Garrett said. “This is not business as usual. This is a real test of how shipping lines treat their customers locally.”

CTAA director Neil Chambers said shipping lines could not wipe their hands of accountability.

“They are a party to the current disruption and need to play a role in minimising the impact to their shippers and reducing associated costs,” Mr Chambers said.

“If import containers are held up in DPWA terminals and the shipping lines maintain their strict detention free timeframes, there will be little physical chance for the containers to be processed through the landside supply chain and be returned empty to the designated location in the time allocated.”

Mr Brooks-Garrett said the FTA / APSA and CTAA also would be providing updates to the Australian Competition and Consumer Commission regarding how shipping lines responded to such circumstances.

Australia’s Trade Surplus Hits Record High in May

SYDNEY -- Surging commodity prices and a weaker Australian dollar have helped to lift Australia's trade surplus to a record A$5.745 billion in May, bringing closer the country's first current account surplus since the 1970s.

The May result compared with a surplus of A$4.820 billion in April and was driven by a 13% rise in prices of commodities such as iron ore, the Australian Bureau of Statistics said Wednesday. The value of exports rose by 4%, while imports rose by 1%.

Prices for Australia's biggest exports have surged over recent months, with iron ore trading at its highest levels in 5 years as a result of global supply disruptions.

The Australian dollar has also declined this year as the Reserve Bank of Australia moved to cut official interest rates for the first time since 2016.

The RBA lowered its official cash rate to a record low 1.00%, from 1.25% on Tuesday, with Governor Philip Lowe indicating he is prepared to cut again if slack in the job market remains elevated and inflation stays moribund.

The Australian dollar now trades below US$0.7000, compared to US$0.7500 a year ago.

Staff Spotlight

This month, the spotlight is on Andrew Dang, Client Service Officer