April 6 | 2020

 

From Ivan Glucina, our International Freight Specialist

Ocean and sea freight:

  • All carriers are in service.
  • With the introduction of IMO2020 (new low sulphur fuel regulations) in December 2019 and low demand before Christmas, blank sailings (carriers not sailing or omitting port calls) were introduced by the carriers to increase prices.
  • Following Chinese New Year and the onset of COVID-19 with widespread factory closures in China, low demand has continued for the carriers and so have blank sailings.
  • COVID-19 has impacted on container logistics resulting in some ports experiencing equipment shortages (no empty containers available) and port congestion in some areas.
  • Future ocean freight bookings are significantly lower than expected—again due to COVID-19, with many industries in lockdown around the world.

Airfreight:

  • With the cancellation of 700 Australian passenger flights per week, all air cargo in and out of Australia is reliant upon freighter services (cargo-only aircraft).
  • In normal market conditions, the Australian airfreight market relies on passenger aircraft for 70% of total capacity.
  • Freighter services are to Sydney and Melbourne only, shipments destined to the rest of Australia are currently transported via road services.
  • There has been a spike in airfreight demand as the world places the urgent need for medical and personal protective equipment.
  • The airfreight market has now become a ‘spot rate’ market, with costs increasing significantly, double, triple or more. Transit times are also typically 3 to 5 days longer.;
  • Additional freighters are scarce for several reasons. Some airlines have begun passenger freighter services: flying passenger aircraft with no passengers, only freight in the cargo hold and sometimes on the passenger seats. Such flights help to ease the critical capacity shortage; however, they are not cost-efficient with an uplift of approximately 25% of freighter aircraft.

Tip: International courier services have traditionally placed heavy reliance on their own freighter networks. While they are also overcoming challenges in their market, pricing has not increased as much in comparison, and you may find their services attractive at higher weight points than before. The current challenges in the airfreight market are unprecedented and overwhelming at times.

 

From Tom Debney

  • There is an emerging shortage of solvents for inks as most have been diverted to sanitiser. This is causing some issues in the printed packaging industry. It seems some adhesives may be short for specialised multilayer bags and attempts to airfreight them is difficult as the maximum allowed is 50kg. This effects manufacture of saline drip bags and blood bags.
  • We are continually being offered sanitiser from China and face masks. Quite a few face masks are not what they claim.
  • There is a shortage of pumps for bottles for hand sanitiser locally.
  • Glyphosate (We know it as roundup) is short, but shipments are arriving in Australia now and will need to be repackaged and let down to strength as this was not possible in China. The world price is weak, but AUD/USD effect is in place. Expect supply back to normal in May/June when no one needs it anymore.
  • Cases of food poisoning are low due to increase handwashing and people eating out less at restaurants that may not have the same levels of hygiene people practice at home.

 

From Gary Wilson, our Print Specialist

  • The print industry is in a two-speed world, with some busier than ever while others have lost over 80% of their business. Printers reporting full workload have clients in the energy, superannuation and carmakers.  Those that have taken big hits have extensive exposure to the retail trade, especially fashion. Reports of printers that were struggling are closing. This will open up opportunities for others to grow their business. Post COVID-19 will show similar results to post-GFC, with fewer printers and consolidation.
  • The ability of those printers who are trading to respond to RFPs is difficult, and we are treading carefully.  We need to ensure that our clients RFPs are dealt with not only expeditiously, but also ensure that pricing is the best we can obtain.
  • In the coming weeks, as throughput volumes reduce, printers’ sales teams will be looking for opportunities. Clients who have spent around the $150,000+  (print, mail, Web2Print) will have some opportunity to get in early before the ramp-up post-COVID-19.

 

From Grant Levy

 

 

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