July Insights

End of the financial year, half way through 2024, 173 days until Christmas! Our July newsletter continues to highlight some key factors impacting companies in the global environment. We cover supply chain challenges, regional developments, technology and sustainability initiatives, along with July awareness dates that can be incorporated into your team's activities. Our goal is to provide forward-looking insights to help you proactively navigate these complexities amidst competing priorities. As freight rates continue to rise its more important than ever to optimise your freight spend, and we explore strategies like freight consolidation, mode adjustments for urgent SKUs, and partnering with other loaders. These proactive measures can significantly enhance your logistics efficiency and cost-effectiveness in a fluctuating market. Additionally, we highlight advancements in visibility that can provide critical insights and improvements in your supply chain operations. This edition also focuses on the dynamic market of India, showcasing the increasing opportunities for Australian companies looking to expand. We discuss the factors influencing the movement of the AUD in July and offer tips on maximizing your airfreight spend amid shipping delays. Finally, we review the booming global market of biofuels, emphasising the potential and challenges in this rapidly growing sector. As always, for more personalised solutions, please feel free to reach out to us at info@completeglobal.com.au

Maximise your freight spend

Many shippers, driven by uncertainties surrounding rates, transit times, and port congestion, have moved up their orders to secure available stock. Traditionally, the peak shipping season witnesses rate hikes in August / September with Chinese national holidays in October.  With numerous orders being placed earlier this year, there are significant implications for Q3. Although the Red Sea crisis remains unresolved and is likely to continue through to 2025, there might be a reduction in volumes aligned with sales as while the level of the rate hikes are consistent with COVID data, they are more centred around port congestion, delays and equipment shortages. U.S. importers are experiencing increased high cargo volumes, potentially driven by concerns over rising tariffs and labor negotiations at East Coast ports.  Exporters are experiencing issues with inconsistent ERD data adding to costs and wastage of chassis usage which passes costs down to Australian importers.

Congestion is reportedly easing in Singapore, Malaysia and China but increasing around India due to it being used as alternative transhipment hub.  Some carriers have even halted bookings from India to USA as a result of ongoing congestion.  Port workers in France delayed strikes until after September while Canadian rail strike discussions are ongoing.  

Peak season surcharges (PSS), have been announced as follows: from Northeast Asia, Southeast Asia, India, and the Middle East to Oceania at USD500 per TEU; from Europe to Oceania at USD500 per TEU; and from Asia to the USA and Canada at USD1000 per TEU. Australian exporters are facing an additional USD400 per TEU starting from July 1. Carrying on with their mid-month adjustments, carriers also believe volumes will validate a further increase in rates ex NEA on 15th July, although the quantitative amount is slightly lower at USD300TEU.  These adjustments highlight the importance of strategic planning and cost management in optimising your freight spend during this critical period.

One effective strategy is to consolidate shipments from various suppliers. Many loading agents offer warehouse solutions that can consolidate orders, reducing minimum charges and optimising space utilisation. This can lead to significant savings and more efficient use of resources.  

Take a look at your year end sales plans – what targets have you made?  Are there any key sales events that you plan to participate in?  Fathers Day, Halloween, Black Friday, Cyber Monday?  Use previous years sales data to identify key SKUs to move in advance.  

Prioritising urgent SKUs on a per order basis is important. Evaluate whether the entire order is urgent or if only part of it is. If possible, split the shipment so that urgent items are sent by airfreight or direct service, while less urgent SKUs can use cheaper or slower vessel services. This ensures that critical products reach their destination quickly without incurring unnecessary costs for the entire shipment.

Consider multimodal movements to enhance efficiency and reduce costs.  For urgent orders you may consider discharging in an alternative port with an earlier arrival and using rail to move cargo to the final destination.  While the rail costs will be extra – it may provide a faster move than waiting for an allocated coastal vessel.  Ensure that your handling agent arranges for the container to be discharged at the final destination port – not discharge.  These moves are often better arranged prior to booking at load port to avoid change of destination fees and terminal moves.

Collaborate with others for available space on urgent orders – your cargo availability may well suit another company who wants to retain space but has incurred a supplier delay.  

keeping things visible

Supply chain visibility has become a hot topic as companies increasingly recognise the value of real-time data. However, not all visibility solutions are created equal. Some merely provide location data, while others offer highly accurate estimated times of arrival (ETAs) that support daily operations such as automated appointment scheduling and exception management.

True visibility goes beyond tracking shipments; it’s about generating actionable insights. This includes predicting ETAs, detecting potential exceptions early, foreseeing shortages, avoiding costly expedites, and quantifying the impact of disruptions—all in a single, easy-to-understand view for your frontline associates. Without relevant, clear, and actionable information, the data is of little use.

Key Benefits of Real-Time Supply Chain Visibility
Implementing real-time supply chain visibility can unlock significant value across several areas:

Reducing Additional Fees: By monitoring capacity and avoiding fees related to detention and demurrage.
Improving Customer Service: Making realistic delivery promises and proactively alerting customers to delays.
Increasing Team Productivity: Enabling teams to prioritise tasks based on financial impact.
Lowering Supply Chain Costs: Optimising inventory to prevent shortages and reducing the need for expensive expedites.
Managing Ecosystem Performance: Ensuring the smooth operation of the entire supply chain network.
Practical Insights and Considerations 

Evaluating Geographical Spread: Companies with short logistics lead times might not benefit as much from visibility solutions. The key advantage is proactive problem-solving through alert-based insights. If your supply chain is localised, traditional communication methods may suffice.

Ensuring Data Connectivity: For a visibility solution to be effective, all supply chain data points must link together. This involves connecting SKU codes to purchase order numbers, sales orders, shipment IDs, etc. Conducting “data walks” during the design phase ensures that all necessary data is available and connected.

Assessing Global GPS Tracking Maturity: GPS tracking varies globally, with North America and Europe being more mature markets. Long-distance container shipping and airfreight tracking are generally reliable, but intermodal or road freight tracking outside these regions can be challenging. Analyse your logistics partners’ capabilities and aim to cover the majority of your logistics needs efficiently.

Robust Support Systems: Accurate and visible supply chains require more than just the right technology. Ensure robust support systems are in place, including backup systems and a dedicated IT support team to handle system issues promptly.

Employee Training and Development: Invest in training your employees to manage supply chain interruptions effectively. A proactive approach helps prevent minor issues from escalating into major disruptions.  The best visibility platforms will be a waste of money without employee adoption and utilisation.  Have super users who can train others.  Consider incentives for employee utilisation.

In today’s high-stakes business environment, maintaining a well-functioning supply chain is crucial. By prioritising accuracy, visibility, and support, businesses can enhance efficiency and profitability. Leveraging modern technologies like AI and IoT for real-time tracking and analytics, coupled with strong IT and human support systems, creates a robust supply chain.

By following these guidelines, business leaders and supply chain managers can unlock the full potential of visibility systems, driving their organisations toward greater success and resilience.

june economic data for the aud

The AUD/USD movement had been held to a narrow range across the end of June on the back of light economic data. The recent RBA speech, where interest rates remained unchanged, emphasized a low tolerance for inflation pressures, suggesting a willingness to raise rates if necessary.  This caused concern in light of the CPI figures released 26th June. 

Australia’s inflation rate has risen more than expected, reaching 4.0% over the twelve months to May, up from 3.6% in April.  

Should the Board decide that a rate hike is necessary, it would be the first since last November.  However, there’s still a possibility that the RBA may choose to tolerate higher inflation for a longer period to preserve gains.

Keep an eye on the UK elections on July 4th and the French elections later in July. Chinese and US inflation rates will be disclosed on July 10th and 11th respectively, with speculations of the Fed potentially reducing interest rates starting from September 2024. The upcoming Federal Reserve meeting is scheduled for the end of July. Australian quarterly inflation figures are set to be published on July 31st, which will be a greater indication of the market than the monthly rate – the outcome of which may be disclosed at the next Board meeting early August. Remember, that while increases in interest rates are not positive for home owners, if rates in other countries stay the same or decrease, demand for the AUD can increase in line with better return on investments. Chinese GDP data expected in mid-July.

 

 

FOCUS india

The Australia-India Economic Cooperation and Trade Agreement (ECTA), which came into effect in December 2022, is already proving to be a game-changer for both nations. India, currently our fourth-largest export market, is poised to become the world’s third-largest economy by the end of the decade. This agreement marks a significant milestone in our trade relations, offering substantial benefits for both exporters and importers.


Tariff-Free Trade: Over 85% of Australian goods exports to India are now tariff-free, with this figure set to rise to 90% by January 1, 2026. Similarly, 96% of imports from India are currently tariff-free, and this will increase to 100% by January 2026. This reduction in tariffs opens up new avenues for Australian businesses to tap into India’s vast market.

Access to a Rapidly Growing Economy: India is not only the fastest-growing major economy but also boasts a market of over 1.4 billion people. The country’s economy reportedly expanded by 8.4% in the last quarter of 2023. With the uncertainty of elections now behind, India is likely to see improved capital flows and a rebound in exports.

Rising Consumer Demand: While consumer spending in India has been subdued post-pandemic, the rapid growth of India’s middle class is expected to drive demand significantly. This presents a golden opportunity for Australian businesses to cater to an expanding consumer base.

Strategic Advantages:
India’s concerted efforts to boost manufacturing, create jobs, and attract global investment are timely, especially amid ongoing trade tensions between the US and China. These initiatives align perfectly with the goals of ECTA, providing Australian businesses with a stable and lucrative trading environment.

Looking Ahead:
As we move towards 2026, the full implementation of tariff-free trade under ECTA will further strengthen our economic ties with India. This agreement not only secures access to one of the world’s fastest-growing markets but also positions Australian businesses to capitalize on the burgeoning opportunities in India’s economy.

The Australia-India Economic Cooperation and Trade Agreement is a strategic and forward-looking partnership that promises to enhance trade, drive economic growth, and foster stronger bilateral relations. Businesses in both countries stand to benefit immensely from this landmark agreement, paving the way for a prosperous future.

how to maximise your airfreight spend for urgent orders

With sea freight delays, many shippers are turning to airfreight for urgent cargo. Here are a few strategies to help you maximise your airfreight spend:

Assess Urgency of SKUs: Determine if certain SKUs are more urgent than others. If so, ask your supplier to split the order, moving the majority of cargo by sea while sending the urgent items by air. This ensures critical products reach their destination promptly without incurring unnecessary airfreight costs for the entire shipment.

Pack Airfreight Pallets Correctly: Most cargo planes into Australia are passenger aircraft, which offer greater frequency but have specific size constraints. To ensure regular flights, pack pallets no higher than 158 cm and no longer than 228 cm. Overheight or overlength pallets may need to move by freighter, which is more costly and offers less frequent options.

Efficient Packaging: Airfreight rates are calculated based on the greater of either the weight or the volume of the shipment. The formula used is:

Chargeable Weight (kg)=Length (cm) × Width (cm) × Height (cm)6000Chargeable Weight (kg)=6000Length (cm) × Width (cm) × Height (cm)

This means you pay for either the actual weight or the space required for your consignment, whichever is greater. Efficient packaging is critical—every centimeter counts!

Ensure Your Shipper is ‘Known’: Make sure your shipper is a ‘known’ entity to maximise carrier options. Known shippers have met security requirements, allowing them to access more flight options and streamline the shipping process.

Use Consolidation Services: Consider using consolidation services from major hubs.  This is a big one as while  it may mean less frequent flights (one or two per week), it can move at a much lower rate than standard airfreight including potential discounts on local terminal fees at destination. Consolidation can be an effective way to reduce costs while ensuring timely delivery of your cargo.

Understand Cost Calculations: Knowing how airfreight costs are calculated helps you make informed decisions. For airfreight, 1 cubic meter is considered equivalent to 167 kg. This ratio is different for other transport types, like trucks (1:3) and sea freight (1:1).

By following these strategies and working closely with your freight forwarder, you can optimise your airfreight spend, ensuring timely, cost-effective, and reliable transportation of your goods. These practices are especially important in the current logistics landscape, where delays in sea freight are driving more shippers to rely on airfreight for urgent shipments.

the future of fuels

As the world grapples with climate change and the urgent need to transition from fossil fuels to renewable energy sources, the biofuel industry has emerged as a promising solution. The global biofuel trade reached nearly USD 120 billion in 2023, reflecting its critical role in the shift towards sustainable energy.

Biofuels offer significant benefits, particularly in reducing greenhouse gas emissions. Made from renewable resources such as crops and plant waste, which absorb carbon dioxide as they grow, biofuels can help mitigate the impacts of climate change. This is crucial as we strive to meet global emissions reduction targets.

The growth of the biofuel market is being driven by increasing demand across various sectors:

Aviation
Vehicle
Industrial
Others

In 2024, the biofuel market is primarily dominated by two main product types:

Biodiesel
Ethanol
These products are seeing widespread adoption and are playing a crucial role in the transition to more sustainable energy sources.

The biofuel market is a global phenomenon, with several regions leading the charge:

North America (United States, Canada, and Mexico)
Europe (Germany, UK, France, Italy, Russia, and Turkey)
Asia-Pacific (China, Japan, Korea, India, Australia, Indonesia, Thailand, Philippines, Malaysia, and Vietnam)
South America (Brazil, Argentina, Colombia)
Middle East and Africa (Saudi Arabia, UAE, Egypt, Nigeria, and South Africa)

However, the industry faces challenges, notably in infrastructure. The production of biofuels requires specialised equipment and facilities, which are not widely available in all areas. The lack of biofuel refineries and storage facilities can limit production and distribution, potentially hindering industry growth. 

Despite these challenges, Australia is positioning itself as a leader in biofuel technology and infrastructure. Australian initiatives are making waves in the industry, with projects that showcase the country’s commitment to advancing sustainable fuel solutions.

Australian initiatives are at the forefront of innovation. Airbus and Qantas have joined forces to convert sugarcane pulp into Sustainable Aviation Fuel (SAF), while BP’s Kwinana Energy Hub aims to produce biofuels and support national decarbonisation goals. These projects underscore Australia’s commitment to advancing sustainable fuel solutions.

The impact of biofuels extends to the world of motorsport as well. Formula 1 is set to achieve carbon-neutral fuels by the 2026 season. The new F1 power units will run on fully sustainable fuels, developed through extensive research and testing by Formula 1 and partner ARAMCO. These fuels will ensure no new fossil carbon is burned, instead deriving carbon from non-food sources, genuine municipal waste, or even captured from the atmosphere.

Australia’s abundance of feedstock, quality farmland and stringent labelling and compliance mandates make it well-suited to capitalise on the growing biofuel market. Developing a strong domestic biofuel sector could enhance Australia’s energy security and reduce dependence on international oil markets.

As the world races towards a low-carbon future, Australia’s role in the biofuel industry becomes increasingly vital. With continued innovation and strategic development, the country is poised to make significant contributions to this critical global sector.

past insights

more insights

June Insights

Hard to believe it’s the end of May already! Our June newsletter continues to highlight some key factors impacting companies in the global environment. We cover supply chain challenges, regional developments, technology and sustainability initiatives, along with June awareness dates that can be incorporated into

Read more >

May Insights

Welcome to CGS May Insights, where we explore the upcoming month in detail, highlighting different factors that might impact your supply chain. For further information on the topics mentioned, feel free to contact us at info@completeglobal.com.au. negotiating with new suppliers 5 tips Negotiating terms with

Read more >