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 your team's activities. Our goal is to provide forward-looking insights to help you proactively navigate these complexities amidst competing priorities. June is traditionally a busy month for businesses, particularly in our region, as we prepare for the fiscal year-end. Retailers are hoping for a surge in end-of-financial-year sales to set the tone for the remaining two quarters. However, they face increased uncertainty due to substantial rate hikes, equipment shortages, blank sailings, and port bypasses. Overnight, new rate increases of USD500/1000 ex NEA, SEA, and the Indian Sub-continent to Australia were announced for July, compounding the intended increases for June. Whether these will be applied in full remains to be seen but they still add to the market uncertainty. We take a timely look at transhipping with Singapore port reaching critical levels with up to 450,000 TEUs in the queue for berthing. Vessels to the USA ex China are at capacity. Backhaul vessels are still relatively open, however, they are being caught up in transhipment delays and may well be affected by the increasing Asia to Oceania rates. Visibility and communication are key to cargo movements at the moment. Prioritise 'must-move' orders, explore alternative modes for key SKUs, and ensure you have full transparency over the location of your cargo at all times so you can keep internal and external stakeholders updated. Cybersecurity continues to rank a top priority for businesses especially as they move forward with digitisation initiatives. Given the potential for significant operation disruption, loss of reputation and legal ramifications, this is an area that business leaders can't lose sight of. Prior Preparation Prevents.... In June we also take a look at the dynamic market of Vietnam and the increased opportunities for Australian businesses. We take a Quick Look at economic data that may impact the AUD and touch again on the incoming mandatory carbon reporting and what it will mean for businesses - particularly given the global adoption of similar policies. For more personalised solutions, please feel free to reach out to us at info@completeglobal.com.au
smarter, meaner, sneakier, costlier.....
A sobering outlook of cybercrime as industries push to digitise. Consider this – the global cost of cybercrime this year alone is expected to exceed US$8 trillion. Its no wonder that so many CEOs consider cyber attacks to be an extreme threat to their business. It can disrupt operations, damage your comany’s reputation as well as having serious legal and compliance implications. Technology advancements have given us greater visibility and streamlined processes but also opened us up to greater risks. The Australian Government is committed to being a world-leader in cybersecurity by 2030 as outlined in the 2023-2030 Australian Cyber Security Strategy paper. There are some fantastic Australian companies highly skilled in helping businesses protect their network from cybercriminals and it is an investment well worth considering for any business owner. But in addition to protection systems and insurance, what are some of the things that companies can do asap to protect their operations and data?
- Staff training - start this from the onboarding process and conduct periodic refreshers. Regular training can turn your greatest area of risk into one of your greatest defenders.
- Keep systems updated with a strong network - check regularly to make sure system updates are being installed, particularly with hybrid staff.
- Develop and enforce security policies - both internally and externally. Make sure these are updated regularly and circulated to all staff and vendors.
- Have a Cyber Security Incident Response Plan (CRISP) to ensure an effective response and prompt recovery in the event that system controls have not prevented a breach.
- Make use of Government resources - www.cyber.gov.au; business.gov.au; asd.gov.au as well as specialist industry professionals.
WHAT HAPPENED TO THE FREIGHT RATES?
Peak season has started early with plenty of slots being booked now as a result of low availability of vessels and equipment. Many shippers have learned lessons from previous years, bringing imports forward to avoid any further capacity squeeze and have goods available ahead of third and fourth quarter sales season. Market rates have been seeing steady increases towards June with a 5.5% increase on the AUS/NZ lane according to the China Containerised Freight Index. The Drewry World Container Index (WCI) jumped a further 16% – 142% higher than it was at the same time in 2023. Carriers have announced rate hikes on all North Asia outbound lanes for June (approx US300-500 per TEU) and space continues to be tight. This is contrary to some previous years where we have seen rates and volumes drop in May and June as we head towards the end of the fiscal year. Rates from SEA are increasing slower than ex NEA (GRI US$100/200). Space ex USA to AUS is relatively open and rates expected to remain stable – imports into USA have increased significantly which may be also be attributed to stock being moved prior to increasing USA tariffs and concerns over east coast port labour talks. There is a reported shortage of 20′ containers in India and 40’HC ex China. Vessel bunching and berth delays in Qingdao, Shanghai and Ningbo. Reports indicate approx 450,000 TEU of cargo waiting on vessels off Singapore port leading to vessel delays of up to 7 days. Port congestion can also put a significant upward pressure on rates as well as encourage port bypasses. Blank sailings are continuing to cause week-to-week capacity fluctuations as are port bypasses where the carrier elects to omit a call during its transit. These bypasses are always a nightmare as they are unexpected and can add significant delays to the final ETA. We always talk about having freight buffer, so using consolidation and cheaper services wherever possible, so you can dip into your hypothetical buffer if and when you need it. Difficult in an unstable market and customers will be weighing up the cost benefit of cheap freight against the need to have cargo on the shelves to sell when and where they need it. The biggest thing here is communication with your service provider, identify urgent must-go orders. Having that key person to talk to that knows your cargo and business needs can help create solutions during chaotic times. You may need to consider partial airfreight moves for urgent cargo. LCL cargo will still face delays with blank sailings and port congestion but may offer a more cost effective solution for split volumes. It will be interesting to see if this early peak fosters a case of ‘the more we talk about it, the worse it seems and the higher price we are willing to pay’.
june economic data for the aud
In June, several events on the economic calendar could affect the AUD:
Early June will see the release of Chinese, EUR, and USA manufacturing data.
Chinese data is particularly significant as it often impacts the AUD due to the strong economic ties between China and Australia.
The Australian GDP and the Balance of Trade figures, especially export data, will provide insights into the country’s economic performance.
The RBA meeting on the 18th of June will be crucial, with traders observing the alignment of the inflation outlook with the recent government budget figures.
It is anticipated that interest rates will remain at 4.35% for the rest of the year although recent inflation figures could indicate a possible hike later in the year.
Any potential rate cuts by the Federal Reserve later in the year could have a positive effect on the AUD.
However, the upcoming US election could introduce uncertainty and alter the economic landscape significantly. 64 countries will face elections this year, but the US election on 5th November is expected to have a significant impact on trade.
FOCUS vietnam trade
Vietnam is an exciting and dynamic market and one of the fastest growing economies in the SEA region with USA, Europe and China being key export markets. I have had the opportunity to travel there many times for business, accompanying Australian buyers and attending conferences, and I have found their products to be of great quality and their companies to be ambitious. It has a young population, growing wealth, engaging business environment with increased urbanisation and is considered to be a standout option for Australian businesses to pursue market opportunities. Key Vietnamese market priorities are reported to include energy security, green economy and innovation engagement according to Trade and Investment Queensland. Two-way trade between Australia and Vietnam was reported to be valued at $25.7 billion in 2022-23. On March 7th 2024, our two countries agreed to a joint statement on the elevation to a Comprehensive Strategic Partnership which places us in the company of China, USA, India, Japan and South Korea all recognising the strategic trade importance of Vietnam. The Strategic partnership seeks to enhance economic engagement, education, tourism, energy and the environment. DFAT 2022-2023 figures show strong AU exports of cotton, wheat, education-related travel. Imports from Vietnam include telecommunication equipment, furniture and electrical machinery. There has been consideable foreign investment in Vietnam, particularly from China in response to increased US tariffs and trade policies. With China set as Vietnams largest trading partner, a high-speed rail line connecting Hanoi with China will further bolster trade. Two high-speed rail lines have been discussed and would be due for completion by 2045, making use of Chinas expertise for development. Bilateral engagement between Australia and Vietnam will likely deepen over the coming years, particularly with a rise in geopolitical tensions in the region.
What is a transhipment and why has the eta of my cargo blown out so badly?
Transhipment services offer a way to expand service options and can at times offer a more cost-effective solution for less urgent cargo. The original vessel stops at a part-way point, offloads cargo to move onto another vessel. This allows the vessel operator to service multiple ports – some of which may require smaller or specialised vessels or to where it does not offer a direct service. But while it can offer additional service options, they can also become extremely challenging in congested regions or peak shipping times, where delays at major transhipment hubs like Singapore and Malaysia have at times been up to 10 weeks. Currently Singapore port is reporting 450,000 TEUs of vessels in the queue caused mainly by the diversions through the Red Sea crisis as well as poor weather in regions affecting vessel schedules. While it may be impossible to control delays such as bad weather and congestion, one of the most important elements in navigating transhipments within your supply chain is communication. The earlier you can find out about a bottleneck – the quicker you can make necessary arrangements to adjust your flow of goods and meet your commitments.
The major transhipment hubs of Singapore and Malaysia are currently undergoing significant developments to enhance their services which is welcoming news, albeit many years away from completion. Tuas Port in Singapore was officially opened in September 2022, and once completed in (around) 2040, it will have a handling capacity of 65 million TEUs – almost double the volume handled in 2021. It will also be fully automated and have advanced sustainability capabilities as part of Maritime Singapore’s Green Initiative.
- Check with the carrier or agent as to the current delays in the intended transhipment port prior to booking.
- Be specific with the service that you want your cargo to be booked on. Sometimes carriers will operate both a direct and transhipment service from the same POL.
- Confirm transhipment dates when booking the cargo – not just POL ETD and POD ETA. Check that suitable time has been allocated for the transhipment and add a buffer to your ETA if the dates given are unrealistic
- Allocate extra transit times for your cargo during peak shipping periods. If your cargo is time-sensitive, opt for a direct vessel or consider airfreighting part components if cost allows.
- Work with an agent who provides visibility into your bookings so they can react promptly if your cargo does get stuck in between vessels. It can also help identify if your cargo has been loaded onto an alternative route.
Mandatory Carbon Reporting
The clock is ticking on Australia’s net zero agreements, and the big question is – are companies ready for the upcoming changes? In recent years, 35 nations and regions have tabled mandatory climate-related financial disclosure requirements. The Australian Sustainability Reporting Standards – Disclosure of Climate-related Financial Information is due to be phased in for our largest reporting entities as of January 1st 2025. Our largest reporting entities will need to prepare a sustainability report which includes the entity’s climate statements for the year – which must comply with the sustainability standards set by the AASB. Organisations will need to conduct risk and opportunity assessments across governance, strategy, risk management and metrics and targets. As more and more companies are required to report their financial climate risks, this will trickle down the supply chain.
The European Union Corporate Sustainability Due Dilligence Directive (CSDD) will require companies to identify, assess and mitigate environmental and human rights violations – ranging from child labour and slavery, pollution, deforestation, and damage to ecosystems throughtout their supply chains.
Given the increasing global momentum towards mandatory climate disclosures, it is prudent for companies to establish robust systems for measuring and reporting emissions now, particularly if they want to trade with regions that have enforced such requirements. While the process may sound complicated, more reporting requirements can actually give a company greater visibility of the physical and transitional risks that may affect them. It gives greater transparency and accountability, assessing performance in critical areas beyond financial metrics. It can set the lead for greater investor confidence, improved reputation and enable companies to take strategic action in reducing emissions in line with our global commitments.
More information about Australia’s reporting framework can be found at www.treasury.gov.au
the tune of june
June 5th is World Environment Day and the 2024 focus is land restoration, desertification, and drought resilience under the slogan ‘Our land. Our future. We are #GenerationRestoration’. Its up to us to make a difference. There are some excellent companies that are working hard to regenerate local native forests and businesses are encouraged to get involved. www.worldenvironmentday.global for more information
June 8th is World Ocean Day – One Ocean – One Climate – One Future – Together. Its all too clear that we need a healthy ocean for a healthy climate. Grab family and friends and do a beach clean up. Reduce pollutants, eat sustainable seafood, demand plastic free alternatives, conserve water, support organisations that are undertaking critical work to protect our oceans. www.worldoceanday.org for more information
The month of June is Bowel Cancer Awareness month – this is Australia’s second deadliest cancer. Bowel cancer reportedly claims the lives of 103 Australians every week but its also one of the most treatable cancers iwhen detected early. Over 50’s – DO YOUR TEST!!! www.bowelcanceraustralia.org for more information
June 12-18 is Mens Health Awareness week. Mental health, heart health, exercise, mateship. Check out the ‘Know your Man’ toolkits to help take action. www.amhf.org.au for more information and access to the checklists
The fabulously talented Michael J Fox was born June 9, 1961. After being diagnosed with Parkinsons Disease at age 29, his foundation has raised $2billion for Parkinsons research projects.
past insights
