The ongoing Red Sea Crisis continues to disrupt global shipping lanes, compelling businesses to seek alternative multimodal solutions such as Sea-Air and Air-Sea combinations to keep their supply chains flowing smoothly. This situation has led to a significant rerouting of cargo, with many carriers opting for the longer journey around the Cape of Good Hope, which has in turn led to increased transit times and costs, especially impacting the Asia-Oceania trade lanes. In response, companies are increasingly securing comprehensive cargo insurance and are advised to book shipments well in advance to navigate these disruptions. Kerry Logistics, with its strategic hubs and expertise in airfreight, is at the forefront of offering innovative solutions to mitigate these challenges effectively.
The maritime industry is currently facing a complex landscape due to the Red Sea Crisis, alongside other global economic pressures. This has resulted in a notable shift in carrier fleet rankings and has underscored the importance of efficient multimodal transport solutions to ensure continuity in supply chains. Despite the resolution of the DP World Industrial action, the logistics and shipping sectors remain on high alert to manage the ongoing challenges and ensure the timely delivery of cargo.
Economic indicators highlight a cautious recovery path for Australia's economy, with growth anticipated as various fiscal and monetary policies begin to take effect. New Zealand, on the other hand, is grappling with its second recession in 18 months, taking stringent measures to control inflation. The air freight market is experiencing a period of adjustment following a spike in demand, with rates beginning to stabilize but expected to remain sensitive to capacity constraints and regional logistics dynamics. Amidst these evolving scenarios, Kerry Logistics continues to adapt its strategies, providing customized solutions to meet the changing needs of the global supply chain, emphasizing the importance of flexibility and strategic planning in overcoming current and future logistics challenges.
In response to the evolving challenges highlighted by the Red Sea Crisis, businesses should prioritize supply chain diversification and resilience. This includes exploring alternative logistics routes, adopting flexible inventory strategies, and leveraging partnerships with versatile logistics providers. Emphasizing predictive analytics for proactive planning and securing comprehensive cargo insurance can safeguard operations against unforeseen disruptions, ensuring continuity and competitiveness in the dynamic global market.
The Red Sea Crisis (RES) is still ongoing, with no signs of immediate relief. Carriers continue to re-route via Cape of Good Hope, with a significant increase in Air-Sea and Sea-Air multimodal solutions, while various non-related trade lanes have shown decline in ocean freight rates.
The Red Sea attacks have serious political and commercial considerations, from disruption to global supply chains and the impact on consumers, to legal implications for the shipping industry. Check the curated article in our related news section.
During the end of march, there were discussions with experts in different forums with the following takeaways:
Fewer ships appear to be transiting through the Red Sea and adjoining Suez Canal after the latest attack, according to maritime risks analytics company Windward.
Transits have already dropped substantially since December when carriers started avoiding the area and rerouting vessels around the southern tip of Africa. The longer the disruption persists and the more ships are diverted, the greater the delays in delivering goods, commodities and fuel, which risks driving prices higher for that lane.
With above into consideration, we are experiencing an uprise in Multimodal Solutions. Several Freight Forwarders have deployed solutions using the middle east as a hub from Europe to China/Oceania. Kerry is no exception. Our solution utilizes our Hong Kong prowess as a hub, backed by our expertise in airfreight leveraged by SF Group. If you are interested in discussing a solution to mitigate these impacts in your supply chain, click here:
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Despite the conclusion of the DP World Industrial action, DPW terminals in Australia continue to have delays and facing a new industrial action with the electrical trades union.
Trying to work around these issues, we can see DPW engaging in actions to get read of the backlog. Starting from April 8th, DP World Melbourne Logistics Park (MLP) will engage in 24/7 operations.
You can review our related advisories here, and subscribe to our communications to receive relevant news as they happen.
If you would like to subscribe to our customer advisories, that let you know of any significant operation risks as they happen, click here:
Data released by the Australian Bureau of Statistics today shows that Western Australia's economy continues to go from strength to strength, with monthly employment growing by 1.7 per cent or 26,319 jobs in February - the best result of the states and the strongest growth in employment in almost three years (March 2021). WA's unemployment rate fell to 3.6 per cent in February, below the national rate of 3.7 per cent. The number of unemployed in WA fell by 11,419 for the month. For the first time, WA's total employment exceeded 1.6 million in February, including record employment for Western Australian men and women. Over the past 12 months, employment growth in WA has been very strong at 4.9 per cent in year ended terms or 74,295 additional jobs, above the national growth rate of 3.2 per cent.
Various economic indicators and events are shaping the Australian economy, including a visit from China's Foreign Minister, which underscores efforts to strengthen economic ties. The Reserve Bank of Australia (RBA)'s policies and the broader economic outlook are key areas of focus. Australia's GDP growth has been described as "tepid" at the end of 2023, struggling to keep pace with population growth. This situation suggests that the November interest rate rise may have been unnecessary, potentially affecting consumer confidence and spending.
New Zealand has entered its second recession in 18 months, with the economy contracting again following a 0.3% contraction in the September quarter. This development meets the technical definition of a recession and could have implications for consumer spending and logistics demand. Economists had expected 0.1% growth. GDP shrank 0.3% from the year-earlier period, worse than estimates of zero growth.
Check our snapshot for a quick glance on space, rate, equipment and transit times for Oceania
Most lanes are observing increased rates and tight booking space. Airlines are dealing with considerable cargo backlogs across major international airports in India as volumes spike, according to industry updates. Ocean trade diversions, in the wake of lingering Red Sea-linked pain points along with the traditional peak season for air cargo during March and April, have caused the acute capacity overhang.
India’s air exports have seen strong growth, a cumulative expansion from April through February, the first 11 months of fiscal year 2023-24, some 21% year on year, according to data from industry stakeholders. At the same time, volumes out of Delhi Air Cargo rose by around 43% last month, driven chiefly by ready-made garment (RMG) volumes, sources confirmed. Demand has been especially high on connections to Europe, with weekend flights filling available capacity and carriers have often had to leave scheduled packages behind in recent weeks. As a result, carriers have been able to push rates significantly higher to Europe and the US.
Air cargo tonnages and rates from Asia Pacific are continuing to rise, five weeks on from the Lunar New Year (LNY) dip in early February, as disruptions to container shipping and strong demand for cross-border e-commerce shipments continue to boost volumes and prices. According to the latest weekly figures from WorldACD Market Data, combined export tonnages from Asia Pacific origin points rose by a further +8% in weeks 10 and 11 (4-10 March and 11-17 March), compared with the previous two weeks (2Wo2W), and by +10% compared with the same period last year. Average rates from Asia Pacific origin points also rose by +8% in weeks 10 and 11, compared with the previous two weeks, although, like most origin regions, rates were down on a year-on-year (YoY) basis – which is not surprising given that available capacity ex-Asia Pacific is up +19%, YoY.
Based on the more than 450,000 weekly transactions covered by WorldACD’s data, Asia Pacific to Europe routes recorded the biggest increases in tonnages (+15%), on a 2Wo2W basis, with rates also up +8%, as disruptions to Asia-Europe container shipping (caused by the attacks on vessels in the Red Sea) and strong e-commerce demand added to capacity and pricing pressures. And Asia Pacific to North America routes also saw increases in tonnages (+11%) and average rates (+8%), with e-commerce shipments and water level challenges in the Panama Canal adding to the demand-side pressures, freight forwarders report.
Sea-Air and Air-Sea solutions are at the forefront for time-sensitive cargo and are providing a solid alternative to planning transit times. Choosing the right hub for imports into Oceania is key, as well as understanding the implications in terms of availability and congestion for such Hubs.
Kerry Logistics has deployed a solution utilizing our Hong Kong prowess as a hub, backed by our expertise in airfreight leveraged by SF Group. This effectively bypasses the congestions we are seeing for Europe cargo into the region by not using Middle East as a hub. If you are interested in discussing a solution to mitigate these impacts in your supply chain, click here:
At a latitude of 30 degrees north and a longitude of 115 degrees East, lies the fourth air cargo hub in the world, Ezhou Huahu Airport. Adjacent to the navigable waterways of the Yangtze River and less than 80 kilometers away from Wuhan, China's land transportation hub, the Ezhou Huahu Airport opened in July 2022 is located at the heartland of China. This modern aerial Silk Road has a business presence at Asia and is extending to Europe and the United States. This showcases the "China Speed" to the world, with one-day nationwide delivery and two-day global reach.
SF Group, from which Kerry Logistics is part of, operates in this hub, providing us with alternatives and solutions designed to expedite supply chains from China to all over the World. Check the video here:
Customers may be seeing delays and increased costs recently due to document processing delays. DAFF have acknowledged these issues in their discussions with our representative industry groups. There are numerous issues which are beyond our control, we have seen delays more than 7 days to obtain clearances and directions. This can be particularly difficult to plan when there are short shipping times from origin.
We hope that there will be improvement with the measures being put in place of additional staff and overtime. As always, receiving documentation in time can mitigate delays considerably.
Australia has entered into FTA’s recently with India and the United Kingdom over the last 18 months. Many types of products are now covered. If you do ship from these countries, please speak with our Customer Service and Customs Teams to make sure these FTA’s are available to you.
Please see the below links for further information and if you have any questions, please reach out to us to discuss how we may assist.
Do you import goods which are not manufactured in Australia? We may be able to assist in obtaining a tariff concession which could result in zero duty payments. Currently there are 15000 items covered, with more announced weekly.
If you would like experts to review your customs process and see if you have overpaid or are overpaying Customs Duties, click below. We have a track record of helping companies succeed with the complexities of Customs in Oceania.