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NSW Budget 20/21 - Cash & calculator

NSW Budget – Who are the winners & losers?

NSW Budget – Who are the winners & losers? 2560 1341 tgl_editor

The New South Wales (NSW) Government recently released its 2020/2021 state budget, but what departments and industries have been hit hard, and who are coming out as champions? After the brutal impact of Covid-19 on the NSW state, it has been crucial for the NSW Government to allocate additional funds to industries hit the most by the pandemic. Continue to discuss the winners and losers of the 20/21 NSW budget.

WINNERS

Businesses – There is no lie, that NSW businesses were one of the hardest hit by Covid-19. In order to build this back, the NSW Government has implemented a $500 million dollar “Out and About” stimulus. This allows all NSW residents 18+ to receive $100 worth of digital vouchers to spend in restaurants, cafes, bars, performing arts venues, cinemas, or amusement parks. The program will be trialed in Sydney’s CBD in December and rolled out across the rest of the state next year.

First Home Buyers – Homebuyers in the lower price range could be big winners under a major overhaul of the state’s stamp duty tax. The proposed reforms mean buyers would be given the choice of paying stamp duty or a smaller annual property tax. The aim is to get more first home buyers into the property market. This would see existing stamp duty concessions for first home buyers replaced with a grant of up to $25,000.

Employment – The NSW Government has put a strong focus with this budget on jobs: job security, job creation, and job growth. With the ABC reporting, more than 300,000 people across NSW are currently unemployed, it is vital that the government focuses on decreasing this number. But Treasury predicts the Government’s measures will help reduce unemployment to 5.25 percent and put 270,000 people back into work by June 2024. That’s still not back to pre-COVID levels of 4.5 percent unemployment.

Part of the Government’s push includes the $250 million Jobs Plus program which aims to create up to 25,000 new jobs by mid-2022 by encouraging interstate and international businesses to relocate to NSW.

Under the program, businesses that create at least 30 new jobs will receive payroll tax relief for up to four years.

Infrastructure – The government is investing in $107.1 billion in infrastructure, including fast-tracking major projects to smaller scale initiatives like replacing lights across the state’s schools with LED lights.

Parents – The government is extending free community preschool for three to five-year-olds at a cost of $120 million.

Renewable Energy – The Government has made its intentions clear on climate, with a $32 billion renewable energy plan to transition away from coal-fired power. The budget has provided for a $50 million grant the Government says will drive investment in private infrastructure worth $32 billion in renewable energy over the next decade. The aim is to drive electricity prices down while creating more than 9,100 jobs.

LOSERS

Public service – NSW mandarins will be one of the biggest targets of the Treasurer’s savings measures, with a four-year freeze on public service pay rises at 1.5 percent and a focus on cutting “wasteful” spending, like travel, events, and contractors.

Economy – There is no surprise that the NSW economy has taken a massive hit due to the force of the COVID-19 pandemic. With the ABC reporting “NSW’s budget has plunged into a $16 billion deficit and is not expected to return to surplus until 2024.

The Government’s overall spend on the COVID-19 pandemic has reached $29 billion.

At the same time, forecast revenue is down by $25 billion over five years.”

TGL Team

DP World Australia Authorised Stop Work meetings

DP World Australia Authorised Stop Work meetings 150 150 tgl_editor

DP World Australia has released updates following the industrial action chaos currently submerging Port Botany and other national ports.

The following details published by DP World are relevant for each port affected.

Brisbane

Please be advised there is an authorised Maritime Union of Australia (MUA) yard meeting for employees at Dp Brisbane on Friday, 20/11/2020, from 1300 – 1700 hours. The Authorised meeting is to allow employees to vote on a new DP World Brisbane Enterprise Agreement. Terminal operations (Vessel & Road) will be stopped during these hours. Please note that the terminal will be closed from 12 noon Friday 20/11 and normal operations will resume at 1700hrs, Friday 20/11.

Sydney

Please be advised there is an authorised Maritime Union of Australia (MUA) yard meeting in our Sydney Terminal on Thursday, 19 November 2020, from 1200 – 1600.

The authorised meeting is to allow employees to vote on a new DP World Sydney Enterprise Agreement.

DPW PBT are taking the opportunity to make a critical upgrade to our TOS during the Yard Meeting. This will require an extra 2 hours on top of the Yard meeting, so the Terminal will remain shut until second run on Evening shift.

Terminal operations will be stopped during these hours.

GATES CLOSED 1100 Thurs 20/11 Last zone 1000 Road ops to commence at 1900 Below vessels will have an additional free day:

XIN DA LIAN – LFD Saturday 21/11

AL HILAL – LFD Saturday 21/11

ANL EMORA – LFD Sunday 22/11

OREA – LFD Sunday 22/11

SPIRIT OF SYDNEY – LFD Monday 23/11

These dates will not reflect on 1STOP due to a technicality in the system

We will continue to monitor the landscape and provide updates where necessary.

TGL Team

Two business people shaking hands with happy bystanders watching on

Australia Joins the Regional Comprehensive Economic Partnership

Australia Joins the Regional Comprehensive Economic Partnership 2560 1707 tgl_editor

­­Australia, China, Korea, Japan, New Zealand and the ASEAN nations have signed the long-negotiated Regional Comprehensive Economic Partnership (RCEP).

The RCEP is a large Free Trade Agreement (FTA) that covers 58% of Australia’s two-way trade in goods and services. 

Currently, all parties have signed into the partnership but there is a long path ahead before it becomes Australian law. This agreement needs to go through the Australian parliamentary process before it is approved. Realistically, the partnership approval is likely to happen early on in 2022.

For importers and exporters, the key benefits are: greater likelihood of goods satisfying rules of origin, increase in efficency for Australian companies to integrate into global supply chain networks, exporters to provide a declaration of goods with that being in electric form and there will be better access into RCEP countries for Australian investors and exporters of service.

The true question is will this agreement make trade easier? Although, there are many benefits of this agreement, there are some limitations which could inhabit its use. The core limitation is the direct consignment rules.

Although there are 15 partners, there are still strict rules on what can occur to goods if they are not shipped directly from the exporting party to the importing party. Usually for multi-party partnerships there are minimal rules on indirect shipments that enter a third party country.

However, in RCEP transhipments that move through other RCEP nations, such as Singapore and Malaysia, will be subject to strict requirements, such as the goods must remain in customs control.

Currently, China has elected to ban a number of imports from Australia, such as red wine. Under the China Australia FTA, China promised to grant Australian goods the same rights and market access as goods originating in China. Following Australia joining the RCEP, China has extended this promise in RCEP.

The Association of Southeast Asian Nations (ASEAN) comprises of 10 nations being Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

TGL Team

Waterfront Industrial Action Update

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The Freight and Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have expressed serious concern for the possibility of further Protected Industrial Action that may take place in the coming months. These fears swirl whilst the market faces a glut of empty containers severely congesting ports, assisting farmers in the exporting of agriculture commoditise and other produce as well as the increase in demand of imports due to the fast-approaching festive season.

The FTA says “ While the Federal Government justifiably boasts about its diplomatic achievements in gaining access to Free Trade Agreements and other opportunities for Australian commerce,”

“They are missing a fundamental requirement by failing to guarantee that we have a reliable supply chain to facilitate import and export operations.”

Further to previous updates on the industrial action attacking Australia’s major stevedores, there have been no significant updates or developments. The following updates provide insight into the current landscape for each stevedore:

Patrick Terminals

the MUA provided undertakings to the Fair Work Commission (FWC) committing to not organise or notify any industrial action against Patrick Terminals before 1 December 2020. Patrick and the MUA will continue intensive negotiations in aim to resolve outstanding claims.

Hutchison

We understand that the MUA has lifted the Protected Industrial Action in Brisbane and Sydney for the next three months allowing more time for continued negotiations.

DP World Australia

We understand that the Sydney, Brisbane, and Melbourne Enterprise Agreements (EAs) are within sight of the finish line with an expectation to be signed off by about 9 / 10 November 2020. Complexities remain in Fremantle and are likely to be delayed.

Although there are no new revelations with industrial action, the FTA has expressed concern about the growing delays due to the current weather events.

The FTA says “This is becoming as big a problem as the much publicised industrial action.”

As of 5th November, the NSW coast was given an extreme wind warning again. Predictions are that La Niña will continue to deliver high rainfall and adverse weather conditions until at least into February 2021.

We will continue to monitor the landscape and provide updates where neccesssary.

TGL Team

ACCC Stevedore Monitoring Report Review

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The Australian Competition and Consumer Commission (ACCC) has produced the “Container Stevedoring Monitoring Report 2019-2020” that presents information on the financial and operational performance of the monitored container stevedores within the logistics sector. This report also provides observations into the key developments of the sector. Within the logistics sector, more specifically, this report relates to the sea freight category and the major stevedores within its market.

A discussion on the key findings of the report and TGL’s lessons learnt is provided below.

Stevedore revenues increase despite a significant reduction in container volume

Through monitoring, the ACCC found that Stevedore’s total revenue at monitored ports has increased by $38 million or 2.8 percent, despite the significant drop in container volumes. It appears that the major driver of revenue increases was further increases in Terminal Access Charges (TAC’s) or infrastructure charges. The ACCC reports that TAC’s have aggregately increased by $87.6 million, or 51.9 per cent, since 2018–19.

The Freight and Trade Alliance (FTA) and the Australia Peak Shippers Association (APSA) continue to explain that Stevedores are operating in a highly competitive environment with limited shipping lines serving the Australian market and larger vessels deployed under consortia arrangements. Due to this, Stevedores are clearly reducing quayside charges imposed on shipping lines to retain and win new business and are making up the lost revenue and achieving significant profits through an increase in landside charges.

From this, TGL has learnt that due to this increase in surcharges with importing and exporting, many clients are affected by this increase. As we continue, we hope to see this surcharge decrease to better assist our clients with their shipping costs.

Appropriateness of the point of charging

The ACCC reports that freight forwarders, importers, and exporters are contracted with partner shipping lines to send cargo. With this, many shipping lines are required to choose the stevedore and with the rise of TAC’s, many stevedores are presenting a ‘take it or leave it’ proposition. Meaning, they are pressuring shipping lines to pay the surcharge to deliver their cargo or to leave it and not deliver their cargo. Since landside port users cannot directly choose their stevedore, there is very minimal effective constraint on these rising charges and who has to pay them.

Congestion Surcharges

The ACCC reports that for reasons that were not clear at the time of drafting this report, some shipping lines have imposed a ‘congestion charge’ on senders and receivers of up to US$350 per standard container in Sydney, which is attributed to congestion at Port Botany. The ACCC is watching developments around congestion charges closely, noting that we consider these should be temporary (and only if justified and reasonable) and not become embedded fees borne by importers and exporters.

TGL learns from this that our market is heavily influenced by outside factors such as weather, politics, and union action. With this influence, comes unpredictable fees and surcharges that impact our clients and partners. With the congestion at Port Botany clearing, we believe it is only acceptable for shipping lines to eliminate or reduce their ‘congestion surcharge’. Without this change, the logistics and sea freight industry will be greatly impacted as many clients and partners begin to ship their goods with minimal financial gain or potentially at a loss due to the highly inflated costs.

TGL Team

Two wharf workers at a port in Australia

FTA calls on Government to intervene

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The Freight and Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) call upon the Australian Federal Government to intervene and push for action that supports the Australian supply chain.

The FTA pushes for the Australian Government to notice that the current supply chain operations specifically in Port Botany are under fire and will not improve until the government intervenes.

The FTA says “We need the Federal Government to intervene to ensure our port operations are seriously treated as essential services with permanent change to industrial relation law to ensure our trade gateways remain unimpeded.”

Similar to actions from Shipping Australia, the FTA supports the notion that national reform is necessary to ensure that nationally co-ordinated industrial action across the waterfront cannot occur again.

The FTA says there is “Serious ongoing concern that further disruption to operations may again take place in coming months,”

“At a time when shipping lines desperately need to evacuate a glut of empty containers severely congesting port precincts, service surging import demands and help farmers get a bumper crop of agriculture commodities and other produce to export markets.”

“While the Federal Government boasts about its achievements in gaining access to Free Trade Agreements and other opportunities for Australian commerce,”

“They are missing a fundamental requirement by failing to guarantee that we have a reliable supply chain to facilitate import and export operations.”

The FTA explains it is unimaginable that there are insufficient ships entering Port Botany with cancelled sailings and others by-passing Sydney altogether. With many shipping lines refusing to take bookings due to knowledge of two week delays.

Those shipping lines that are servicing Sydney are charging astronomically priced ‘congestion surcharges’ on top of record high freight rates.

This leaves the clients who can meet the contractual obligations are doing so with diminished financial returns and in some cases at a loss.

The FTA says “Overseas purchasers are shaking their heads at the unpredictability of our operations and are moving to alternative suppliers in a highly competitive international trade environment.”

This will pose a major threat to the long term sustainability of Australian exporters.

We will continue to monitor the landscape and provide updates where necessary.

TGL Team

TGL reports on the waterfront industrial action at Sydney's Port Botany and the surcharges currently impacting all partners.

Patrick Terminal withdraws FWC application

Patrick Terminal withdraws FWC application 2560 1709 tgl_editor

The Maritime Union of Australia (MUA) has committed to the Fair Work Commission (FWC) to not organise or notify of any industrial action against Patrick Terminals before 1 December 2020.

Both parties, Patrick Terminals and MUA, have mutually agreed to meet for three days each week before this date in an effort to negotiate on the new enterprise agreement.

Given this agreement, Patrick Terminals has withdrawn its application to the FWC as of Friday 23 October 2020.

Patrick Terminals says “Given the commitment from the MUA to both withdraw their protected industrial action and make undertakings to not organise or notify any industrial action before 1 December 2020, Patrick Terminals’ has withdrawn its application from the FWC.”

For some background context, Patrick Terminals had lodged an application to the FWC seeking to suspend or terminate the campaign of protected industrial action organised by the MUA. This matter was set to be heard by the FWC across a two-day hearing on the 26 and 27 October 2020.

Looking to the future, Patrick terminals says “Our focus continues to be to clear the backlog of container cargo in Sydney and Melbourne as a result of the MUA industrial action and work towards resuming normal operations,”

“We can confirm that our Brisbane and Fremantle Terminals are operating as normal. Delays in Melbourne have reduced to approximately 5 days.”

“Delays in Sydney are also reducing as a result of shipping line customers removing the Sydney port call from their shipping service.”

We will continue to monitor the landscape and provide updates where necessary.

TGL  Team

FTA and CTAA urge for immediate blanket extensions on all container detention's from international shipping lines to compensate for the current Australian logistics market.

Industry Bodies call for Container Detention Exemption

Industry Bodies call for Container Detention Exemption 2560 1260 tgl_editor

The Freight and Trade Alliance (FTA) and the Container Transport Alliance Australia (CTAA) have called for a blanket exemption effective immediately to ease many operational issues currently impacting the Australian Logistics market.

Following the intense industrial action at Port Botany, port congestion surcharges, increased freight rates, poor weather, and the scarcity of containers in major Asian ports, the FTA and CTAA are requesting action to assist Australian businesses in recovery.

The FTA and CTAA said “The exorbitant surcharges and container detention penalties being levied by international shipping lines are unduly impacting Australian businesses faced with a deep economic recession.”

Rather than offering compensation to their clients, due to the backlog of empty containers clogging the container parks and with no capacity to fit more, shipping lines are continuing to impose container detention penalties for failing to return the empty containers in the contracted period.

The FTA explains they have been inundated with examples from members explaining shipping lines declining their requests for container extensions.

With many lines assessing their clients on a ‘case to case’ basis the FTA says this is “no longer satisfactory” as the current environment is impacting every sector in international sea freight.

Paul Zalai, Director FTA and Secretariat APSA says it is time for a blanket waiver of container detention penalties in Port Botany until such time as shipping lines can evacuate sufficient containers to ease congestion.

“It is time for international shipping lines to stand up and be a part of the solution and not use this predicament as a means of recovering operating costs to sustain record profits.”

“These shipping line imposed fees are clearly being used to cover the consequences of poor planning, operational inefficiency, and strategic inertia in the knowledge that ‘the customer will pay’.” Zalai said.

TGL will continue to monitor the landscape and provide updates where necessary.

TGL Team

Hutchison’s Stop Work & Patrick Terminal Update

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Hutchinson Update

Further industrial action is taking place at Hutchison Port Botany as of tomorrow 23 October 2020. With a “Stoppage of work for 24 hour duration, commencing at 6:00hrs, on Friday 23 October 2020.”

We will continue to follow this situation closely and provide updates where necessary.

TGL Team

Patrick Update

On 2 October 2020, the Fair Work Commission enforced temporary suspensions on the Protected Industrial Action campaign by Patrick employees. These orders remain in place until the hearing of Patrick Terminal’s application to terminate or suspend industrial action on the 26 & 27 October 2020.

We will continue to monitor the landscape and provide updates where necessary.

TGL Team

TGL reports on the waterfront industrial action at Sydney's Port Botany and the surcharges currently impacting all partners.

Port Botany Surcharge Update

Port Botany Surcharge Update 2560 1709 tgl_editor

Sydney’s Port Botany terminal is still under fire following a chaotic period of industrial action, adverse weather, and operational events.

The current scenario has resulted in delays in scheduled vessel arrivals at DP World Australia of up to 10-14 days and Patrick Terminals being 21 days. 

Due to these delays, some shipping lines have ‘blanked’ sailings, by-passing Sydney and in some cases stopped taking bookings all together.

Although the stevedores at Port Botany terminal are still experiencing delays, the NSW Ports CEO, Marika Calfas, said in the NSW Ports Update that Port Botany is now experiencing “Good productivity and capacity improvements” due to the recent suspension of the industrial action.

As there is now an improvement in the port delays, it is questionable as to why shipping lines are still charging a ‘Port congestion’ surcharge to their customers.

The surcharges are ranging from USD 285 to 350 per TEU.

The latest surcharge was implemented in early September as a temporary measure to overcome shipping line costs associated with poor productivity at the port.

Shipping lines then proceeded to explain that they were facing extensive waiting times anchored off the port (estimated to cause $25,000 per day in direct costs) which was subsidised by the surcharge.

They explained that other unbudgeted items including the management of additional transhipments, higher fuel costs, equipment costs, and lost opportunity costs were also the reason behind the surcharge.

Currently, there are no queues of shipping vessels anchored off Port Botany.

Noting the above, the Freight and Trade Alliance (FTA) has requested further detail from shipping lines to understand what the surcharge is specifically covering, how many vessels are actually anchored across Australia or are slow steaming to Sydney, and whether shipping lines are seeking compensation from stevedores and if so, why are they also penalising exporters, importers and freight forwarders. 

We will continue to monitor the landscape and provide updates where necessary.

TGL Team

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