Notice of Annual General Meeting
The 2017 AGM will be held on October 11th in Tauranga, hosted by Zespri
An agenda will be distributed closer to the event however at this stage we expect to schedule members’ business in the morning session, and in the afternoon we will host a programme of guest speakers and presentations for the full membership including affiliates.
GLOBAL SHIPPERS FORUM
Annual Conference GSF2018 8-11 May 2018, Melbourne
This is the first time the GSF Annual Conference has been held in Australasia and presents a rare opportunity for our members to participate in what is described as the world’s most senior gathering of shippers and logistics providers to connect on issues of concern within the Asia pacific region and internationally including trade facilitation, international logistics challenges and other macro-trends affecting global trade, global policy and compliance.
The Global Shippers Forum (GSF) represents shippers’ interests in the major UN agencies including the International Maritime Organisation (IMO), International Civil Aviation Organisation (ICAO), International Labour Organisation (ILO) and the World Customs Organisation (WCO). Their role centres on international logistics policy.
The annual conference will be held as part of the MEGATRANS2018. Australia’s leading logistic and supply chain event. We encourage members to attend and are currently working with the co-hosts of the event, the Australian Peak Shippers Association (APSA), to secure a discounted registration fee for our membership. Details will be forwarded as soon as we are able to confirm; in the meantime make a note for your 2018 schedule as you won’t want to miss this opportunity. We are also pleased to note that GSF Secretary General, Chris Welsh, has agreed to visit NZ either before or after the Melbourne event and we will be organising an event to maximise this opportunity.
FREIGHT, PORTS, SHIPPING AND SUPPLY CHAIN FUTURES SUMMIT 15 – 16 August, Grand Millenium, Auckland
Bringing together the key stakeholders throughout the supply chain to maximise collaboration and develop long-lasting relationships to support New Zealand’s freight industry.
NZSC Chairman Mike Knowles will be speaking at the summit with a presentation about Shipping Trends – local and international impacts. NZSC government relations adviser Charles Finny is also presenting at the summit with a presentation on geopolitical macroeconomic factors, global trade flows and their impact on New Zealand.
NZSC has secured an exclusive 2 for 1 registration rate for Council members.
Add the promotional code MHLYIL when booking online to receive the offer. The discount will work when registering quantity= 2 people online with the code. Note: earlybird registration closes 13 July.
Update: Maersk/Hamburg Sud Merger
NZSC recently contacted the Commerce Commission for an update on their market enquiry regarding the Maersk / Hamburg Sud merger. We have received a comprehensive response that the competition authority does not intend to take any further action on this matter.
By way of explanation the Commerce Commission advised they did not receive a formal application for clearance from the parties so they assessed whether the proposed acquisition would be in breach of section 47 of the Commerce Act 1986 (section 47 prohibits mergers that would have the effect, or likely effect of substantially lessening competition in a market in New Zealand).
After making a number of enquiries (including NZSC members) the Commission did not consider that the proposed merger of Maersk and Hamburg Sud was likely to have such a result. It considered that while there will be aggregation on a number of shipping routes as a result of the merger, sufficient excess capacity exists in the market such that other carriers will be able to enter or expand into affected routes relatively swiftly, to respond to any exercise of market power by Maersk/Hamburg Sud. It noted the recent entry of Seatrade as an example of this.
The Commission also noted that they liaised closely with the other international competition agencies that considered this matter and noted the extensive investigations carried out by the USDOJ, EU and the ACCC, which found that no issues were likely on the Oceania to North America and Europe routes.
UPDATE: COMMERCE (Cartels and Other Matters) Amendments Bill (‘the cartels Bill’).
Commerce and Consumer Affairs Minister Jacqui Dean has now tabled a supplementary order paper to the Commerce (Cartels and Other Matters) Amendment Bill (‘the Cartels Bill’).
The paper makes four main changes to the Cartels Bill:
- Introduces a new targeted block exception for international liner shipping from the prohibitions against anticompetitive agreements and cartels in the Commerce Act 1986. This is outlined in clauses 7A and 7B (sections 44A and 44B);
- Makes a technical amendment so that businesses can use and enforce restraint of trade or ‘non-compete’ clauses in their agreements without breaching the cartel prohibition in the Commerce Act. This is outlined in clause 7 (subsection 31(1B));
- Amends the enforcement regime for overseas acquisitions by allowing private parties to take action for damages if the merger parties contravene a court order, and clarifies which New Zealand bodies corporate may be the subject of a court order seeking remedies for the anticompetitive harm. This is outlined in clause 8 (section 47C) and clause 19A (section 84A);
- Consolidates the previous Government supplementary order papers Nos 407, 68 and 148
MBIE has acknowledged and thanked NZSC for our input to the development of the Bill.
STRATEGY DAY FOLLOW UP – MARITIME NZ
Maritime NZ Chief Executive Keith Manch has provided the following responses as follow up to members’ queries at the recent NZSC Strategy Day:
Implementation of the IMO decision on 2020 marine fuel sulphur requirements:
The MoT policy position, in general, is that NZ supports the low sulphur fuels plan at IMO. Implementation requires ratification of MARPOL Annex VI. MoT has on its work programme to undertake cost benefit analysis of the benefits of signing up to MARPOL VI and then go back to Cabinet with further advice on whether to progress this. It is not likely to be progressed prior to the election.
From a Maritime NZ perspective, while NZ hasn’t ratified, we can’t enforce the requirements here for ships that visit, and NZ can’t be required to provide facilities for them.
However, our ships going overseas to countries that have ratified will need to comply with the convention requirements as per the country they’re visiting. We will do what we’ve done in other cases where this has happened, in that we’ll provide guidance to shippers letting them know that they will need to consider the requirements of the countries they visit. This is also the case at the moment with existing requirements in Marpol and other conventions that we haven’t ratified, when they are visiting countries that have. If necessary, they achieve certification through commercial arrangements with Recognised Organisations (the class societies – often called “statements of compliance’ with a convention as opposed to the actual certificate required).
Will the requirement to use low sulphur fuels or the approved equivalent methods apply to the entire voyage of a ship, or just when it is in/near port/land? What is the scope of application in respect to ship type?
Subject to the comments above, the requirements apply for the whole voyage, and apply to all ships.
What will the compliance mechanisms be?
Compliance mechanisms will be worked on once it is apparent we are moving towards ratification. They are likely to revolve around seeking confirmation through documentation that fuel being used meets requirements, or where the solution used is to ‘scrub’ emissions from higher sulphur fuels that the equipment used to do that meets appropriate design etc standards.
Crane Surveyors: Is it possible to have more certified crane surveyors?
At the meeting I indicated that this is a ’market’ issue. I’m told that the shippers could discuss this with the class societies. I am not aware of any regulatory barriers (or indeed anything we can do to create more surveyors) but if collectively shippers and class societies think there is more we can do we would be happy to engage.
Verified Gross Mass operation – Will Maritime NZ publish the report of the recent VGM spot check operation/ use it to support some media to ‘get the message out’?
Yes, Maritime NZ plans to produce a report and publish it. MNZ will engage directly with the shippers relating where we found differences to the VGM. We have not fully formed a view on what this engagement will look like just yet.
Recent stevedoring operation – will there be a report about this?
Yes, Maritime NZ will produce and release a report about this. Work on follow up/reporting regarding the VGM and Stevedoring operations will occur over the next couple of months.
- Shippers Council congratulates Port of Tauranga for achieving a NZ record for container throughput of more than one million TEUs processed in a year – a first for any New Zealand port. It is a significant milestone that underlines the value of the port’s strategic investment in big ship capable infrastructure.
- Tainui Group Holdings (TGH) reports that it has entered a joint venture with LINX Cargo Care Group to develop and operate the Ruakura inland port and logistics hub. Earthworks are reported as moving ahead on schedule and on track for opening what will eventually be a 31 hectare inland port with the capacity to handle around one million TEU (20 foot equivalent container units) per year when fully built out, in the first half of 2019.
- Toll Group NZ (whose parent Toll Holdings in Australia was bought by Japan Post for A$6.5 billion last year) has purchased a new site in Otahuhu with the intention of building a new freight forwarding facility with access to KiwiRail’s rail network. The transaction received Overseas Investment Office approval on May 30 and involved a 17.2 hectare plot of land in Otahuhu and an 8,400 square metre site.
INTERNATIONAL NEWS
Penalties for FCL booking cancellations
In recent months, shipping liners including Maersk, CMA CGM, and Hapag-Lloyd have begun implementing “no-shows fines” on shipments that fail to show up on vessels, including booking cancellations or transfers made less than seven days before the sailing date.
Under the current implementation, the booking party is responsible for paying this fee, with potential implications for intermediaries such as freight forwarders.
The fines are aimed at cost compensation for what is reported to be a significant issue. Hapag-Lloyd estimates that globally around a quarter of its bookings fail to load as a result of no-shows.
This isn’t the first time liners have tried to introduce penalties for FCL cancellations however in the face of carrier consolidation with fewer carriers to choose from, the likelihood of these fees gaining traction has greatly increased.
More container shipping M&A activity expected as smaller carriers try to keep up
Commentators note a “high likelihood” of a new wave of M&A activity involving medium-size ocean carriers, as the gap widens between them and the largest container lines. Independent maritime research consultancy Drewry notes that the top three container lines now enjoy a massive 42% dominance of the global container market, which compares with the 26% share held by the top three carriers in 2005.
Drewry notes that CMA CGM’s acquisition of APL, the merger of Cosco and CSCL, Hapag-Lloyd’s merger with UASC and the forthcoming takeover of Hamburg Sud by Maersk has resulted in a widening of the chasm between the big players and their mid-sized peers. “Inevitably, as the gap between the leading seven carriers and everyone else gets wider, speculation will mount about whether the smaller players can keep up and remain cost-competitive,”. Drewry also notes that one consequence of the rush of M&A activity over the past two years was that shippers now had fewer and fewer options when booking container space. “This was the “unfortunate price” to be paid for years of sub-economic rates that had forced carriers to “seek safety in numbers”, it said.
Shipping Industry Unities To propose Ambitious Co2 Reduction Objectives
Four major international trade associations have made a joint proposal to the UN International Maritime Organisation (IMO) concerning ambitious CO2 reductions by the international shipping sector. The IMO Marine Environment Protection Committee is scheduled to meet in July to begin the development of a strategy for the reduction of the sector’s CO2 emissions aligning the international shipping sector response to the 2015 Paris Agreement’s call for ambitious contributions to combat climate change.
In a detailed submission, the industry bodies have proposed that IMO Member States should immediately adopt two Aspirational Objectives on behalf of the international shipping sector:
- To maintain international shipping’s annual total CO2 emissions below 2008 levels; and
- To reduce CO2 emissions per tonne of cargo transported one kilometre, as an average across international shipping, by at least 50% by 2050, compared to 2008.
In addition, the industry associations have suggested that IMO should give consideration to another possible objective of reducing international shipping’s total annual CO2 emissions, by an agreed percentage by 2050 compared to 2008, as a point on a continuing trajectory of further CO2 emissions reduction.
The industry associations assert that it is important for IMO to send a clear, unambiguous signal to the global community that shipping’s regulators have agreed to some ambitious objectives for reducing the sector’s CO2 emissions, in the same way that land-based activity is now covered by government commitments under the Paris Agreement.
The shipping industry wants IMO to remain in control of additional measures to address CO2 reduction by international shipping and to develop a global solution, rather than risk the danger of market-distorting measures at the national or regional level.
Importantly, the industry submission emphasises that any objectives adopted by IMO must not imply any commitment to place a binding cap on the sector’s total CO2 emissions or on the CO2 emissions of individual ships.
Grappling with the 2020 marine fuel sulphur
The IMO decision on 2020 marine fuel sulphur requirements is clearly a call to action for the industry. Under the new global cap, ships will have to use marine fuels with a sulphur content of no more than 0.5% against the current limit of 3.5%S in an effort to reduce greenhouse gas emissions. (The Emission Control Areas (ECAs) will remain at the 2015 standard of 0.1%S content.)
Ship owners will soon need to decide if they want to continue using high sulphur fuel oil, in conjunction with scrubbers or exhaust gas cleaning systems; or switch to low sulphur fuel options, including distillates; or virtually sulphur-free LNG fuel.
For fuel suppliers, it appears that even if EGCS are chosen by some operators, there will still be a very substantial increase in demand for very-low-sulphur marine fuels, and a corresponding reduction in demand for high-sulphur fuel oil (HSFO).
From shippers there is an emerging call that the regulation must be implemented consistently across the global industry, in order to maintain investment confidence and support fair competition.
This has been recognised by the IMO, which has initiated the development of a new output to promote consistent implementation of the 0.5% sulphur standard, and is considering wide-ranging actions to enforce global compliance
Global shipping feels fallout from Maersk cyber attack
Global shipping is still feeling the effects of the cyber attack that hit Maersk, showing the scale of the damage a computer virus can unleash on the technology dependent and inter-connected shipping industry. The cyber attack was among the biggest-ever disruptions to hit global shipping, and while in New Zealand Maersk operations were maintained and run to schedule, that was not the case elsewhere.
The impact of the attack on the company has reverberated across the industry given its position as the world’s biggest container shipping line and also operator of 76 ports via its APM Terminals division. While too early to fully assess the financial impact some commentators have estimated the impact of the attack might cost the Maersk group more than USD 50 million in lost freight and bookings.
Integration of K Line, MOL and NYK container shipping businesses
Japanese shipping lines K Line, MOL and NYK have announced that the integration of their container businesses is still going to plan, despite missing the previously announced 1 July establishment target for the new Ocean Network Express (ONE) brand and the announcement from the South African Competition Commission that it had refused the merger, alleging that the transaction was “likely to increase the scope for coordination in the container liner shipping market, while creating a platform for coordination in the car carrier market”.
The statement this week from the Japanese carriers notes that the new company has “received all necessary approvals for compliance with local competition laws in regions and countries where compliance is required and progress is being made towards completing the establishment of the new integrated container shipping business. The service commencement date for the new commencement date is “unchanged from 1 April 2018”.
The merger into ONE will integrate K Line, MOL and NYK’s container businesses and global terminals, except those in Japan.
TRADE NEWS
Trade Negotiations Update
EU
The prospect of a negotiation is looking promising. Both sides have released a summary of the joint scoping study agreed a few months ago. This is a good sign that we can look forward to a more transparent approach to this and other future negotiations.
EXPORT NZ RELEASES BENEFITS OF TRADE REPORT
Export NZ has released a report analyzing the benefits to all New Zealanders from freely traded exports and imports. Produced by the NZ Institute of Economic Research (NZIER) The Benefits of Trade shows that New Zealand’s export sector directly and indirectly accounts for nearly three quarters of a million jobs, and that exports bring in 43 percent of New Zealand’s GDP.
