Australia foreign trade holding up – but domestic logistics a challenge


Australia’s trade with South-east Asia is “holding strong” amid China’s softening economic outlook, but domestic supply chain bottlenecks are yet to be ironed out.


According to David Aherne, MD of Melbourne-based forwarder Across The Ocean Shipping, carriers are scheduling blank sailings on China-Australia trade routes to reduce capacity.


He told The Loadstar: “We are seeing Chinese supply chain markets softening significantly. The fall in demand has been compounded by high inflation and delays in production due to lockdowns. However, the South-east Asia market is holding strong.”


For example, Mr Aherne said, Vietnam was “booking heavily”, with commodities traditionally produced in China “now moving ex-Vietnam, which is a shift in supply chains.”


Port congestion is affecting the region, however, with Manila a particular hot-spot and facing “massive issues”, Mr Aherne noted. Elsewhere, he said Australia’s trade with the Indian subcontinent was also performing well.


“India is showing some interesting variances, we’re seeing a more settled market in terms of space and equipment, and rates are levelling off” he explained. “Overall, we have observed an increase in shipping business from the subcontinent during the past quarter, which is a new uptick.”


Meanwhile, China’s apparent softening is impacting freight rates, despite the widespread blank sailings. Mr Aherne said: “Typically, at this time of year, we would see rates beginning to wind up for the Christmas peak, but we’re seeing something very different.


“Although there was a lack of sailings for the first week of August, rates for the main China-Australia tradelanes are continuing to decline, due to cargo demand remaining weak. After a long period of stability, South-east Asia rates have begun to decline as well.”


But within Australia, landside logistics congestion continues to pose a challenge for forwarders, Mr Aherne noted.


“The major issue is de-hire facilities [for empty containers] being at full capacity, as transport companies struggle to keep up with demand, due to Covid-related staff shortages.”


Bio-security delays are also impacting imports, according to the Freight & Trade Alliance (F&TA), which said document assessment was being delayed by three-to-seven days and inspection bookings by several weeks “in some cases”.


The F&TA added: “As a result, recent feedback indicates that, in addition to exorbitant container detention fees being paid to shipping lines for failing to return empty containers to nominated facilities within prescribed timeframes, high storage charges are being applied by terminals and depots until cargo is released by the department.


“This is particularly alarming, as it has occurred during a period typically regarded as ‘off peak’ in the lead-up to Asia’s brown marmorated stink bug season, starting 1 September.”


Credit The Loadstar by Sam Whelan

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