Merger Update: CSCL / COSCO

CSCL and COSCO have merged, following the integration and restructure of China COSCO, COSCO Pacific, China Shipping Container LINES (CSCL) and China Shipping Development. It’s a merger that will create an organisation that will be one of the world’s four largest container shipping lines.

The new entity will have a fleet of 288 container ships, of which 84 are larger than 8,000 TEUs and a total shipping capacity of approximately 1.6 TEUs.

As leaders in China’s shipping industry, COSCON and SCSL have cooperated for many years. The expectation is that the restructure and consolidation will yield a great improvement to the company’s core competitiveness. The merger will also offer employers a more diversified career development path.

For investors, the integration of quality resources and capture of synergies will bring a better return on investment. For customers, the expected shipping capacity and widened scope of the business will optimise the route network and improve the fleet structure. The end-goal for customers is an enhanced ability to deliver high-quality customer services and meet more rigorous services standards. 

While the merger should further consolidate market share among shipping lines, the impact on shippers and consignees in Australia will be less capacity in the trade lane to China. Based on past experience, Australian business can also expect pricing competition to intensify post-merger.

Enhanced Project Bylaw Scheme (EPBS) closure

A recent major announcement from the Australian Government is that the Enhanced Project Bylaw Scheme (EPBS) will be closed. The EPBS provides duty free entry for goods associated with certain large capital projects. 

For very large projects the scheme was often more efficient than using tariff concession orders.  It was no doubt more popular in an environment where TCOs were being narrowly applied.

The popularity of the EPBS is highlighted by the fact that the saving from the closure is projected to be $60 million a year.  In other words, an additional $1.1 billion dollars of imports that will be subject to duty.

Real skill will be required in drafting TCO wording that in the current compliance environment will be  wide enough to cover the variety of items imported for major projects

Container Weight: Who is responsible for VGM?

In January of 2015, the International Maritime Organisation (IMO) amended the Safety of Life at Sea Convention (SOLAS) to require - as a condition for loading a packed container on to a ship for export, that the container has a verified gross mass (VGM).

20Cube provided an update to our clients earlier this month on the issues that shippers must address and the potential consequences for not doing so.

With the legislation due to start from 1 July 2016, there are still some in the industry asking who is ultimately responsible for VGM.

While the immediate answer is that it is the responsibility of the port where the weighing and weight verification should occur (as it is the last stop before shipping), our view is that it is too late in the supply chain and does not align with the purpose of the legislation. Safety is a consideration for road transport as much as it is for sea freight.

The responsibility ultimately lies with the shipper (i.e. the sender of goods), who has the responsibility of obtaining the Verified Container Gross Mass and forwarding this information to relevant parties involved in moving the containers. By definition, the shipper is the legal entity or person indicated on the bill of loading (or sea waybill or its equivalent transport document), not the company that moves goods on their behalf.

Port and ship masters can only plan based on information provided to them, which means that ports do not need to prepare for the IMO/SOLAS changes: their role is to ensure proper stowage based on container weight information provided to them.

For more information about methods for VGM and ongoing dialogue about the legislation,please view our recent update here or contact 20Cube for more information.

Tariff Concession Orders

The Australian Border Force (Customs) acknowledge that the interpretation of Duty Free Tariff Concession Orders (TCO) is an area of concern for importers and brokers.

20Cube advise our clients that care needs to be taken when claiming TCOs. In particular:

Does the NEW / UPDATED model still fit the TCO?

Particular goods may been eligible to claim a TCO previously, but changes in the properties or characteristics of the goods, even small variations, may affect their eligibility.

Applying TCOs which are Sets, Kits and Assemblies

TCOs do not apply to sets, kits, assemblies or systems unless they are specifically referred to in the wording, together with a list of all the items making up the set, kit, assembly or system

Does the wording fit your product exactly?

How does the wording of TCOs, particularly those containing a number of ‘and’ stipulations or specific punctuation, fit your product?

Will my product comply to parameters where units are stipulated in the wording of the TCO?

If doubt exists as to the applicability of a TCO to any goods, 20Cube advise clients that a Tariff Advice be sought, or a NEW TCO on the specific good can be applied for.

For further clarification, please contact one of our Customs Consultants. 

Trade Credit Insurance

n the current economic climate all businesses large and small face the challenge of managing cash flow and the risks associated with bad debts. No matter how well managed and how successful a business may be, cash flow and profitability can be significantly impacted should a major customer or a number of key customers fail to pay.

Trade Credit Insurance or "debtor insurance" protects receivables against loss due to insolvency or nonpayment. It ensures invoices will be paid no matter what.

Trade debtors both in Australia and overseas can be insured with cover extending to insolvency, continued nonpayment and political risks. Policies can also cover supplier default and pre-delivery risk.

Trade Credit Insurance reduces and protects you from the risk of nonpayment,

providing market intelligence from global underwriters on both customers and prospects.

Trade Credit Insurance is not only about indemnifying against losses but also about offering credit terms to the right customers and enabling business growth.

Courtesy of 20Cube Logistics, our partner Invoice Management Solutions (IMS) is offering a free "Health Check" as follows:

• IMS & our panel solicitors will review your Credit Application/Terms & Conditions (an alarming number of businesses are still not covered under PPSA)
• IMS will review your overall credit management (we often find deficiencies in this area/room for improvement but are usually able to offer quick fixes/solutions)
• IMS will provide you with a no obligation Trade Credit Insurance Report which will include quotations from themmajor insurers. (If nothing else at least you will be  provided with an opinion from the insurers on their top clients/potential buyers as to their credit worthiness)

For more information, please contact Mark Lathwell, Managing Director of Invoice Management Solutions on 0417 008 061.