Summer 2017 across borders

MaritiMe Container ServiCeS – SMart and effeCtive SolutionS

Contents Across

2 National Freight And Supply Chain Strategy Moves borders Forward 4 Leading the way on emerging reforms SUMMEr 2017 6 FTA/APSA hits the world stage 10 New Trade Show To Host Global Industry Leaders 12 Unintended consequences 15 Are you ready for a port closure or other major disruption to your supply chain? 16 Smart containers talk and listen 18 Protectionism in disguise 19 Mapping ’s future agriculture needs 20 Clear evidence of the benefts of trade liberalisation for Australia 21 North Asia Free Trade Agreements – Guide for Importers and Exporters 22 The customs compliance areas that you must focus on 25 Australian Trusted Trader – delivery of reforms for importers 26 Illegal logging laws: what they mean for customs brokers 28 Changes to cost recovery charges for Biosecurity approved arrangements Keeping Australia’s 30 Supply Chains Still at the Mercy of Thieves International Trade Moving 32 Making Friends With Your STCs 34 Facing the perfect storm: how digitising will smooth the way in the fast-growing container world 2107 marks the frst year that Freight & Trade Alliance (FTA) has served as secretariat to Peak Shippers 35 The app that is changing the container transport industry Association (APSA). During this transitional period we have 36 WiseTech Global launches border compliance engine, seen a signifcant increase in membership underpinning our BorderWise success as an infuential advocacy alliance. 38 Legal Update Checking the T’s and C’s While this edition of Across Borders highlights many of 40 Circle the wagons, AMAZON is coming!!! our recent achievements, much more work lies ahead 42 GST on low value imported goods of us in leading ongoing statutory reforms, infrastructure developments, supply chain process improvements and a 44 Fletcher International Exports leading the way with need to tackle the surge of new and emerging surcharges. integrated processing and 46 MCS committed to cost efcient logistics solutions and In line with these outcomes, a delegation of APSA / FTA services board representatives and members recently had the privilege of meeting with the Hon. Darren Chester, Minister 48 BSM Luncheon 2017 for Infrastructure and Transport. Many of the issues 50 The Counter Ofer Conundrum discussed are referenced in this edition’s chairman’s report 52 More unfair dismissal cases, and lower success rates for and Ministerial foreword. employers. We would like to take this opportunity to thank the Minister, 54 Australian Shipping and Maritime Industry Awards departmental representatives and our colleagues at Shipping Australia Limited for their ongoing and positive engagement with APSA in our role as the peak shipper body as designated under Part X of the Consumer & Across Borders is published by Competition Act. We look forward to continuing this role Freight & Trade Alliance (FTA) to ensure that exporters have the opportunity to negotiate with Conferences, Discussion Agreements and major 68 Brooker Avenue Consortia on minimum levels of service. Beacon Hill NSW 2100 That leaves us with what we like doing best and that’s T: 02 99751878 showcasing “good news” stories. To that end we are E: [email protected] again delighted to continue our member feature series

www.FTAlliance.com.au with Fletcher International Exports and our most recent sponsor, Maritime Container Services (MCS).

Across Borders is produced Finally, on behalf of Caroline, Travis and the administrative by Ontime Publications. For team at FTA, I would like to wish you and your families a advertising rates please contact merry Christmas and we look forward to partnering you Steve Moxey on 0400 473 200 again in 2018.

Front cover – image courtesy Maritime Container Services By PAul ZAlAI, Co-founder and Director, (MCS) – St Peters, Freight & Trade Alliance (FTA)

Summer 2017 I Across Borders I 1 MINISTERIAL ADDRESS

NATIONAl FREIGHT AND SuPPlY CHAIN STRATEGY MOVES FORWARD

our understanding of what challenges across jurisdictions. lie ahead and how we can best I am pleased with the level of take advantage of the opportunities engagement by and with stakeholders, presented. and with the widespread support for the By DARREN CHESTER, Minister for I would like to thank the Across Borders development of a national strategy that Infrastructure and Transport team for this opportunity to update acknowledges the need to improve links readers on progress to date. I would between our road and rail freight, and also like to thank those members of the our major ports. During September 2017, Freight and Trade Alliance (FTA) and the Freight & Trade Alliance Australian Peak Shippers Association The second stage of the consultation process is now in progress with talks (FTA) and Australian Peak (APSA) who responded to the study — your expert input is much appreciated. being held with selected stakeholders. Shippers Association (APSA) The fnal Inquiry report is due in March representatives had the In early October, I received an update 2018. from the Expert Panel assisting the privilege of meeting the Hon. Inquiry, which came as a result of COASTAL SHIPPING Darren Chester (Minister for the completion of the frst round of Australia’s shipping sector is a vital link in Infrastructure and Transport) and consultations, following the release of the the supply chain, but the current coastal Discussion Paper in May. departmental representatives for trading system has failed. Stakeholders focussed discussions on logistics The Expert Panel comprises Maurice have told me that the current regulatory and international trade matters. James, Managing Director Qube regime is a substantial burden because Logistics; Marika Calfas, CEO NSW of various administrative issues. In a Following this engagement the Ports; Nicole Lockwood, Principal, bid to turn this around, I introduced the Minister has generously provided Lockwood Advisory; and David Simon, Coastal Trading (revitalising Australian the following commentary on Executive Chairman of Simon National Shipping) Amendment Bill 2017 into Carriers. related federal government Parliament on 13 September with the aim of creating a simpler and more initiatives. By the end of September, the Inquiry had received 126 written submissions – and fexible coastal shipping industry that readers of Across Borders know how of these, 62 were lodged by business can meet the demands of the modern critical it is to Australia’s trade, both or associations involved in the freight Australian economy. The Bill is awaiting international and domestic, that we industry. debate. streamline our freight and supply chain to The scope of the Inquiry is broad In closing, I would also like to improve efciency and boost productivity. congratulate FTA and APSA in the To achieve this goal I have been working and far-reaching. The key issues and themes that emerged from the extensive lead up to the frst anniversary of your closely with the transport and logistics consultation process included access alliance – an alliance that brings together sector, state governments and local to key national terminals and freight Australia’s largest international trade communities to ensure we are supporting routes; industrial land availability for and logistics representative group and transport infrastructure projects that will freight; conficting movement of freight the peak body representing Australian help make a real diference. and passengers during peak periods; shippers for more than 25 years. I am We are developing the strategy via national supply chain integration and sure the alliance will continue to be at an Inquiry into National Freight and protection from urban encroachment; the forefront of all emerging supply chain Supply Chain Priorities, which will set and, integrated planning for freight issues.

2 I Summer 2017 I Across Borders Unlocking VALUE across the CONTAINER logistics SUPPLY chain

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containerchain.com Summer 2017 I Across Borders I 3 EXECUTIVE REPORT

leading the way on emerging reforms

Container Stevedoring Monitoring report Consumer Act are in fact refective of that 2016-2017. need. In the current model, shippers have no The forecasting tool will enable a clearer ability to participate in the negotiations view of these requirements. between the shipping lines and the terminals as these are confdential Currently the MLS refect gross annual agreements negotiated under the umbrella targets for container capacity to support of Part X exemptions. registration of shipping line consortia under the Act, however they do not cater Neither can shippers participate in the in specifcs for the seasonal nature of agreements between the terminals and the Australian market and variations in By PAul BlAKE, Chairman, carriers (unless they run their own feet) demand. Australian Peak Shippers Association and as such are unable to infuence any of the costs that emanate from access Having a live and comprehensive agreements which the carriers are obliged capability to forecast demand is not only to sign to deal with the terminals an efective tool for the shipping industry What an extraordinary time to be involved and compliance, but also as an indicator in the shipping and international logistics FTA/APSA has a mandate to ensure that to Government and the logistics industry sector with the level of change or evolution shipper interests are not further eroded of trends and seasonality in the export seeming to accelerate on a weekly basis. in the changed model and as such has market. undertaken a substantial review by legal The Australian Peak Shippers counsel and is also reviewing options for Initial discussions have taken place with Association’s (APSA) primary goal is to the commercial model to be re-aligned so Shipping Australia for FTA/APSA to ensure that Australian exporters have that shippers can be actively involved in provide general principles of revised MLS continued access to outwards liner cargo a process from which they are currently requirements for shippers. shipping services of adequate frequency excluded. and reliability and at freight rates that are The Federal Government’s Inquiry into internationally competitive. FTA/APSA membership continues to grow Freight and Supply Chain Priorities and we welcome new members Fletcher continues and FTA/APSA has been active To this end the Freight & Trade Alliance International Exports, Alibaba, Biarri in the process responding to Scenario (FTA) /APSA team have been extremely Optimisation, eBay, Glencore Agriculture, Planning conducted by Deakin University active in the past few months and will Wilmar Gavilon, Burra Foods and Flinders and sponsored by the Department of continue to be so in the coming months, Ports to the team and encourage them Infrastructure and regional Development. on a number of key focus points that to be active and engaged at a time of contribute to achieving this goal. signifcant change and consolidation in the Supporting the activity in the formal international trading environment. process of the Inquiry, it was indeed a Clearly the historical model of container pleasant opportunity for members of the shipping lines negotiating with stevedores An in principle agreement has been APSA Board to meet with Minister Chester and then incorporating the costs of that reached with Deakin University’s Centre for in Canberra recently and attend a dinner negotiation into freight rates and Terminal Supply Chain & Logistics (CSCL), headed hosted by Henning Harders to discuss and Handling Charges has changed and by Dr Hermione Parsons, to facilitate the reinforce the key issues raised in the APSA shippers are now taxed with “defacto” development of a forecasting tool for submission to the Freight Inquiry. freight rate increases via surcharges levied exports, which was fagged in the Spring by the terminal operators on the shippers’ Edition of Across Borders. A big thank you to Christian Harders at transport company of choice. Henning Harders for sponsoring the dinner It is imperative that the exporter industry meeting and we see this as the forerunner This departure from the historical is able to communicate its needs to the to similar events in the future. model and the potential impacts on shipping industry, so that the Minimum the international supply chain is well Levels of Service(MLS) which are There are several “new” and evolving documented in the Australian Competition embedded as primary compliance targets issues for the shipper community to and Consumer Commission (ACCC) under Part X of the Competition and ponder which have the potential to

4 I Summer 2017 I Across Borders signifcantly impact on international supply chains. The “Big Ships” discussion has re- emerged and alarm bells should be ringing in the Port of if the indications of the short term future, as espoused by Shipping Australia, is correct. FTA/APSA raises the question as to who actually wins fnancially from the introduction of big ships into the Australian trades? In recent weeks the Chinese Government has confrmed its commitment to the roll out of an Emissions Trading Scheme which will impact Australian companies trading into China within a relatively short Ministerial Dinner at the Park Hyatt, Canberra – 19 September 2017 period and especially the mining and steel BACK ROW - Dominic Dillon (Trade Execution Manager – Cargill), Brett Charlton making sector in the frst. (Chairman - Tasmanian Logistics Committee), Kurt Wilkinson (Commercial Manager Indications are that Scope 3 (involving - Fletcher International Exports), Mark Lewis (Manager Grain Services - Riordan Grain supply chain) emissions will be included in Services), Travis Brooks-Garrett & Paul Zalai (FTA/ APSA) MIDDLE ROW – Christian the ETS program and as such FTA/APSA Harders (General Manager – Henning Harders), Caylene Wright (National Distribution has commenced working on the potential Manager - Barrett Burston Malting), Eimear McDonagh (Director - Australian Cotton Shippers Association), Caroline Zalai (FTA/APSA) FRONT ROW – Anthony Byrnes impacts and solutions for the introduction (Commercial Manager - Henning Harders), The Hon Darren Chester MP, Olga Harriton of not only the China ETS but also the (Global Logistics Manager - Manildra Group), Mark Owens (National Manager Rail, growing number of schemes appearing on Strategic Planning and Development - Manildra Group) a worldwide scale.

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Summer 2017 I Across Borders I 5 GLObAL ShIPPERS FORUM

There are currently 15,000 lobbyists our relationships with the executive FTA/APSA registered in Washington D.C. In branch of politics. We have formed 2011, for every congressman there relationships with all relevant were 23 registered lobbyists. Ministers, Shadow Ministers, at both a State and Federal level, and hits the Lucky for us, the political scene in their advisors. We have several key Australia is very diferent. Politicians are accessible and many of them are, supporters in Canberra, on both world stage - dare I say it, grounded. However, for sides of the chamber, and we are the last number of years, there has enormously grateful for their support. been a major imbalance in Canberra. We participate in the National Infrastructure owners and operators Committee for Trade Facilitation (the have had the loudest voice in major national peak committee for trade Re-asserting policy decisions that afect the afairs), as well being admitted to movement of freight. In the battlefeld the major committees facilitated by the voice of of political infuence cargo owners, the border agencies- the Australian who bear the costs and are most Border Force (ABF), the Department afected by inefciencies and supply of Agriculture and Water resources Australian chain failures, have been outgunned (DAWr) and the Ofce of Transport and outmanned. But this isn’t the Security (OTS). cargo owners result of some grand conspiracy. It is Our partnership with the Australian about visibility and branding. The large Peak Shipper Association (APSA), the infrastructure owners can aford teams largest peak body of containerised and freight of lobbyists, hold grand events and exporters in Australia, has only hire Pr frms to spread their message. strengthened that voice. The infrastructure users (cargo forwarders owners and freight forwarders) have Our political infuence is growing but not had the same level of political we have a long way to go. It is now up activity and, as a result, to some to us to ensure that our engagement extent, we have become passengers with politicians is positive, in the development of freight and collaborative and solutions-focused. international supply chain policy. However, international supply chain The good news is that things are afairs do not stop at the border. For changing. In the last few years, FTA/ real infuence we need to establish an APSA has invested signifcantly in international voice.

Global Shippers Forum Achievements 2017: • Shippers voice at global level Infuential with UN bodies: IMO, ICAO, WCO, UNCTAD, OECD, World Bank

• Global voice - local impacts Supported/advised competition: USA, New Zealand; Australia, Hong Kong,

• From confrontation to collaboration Brokering new dialogue in container shipping via OECD

• Container safety campaign Working with supply chain interests on common goals: WSC, ICHCA, TT Club

• Air cargo performance indicators Developing new measures with IATA & Cargo iQ

(LtoR) James Hookham, Deputy CEO, Freight • Growing membership Transport Association of the UK; Sean Van European Shippers Council, Switzerland, Korea + corporates Dort, Joint Apparel Association Forum; Travis Brooks-Garrett, FTA/APSA)

6 I Summer 2017 I Across Borders We are also privileged to be able to share with members some of the key issues that emerged from this year’s conference: Concentration of the liner shipping market The amount of M&A activity in the international shipping line market today has no historical parallel. 1997 was the last period of major consolidation between shipping lines. In that year four shipping lines disappeared. 2017 has seen the acquisition or disappearance of nine shipping lines. The concentration of the liner shipping market remains a potential threat to supply chain owners globally. The experts were clear and unanimous in their prediction of the future: consolidation is not likely to decelerate, and it is likely that we will see 4-7 mega Figure 1 with thanks to SeaIntel Maritime Analysis carriers dominating world trade within the next fve years. That was the view of Olaf Merk from the International Transport Forum (a branch of the In October this year, FTA/APSA was liner shipping market; challenging unfair OECD) and it was reinforced by the proud to represent Australia at the and spurious shipping line surcharges; data presented by Alan Murphy, the Global Shippers Forum in the Canary and leading the way in supply chain CEO and Founder of Sea Intel Maritime Islands, joining major shipper bodies environmental policy. Intelligence (Figure 2). and UN agencies from around the APSA is proud to be Australia’s world. The data presented by Alan also exclusive representative to the GSF and suggested that the over-supply of The role of the Global Shippers continues to be an active member of capacity is not going to ease until at Forum (GSF) the forum. least 2019/2020, and, even then, it The GSF is the peak body for cargo owners globally, tasked with representing shippers to the World Trade Organisation (WTO), the World Customs Organisation (WCO), the United Nations Conference for Trade and Development (UNCTAD) and with ofcial status at the International Maritime Organisation (IMO) via a partnership with the International Cargo Handling Coordination Association (ICHCA). Members represent the world’s major trading nations including China, the UK, the USA, Canada, Sri Lanka, Europe and beyond. Like FTA/APSA their mission is to ensure that cargo owners have a voice in freight policy. Over the last few years the GSF has been involved in major advocacy activities that include challenging the concentration of market power in the Figure 2 with thanks to SeaIntel Maritime Analysis GLObAL ShIPPERS FORUM

• To create a fund for carbon ofsets and a r&D scheme run by the shipping industry

• To pass all costs onto shippers

Australian industry will also be impacted by the introduction of the Emissions Trading Scheme (ETS) in China, which will eventually include Scope 3 emissions (emissions from the point of production and supply chain emissions).

While the “green freight” agenda has often been sidelined in Australia, these developments may create a mandate for Australia’s freight forwarders and cargo owners to take greater interest in this area. FTA/APSA is working with the Australian representative to the Global Logistics Emissions Council (GLEC) to better prepare our members for these future requirements.

Global Shippers Forum 2018 GSF/ICHCA Conference, Canary Islands, 2017 To strengthen our voice in international freight policy, FTA/APSA is proud to will only ease on the assumption that Environmental Policy confrm that we will be hosting next there is a complete freeze on mega- Environmental policy is a growing vessel orders and that there is no new year’s Global Shippers Forum annual issue for industry that has not received rate war for market share. conference in Melbourne from 8 May anywhere near enough attention in 2018 to 11 May 2018. This event will For more shipping line market data Australia. The International Maritime please visit www.seaintel.com Organisation (IMO) is currently cover trade facilitation, supply chain engaging in a round of discussions in security and other emerging issues, Air cargo reform how they can achieve their emissions and will be relevant to Government The Global Shippers Forum is a targets as set down in the Paris stakeholders, importers, exporters and member of the Global Air Cargo Climate Agreement. The debate over international freight service providers. Advisory Group (GACAG). Other environmental policy at the IMO has members include the International seen two distinct positions emerge. We are also proud to be collaborating Air Transport Association (IATA) and The shippers want: with the International Cargo Handling the International Federation of Freight Coordination Association (ICHCA), Forwarders Associations (FIATA). • Policies that improve the who will be joining us for their environment and minimise supply Policy priorities include: chain costs international conference. 1. Safe transport of lithium batteries • Policies that incentivise fuel To book your tickets please visit 2. Efective border security and efciency, e.g. global emissions www.ftalliance.com.au advance cargo information trading If you would like to be more involved 3. Efcient border management and • To share costs across in the activities of the Global Shippers trade facilitation stakeholders Forum or if you would like to provide 4. Accelerating industry The shipping industry wants: input into any of these policy modernization • To introduce a global fuel areas please email me directly at 5. Minimizing environmental impact surcharge (“bunker levy”) [email protected]

8 I Summer 2017 I Across Borders ADvErTOrIAL

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Summer 2017 I Across Borders I 9 GLObAL ShIPPERS FORUM

NEW TRADE SHOW TO HOST GlOBAl INDuSTRY lEADERS – MElBOuRNE, MAY 2018

The world’s most senior gathering of the Secretariat for APSA, says the sponsors, WiseTech Global, Port shippers and logistics providers will meet event is set to host policy makers of Melbourne, TT Club, 1-Stop, in Melbourne at the Global Shippers and international trade practitioners Containerchain and Insync Personnel. Forum (GSF) and International Cargo from around the world, people whose We would also like to acknowledge Handling Coordination Association decisions have a lasting efect on the the support of the victorian State (ICHCA) annual general meetings and way cargo is moved in Australia. Governments and Melbourne open conference during May 2018. Convention Bureau in bringing this event “It’s quite unique to have transport to Melbourne. To fnd out more about The event will discuss trade facilitation, operators, freight forwarders, customs delegate and sponsorship information, international logistics challenges and brokers, logistics providers and please refer to www.FTAlliance.com.au other macro trends afecting global government representatives all in the trade. one room discussing trade issues” • 8 May 2018 – GSF, ICHCA and vIP - Lord Mayor Welcome Function Held for the frst time in Australasia, John Warda, ICHCA Australia hosted at the impressive Melbourne Chairman highlighted the close working • 9 May 2018 – Port Tour and GSF and Convention and Exhibition Centre (CEC), relationship between ICHCA International ICHCA Annual General Meetings this combined event will be held as part and the GSF noting that conference • 10 May 2018 – *DAY 1 open of MEGATrANS2018, Australia’s leading delegates will receive updates from conference – EArLY BIrD NOW logistics and supply chain exhibition. these peak bodies on their engagement AvAILABLE with international organisations including The Australian Peak Shippers the International Maritime Organisation, • 11 May 2018 – *DAY 2 open Association (APSA) and ICHCA the World Customs Organisation and conference – EArLY BIrD NOW Australia successfully bid for the the United Nations Council for Trade and AvAILABLE combined conference with the help Development. from the victorian Government, Port • 10 – 12 May 2018 – MEGATrANS of Melbourne and the organisers of “The conference will focus on facilitating exhibition – refer www.MEGATrANS. MEGATrANS2018. global trade in an innovative, safe, com.au productive, secure and sustainable Paul Blake, APSA Chairman commented *Sessions that meet criteria as manner”. that the event will attract hundreds prescribed by the Department of of local and international delegates, Simon Coburn MEGATrANS2018 Immigration and Border Protection will once again demonstrating Melbourne’s Show Director explains that as borders be accredited for Australian licenced credentials as a destination of choice for between industries blur, new multi- customs broker Continued Professional global business events. dimensional concepts have to rise to the Development (CPD) points. challenge, and MEGATrTANS2018 is “This is a once in a lifetime opportunity leading the way. for Australian importers, exporters and logistics providers, to be at the forefront “We’re inviting everyone to be a part of of global policy and compliance issues. this game changing expo format – from We’re inviting APSA has represented Australia’s hands-on decision makers in the supply everyone to be a shippers since 1992 and we are proud chain and logistics industry to CEOs, to be able to host the global trade COOs, regulatory bodies, urban planners part of this game community for this event.” and government on all levels”. changing expo Paul Zalai, Director and co-founder A special note of appreciation is of Freight & Trade Alliance (FTA), extended to the initial conference format

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Summer 2017 I Across Borders I 11 LOGISTICS REFORMS

unintended consequences

By DAlE CRISP*

The Australian Competition and Consumer Commission has released its 2016-17 Container Stevedoring Monitoring report, the 19th prepared, as directed by the Federal Government, to check prices, costs and profts at six Australian container ports.

Experience teaches us that the CSMrs Ports Australia and Flinders are imbued with positivity, at least from Container Terminal each with around the ACCC’s perspective; however, delving 6%. As Melbourne’s victoria International beyond the accompanying media release Container Terminal did not open until and the report’s executive summary can January this year it is not included in the usually reveal a little more about the state ACCC’s assessment. The Commission of the Australian waterfront. notes that Patrick and DPWA’s shares of national TEU volumes are beginning to be Amongst the 2016-17 headlines, the impacted by increased competition at the ACCC highlights the following: east coast ports: indeed, their combined • revenues per TEU slid 2% to 2016-17 share of 89%, while still high, $16.70; Costs per TEU fell a more was the lowest ever recorded in the substantial 6.8% to $140.70 per TEU; ACCC’s monitoring program. “Improving Operating profts (EBITDA) rose a competitiveness by Hutchison in considerable 25.7% to $28.90 per TEU; and and the entry of vICT in and operating proft margin rose four Melbourne is expected to further increase percentage points to 17.1% per TEU. the pressure on Patrick and DPWA’s national shares,” the Commission said. • In 2016-17 DP World Australia held a 45% national market share, followed • The volume of containers passing by Patrick at 44% and Hutchison through Australia’s ports is the highest

12 I Summer 2017 I Across Borders ever recorded. In 2016-17 Australian stevedores handled 7.2 million TEU, an increase of 3.7%. Sydney’s 2016-17 throughput reached 2.5 million TEU, surpassing Melbourne’s 2.4 million. Sydney throughput grew by 4.8% during the year, compared to Melbourne’s 2.6%. Brisbane led the growth pack at 6.4% while Adelaide rose 2.9% and Fremantle actually slipped 0.4%. • In terms of container terminal productivity the ship rate (containers handled per hour) rose by a marginal 0.2% to 55.6; the crane rate fell by 1.7% to 29.2 cph; the labour rate also fell, by 1.1% to 46.5%; and truck turnaround times slipped marginally by 0.5 to an average of 29.9 minutes. In real terms productivity has stagnated. In its report (https://www.accc.gov.au/ publications/container-stevedoring- monitoring-report/container-stevedoring- monitoring-report-2016-17 ) the ACCC devotes considerable space to the most contentious topic currently consuming shippers, transport operators and their representative bodies: the imposition of new and/or substantially increased (by up to 900%) infrastructure charges by stevedores and other container chain participants. “Partly as a response to declining stevedoring revenue from shipping lines, stevedores have increasingly sought to generate revenue from non-stevedoring activities,” the ACCC observes. “revenue from non-stevedoring activities currently into account DPWA’s mid-November impact of the additional competition HPA accounts for around 18% of total revenue announcement of further increases, such and vICT bring. (up from 16% in 2015-16). However, it is that by 1 January 2018 that company’s But just what has been achieved? expected that non-stevedoring revenue Melbourne infrastructure charge will will increase signifcantly in the future have gone from $3 per container in April HPA has invested over $700 million in following the decision of some stevedores this year to $49.20, and in Sydney from Brisbane (opened January 2013) and to implement new or higher infrastructure $21.14 (previously $0!) to $37.65. (HPA Sydney/Port Botany (opened November surcharges on landside operators”. and vICT have not so far levied any such 2013) – yet four years later, in 2016-17, The controversy surrounding this issue imposts.) the company held just 6% of the national is explored elsewhere in this edition of market. And by my assessment, HPA has The ACCC will no doubt examine more Across Borders and at length on the FTA/ lost customers to both DPWA and Patrick closely what might be motivating these APSA website. The ACCC expresses this year – indeed I can identify only two charges and the shift in revenue sourcing well-founded doubts about some of the regular users in Brisbane and Port Botany they represent – but will it consider its justifcations ofered for these charges but – and the $550 million vICT, now trading own role in what is a highly undesirable concludes it will not be able to accurately for almost a year, has just one. assess the situation until it completes outcome? the 2017-18 CSMr and, presumably, it I would argue that the push for additional As is its remit the Commission is will be some time after that before the competition on the waterfront has committed to the promotion of Commission is able to take any action if it backfred spectacularly. competition in sectors where it fnds that’s required. identifes market distortions caused by If anything the stevedoring duopoly has In the meantime, by the ACCC’s own monopolistic or duopolistic behaviour. been reinforced – and rivals enfeebled – estimates the infrastructure charges As such it has been loud in its because shipping lines have been able to will generate around $70 million per encouragement of new entrants to the exploit the situation to drive container lift- annum in additional revenues for the Big container stevedoring business and on/lift-of prices down, a situation tacitly Two stevedores. And that’s not taking continues to talk in hopeful terms of the embraced (in the short-medium term) by

Summer 2017 I Across Borders I13 LOGISTICS REFORMS

reduction in your charges. After all, in the current dog-eat-dog environment that’s forced lo/lo charges down, has there been any reduction in THCs levied on shippers? No. What might be the end game in this last-terminal-standing shoot-out on the waterfront? DPWA and Patrick both have good reason to covert thy neighbours’ facilities. In Melbourne, both would dearly love to escape the constraints of Swanson Dock and the limitations imposed on ships by the physics of the Yarra river and the air draught of the West Gate Bridge. vICTL, which should now be enjoying a competitive advantage precisely because it is not so encumbered, would be a desirable prize. In Port Botany DPWA is also constrained from expansion, having not enjoyed Victorian International Terminal - Webb Dock East, Melbourne Victoria Patrick’s access to an extra berth granted as a trade-of for vacating Darling Harbour. DPWA and Patrick. Their principal aim is a very long time. With sea-side income HPA Hayes Dock would thus be a very surely to outfank/out-manoeuvre HPA and locked in a downward spiral compensatory attractive proposition for DPWA. ICTSI until these operators give up. revenues must be found … And in Brisbane, well, as happened with Meanwhile, the ‘interlopers’ are busily While acknowledging that ICTSI and HPA CSX’s withdrawal and Patrick’s resultant engaged in their own war of attrition that have made their own decisions to invest, acquisition of the abandoned facility to sees them refuse to establish any East and bear all the risk that entails, one can’t establish its frst AutoStrad™ terminal, it’s Coast joint operating agreement, on the help but conclude that the ACCC and just a matter of the Big Two stepping along basis that each believes it too can outlast supporters of its pro-competitive mantra the Fisherman Islands quayline to ‘share’ the other. have driven well over $1 billion in capital the HPA space. (It should also be recalled expenditure and who-knows-what in that when CSX fnally threw in the proft- Of course shipping lines will argue that operating losses – all to provide container less towel in 2004 its Adelaide terminal Australia- or East Coast-wide stevedoring lines with exploitable market tension and was acquired by DPWA in conjunction with contracts are no longer a necessity and occasional overfow facilities in Australia’s Flinders Ports, with the latter buying out its that they, the lines, are unconstrained three biggest box ports. partner in 2012.) when it comes to mixing and matching stevedores across ports, according to Crucially, while the ACCC routinely lauds In 2014 this writer calculated that with essentials such as the availability of its own achievements in propelling that developments then in progress and suitable berthing windows. waterfront competition, who have been planned at the three East Coast ports, the actual benefciaries? If we exclude overcapacity in the Australian container But this argument is self-serving and not locals employed in the construction and stevedoring sector stood at 60% - and supported by the evidence: as research subsequent operation of the new terminals stilted volume growth since then has done undertaken for the Australian Peak (just how many jobs do automated little to change that situation. Shippers Association shows, by-and-large terminals sustain … ?) there is only one lines and their consortia and vSAs have winner, and that’s shipping lines. Overseas As things stand now, greater competition aligned their contracts with one or other of shipping lines because, of course, there amongst Australian container terminals the Big Two. There are exceptions but one is now virtually no Australian merchant is costing Australian road and rail could almost suspect carriers of doing just marine. transport operators and by extension their enough to keep ICTSI and HPA interested, customers, shippers, big money. while happily accepting the deals on ofer Lines will assert, as they always do, from Patrick and DPWA. that greater waterfront competition/ And while the Big Two are busy, have a efciency/productivity translates into lower total of eight berths occupying over 2,600 Global container lines’ behaviour is typifed freight rates for Australian exporters and metres of quayline, 13 ship-to-shore by infection of others in the industry with importers. But, like the oft-perpetuated gantries, 38 automated stacking cranes, whatever disease they are themselves myth that larger ships mean lower blue sea any amount of supporting equipment and aficted. Thus, just as continuing over- rates [Shippers: Contact the undersigned almost 100 hectares of terminal space is capacity in liner trades guarantees that urgently if your container line has ever idle 90% of the time. freight rates (and profts) remain depressed, introduced larger vessels to an Australian so DPWA and Patrick will be powerless trade and promptly passed the ‘benefts’ to return their own lo/lo charges to those on to you] any reduction in lines’ costs *Shipping writer Dale Crisp also provides FTA/APSA of ‘the good old days’ as long as over- goes frst to their bottom line, and may with communication and content advice. capacity at terminals exists. And it will, for or may not re-surface in the form of a (Copyright) Images provided by Dale Crisp

14 I Summer 2017 I Across Borders Are you ready for a port closure or other major disruption to your supply chain?

By SANDY GAlBRAITH, Director, Strategic Marine Group

As the ships calling into our ports varying periods access for other ships. workshops focussing on the commercial aspects of a port closure resulting from a grow in size, testing the physical As we see the introduction to the Australian shipping incident that requires a salvage trade of containerships in the order of limits of those ports, so the risk solution. of a catastrophic incident that 10,000 TEU capacity, so we see the pressure coming on the safe working limits The workshops are aimed directly at those results in an extended closure of our ports. Nowhere more so than in the who are most likely to be afected by such of one of our ports increases port of Melbourne, where the limitations an incident, with a particular focus on the proportionately. of the Yarra river make berthing for these cargo. large ships in Swanson Dock a major issue. In addition to looking at the operational Of course, it is not just containerships that aspects of dealing with the problem, we When a port is forced to close, the impact pose a threat to the port’s commercial will examine the fnancial impacts for third is not just on the port itself, but on the operation. Nor is it just groundings. parties, the short and long-term efects as terminals, the ships that are locked well as the consequences for ship owners, inside, at anchor or en route, the shipper/ We all recall the dreadful foods that charterers and charter parties, ports, cargo cargo interests, the shipping agents, the devastated Brisbane a few years ago, interests, ancillary industries, road and rail freight forwarders, the pilots and towage severely impacting its port operations. freight operators. We will also discuss the operators, to name but a few. Then there Similarly, weather events like cyclones consequences of a business interruption to regularly close ports in Australia’s north, is the knock-on efect to the local, state the parties and of course look in detail at while in Tasmania in mid-2016 the port of and sometimes, national economies. very the legal and insurance aspects. quickly, if not addressed in an appropriate Devonport was closed for three days due and timely manner, it moves from being a to concern for vessel safety in the harbour Finally, workshop attendees will discuss port crisis to a political crisis. and channel as a result of extreme weather preparation for such an event including conditions. Hydrographic and bathymetric what control measures can be applied to recent disruptions to trade stemming from surveys and investigations of the river mitigate the impact of a port closure. the Hanjin failure loom large in the minds of depths were required before the port was In addition, the Strategic Marine Group can exporters and importers. Bulk trades too allowed to reopen. are prone to disruption as grain, gypsum provide services specifcally designed for and mineral shippers discovered when the The maritime consultancy, Strategic Marine your organisation on contingency planning port of Thevenard was closed following Group, was recently engaged by a large to mitigate the impact on your business and structural damage to its single berth. This exporter of iron ore to review its plans for associated supply chains. coping with port closure in the event of the closure lasted months, inficted commercial Established in 2009, the Strategic Marine grounding of a fully loaded capesize vessel damage to the local and regional economies Group has ofces in victoria, New South in the channel. risk assessment suggests and created contractual difculties between Wales, Queensland and Tasmania. The this kind of event is low probability but shipowners and charterers. SMG team brings together extensive should it occur, the efects are high impact. When you examine the number of port commercial experience and expertise to closures that occur around the world, Some of our biggest bulk ports are handling adopt a highly business-focussed approach astronomical numbers of huge ships fully to any technical and operational analysis you would be quite surprised at just how loaded, sometimes in very long departure it undertakes within the maritime and regular an occurrence it is. It in past three channels. Groundings have occurred, but ports industry, particularly for customers months alone, we have witnessed two so far closures have been avoided. But how operating in Australia, New Zealand and our major European ports – Antwerp and long will that remain the case? region. Southampton – and the South African hub port of Durban afected by the groundings Early next year, the Strategic Marine For further details, email: info@ of large containerships that blocked for Group plans to launch a series of one-day strategicmarinegroup.com

Summer 2017 I Across Borders I15 LOGISTICS REFORMS

Smart containers talk and listen

By MY THERESE BlANK, Sales and Country Manager, Maersk line Australia

I would like to thank Freight & Trade Maersk Line is very excited to share as well as use the data to study and Alliance (FTA) and Australian Peak with the “Across Borders” readers the improve their entire supply chain. Shippers Association (APSA) for details of our new reefer product that Particularly for customers with very we think shippers will be excited about. the opportunity for Maersk Line to sensitive, higher value refrigerated cargo, This initiative launched last month was rCM signifcantly raises the total value contribute to topical issues and our “remote Container Management” proposition of refrigerated container system, or in short rCM. industry news along with the editors trade. and readers of “Across Borders”. Data driven supply chain visibility We see a lot value in joining the Identify critical supply chain rCM is part of our ongoing investments weaknesses wider debate that is Australian into developing market leading reefer shipping and we hope to participate products, which also counts launching Whilst the impact of rCM is powerful, on a regular basis going forward. over 50,000 new reefer units globally, in the technology behind it is relatively the last 18 months. simple. A GPS, a modem and a SIM card on all 270,000 of Maersk’s refrigerated A recurring topic, and one also raised The new technology has been well ‘reefer’ containers enable location, with us by APSA, is the ongoing received by Australian reefer shippers, temperature, humidity and power status discussion surrounding shipping line giving rCM a ‘thumbs up’ for introducing surcharges and whether some of these data transparency and peace of mind readings to be continuously collected ancillary charges to shippers are justifed. knowing that their perishable products and stored. That information then We can appreciate these questions are delivered in optimal condition to their reaches customers and rCM global but also want to take the opportunity customers around the world. support teams via satellite transmitters on 400 of Maersk Line’s owned and to balance those with the reality that With rCM, our customers have complete shipping lines are struggling with the access to the reefer’s current location, chartered ships. continuous decline in freight rates. This is temperature and atmospheric conditions With clarity about the location and a clear threat to the sustainability of the inside as well as the power status, at condition of the cargo at all times, not industry and specifc shipping lines. all times and no matter where it may be just during the ocean transport but in the world. Meanwhile, our staf are In the last 24 months alone, we have throughout the journey of the container, there to manage the container, either seen freight rate reductions of around rCM will help identify problem areas in 20 percent on Australian export and remotely or through notifcations to local technicians if a hands-on fx is required. customers’ supply chains and ways to import trades, whilst during that same improve them. period the operational costs for shipping Access to rCM data is free to lines have increased or at best remained customers. By paying a subscription For example, if a customer’s reefer is not unchanged. Shipping is a business fee customers will be able to download being pre-cooled as agreed at the farm, like any other - lines need to deliver all data from the full journey of the the customer can easily see this in the sustainable results to their shareholders, container, thereby giving them an temperature graph on their screen and at the same time invest heavily in assets unprecedented level of visibility into their can contact or follow up with the supplier like vessels and equipment to provide supply chains. and the farm. Likewise, if a truck driver the network and services that support The old days of waiting, hoping and or port worker turns of the power to the our customers’ business growth. It’s a reacting are over. Customers can now reefer, this will be visible. rCM ensures tough balancing act. monitor and make decisions about their the customer has the information they related to the importance of investment, supply chain as their cargo moves, need to improve their processes.

16 I Summer 2017 I Across Borders Opening the black box Australian shippers and the initial a high priority for Maersk Line. Our feedback has been very positive. exploration of the many opportunities One of our major global reefer Following a demonstration of the new from more intelligent containers is still customers - Spanish company, Safr technology, one large produce exporter in an early phase but we have high Fruit – has been testing the solution was clearly impressed with the benefts expectations. in recent months and their view is of having essential data accessible for clear: For as long as they have been As we receive feedback and learn every single container movement. They in business, they have wanted a better more from our customers, we will envisage developing and building rCM feel for how their fruit and vegetables look for ways to improve and expand into their own “internal” system, and were treated before arriving at the the value of rCM. We look forward eventually doing away with existing data customer. During transportation, the to collaborating closely on this digital loggers on export shipments. reefer container was basically a “black transformation journey with customers box” and they were eager to get a Shipping’s digital future and partners around the world, including stronger understanding of the end to readers of “Across Borders”. end process making sure that the fruit rCM has the capabilities that customers arrived in the best possible conditions. have wanted from shipping lines for The easy-to-use RCM platform With rCM data at hand, they suddenly a very long time. The technology ofers shippers: is well suited for traditional reefer have become master of their own goods • A shipment overview of all commodities like agriculture, however again. That brings along two important containers with journey assessment we also expect rCM will open doors benefts: parameters, option to export to Excel. for new opportunities in sectors like Firstly, with full transparency of the pharmaceuticals. Companies with less • A temperature graph with option complete supply chain, the customers robust, high value cargo have in some to view O2 and CO2 and ambient can ensure that the cargo is being cases been reluctant to deploy sea temperature also available. treated with the highest care at all freight. With rCM, we can now start a • view of container positions on a stages on the container’s journey. dialogue with those customers on how map, with option to view route Secondly, with more reliable data they can better harvest the important available, the customer can work more economic and environmental benefts of • Journey assessment based on strategically on developing products sea transport without compromising on standard thresholds. and optimise processes along the entire product safety requirements. • Consolidated list of notifcations supply chain. The development of smart assets and sent daily. Option to subscribe for rCM was recently launched with digital supply chain integration holds notifcations via email

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Summer 2017 I Across Borders I17 TRADE REFORMS

reviews the Free Trade Agreement once negotiations are complete, then the Protectionism in ability to re-open negotiations would be limited and if the Commission suggested there were areas for improvement, would the Parliament vote down the free trade disguise agreement which might overall have benefted Australia? Currently, Government negotiations By RuSSEll WIESE and lYNNE GRANT, Hunt & Hunt lawyers (conducted by public servants and not politicians) are informed by a wide cross section of interested parties. Before It has been suggested that the Productivity Commission conduct negotiations for a free trade agreement independent analysis of each new Free Trade Agreement before signing. get going, the Federal Government usually Is this simply window dressing for a more protectionist trade policy undertake a study of the likely impact of setting in Australia? a free-trade agreement on producers, consumers and regulators. Often, opportunities are provided for submissions We are living through an era of increasing body review what has worked and inform and these are all taken into account in national trade protectionism globally. future governments about what could be setting the negotiation framework. Further, Historically, Australia has been open improved is good practice, provided it is before the Free Trade Agreement becomes to liberalised global trade and foreign done with a level of political sensitivity and law, the fnalised agreement is reviewed by investment. Free Trade Agreements doesn’t unduly criticise another country two parliamentary committees, which take have been one of the tools that or countries with whom we are seeking to evidence and submissions from the public. Federal Governments, of both political advance mutual trade and investment. persuasions, have utilised in this joint Clearly, the idea of giving business and But is the frst of these ideas realistic? endeavour. representative bodies a role in trade Negotiating a Free Trade Agreement is negotiations is not new. Indeed, over 200 The negotiation and conclusion of a Free somewhat like negotiating a commercial responses were received by DFAT when it Trade Agreement is an economic and agreement, but with the overlaying invited public submissions before the start political balancing act. So, when a political complexity of domestic, regional and of negotiations of a free trade agreement party suggested recently that, if it wins international politics at play. with the United States over 12 years ago. Government, it would have the Productivity In the case of a bilateral agreement, there The current Indonesian FTA negotiations Commission undertake an independent will be two countries with competing have involved business leaders from economic analysis of a Free Trade priorities and national interests, along with Australia and Indonesia providing both Agreement before it is signed, has certainly varying political realities. It will always be a countries with advice on where the trade grabbed some headlines. case of fnding a compromise, so inevitably negotiations should be focused, what the At frst glance, a review by the Productivity each country will achieve some, but not all, key impediments were and how they can Commission of any future free trade of its desired outcomes. This difculty is be overcome. agreements sounds reasonable. But dig magnifed with multilateral FTAs. By calling for a further process of reviewing a bit deeper and you’ll fnd it has real A perfect example is the China Australia Free Trade Agreements, is there an practical complications. On what basis Free Trade Agreement which took over 10 implied suggestion that Australia’s current and from which perspective would the years to negotiate. Australian producers Productivity Commission be reviewing the agreements are not in the country’s of wheat, sugar and rice saw very little agreement? How will this review improve economic interest? What is the evidence improvement in their ability to export to the quality of Free Trade Agreements that for this? Our concern is that claims, China, despite the free trade agreement. Australia enters into? Critically, is it simply not backed by evidence, feed into the On the Chinese side, China wasn’t able to window dressing for a more protectionist protectionist sentiment gaining popularity achieve the investment outcomes it was policy setting in Australia? Is creating an across the globe. seeking. Ultimately, Chinese State Owned additional hurdle for an FTA to clear just We should always look at what we protectionism in disguise? Enterprises still require approval from the Australian Foreign Investment review have done in the past to see how we The suggestion was that the Productivity Board for all investments in Australia, can do better in the future. But the Commission: regardless of the dollar value. question remains, which of our past FTA negotiations have produced poor • be asked to conduct an independent When, in the lengthy and complex outcomes for Australia? Which FTAs do economic analysis of each new free trade negotiating process, would the we wish the Productivity Commission agreement before it is signed; and Productivity Commission review the Free could have protected us from? If the Trade Agreement? If it were asked to • independently review free trade economic success of Australia’s FTAs review a working draft at an early stage, agreements 10 years after they are signed remain, it is important to ask “what has then it would still be open to signifcant to see what the impact they have had. changed”. The answer to that is played negotiation, which could render the out daily on Twitter – protectionists’ The second of these ideas has merit, Commission’s input, at least by the time policies now make good politics. if conducted in the spirit of trade the agreement came before Parliament, liberalisation. It is generally accepted largely meaningless. Further, it would If you have any queries about global that the Productivity Commission involve disclosing for public comment, trade or how we can assist your provides quality, independent advice to ongoing confdential international business, please contact Lynne Grant or governments. Having an independent negotiations. But if the Commission Russell Wiese.

18 I Summer 2017 I Across Borders Mapping Australia’s future agriculture transport needs

By luKE HARTSuYKER, Assistant Minister for Agriculture

As part of the Coalition the highest costs in the value chain. methods, and determining those that optimise vehicle movements between Government’s commitment to “TraNSIT identifes current bottlenecks enterprises in the agriculture supply building the infrastructure of the and problems in our transport chain,” Dr Higgins said. 21st Century, $1 million was infrastructure and is able to model provided through the Agricultural how changes to transport routes and “Planned future enhancements of new infrastructure will help drive down Competitiveness White Paper to TraNSIT will also seek to maximise agriculture transport costs. agricultural supply chains by increasing develop the Transport Network “It models current transport movements their resilience to food and other Strategic Investment Tool (TraNSIT). and allows us to see how infrastructure adverse weather events to deliver greater development will beneft diferent farming farmgate returns for producers.” The TraNSIT tool was developed by the communities across Australia. More information on TraNSIT is available CSIrO to model current and potential “Farms across the country will be able at https://www.csiro.au/en/research/ agriculture transport routes and identify to access comprehensive modelling and LWF/Areas/Landscape-management/ current transport bottlenecks and information about transport logistics Livestock-logistics/TrANSIT and a inefciencies. costs and mapping across the supply copy of the report is available at http:// The Coalition Government has released a chain from farmgate to market. www.agriculture.gov.au/ag-farm-food/ report outlining new modelling by CSIrO, “The Coalition is committed to building infrastructure/transit which will help drive down transport infrastructure based on the best costs for farmers and cut transportation Fast facts: available evidence and TraNSIT does times to customers by mapping current this by allowing farmers, industries • Transport infrastructure is essential and potential agriculture transport and government to make sensible and to moving over 80 million tonnes of routes. efcient future infrastructure plans. Australian agriculture output between Assistant Minister for Agriculture and farms, storage, processors to markets “TraNSIT will also have signifcant Water resources, Luke Hartsuyker, each year. ancillary benefts of better animal welfare, released the report from the $1 million improved driver and road safety and • Total annual agricultural transport investment in CSIrO’s Transport more informed policy development. cost (road and rail) is around $5.8 billion Network Strategic Investment Tool (annual average over the past fve years) (TraNSIT) model, which delivers on “I thank the team at the CSIrO for across more than fve million vehicle and another Agricultural Competitiveness developing TraNSIT, which will help get White Paper initiative. better transport operating outcomes for 10,000 rail trips. Commodities include the nation’s agriculture.” beef, sheep/goats, dairy, pigs, poultry, “One of the top priorities of this grains, cotton, rice, sugar, bufalo, government is to boost farmgate Dr Andrew Higgins, Senior Principal stockfeed and horticulture. returns, making it easier and cheaper research Scientist at CSIrO in Brisbane for farmers to transport their livestock and lead author of the TraNSIT report, • $1 million funding was provided and commodities to market,” Minister said the tool will allow industry and to the CSIrO for the TraNSIT project Hartsuyker said. government departments to easily through the Agricultural Competitiveness access information to improve transport White Paper. “TraNSIT will inform Australia’s future planning. transport infrastructure investment • Transport costs account for up decisions across the agriculture sector. “The tool works by analysing possible to 40 per cent of the market price of This matters because transport is one of combinations of transport routes and agriculture supply chains.

Summer 2017 I Across Borders I19 TRADE REFORMS

Report by the Centre for International Economics: Australian trade liberalisation: Analysis of the economic impacts Clear evidence of the benefts of trade liberalisation for Australia

A new report by the Centre for As tarifs have declined, trade has tarif increases would result in fewer jobs International Economics has increased — both merchandise exports in Australia and, over the longer-term, found the average Australian and imports — and Australia has become lower real wages for Australian workers, more integrated into the global economy. family income was $8,448 higher and reduced household consumption and Apart from some volatility around the time living standards. in 2016 than it would have been of the Global Financial Crisis, Australia’s without three decades of trade trade has increased consistently for 30 CIE’s full report Australian trade liberalisation. The report also years. liberalisation: Analysis of the economic found one in fve – or 2.2 million – The other key fnding from the report is impacts can be found on the Department jobs are trade-related. the importance of trade to employment. of Foreign Afairs and Trade website at It found that one in fve jobs, or 2.2 dfat.gov.au. million people, in Australia are employed Break out box – In addition to export- Commissioned by DFAT, the Centre in trade-related activities. This includes for International Economics (CIE) has workers in export-oriented sectors such related jobs, many Australians are updated its 2009 report quantifying as agriculture, minerals and energy, as employed in jobs related to imports. the economic impacts of Australia’s well as those in importing and distributing Australian Bureau of Statistics’ data program of tarif reductions. At a time goods into Australia. suggest around 38 per cent of all goods when protectionist sentiment is evident in in the Australian economy were imported The report modelled a further liberalisation some parts of the world, it is important to in 2013-14. Using that share and applying ensure the availability of empirical data to of global merchandise trade. It found it to the number of Australian workers present the case for the benefts of trade. that this would have a positive impact on economic activity, employment would employed in the distribution industries The new report – which spans the 30 grow, and in the longer-term, Australian associated with the movement of goods years from 1986 to 2016 - reinforces real wages and living standards would in the economy (transport and storage, the fndings from the 2009 study that increase. wholesale and retail trade), the report lowering tarifs and other trade barriers estimates around 671,200 employees has delivered higher living standards for Given calls from some for Australia to are associated with getting merchandise Australia. change course on trade liberalisation, the report also modelled scenarios of imports to end users. This is six per cent The modelling covers only measures to higher global tarifs. It found that such of total Australian employment. reduce barriers to merchandise trade — it excludes actions to reduce barriers to services and investment liberalisation, as well as measures by our trading partners. The results, therefore, are a conservative estimate of the benefts from Australia’s liberalisation over the past 30 years. Over this period, the average (trade- weighted) import tarif applied in Australia declined from over seven per cent to less than one per cent. Individual tarifs declined from relatively high levels – including a peak of nearly 90 per cent - to a maximum of fve per cent. In 2016, 79 per cent of all imports (by value) to Australia attracted no tarif. Almost half of all product categories were tarif free for all countries and least developed countries enjoyed tarif free access on all goods.

20 I Summer 2017 I Across Borders North Asia Free Trade Agreements – Guide for Importers and Exporters

As outlined in the Spring edition of Across Borders, the Federal Minister for Trade, Tourism and Investment, the Hon. Steve Ciobo MP, announced the Australian Peak Shippers Association (APSA) as a recipient of an Austrade Free Trade Agreement Training Provider Grant.

Events and webinars As a part of the grant, APSA and Freight & Trade Alliance (FTA) have completed delivery of a series of webinars and face-to-face sessions covering the following topics: • Export Trade Compliance / ChAFTA Declarations of Origin • Non-Tarif Barriers to Trade • Introduction to ChAFTA / Tax Considerations Specifc to the Chinese Market • Introduction to JAEPA / Tax Considerations Specifc to the Japanese Market • Introduction to KAFTA / Tax Considerations Specifc to the Korean Market • FTAs and other issues for Agriculture exporters • Scams, bribery and corruption - Managing risks in a dishonest world recordings from all sessions, including optional online assessments are now freely available at www.ComplianceNetFTA. com.au. Note: Content also attracts CPD points for licensed customs brokers E-Learning As a part of the next phase of this training program, APSA is proud to launch a new e-learning course titled “North Asia Free goods meet rules of Origin requirements; Trade Agreement Guide for Importers and Exporters” available to • know the Certifcate of Origin documentation requirements for members and non-members of the Association and highly suitable your goods; and for export operators, freight forwarders and any employee involved in export supply chain operations. • understand the consequences of not completing Certifcate of Origin documentation correctly The course is self-paced, incorporating audio, text and reference materials and has been designed to provide fundamental The e-learning course is freely available at www. knowledge on Free Trade Agreement compliance requirements. CompliancenetFTA.com.au Including the optional online assessment, the course takes For further detail please contact Caroline Zalai at admin@auspsa. approximately two (2) hours providing an overview on the following com or 02 99751878 key areas: The above activities have received funding from Austrade as • understand what are Free Trade Agreements and how a part of the Free Trade Agreement Training Provider Grant business can beneft from them; Program. The views expressed within the activities are not necessarily the views of the Commonwealth of Australia, and • know the importance of North Asian Free Trade Agreements the Commonwealth does not accept responsibility for any tarif arrangements; information or advice contained herein. • be able to identify the customs tarif code for goods; • understand how imported and exported goods will be treated by either country by reading their tarif schedules; • know how the steps required to determine whether your

Summer 2017 I Across Borders I21 bORDER REFORMS

In 2016 the ABF did not highlight the unauthorised movement of goods, or The customs compliance compliance with depot licence conditions, as falling within its 5 areas of focus. However, the results from 2016/17 show that the activities of depot operators areas that you must received extra attention. Asbestos laws are now being enforced The ABF has come down hard on focus on importations of asbestos. While not initially listed as a focus area in 2016, this By RuSSEll WIESE and lYNNE GRANT, Hunt & Hunt lawyers. changed after some high profle reporting of asbestos being found on building sites and in crayons. Fairly or unfairly, a degree of blame was placed on the ABF. It responded with a massive increase in asbestos compliance activities. Asbestos is a prohibited import. In 2014/15 there were no infringement notices issued in respect of prohibited imports. In 2015/16 the fgure was just 10. In 2016/17, 46 infringement notices were issued in respect of prohibited imports. We have not been provided with the detail of what were the prohibited imports. However, it is safe to assume the vast majority involved asbestos. The infringement notices only tell half the story. Industry has also faced high costs regularly the Australian Border Force (ABF) to prohibited goods entering Australia or an of testing goods for traces of asbestos and alerts industry as to the areas that will underpayment of duty. the prospect of goods containing asbestos be the focus of its compliance activities. being re-exported. However, for those that believe that actions In 2016/17 the ABF issued 69 infringement The compliance activities represents a speak louder than words, the best guide notices in respect of a breach of a depot change in the seriousness with which this as to the ABF’s compliance activities may licence. This was an increase from only 16 issue is being approached. The position be its annual statistics regarding error in 2015/16 and 30 in 2014/15. Anecdotally, of the ABF is bound to have political and detection and the issuing of infringement we saw an increased level of threats to community support given the nature of notices. The statistics for the 2016/17 cancel or suspend depot licenses. asbestos and the risk it poses to the year clearly show which areas will warrant Correlating with this was a sharp increase community. Importers should not expect infringement notices and which errors are in the level of infringement notices for the attitude of the ABF to change. rather, most likely to be detected. ofences relating to the movement of goods it is the approach of importers that needs Level of compliance activity under customs control. This can relate to to change. Importers of goods from any unauthorised stoppages during an under country need to undertake due diligence to The ABF seemingly took a break from bond movement between 2 locations. This ensure that there is zero traces of asbestos issuing infringement notices in 2015/16, can also relate to goods being permitted to in their imported goods. but ramped up its activities in 2016/17. leave a depot or licensed warehouse prior The value of infringement notices issued to the goods being cleared for customs Our experience is that second hand in 16/17 was $4.8 million, more than purposes. These ofences can be fairly vehicles from Japan and the US receive double the 15/16 fgure ($1.9 million). This easy for the ABF to detect. The ABF can special attention from the ABF. The older the vehicle the more likely that a component jump was also refected in the number identify from its records where goods have will contain asbestos. The ABF has of infringement notices issued – 584 in been held in a depot for a signifcant period. become better skilled at identifying potential 2016/17 versus 266 in 2015/16. If you felt During a site audit the ABF can simply ask breaches. Importers of such vehicles need like you were hearing more customs brokers to see those goods. When they cannot to assume that their vehicle will be held for complaining about infringement notices, you be located the ABF is able to prove the were probably right. inspection and will fnd life easier if they ofence. Alternatively, the ABF can review have already had the vehicle tested prior to records of when goods left the depot and Running a depot – time to review your importation. level of compliance compare those records to the date the goods were cleared. Delivery address is suddenly important In 2016/17 the ABF took a keen interest in the level of compliance shown by If a depot has as a customer an Each year the ABF reviews between 5,000- depot licensees. A licensed depot is a eCommerce retailer, it can expect to handle 6,000 import declaration lines and shares location that goods can be moved to many millions of low value items a year. It the result with industry. Importantly, the for a short period prior to being cleared only takes a 0.001% error rate for 1,000 ABF found that the percentage of lines for customs purposes. Being a depot items to go missing a year. Compliance containing an error had jumped from 16% licensee is a position of trust given that starts with all staf being well informed in 2015/16 to 28.4% in 2016/17. This goods are permitted to be moved to the of the requirements, processes being is an alarming increase. However, our depot despite not being security assessed implemented to facilitate compliance view is that the jump doesn’t necessarily or the subject of a duty payment. Non- and, crucially, regular internal auditing of represent a decline in the quality of the work compliance by a depot operator can lead compliance with those processes. undertaken by customs brokers. rather,

22 I Summer 2017 I Across Borders the ABF audits are focusing on felds in the incorrect information, regardless of the errors related to valuation issues. import declaration that were previously not impact on duty or security. Classifcation needs to remain a focus seen as critical. A signifcant valuation related error is area The best example is the delivery address valuation date (date of export). This error So much depends on the classifcation of feld. It is reported that a delivery address was detected on 332 occasions in 2016/17, the goods. It can determine whether a error was detected on 194 occasions in up from 118 in the previous year. Again, concession applies, what rule of origin should 2016/17. This made it the third highest the issue seems to be around how the error be used under a free trade agreement, error type. In the previous 2 years delivery is being detected rather than a change in whether dumping duties are applicable or address did not make the top 10 type of customs broker behaviour. For containerised whether the goods should be the subject errors. It is hard to believe that collectively goods, the date of export (and valuation of community protection questions. In brokers decided in 2016/17 to pay less date) is the date that the goods were 2016/17, classifcation errors for imports attention to this feld. rather, it is more likely transported from their place of export. The were identifed on 194 occasions. For that compliance levels remained the same, place of export is where the goods were classifcation alone, this represents an error but the detection of the error increased. loaded into the container. It has been rate of 3.6%. We assume that this is due to ABF audit standard practice to use the departure date practices. of the vessel as the date of export. However, Given the importance of classifcation, this Valuation related errors the ABF is now looking at publicly available will always be a focus area. It is important information regarding when the container that areas of doubt be communicated to The ABF did make clear in 2016 that was delivered to the vessel. This is resulting the client and risk management strategies valuation would be one of its focus areas. It in earlier valuation dates. adopted. Obtaining a tarif advice normally is true that valuation is an area where the provides the most certainty. However, it The valuation date impacts the date of level of compliance can be low. However, it is crucial to realise that if a tarif advice is currency conversion for any goods invoiced is also an area of declining signifcance. Free obtained, the ABF is likely to review whether in a foreign currency. Unless there is a trade agreements with China, Japan and the importer is complying with that tarif signifcant currency fuctuation, the diference Korea have meant that a greatly increased advice. A customs broker should only apply in approach between the ABF and brokers number of goods are subject to duty free for a tarif advice after informing their client should have little impact on the customs entry. Further, GST on most imported goods of this approach and obtaining agreement to value of the goods. While this issue may is deferred or claimed back as a credit. The either accept the outcome or seek internal seem insignifcant, given the high level of return on discovering a valuation error would and / or external review. The strategy cannot errors, customs brokers should be including be low, if not inconsequential. be to accept a favourable outcome but valuation date as part of their internal quality ignore an unfavourable one. Nevertheless, the ABF is entitled to focus on assurance program. valuation, if only to ensure Australia’s import Compliance relates to refunds as well statistics are accurate. Further, an ofence More generally, it is important to note that is committed merely by communicating approximately 50% of the import declaration Compliance doesn’t end after the entry of

Sec 77G Depot Compliance Recommended training for Section 77G Depot employees

Section 77G Depot licence holders are required to provide adequate training to make staf aware of their obligations in dealing with goods subject to the control of Customs. This course takes approximately 1.5 hours to complete - upon passing the online assessment a certificate with two years validity will be automatically generated. PAY & ENROL ONLINE Importantly, the course provides operational staf with learning outcomes to be $99.00 per enrolment able to complete day to day activities with confidence that they are compliant Price includes GST with legal requirements. 3 CPD Points For more information go to: www.compliancenetfta.com.au Call: 02 9957 1878 or email: [email protected] FREIGHT & TRADE ALLIANCE

Freight & Trade Alliance, 68 Brooker Avenue, Beacon Hill, NSW 2100. ABN 59 160 523 384

Summer 2017 I Across Borders I23 bORDER REFORMS

goods, it is equally important to ensure Increasing levels of compliance activity that refund applications contain correct information. Claiming a concession or Offence Infringement Infringement Increase particular classifcation when applying for a notices 2015/16 notices 2016/17 refund carries the same level of seriousness as when making the same claims on an 33(6) – Moving, altering or import declaration. interfering with goods subject 150 191 27% The statistics show that compliance activity to Customs control without regarding refund applications is on the rise. In 2016/17 642 refunds applications authority totalling $4.8 million were either rejected or 77R(1) – Breach of conditions adjusted. This was a 30% rise on 2015/16 16 69 431% where 454 refund applications were rejected of a depot licence or adjusted. 243T(1) – False or misleading The reasons for rejections of refunds were not provided. Anecdotally, we have spoken statement resulting in a loss 25 63 252% to a number of customs brokers who are of duty having refunds based on retrospective certifcates of origin rejected. It is always 64AB(10) – Failure to meet important to ensure that the mandatory reporting requirements for 12 49 408% requirements of the certifcate of origin are the arrival of a ship or aircraft completed. Additionally, if the classifcation on the certifcate of origin does not match 233(1)(b) – Prohibited imports 10 46 460% the classifcation used on the import declaration, the reason for this diference should be explained. Importers, exporters and service providers vulnerability for the specifc transaction or has actually been focusing on. entity; cannot elect to ignore any particular area of russell Wiese and Lynne Grant are trade or supply chain compliance. However, members of Hunt & Hunt Lawyers Customs in selecting the areas of internal focus, we (2) the areas the ABF states will be its and Global Trade team and regularly work suggest considering each of the following compliance focus areas; and with customs brokers, freight forwarders, (1) the particular areas of increased risk or (3) the areas which statistics show the ABF importers and exporters.

The law has changed – have your terms and conditions?

The Government is challenging unfair trading terms imposed on small businesses – Do you know if your terms and conditions are enforceable?

Hunt & Hunt has developed industry specific terms Hunt & Hunt is a national law firm that helps logistics and conditions at a fair price – for the one off professionals with customs and transport-specific payment of $825 FTA members will receive: issues, as well as general legal issues, understood from • a clear set of trading terms and conditions the perspective of your industry. specifically designed for use by customs brokers Russell Wiese and freight forwarders [email protected] • a template credit application 03 8602 9231 • a template director’s guarantee Lynne Grant • a letter of authority [email protected] • an explanatory letter to your clients 03 8602 9246 • a letter from Hunt & Hunt explaining how to use the documents. We pride ourselves on our genuine approach Contact us for a free review of your trading conditions and practical solutions.

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24 I Summer 2017 I Across Borders Australian Trusted Trader – delivery of reforms for importers

By PAul ZAlAI, Director, Freight & Trade Alliance (FTA)

Consolidated Cargo Clearance Beneft cargo for all sea cargo types and for air this is a risk to the clearance of their cargo. cargo. Freight & Trade Alliance (FTA) commend Importers will not need to formally ‘opt in’, the Australian Border Force (ABF) This applies for all House bills under a or change their ATT agreement to access in progressing this reform that will single Master Air Waybill (MAWB) / Ocean this new beneft. ATT importers will have signifcantly assist importers involved in Bill of Lading (OBL). Shipping lines, airlines the option to access the beneft on a “assembly order” / multiple supplier import and freight forwarders will continue to consignment by consignment basis. consignments. provide cargo reports at the supplier level, Duty Deferral consistent with current practice, but the The outcomes are as a result of our consolidated shipment may be cleared on FTA has received advice from the ABF advocacy, extending over a four year a single import declaration, streamlining that the duty deferral beneft (including period, and are specifcally aligned to the import declaration requirements for ATT Countervailing and Dumping) will be our formal submission presented to the importers. available to ATT importers during the frst Australian Trusted Trader Industry Advisory half of the 2018 calendar year. Group during September 2014. This beneft will allow lodgement of a single import declaration where there are multiple Importers or the licensed customs broker FTA will continue this approach, seeking to cargo reports. will still be required to lodge Import extend this beneft to a wider section of the Declarations at a consignment level with ABF analysis of Integrated Cargo System international trade sector and to examine the ICS to prepare a statement on the 16th (ICS), shows that on average, there will be opportunities to further streamlined cargo day of the month outlining all duty owing a reduction in import declarations of more reporting processes. with payment automatically coming out of than 10 per cent for ATT importers. This will the ATT importer’s bank account on 21st The immediate result, efective 15 reduce the amount of corresponding import day of the month. November 2017, is the release of the processing charge (IPC) charges paid by “Consolidated Cargo Clearance Beneft”, ATT importers. Please note that deferral does not apply to exclusively available to importers Excise Equivalent Goods and that Import There is however a catch. If any part of accredited as a part of the Australian Processing Charges must still be paid on a the consolidation matches an import Trusted Trader (ATT) programme. per Import Declaration basis. declaration risk profle the entire shipment The new beneft will allow ATT importers, will be ‘held’. ATT importers will have the To learn more about ATT, including the or their licensed customs broker, to lodge choice of reporting their cargo on a single benefts available to your business, visit a single import declaration for consolidated import declaration or multiple declarations if www.border.gov.au/trustedtrader.

Summer 2017 I Across Borders I25 bIOSECURITy REFORMS

Illegal logging laws: what they mean for customs brokers

By DEPARTMENT OF AGRICulTuRE AND WATER RESOuRCES

As members of the freight and products in two diferent ways: as sawn timber, pulp, paper products, veneer, mouldings, wood panels, transport industry, you may not • It is a criminal ofence to import illegally fooring, medium-density fbreboard, think that illegal forestry practices logged products into Australia. particle board, plywood and furniture. overseas are your concern. But if • Anyone importing certain ‘regulated Importers should be aware that the you act on behalf of others who timber products’ into Australia must defnition of ‘timber’ is diferent to that import timber or timber products, manage the risk that the timber or generally used for biosecurity. For the Australia’s illegal logging laws wood fbre in these products has been purpose of the illegal logging laws, timber is considered any wood fbre afect you. illegally logged. This process is known as undertaking due diligence. derived from trees. Exemptions from due diligence apply for consignments where regulated timber products are identifed the total value of the regulated goods From 1 January 2018, your clients who by their tarif codes and include most is under $1,000 and for post-recycled don’t understand their obligations could timber and wood-based products, such products. be paying the cost – in penalties. Illegal logging is a signifcant problem. It degrades forest environments, reduces biodiversity, undermines government regimes and revenues, and contributes to greenhouse gas emissions. On a very human level, it deprives local communities of opportunities to improve the quality of their lives. The trade in illegally logged timber also has the potential to disadvantage legitimate Australian businesses and undercuts market prices. It’s been estimated that each year up to 10% of timber and wood-based product imports into Australia come from sources with high risk of being illegally logged. That’s why the Australian Government has put laws in place to help fght illegal logging (both here and overseas) to support trade in timber and wood- based products that have been legally harvested. What the laws mean The Illegal Logging Prohibition Act 2012 and its associated regulation afects importers of timber furniture and other

26 I Summer 2017 I Across Borders The role of customs brokers logged timber before importing the if required, a ‘soft start’ period of product into Australia. To do this, the over three years has been provided. While customs brokers aren’t directly importer must gather information about However, this phase is soon to end regulated by the laws, you should make the regulated products being imported and from 1 January 2018, penalties for sure your clients are aware of their (such as country of harvest, species non-compliance will commence. These requirements, and the consequences of and any other evidence that product penalties may be up to $63,000, so it’s not complying with them. has been legally harvested). Using this now more important than ever to be You will be required to answer the illegal information the importer, must then aware of the legislation and to make logging Community Protection Question assess the risk that the timber in these sure your clients who import timber or if an imported product falls under a products has been illegally logged – timber products are also aware. regulated tarif code. This question asks using one of three options most relevant And not only will you be avoiding whether importers have complied with to their circumstances. If the conclusion penalties, but you’ll be helping to build their due diligence requirements. The from the risk assessment is higher than a thriving industry in forest-products question needs to be answered for each low, the importer must mitigate the risk derived from sustainable sources. regulated product line in a consignment. if they still wish to import the product. Brokers should communicate with Importers need to have a documented More information their clients in order to answer the system that outlines the due diligence You can fnd out more by visiting question truthfully. While the answer to process and to keep a written record of agriculture.gov.au/illegallogging, and the question won’t afect the clearance the steps taken. keep up to date by subscribing to the of the goods, post-import paperwork Managing the laws and penalties Illegal Logging e-newsletter: agriculture. may be assessed by the Department gov.au/forestry/policies/illegal-logging/e- of Agriculture and Water resources The Australian Government Department updates. to confrm whether it was answered of Agriculture and Water resources correctly and to check the importer’s is responsible for managing the illegal You can also contact a team member due diligence process. logging laws and compliance with them. directly: What due diligence means To allow extra time to help people Email: [email protected] or understand their obligations and to [email protected] Due diligence involves assessing the put in place a due diligence system risk that the product comes from illegally Phone: 1800 657 313

Representing the next generation of business leaders

Summer 2017 I Across Borders I27 bIOSECURITy REFORMS

Changes to cost recovery charges for Biosecurity approved arrangements

By TONY NIKRO, FTA Representative to the Department of Agriculture and Water Resources

Freight & Trade Alliance (FTA) The need for reform was supported by The proposed new changes for has been pursuing changes to the many members, particularly small non-broker approved arrangements to medium enterprises, who assisted in include: cost recovery since last year’s our arguments to DAWr throughout the • Biosecurity industry participants introduction of the blanket $2900 year during our face-to-face forums and with one approved arrangement site approved arrangement fee as by making important contributions to our will continue to pay an annual charge formal submissions. administered by the Department per ABN, however, this will reduce from of Agriculture & Water Resources During November 2017, FTA received $2,900 down to $2,500. (DAWR). a favourable response in the form of • Biosecurity industry participants Industry Notices 108 - 2017 and 109 that operate more than one approved - 2017 outlining proposed changes arrangement site will be subject to the including a $500 annual fee for $2,500 charge but will also pay an businesses solely involved in customs additional annual charge of $400, no clearance activities with a capped matter how many additional sites they price for those with several non-broker operate (i.e. total annual charge will not approved arrangements sites remaining exceed $2,900 per ABN). at $2900. • Should a biosecurity industry The proposed charges for broker participant operate both a non-broker class (19.1 and 19.2) approved class of approved arrangement and a arrangement participants include: broker class, in addition to the annual • Participants will pay an annual $2,900 charge, they will also be required charge of $500 in addition to an to pay an Automatic Entry Processing Automatic Entry Processing (AEP) charge (AEP) charge of $18 per entry. of $18 per entry. The annual charge As outlined in the ofcial notices, the ensures brokers not participating in the consultation process on these proposed AEP scheme still contribute to the cost approved arrangement charging reforms of operating the broker class approved will conclude 5PM (AEDT) Friday 5 arrangements. January 2018. Feedback can be sent direct to DAWr at costrecovery@ • Participants that also operate a non- agriculture.gov.au. broker class of approved arrangement will pay both the higher non-broker We again encourage members to send charge totalling $2,900 in addition to an feedback to [email protected] Automatic Entry Processing (AEP) charge for incorporation into the fnal FTA of $18 per entry. submission.

28 I Summer 2017 I Across Borders BUSINESS PROCESSES GETTING YOU DOWN?

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peaking in October. Again there are regional variations with patterns heavily Supply Chains Still infuenced by peaks associated with annual holidays. Further interrogation of the data relating to attractiveness of cargoes clarifes at the Mercy of that the three commodities, electronics, food and drink and clothing, together comprise over 40% of cargo theft incidents. Just eight commodity groups Thieves account for just under 60% of cargo thefts, as the following table shows: • Electronics 17.00% Analysis by international freight and one which has yet to be overcome in any part of the world. It is notable that • Food & Drink 14.81% insurer, TT Club reveals that cargo the “hot spots” that do occur are not theft remains one of the most restricted to areas sufering economic • Clothing 10.13% signifcant causes of disruption down turn; afuent regions where high • Metals 5.59% in the supply chain. Senior Loss value consumer goods are destined are Prevention Executive, Michael equally susceptible to theft. • Machinery & vehicles 5.26% Yarwood examines the claims latest TT Club data analysis identifed that • Cosmetics 4.18% data shows theft accounts for 10%, there are discernible patterns concerning • Chemicals & Oils 1.59% by volume and cost of all reported the days of the week and months of the year in which cargo is stolen. Thefts • Minerals 1.17% claims in the last ten years. are more frequent between Monday and Friday, with Thursday showing as research suggests that there are For any stakeholder operating in the the most vulnerable day of the week. elevated volumes of cargo thefts on key international logistics sector, it will come Naturally, the exact patterns will vary trafc routes from major import ports as no surprise that incidents of cargo from region to region and through the and terminals. It is perhaps inevitable theft continue to be one of the primary period. Furthermore, the occurrence of that a disproportionate amount of cargo disruptors through the supply chain. This theft will be infuenced by factors such as will be transported along a limited range not only results in direct fnancial loss, peaks and troughs in freight movement, but also has a severe impact on brand including ship calls in certain ports. In of such routes. The road infrastructure reputation and the capability to manage terms of average value, it is interesting that carries this trafc through to major the availability of stock. that Sunday indicates a more targeted population centres serves as a bottle approach, while Friday thefts are the neck and there is rarely sufcient Whilst there are inevitably geographical most lucrative. availability of secure parking to satisfy “hot spots”, this is a global phenomenon The number of notifed thefts through demand. For the criminal organisations the frst and second quarters appears this provides an obvious feeding reasonably stable, with a peak in ground. While rail and inland waterway March, but the incident rate climbs movements are less prone to theft, they through the third and fourth quarters, are not exempt.

theft continues to be one of the primary disruptors through the supply chain

30 I Summer 2017 I Across Borders as professional logisticians are able to move legitimate goods. Security devices to combat such thefts are constantly being developed; technology is advancing rapidly and each emerging product serves to close another loophole in security systems. Where such devices are a visible deterrent, their efectiveness is determined only by the resolve of the thief. If the thief is sufciently motivated it seems that the cargo will in any event be stolen. The device may dutifully record the exact time, date and location of the crime but the cargo may nevertheless be stolen and not recovered. There are, however, an increasing regardless of the geographic location, many stories of the ‘Dark Web’, social number of providers developing covert the subsequent recovery of stolen cargo media and auction websites through tracking devices which are small continues to be challenging, especially which volumes of cargo are laundered. enough to ft within the carton or cargo in regions where the resources of the Frequently such cargo is understood to itself. When undetected by the thief, relevant authorities are stretched and be re-exported and shipped to various this technology may in time serve to have priorities which lie outside of the regional markets in reduced quantities provide the authorities with invaluable sphere of cargo crime. to lower suspicions and avoid detection. information about temporary storage Whichever method is selected, it is Considering the volume of cargo often evident that criminal organisations are of stolen cargo and also reveal typical stolen, one question which plagues adept at moving stolen cargo through routes to market, which may support operators and insurers alike is; how is the supply chain almost as efciently more complete and rapid recovery, as stolen cargo disposed of? There are well as apprehension of criminals. THERE. Whatever the language...

...or time zone

When you are responsible for the transit of cargo around the world, it’s at risk from a huge range of potential problems. That’s why you need transport and logistics insurance from a leading provider. TT Club is there wherever you are, and whenever you need us with trusted local experts who not only speak the language but who can cut through the complexity, and get things done. Quickly, efficiently and mindful you need to keep your business running smoothly. www.ttclub.com

Summer 2017 I Across Borders I31 bUSINESS REFORM

MAKING FRIENDS WITH YOuR STCs A Guide on how to efectively manage your Standard Trading Terms and Conditions

By JAMES COTIS, logical Insurance Brokers

When advising Philadelphians on This article will identify issues • Defences; surrounding STCs and their interaction fre-safety in 1736, Benjamin Franklin • Limits of liability; with insurers, as well as give you that was famously quoted as saying all important ounce of prevention in the • Time limits for claims notifcation, “An ounce of prevention is worth form of practical tips and suggestions for and a pound of cure.” In the logistics efectively incorporating STCs into your • The law and jurisdiction in which the industry, this prevention may take business. STCs will operate. the form of a carefully tailored WHAT ARE STCs AND WHY ARE Subject to the size of the business’s insurance program and (perhaps the THEY SO IMPORTANT? customers, unfair terms in small business least nurtured option) well-managed As insurance brokers who specialise contracts may also require consideration. Standard Trading Terms and in the provision of risk management It is therefore recommended businesses Conditions (STCs) between you and and insurance solutions to the logistics should seek appropriate legal advice your customer. industry, we are often asked about from a solicitor with sound experience the need for participants to establish in transportation law to ensure STCs and incorporate STCs within their are adequate for their requirements and businesses. comply with both Australian law and any international conventions where Where logistics businesses are seeking applicable. Equally important is to ensure liability insurance coverage, a copy of the that the STCs are correctly incorporated business’ STCs will need to be provided within the business. to insurers for their approval as part of Over the years, we have seen numerous the risk assessment process undertaken instances of uninsured businesses by them. Once approved by insurers, it is who have taken short cuts such as expected that the logistics operator will ‘borrowing’ STCs from competitors continue to use those STCs. If alterations and making a few cosmetic changes are subsequently contemplated, those in the belief that that will sufce. Often must be submitted to their insurers for attempting to rely on inadequately approval prior to use. drafted STCs usually ends in disastrous STCs are legally binding on logistics results for the logistics business. businesses and their customers. When We are also aware that trade drafting STCs, a balance must be struck associations have developed and between the logistics operator and their ofer STC templates for use by their customers. STCs should contain the members. Whilst we agree that these usual essentials, which include: templates are useful, and generally robust, it is important that they be • The scope of services to be appropriately customised so that they provided; cover the full scope of your specifc • The basis of liability; logistics operations and that they then

32 I Summer 2017 I Across Borders are properly incorporated within the • Include a link to your STCs within and, in turn, their insurers. Insurers business. your email signature panel; may fnd these alternative agreements HOW TO INCORPORATE YOUR STCs • Send your STCs to your entire unacceptable or call for a change in EFFECTIVELY customer base with a note outlining that policy conditions and the application of The following is a list of some practical they will apply to all services ofered by additional premiums and/or increased tips to assist you in incorporating your your company from a specifed date; policy excesses to meet the increased STCs efectively into your business. Note • Circulate copies of your STCs at exposure(s). that these tips are not meant to take the regular intervals to regular customers; place of appropriate legal advice, which We understand that nutting out the fne we recommend you obtain prior to • Keep a register of your regular, new details of STCs as well as consistently embarking on any course of action. and potential customers to whom you updating and amending them as new send copies of your STCs; • Tip 1: Incorporate your STCs into legislation and/or case law dictates can your customer contracts • Display a large printed copy of your be an arduous and time-consuming STCs in the reception area at your ofce. task. However, if it becomes common Clearly, STCs are inefective unless they are communicated and agreed • Ensure that copies of all signed and regular practice for your business with your customer. Consequently, it STCs are kept in good order and to nurture their STCs, then you may fnd is most important to take appropriate securely fled, backed up and retained that you’ll never have to go in search steps to accurately incorporate your for at least 7 years after services have of a ‘cure’ in the event of an incident STCs into your customer contracts. been discontinued for that customer. arising. Your customers must be ofered the opportunity to either accept or reject Important note: Our experience indicates Who we are your STCs prior to an order for services that most difculties with customers being made. arise from poor communication and/or James and the team at Logical record keeping. It is critically important Insurance Brokers provide specialist risk • Tip 2: Incorporate your STCs within to accurately document what services your customer’s credit application management and insurance solutions to and STCs are initially agreed with your the logistics industry. Logical is delighted Your customers must sign an customer and any alterations made to be associated with the Freight and acknowledgement of your STCs if they during the relationship. If at any stage Trade Alliance (FTA) and is proud to be intend to trade with you. Although you amend your STCs (and insurers every business has its own practices approve the amendments) you will need their appointed insurance adviser since and processes, a practical example to to provide a copy of the amended STCs its inception in 2012. James is also a achieve this would be to incorporate to all your customers (addressed to regular presenter at FTA professional your STCs within your customer’s credit each specifc customer, not templated development events. application. ‘generic’ notifcations). You must • Tip 3: Make your STCs and also ask your customers to sign an Please call James on 02 9328 3322 incorporation clauses visible acknowledgement of those amended to arrange an obligation free discussion and a review of your current Print an incorporation clause on the STCs. insurance program. Alternatively, you face of each document and print the CUSTOMER/SUPPLIER conditions on the reverse of your AGREEMENTS Vs YOUR STCs can visit Logical’s website at www. documents, such as letterheads, logicalinsurance.com.au/logistics. receipts, quotations, invoices, Occasionally, customers may request statements, consignment notes and (or sometimes demand) that their Disclaimer: agreements be used instead of the shipper’s forwarding instructions. The This article is designed to provide helpful incorporation clause and other such logistics operator’s STCs. Where general guidance on some key issues notices to your customers should logistics businesses are insured, indicate that the STCs have a limiting these requests (and any proposed relevant to this topic. It should not be efect on your liability. draft agreements) must be referred to relied on as legal advice. It does not Other suggestions include: insurers for approval prior to signing. cover everything that may be relevant In many cases, these customer and/or to you and does not take into account • Clearly publish your STCs on supplier agreements do not understand your particular circumstances. It is only your website so that customers can or incorporate international transport current as at the date of release. You review and acknowledge them before conventions and logistics industry must ensure that you seek appropriate proceeding with an order; standards into their agreements. We professional advice in relation to • Ensure that prospective customers would recommend exercising caution receive, acknowledge and agree to be consenting to these agreements as they this topic as well as to the currency, bound by and sign a copy of your STCs may signifcantly increase the exposures accuracy and relevance of this material at the commencement of negotiations; and liabilities for logistics operators for you and your business.

Summer 2017 I Across Borders I33 bUSINESS REFORM

estimate it has saved us around $25K per year and countless hours in admin time. It’s Facing the perfect storm: how a better, more efcient way and we have no hesitation in recommending it.” digitising will smooth the way in Another early adopter of the system, Lucy Wei of Q Line, added: “It’s clear to us that digitising the business is the future, with the fast-growing container world more automation and more immediate data feedback. We have already seen the benefts in taking advantage of freight Every year nearly 120 million containers leave ports around the world rates that we previously would have been in an industry that drives the global economy. Yet bookings and prices unaware of.” for 40% of those containers are set by phone calls and emails. And Shipping is one of the world’s oldest that takes time. What if you could do it online in minutes and track the businesses and, in common with many results? industries, it is slow to adopt change, as Mizzen’s Executive Director and co-founder Darren Burden, a former senior digital That’s exactly what trailblazing Australian In its frst year, Mizzen, based in Sydney, strategist with Fairfax Media, understands start-up Mizzen has been doing, with has signed up 45 freight operators and well. a high-tech, fast, cost-saving digitised eight shipping lines and is on target to container booking service that has just expand into new markets next year. “Media had to go from hot metal to notched up its frst year in business. computers, then see its print audience One of Mizzen’s frst customers, richard migrate to the web, tablets, and Fifty years ago, the shipping industry Lamport of Kalgin Global Logistics, said: smartphones. But new businesses and was revolutionised by the introduction of “We’d got used to spending so much time, new audiences were created. People containers but, until now, nothing much on up to half a day, organising a single freight consume their news in all sorts of ways. price setting and distribution has changed quote and booking for FCLs (Full Container In that sense, we are not trying to replace to rock the boat. Loads) to go from all main Australian ports anything in shipping, but we are ofering a to worldwide destinations. We’ve been new channel.” But now, unlike using emails or phone calls, in this business for 29 years, shipping freight operators can quickly get port-to- thousands of containers all over the world As the recent McKinsey report Container port rates direct from shipping lines through and we estimate that 10 to 15% of our Shipping: the next 50 years, concludes: Mizzen, with no intermediaries or mark-ups. “The shipping industry was built on the bookings have been delayed because vision of strong leaders who dared to sail In a few clicks, customers can search carriers haven’t been able to guarantee through the storms. Although it now once shipping line schedules, check dates of space. This is only going to get worse as again faces a period of disruption—this departure and arrival, fnd the right vessel, carrier consolidation and mergers and time from digital technologies—there is a compare rates and book shipments. A acquisitions continue. path forward for companies willing and able complete transaction can be completed in “Since using Mizzen, we can now book to seize the day.” minutes. online, get comparative rates from diferent Small wonder that Mizzen, the frst start-up shipping lines, and have the whole thing of its kind to pioneer a digitised approach done within the hour. That has freed us to a growing industry which has been slow up to sell more volume with our revenue to change, is rapidly getting the attention of in the past year increasing as a result. We shipping lines and freight operators. Management consultants McKinsey forecasts the container business will increase in size by two to fve times in the next 50 years, using digital technology, artifcial intelligence and giant autonomous ships. Mizzen’s Managing Director, veteran shipping executive Jon Charles, said: “What took a freight operator hours on the phone or multiple emails, chasing freight rates and trying to make bookings can now take just minutes on the internet, with new opportunities introduced to insure certainty of being able to make bookings on the vessel needed”. “We had the idea when we sat down and really looked at what could be done to remove the long-standing inefciency in how prices are set and bookings made. By using our simple system, freight operators and shipping lines can have more certainly, Mizzen Group’s Chairman Dr Alan Taylor, Managing Director Jon Charles and be more efcient and more proftable.” Executive Director Darren Burden

34 I Summer 2017 I Across Borders The app that is changing the container transport industry

The use of internet marketplaces The shipping industry has been around placed on transport companies, freight for freight exchange has been for over 1,000 years, and until recently forwarders, and importers and exporters there have been few major technological to meet their customers’ delivery needs. very popular and widely adopted breakthroughs. The industry has been Invariably, trucks are never in the right by trucking companies in the US. operating in the same way all these years, location at the right time. and few have leveraged the Internet for Yet it has taken many years for MoveIt4u solves this industry problem by their international counterparts business, except for online tracking and electronic document transfers. collaboratively connecting owner drivers to catch on to the advantages of and transport companies to the needs these marketplaces. Today, there Then, along came 2015, when disruptive of anyone wanting containers delivered technology became the norm in everyday are a handful of multi-modal freight – anywhere – anytime. MoveIt4u is the life, with such apps as Uber, AirBNB and frst in the world to develop functionality marketplaces on the Internet which AirTasker becoming main stream. for pick ups or deliveries from wharves, have been around for a number of In a similar theme, MoveIt4u was born rail heads, empty container parks – years specialising in international and launched in Sydney in 2017 as whether they be single or round trip jobs freight movements, however they an innovative solution for the delivery – diferent size containers and whether they are full or empty. And as the chain have not been developed to their full of shipping containers, using both the internet and phone apps as its solution. or responsibility (COr) laws in Australia capacity. take efect, Movelt4u has modelled In this industry where volumes are ever its registration policy to capture the changing throughout the course of legislative requirements. the year, with truck availability being either under or over utilised, pressure is Unlike Uber, MoveIt4u’s intention is not to drive the prices down for delivery services, but for prices to be determined by the marketplace. As the bids for jobs are not visible to each other, there is no competitive bidding like Ebay. MoveIt4u utilizes today’s technology including GPS tracking, “live” updates via email and SMS, driver ratings and various reporting. And, it is all available via your PC, iPad, iPhone or android phone with the app which can be downloaded from iTunes or GooglePlay stores. If you are an owner driver or transport company looking for more work, a freight forwarder, importer or exporter who needs an urgent delivery, or a transport company requiring more drivers to get through the workload, then MoveIt4u is for you. register now to connect and deliver. For more information on MoveIt4u – www.moveit4u.com.au – The app that is changing the container transport industry. MoveIt4u is the frst of Phone 1300 768 212 its kind in the industry, and uses state of the art technology to connect companies and drivers in real time, enabling them to maximise their resources, time and costs. Companies can access reporting on the number of jobs completed, the drivers being used, and various KPI reports to measure performances. MoveIt4u easily integrates directly with transport company systems.

Summer 2017 I Across Borders I35 bUSINESS REFORM

WiseTech Global launches border compliance engine, BorderWise

Sydney, Australia, 30 November 2017 WiseTech Global, the technology company behind the industry-leading supply chain solution, CargoWise One, has announced the launch of a powerful and comprehensive border compliance engine, BorderWise, for customs brokers, legal and other trade professionals.

BorderWise brings together a range and alerts on legislation, publications change, often with little or no notice to of critical border compliance data, law and notices from regulatory bodies, to industry. Most countries have numerous, and regulation, and advanced search ensure professionals stay informed of sometime hundreds, of items of customs functionality to help the user to efectively changes. BorderWise contains the full legislation or policy documentation, and minimise customs duty and mitigate the breadth of customs publications from the therefore managing customs compliance risks associated with customs non- World Customs Organization Harmonized is a growing and evolving challenge compliance for themselves and their System Explanatory Notes and the for customs brokers and self-reporting customers (importers and exporters) in the principles of valuation, to ratifed treaties importers, especially in an environment countries involved. and local legislation. Industry expert, where serious penalties are issued for non-compliance or duty short-payments. WiseTech Global CEO, richard White, Director of Sue Danks Tarif Consulting said, “Growing complexity in world trade and vice Chair of CBFCA, Sue Danks, “In my opinion, Australian customs brokers continues to put pressure on the supply has assisted in the development of are highly trained and skilled, but in a chain, and efcient border compliance BorderWise and said, “With increasing time of increased regulatory inspections is critical. We are creating the data sets challenges in addressing border and a penalty regime we all need all the and building powerful new technologies regulation, ensuring compliance is fraught assistance we can to provide advice to address productivity, costs and risk with risk. requirements keep changing as that is timely and accurate. BorderWise mitigation in customs compliance.” new provides that assistance. It is designed to be a powerful border compliance engine legislation and policy changes keep rolling BorderWise ofers the next-generation that pulls the information together and of compliance management, featuring out, while data can be convoluted, difcult through advanced guided search, helps a comprehensive, integrated suite of to interpret and hard to access efciently. present the right information to users in a legal books, technical documents, On top of that, not all customs authorities single window.” tarif-classifcation tools and reference agree on the interpretation or classifcation information. It provides real-time updates of certain goods, and those opinions The system was developed to help customs brokers work more efectively with their customers in advance of border transactions to maximise compliance, assist with forecasting, reduce risk, and ensure that no more than the duty legally due is paid. In addition to helping reduce compliance risk, fnes, penalties and costs, BorderWise can help customs and border protection agencies mitigate safety and security risks arising from the movement of goods through their borders. BorderWise boasts advanced search functionality, for instance, by the tarif classifcation or smart word search, to give the quickest and most accurate and relevant information as results. According to robert Long, Customs & Tarif Advisor at GEODIS in Australia, who recently started using an early trial of BorderWise, “I have used various customs software since the early 1990’s and BorderWise is certainly the best one yet – the absolutely wide range of source material (books in the library) that can be accessed within the one program is fantastic.”

36 I Summer 2017 I Across Borders Looking forward, the BorderWise designed to increase transparency desktop application, making it even easier compliance engine is soon to be and help further mitigate and minimise for users to make timely and accurate enhanced even further with natural non-compliance and risk for customs decisions. Fully integrated into CargoWise language processing and machine brokers.” One, BorderWise can be used by existing learning, where in addition to the CargoWise One customers to signifcantly Christine Kontos, Senior Customs Tarif presented search results, enhance their productivity. In addition, Product Manager at WiseTech Global, WiseTech further due diligence and risk mitigations who has previously served as victorian and additional relevant customs and regional manager and director of the Global has made BorderWise available compliance information will be presented. CBFCA, said, “In designing and building to industry professionals in Australia, as a standalone application available via a “This will be a signifcant help to customs BorderWise we have brought together monthly on demand license. brokers needing to understand specifc huge sets of data including law, regulation and often complex local legislative and trade data, that will drive our machine For now, BorderWise will be launched in compliance needs,” said Zubin Appoo, learning and natural language processing Australia for Australian customs as of 1 Innovation and Technology Manager at techniques. This will further enhance December 2017, and is expected to be WiseTech Global. BorderWise and customs processing released in the United States, Canada, so customs brokers, self-reporters and Mexico, the EU, New Zealand, Singapore, “We will also be enhancing BorderWise other international trade professionals South Africa and the United Kingdom to contain full audit trail capabilities can fnd critical information more quickly, by the end of 2017. During 2018, for tarif classifcations to demonstrate even when the exact phrase or technical BorderWise will then be further enhanced due diligence by allowing brokers to term is not found. This will make a to include Brazil, China, Germany, Italy electronically and seamlessly have signifcant impact on customs compliance and Taiwan, with further key economies importers signof on the compliance productivity and efectiveness.” to follow. documentation before the goods are entered for Customs. This feature is BorderWise can be accessed via web or www.borderwise.com

Making your next Freight or Clearance move? Think Logical(ly)

Logistics is a risky game but luckily, Logical Insurance Brokers is on your team. We specialise in providing insurance advice for freight forwarders, customs brokers, and transport operators.

Steady your hand; protect your business against freight and clearance liabilities.

Call James on 02 9328 3322 or email [email protected].

www.logicalinsurance.com.au/logistics

Summer 2017 I Across Borders I37 bUSINESS REFORM

Legal Update Checking the T’s and C’s

By AlExIS CAHAlAN, Principal lawyer and AlISTAIR SullIVAN, Solicitor, Thomas Miller law

bills of lading. The conduct of Freight Solutions in issuing bills of lading purporting to be original bills was found to be misleading and deceptive. It did not matter that Freight Solutions had no intention of doing so. Freight Solutions was also found to have purported to execute bills of lading as agent for the ocean carrier without authority to issue bills on their behalf or sign as their agent. The Court found that the breach of warranty of authority was the cause of the fnancier releasing funds, and therefore the cause of its loss, meaning that ACFM also succeeded on this basis. Freight forwarders who issue In the same week in October 2017, agreement with an Australian exporter house bills of lading should be conscious the District Court of New South Wales of sheep skins and cow hides. The of how they are representing their role in and the Australian Federal Court both exporter could draw down on the loan shipping documents particularly bills of handed down decisions in relation to upon presentation to ACFM of “original lading which also serve as documents the Australian Consumer Law (ACL) shipping documents… including but of title. legislation. The decisions relate to the not limited to the invoice, customs Unfair Contract Terms activities of both a transport operator declaration, packing slip, insurance and and a freight forwarder and highlight bill of lading”. If the exporter defaulted In the Federal Court of Australia, ACCC aspects of the consumer law as they on its loan repayments ACFM had the v JJ richards and Sons Pty Ltd [2017] apply to entities in the transport sector. right to take possession of the goods. FCW 1224, the new unfair contract terms provisions of the ACL were tested. Misleading and deceptive conduct The exporter supplied the fnance and breach of warranty company with the house bills of lading The November 2016 amendments to that had been issued by Freight the ACL extended the unfair contract On 16 October 2017, the District Court Solutions. These had been signed by provisions that used to apply only to of New South Wales handed down a Freight Solutions as agent for various consumers, to small businesses entering judgment that is of signifcance to all carriers. ACFM believed that it was into standard form contracts. At least freight forwarders that issue house bills acquiring security of the goods when it one of the parties to the contract must of lading, Australia Capital Financial was provided with these house bills of be a small business – that is one which Management Pty Limited v Freight lading and that no other person could employs fewer than 20 people including Solutions (vic) Pty Limited [2017] take possession of the goods without any casual staf who are employed on a NSWDC279. The freight forwarder in presentation of the bills of lading. The regular or systemic basis. The value of this case, Freight Solutions, was found house bills of lading provided had the the contract at the time it is entered into liable for misleading and deceptive features of an original bill of lading with must not exceed $300,000 over 1 year conduct within the meaning of the ACL the consignee marked “TO OrDEr”, or $1million if the contract exceeds one and in breach of a warranty of authority each bill stamped “OrIGINAL” and none year. resulting in judgment being entered of the bills were endorsed. against Freight Solutions in an amount of A term of a contract can be considered The exporter failed to meet one of the $845,456.93. unfair if it: drawdowns and the fnancier expected In this case the fnance company, to recoup its losses against the goods • would cause a signifcant imbalance Australia Capital Finance Management except that the goods had been released to the rights of the parties and their Pty Limited (ACFM), entered into a loan on presentation of the carrier’s original obligations;

38 I Summer 2017 I Across Borders • is not reasonably necessary to payment within the credit terms yet Cautionary Tales for Freight protect the legitimate interests of the continue to charge for services during Forwarders and Transport Operators party beneftting from the term; the period of suspension; and These cases illustrate the need for • would cause fnancial or other • create an unlimited indemnity in its freight forwarders and transport detriment if it were to be applied or favour even where the loss was not due operators to be careful when providing relied upon. to the customer’s fault. documents that relate to the carriage of goods, including house bills of lading In ACCC v JJ richards the Federal In this case it was the Australian and standard terms and conditions. Court found that several of the terms Competition and Consumer Commission contained in the waste operator’s It is important to ensure that house bills standard form contracts to be unfair. JJ (ACCC) which sought declarations of lading are not confused with sea bills richards had entered into standard form from the Federal Court to restrain JJ of lading and should not include wording contracts with over 26,000 customers. richards from using these clauses in such as “OrIGINAL”. In addition, to These included clauses that allowed JJ their standard form contracts. Should a consider the efect of the complete richards to: contract term be declared unfair, a court documented transaction before it is may order that the term be declared concluded. A freight forwarder should • automatically renew contracts also not purport to act as agent for a unless the contract was terminated 30 void with the balance of the contract to sea carrier where there is no actual days before the end of the term; remain on foot. Alternatively, a court may refuse to enforce a contract or agency, as this will be held to be • unilaterally increase its prices; direct a refund or the re-performance of misleading and deceptive conduct under the ACL. • use reasonable endeavours to services. perform the collection services but Transport operators should also check Importantly, certain contracts, including accept no liability if such performance their standard terms and conditions in for carriage of goods by sea, are was hindered; light of the decision in JJ richards. In excluded. However, a freight forwarder’s particular, it is important to consider • ensure the customer exclusively terms and conditions, extending the whether there is any signifcant used JJ richards for their waste period of carriage beyond the sea leg imbalance between the parties to removal services during the term of the and including transport by road or rail, the contract and if so whether this agreement; may still be caught by the provisions of is necessary to protect a legitimate • suspend the services for non- the unfair contract terms legislation. business interest. The transport & logistics specialists for Australasia Legal services for the real world

Thomas Miller Law Pty Ltd, Level 10, 117 York Street, Sydney, NSW 2000 Australia Tel: +61 (0)2 8262 5850 [email protected] www.tmlawltd.com SYDNEY - LONDON - NEWCASTLE - PLYMOUTH - GENEVA

Summer 2017 I Across Borders I39 INTERNET TRADE REFORM

Circle the Wagons, is coming!!!

By KAI lINCOlN, Seko logistics

Without downplaying the might and company to lease shopping space, a elections and impacting decisions of breadth of Amazon, I’d say that the hype 3rd party warehouse solution, coupled countries and economies for a very long surrounding Amazon’s arrival in Australia with a trucking company to deliver to time so in comparison, using the media has been one of the most over-saturated the areas where DJ’s deliveries were to create habits of consumers is relatively topics of 2017. So why not join the already headed. They could’ve done the easy these days. masses and throw my own two cents in same with international freight, customs Okay, so what does this mean for us as the bucket. However, as a publication brokerage, etc., etc. But they didn’t. No freight and logistics providers? dedicated to our beloved freight and one else has. Firstly, let’s remember, Amazon aren’t logistics industry, I’ll make sure to try and As someone from a 3PL and freight “coming” to Australia. They’ve been here keep things as relevant to us as possible. background, we have always sold our for a long time. It’s reported that they services on the premise that we are the As is my habit, to talk about the future, did AUD 1 Billion in sales in Australia logistics experts and retailers are the we must frst spend a little time on the last year. Yeah, not the numbers of retail experts and we should focus on past. There’s plenty you can read about a new market entrant. They’ve had our strengths. This is still very true – I’ve the history of Amazon, (which, mind boots on the ground for their technology seen some retailers make some very silly you, has been around for 22 years now), products for several years now and supply chain decisions. However, the however there are some very important have been fulflling physical merchandise way that Amazon have moved through factors and strategic steps to consider purchases directly the world, they’ve when you think about what Amazon are from overseas for well managed to keep going to do to the Australian economy. over a decade. They the expertise in the To start with, we all need to stop thinking are simply expanding businesses where the adapt or die about Amazon as a retailer. They are their Australian service expertise belongs whilst technology media business that happens oferings. Having said leveraging this within to sell some physical merchandise and that, their global expansion hasn’t been the Amazon retail network and on-selling logistics services. perfect. reports suggest that 92% of it to others. their revenue on product and grocery Amazon are fortunate in the sense To understand where Amazon are sales comes from four countries – the that their visionary leader, Jef Bezos, going, you just need to look at some USA, UK, Germany and Japan. As was able to look beyond his initial core of their recent acquisitions and major logisticians, we know that Australia business model (selling books online) investments (and those of their related provides unique geographical challenges and identify the services that he relied parties). Currently, the big news is that most other countries don’t have; on. Over time he built or acquired around their entrance into brick and We’re a big, sparsely populated chunk of services to support his own business. mortar grocery retail with the purchase land. Once mature or established enough, of US chain Wholefoods. Logically, their However, it is likely that Amazon will those services could be on-sold to other signifcant investments in cloud, data disrupt the traditional Australian retail companies, many of whom were and still mining and AI technology are going to landscape, so, let’s start with the one are, competitors to Amazon. Hosting assist Amazon with further personalising that will probably have the biggest direct services, a marketplace for selling online, ofine and hybrid shopping impact on many of us – margin pressure. goods, 3PL warehousing with fulfllment experiences. Interestingly, though, their Amazon the retailer is a very low-margin by Amazon (FBA) – the list goes on. large investments in media are largely business. Their retail sales return a Amazon’s web-services business now ignored when people talk about the gross-margin of less than 7%. Even accounts for nearly three-quarters of all Amazon efect on the economy. Twitch. compared to freight forwarding (which as profts and can help to support their low- tv, a huge community of online gamers, we all know isn’t the industry you push margin retail business as well as any new The Washington Post and sizeable your kids into if you want them to get areas that they want to dabble in. interest in Twitter are a few examples rich) this is measly. So, whilst Amazon of their recognition of the importance There’s no real reason why other retailers have the luxury of their other services that online and social media play in this here or overseas couldn’t have attempted propping up their profts, most Australian modern world of ours. News and the similar things in years past. Why couldn’t retailers don’t. Local retailers are going sharing of information has been winning David Jones have established a property

40 I Summer 2017 I Across Borders to need to fnd a way to compete with Amazon’s lower cost. As we all know, they are going to look at their cost-base before they start to think about lowering their margins (by the way, for the blue- chip Australian retailers the gross margins sit somewhere in the range of 20-40%, much of which is required to cover the high overhead costs of property and wages). So, wherever there is a supply-chain cost, retailers will be looking for cost-downs Or innovative supply-chain solutions from us. I think we’d all have to acknowledge that in the world of physical freight there hasn’t been a tremendous amount of recent innovation that has led to cost savings for retailers. There’s not much sharpening of pencils left for us to do in the traditional commoditised services, so it’s time to get out the whiteboards, your favourite bottle of innovation juice and start thinking outside of the boxes that we’ve grown especially comfortable with. Next – get ready for your customers to become more demanding around service. As consumers begin to get a taste for next-day, same-day, two-hour deliveries, etc., this will ripple up the supply chain. Everything is going to need to shorten. Of course, there are some physical Seko Logistics - Geof Rowan (Sales Director), Justin Irvine (Commercial Director) and truths that we can’t change – shipping Kai Lincoln (Managing Director) times from China won’t drop by much will this cost anything extra?” Expectation remind ourselves that whilst it could be and airfreight capacity will continue to is going to rise to the point where these perceived that they’re a pain in the ass, be limited out of the key retail origins. questions and requests can be dealt However, this is where innovation will be the reality is, that with every demand, with online and your systems will need to required. In-country vendor managed every time they catch us on a slip-up and shufe bookings, driver rosters, diferent inventory solutions, decentralised multi- every new solution they require, they make warehouse solutions (label on unpack retailer super-DC’s, express recovery our business better. Amazon plays this cross-docking, versus storage, versus and cross-dock solutions are just a few role for global retail. They are a behemoth unpack, value-adding and despatch) all so examples of solutions that will become who we need to be wary of, they are an your customer can see what the impact much more commonplace in Australia. agent for change, who we need to admire, to cost and time will be and a decision and they are a very sound business, who With the compression of the supply-chain can be made in minutes without waiting we need to respect. will ultimately come further demands on for a phone-call back or even talking to a fexibility and visibility. Knowing when person. I’ve got young children and we can kid all a vessel lands and the availability of a we want about the little Amazon babies And then, once you’ve done all that, you’ll container is “so 90’s”. Being able to that are growing up to serve as the next need to provide measures on how you track that status online is “so 00’s” and wave of shoppers for Amazon goods actually performed. being sent push notifcation emails about and services, however the reality is that statuses is “so 20-teens”. Sophisticated Fortunately, there are some very smart unless we live completely of-the-grid, dashboards/control-towers that can report people out there who are building these this is no joke. Amazon or one of their dynamically on “what-if” scenarios will systems for the industry, however it’s related entities, will have a signifcant level become standard. going to take leaders in our industry to of infuence on us and, especially, future recognise that these aren’t a fad, but are What am I talking about? You already generations. Fight or fight isn’t really the changing face and pace of business. deal with this in your daily work. A an option here. Adapt or die is probably There may also be a requirement for customer calls you and says, “I really need more like it. businesses to come together in shaping that container urgently, is there any way the innovative technology, either through Let’s just hope that unlike Anakin that you can schedule in a late delivery consultation, early-adoption or funding. Skywalker*, Amazon decide to use their and I’ll get the warehouse to stay open super-powers for good and not evil. late so we can unpack it that night and We have a demanding customer in our get the orders out the next day. Oh, and portfolio of clients and we all regularly *Anakin Skywalker is Darth Vader

Summer 2017 I Across Borders I41 INTERNET TRADE REFORM

GST on low value imported goods By DAVID PENPRAZE, Crowe Horwath

With efect from 1 July 2018 the to take efect from 1 July 2017, in line for the new measures. with the introduction of GST on inbound GST treatment on the supply to • Conclusion 3 – The legislated model intangible supplies to Australia which took is the most feasible model at this point in Australian consumers of low value efect on that date, however after the bill time, given the Australian Government’s imported goods made by ofshore was referred to the Senate Economics decision to change the law to collect GST Legislation Committee it was passed into vendors directly, through online on low value imported goods and the platforms or via redelivery services legislation in June 2017 subject to two amendments. The frst amendment was limitations of alternative models. will change. to delay the introduction of the measures • Conclusion 4 – The Productivity for one year until 1 July 2018, and the Commission has concluded that although This represents a signifcant modifcation second that a Productivity Commission there is a case to consider delaying the from the position that has existed since public inquiry into the matter. implementation of the legislated model for the introduction of GST on 1 July 2000, The Productivity Commission was asked various reasons, it considers that there is which provided concessional treatment to undertake a public inquiry into diferent not sufcient basis to recommend a delay for low value imported goods. Under the types of models for collecting GST on of the current implementation schedule existing provisions GST is not applied to low value imported goods, and its fnal for the new measures. the importation of goods where they fall report was produced and provided to the under the low value threshold. With respect to the fourth conclusion Australian Government on 31 October reached by the Productivity Commission This change is signifcant not only in the 2017. in its inquiry it was considered that, Australian GST system, but also on the After the fnal report was tabled in although delaying implementation may broader global GST or valued added tax Parliament it was released to the public result in benefts including providing more (vAT) stage because Australia is the frst on 9 November 2017. The fnal report time for relevant technological changes country or union to introduce such an contained 4 conclusions coming from to play out, allowing Australia to study impost on supplies of low value goods the inquiry, which can be summarised as and learn from the experiences of other made from outside the indirect tax zone. follows: nations who adopt similar measures Although it is anticipated that and to avoid ‘frst mover’ risks, these • Conclusion 1 – The revenue governments in various other jurisdictions benefts comprised insufcient impetus collected under the legislated model is will follow suit and legislate along similar for the Productivity Commission to make likely to be modest and subject to the lines to impose GST or vAT on low value a recommendation around delaying the rate of compliance to the system by goods imported into their jurisdiction, current implementation schedule. foreign suppliers, who will incur signifcant Australia currently fnds itself as the costs to comply with the legislated model In addition to the conclusions reached frst adopter of such new legislation. and Australian consumers will be charged by the Productivity Commission, the Accordingly the trials and tribulations higher prices for low value imported fnal report also contained a single of being the earliest adopter of such goods. However, tax neutrality between recommendation that the Australian legislative changes will be experienced imported and domestically retailed low Government should undertake a by both the Australian Taxation Ofce value goods should improve as a result of comprehensive review of the collection and new GST taxpayers upon their the legislated model, without Australian of GST on low value imported goods commencement. consumers incurring any major disruption around 1 July 2023 (i.e. 5 years after The newly legislated model for imposing when importing the goods. commencement of the legislated model) GST on low value imported goods does unless exceptional circumstances • Conclusion 2 – Although a number not have the efect of removing the necessitate an earlier review. of other collection models have been low value threshold, rather it imposes proposed (including transporter, fnancial The Productivity Commission fagged an obligation on certain suppliers and intermediary and self-assessment by several examples of exceptional deemed suppliers to charge and collect purchasers) which would mitigate some circumstances which may warrant the GST on supplies of low value goods of the limitations of the legislated model, undertaking of an earlier review, including under a vendor collection model. no other model would be ready for extremely low compliance with the The legislated changes were originally deployment by the 1 July 2018 start date legislated model, unintended impacts

42 I Summer 2017 I Across Borders on consumers or signifcant trade policy start date. ofshore suppliers, it is noted that there issues arising. may be substantial interaction between Accordingly, where a supplier (or deemed such suppliers and Australian based The Productivity Commission also supplier) makes ofshore supplies of businesses involved in the importation or recommended that the comprehensive goods (except tobacco or alcohol freight forwarding of the relevant goods. review to be undertaken should consider products) that have a customs value of the following key matters: A$1,000 or less when the price is frst It is intended that the new measures will agreed with the customer the supply not give rise to border delays in relation • The performance of the legislated of the goods will be connected with to the importation of low value goods model during the period from introduction Australia. where suppliers have already paid GST up to the time of review; on the taxable supply, nor should double In the case where such a supplier • Where the legislated model is taxation occur on low value goods at reaches the GST registration turnover achieving unduly low rates of compliance, threshold of A$75,000 or more on a the initial supply and subsequent border whether there is merit in introducing other current or projected basis including its entry point. measures for lifting compliance; supplies of low value imported goods, As noted above, the new provisions are • Where the legislated model is the supplier will be required to register only intended to capture supplies of low achieving high rates of compliance, for GST, charge and remit GST on those value imported goods to consumers. In whether there is merit in introducing other supplies and prepare GST returns. this regard, an entity will be a consumer measures to extend the model to higher A number of types of GST registration if it is not registered for GST or does value imported goods; and will be available to such suppliers, not acquire the supply in carrying on its • Whether a valid case can be made including a simplifed GST registration enterprise in Australia. to adopt an alternative collection model for eligible non-residents who want Accordingly, the information provided to the legislated model, taking into to electronically register, report and to suppliers and DIBP at the Australian account appropriate factors at the time of pay their GST liabilities on a quarterly border is critical to ensuring that supplies the review such as relevant technological basis. This option does not allow the of low value imported goods made to and process advancements. supplier to claim Australian GST credits, registered Australian entities are not however for suppliers operating purely regardless of the recommendation subject to GST. Safe harbour provisions outside of Australia this should not cause made and conclusions reached by the apply for suppliers to treat supplies as issues. Suppliers who only sell low value Productivity Commission it is important to not connected with Australia if they imported goods will not be able to apply understand and be prepared for the fact reasonably believe that the recipient of for simplifed GST registration until 1 that the legislation already passed will be the supply is not a consumer. January 2018. efective from 1 July 2018 as currently In order for these safe harbour rules to drafted, subject to any subsequent Although these new measures are aimed apply, the supplier must have obtained amendments that may be made to that at the collection of GST on supplies the recipient’s ABN and received a legislation between now and the current of low value imported goods made by declaration or other information indicating that the recipient is registered for GST. In conjunction with these measures, penalties apply to recipients who avoid GST on supplies to them through misrepresenting their GST status. Where supplies of low value goods are subject to GST a further mechanism exists to prevent double taxation at the border, deeming the importation to be a non-taxable importation if the importer notifes the Comptroller-General of Customs that the goods were supplied as part of a taxable supply at or before the time when the taxable importation would have been made. The ATO is currently working with DIBP to ensure that the required information to provide such notifcation is included with the other reporting data provided on the entry of goods for customs purposes. Where your business imports goods and these measures may impact your Robert Fais (Australian Taxation Ofce), David Penpraze (Crowe Horwath) and Sarah customers, you should consider opening Marslen (Department of Immigration and Border Protection) presenting at the FTA dialogue with them as to the additional – CPD – Border and Biosecurity Compliance Program event, Parkroyal, Melbourne reporting obligations that will arise under Airport, 6 September 2017 the new rules.

Summer 2017 I Across Borders I43 MEMbER PROFILE

Fletcher International Exports leading the way with integrated processing and logistics

Fletcher International Exports is a frst generation family owned business, started By roger and Gail Fletcher over 30 years ago. The company is Australia’s most vertically integrated processor and exporter of lamb and sheep meat products. The company operates two highly efcient processing facilities, located in Dubbo, New South Wales, Albany and Western Australia. The two plants have a combined processing capacity in excess of 90,000 sheep and lambs per week, equating to over 4.5 million head per year. The processing philosophy is to utilize as much of each animal as possible.

To complement the existing processing packing facility serviced by Fletcher to continue to work with its customers operations, the company has been owned locomotives and wagons. to develop new innovative products for active in developing signifcant farming changing consumer tastes and lifestyles. interests. These interests further Fletcher International Exports has been The company’s full vertical integration strengthen the livestock and grain responsive to the changing dynamics from farm and processing to logistics supply chain and provide an opportunity of consumer demands in the global and in market support provides essential to supply consistently throughout the marketplace. The expansion of the capabilities to realize this strategy. year. company’s chilled meat business and the development of the grain and pulse The locations of the company’s In the past 10 years the company has export business have been examples processing facilities provide clients developed Fletcher Commodities which of recent responses to meet changing with unmatched fexibility in terms of exports and markets cotton, grain, shipping. Each site has advantages in markets and opportunities. pulses and oilseeds through a state transit times to specifc markets and of the art grain handling and export One of the companys core strategies is contracts can be shipped from either

44 I Summer 2017 I Across Borders the east or west coast of Australia to supply chain when meeting customer’s openly encourages enquiry. achieve the optimum delivery time. expectations. Fletcher Logistics manages the Fletcher International Exports utilises Fletcher Commodities and Fletcher entire import and export task from the latest technology to ensure efective Logistics has a class leading facility. intermodal terminal to port and return. logistics management of cargo to clients No container job is too big or small. • Grain storage capacity of 350,000 in over 100 countries. The company metric tons (silo, bunker and shed) The division prides itself on using a has made considerable investment to storage. strong relationship network to leverage completely re-ft production, inventory, better value for customers on shipping, sales and shipping I.T. systems. This • Cotton lint warehouse capacity of trucking and rail rates to ensure our provides ‘real time’ order information 25,000m². customers have the most competitive and places the company in a strong options available. Fletcher Logistics position to manage business growth into • High fow container packing for promotes open communication ensuring the future. both 20 and 40 foot containers, bulk and palletised. transparency and consistency right Established in 2009 the Fletcher across the supply chain when meeting Commodities Division’s asset base of The company is in the enviable customer’s expectations. grains packing and intermodal terminal position of owning all its own logistics Fletcher Logistics owns the longest in Dubbo NSW has surged ahead. infrastructure from the processing Beginning with 12,000 metric tonnes of plants to the wharf. This includes road and heaviest container export train in silo storage to service the companies trains for the west coast operation and Australia. locomotives and wagons for the east farming requirements the site quickly Fleet size of 3 x C44aci UGL 4500 coast facility. expanded to the site’s current capacity horsepower locomotives, 62 x 60 foot of approx. 350,000mt of storage across Fletcher Logistics handles in excess CIMC wagons with a combined length of silos, sheds and bunkers. of 60,000 twenty foot Equivalent Unit 1.28km. (TEU) per annum. The division supports Fletcher Commodities now receives With the addition of a banker locomotive its own logistics and shipping centre, all grades of Wheat, Barley, Desi in peak season the train has a capacity Chickpeas, Faba Beans, Albus Lupins, where staf have extensive experience in of up to 6,100mt trailing tonnage, 186 Canola and Cotton Seed. working with shipping lines, Government TEU slots per service, three times per Bodies and freight forwarders in making A large proportion of the grain received containerised import and export of week. at Fletcher Commodities is exported to freight seamless. The intermodal Train unloading and reloading is carried over 40 countries around the world to terminal handles a variety of products a variety of diferent end users such as out efciently by three frontline 40mt including abattoir products, mining four mills, bio-fuel producers, stockfeed heavy lift container handlers and several exports, cement imports, fertilizer companies and retail packaging empty handlers, putting the train unload/ imports, grains, pulses, cotton lint, companies. reload times as one of the best in the cottonseed and agri/mining chemicals country. The business promotes open with room to expand into new products. communication ensuring transparency The division is always looking at new When on site, the train stables on the and consistency right across the ways to service the freight market and company’s private 1.5km double ended loop siding, with over 1000 metres of hard stand train loading area. The train calls all three Sydney container ports before collecting empty containers for the return journey to Dubbo. The Fletcher Group recently became a member with APSA with the vision of joining like-minded businesses and promoting best practise to the shipping and logistics industries. Both of these industries require signifcant input from stakeholders further abroad, and we feel it is extremely important that businesses such as ours inform the stakeholders, be it government or consortium of the Strengths, Weaknesses, Opportunities and Threats we face into the future. For more information about Fletcher International Exports please visit www.fetchint.com.au If you would like to join the Australian Peak Shippers Association please visit www.FTAlliance.com.au

Summer 2017 I Across Borders I45 MEMbER PROFILE

MCS Maritime Container Services, committed to cost efcient logistics solutions and services for the container, shipping and transport industries

By JAMES WRIGHT, Director, Maritime Container Services

MCS is a 2nd generation family owned intermodal transport business from the same location, without entering which has been delivering supply chain solutions to our customers the congestion of Port Botany. This can be facilitated on a 24/7 basis for those for over 4 decades on road and rail. MCS operates from 2 strategic transport customers supporting rail. greater Port Botany precinct locations: MCS Cooks river rail Intermodal Each MCS rail service to and from Terminal (CrIMT) and Banksmeadow. Port Botany can move up to 170 TEU equating to a reduction of 120 truck CrIMT is underpinned by the largest international shipping lines calling Port movements of one of Sydney’s busiest Empty Container Park in NSW with a Botany. road systems, while supporting the NSW holding capacity of 14,000 TEU. The Government’s target for increased rail The MCS rail division operates from terminal services some 90,000 TEU of modal share. CrIMT servicing Port Botany via 4 regional rail per annum and recycles 2 direct rail services per week with plans Our second operation at Banksmeadow out of every 3 empty containers back to increase frequency in 2018. The is located just 1 kilometre from Port through to the export cycle. MCS’s dynamics of this combined model allows Botany. The Banksmeadow terminal ability to deliver this outcome makes us exporters to drop of a loaded container the supplier of choice to all of the major acts as an interim FCL storage facility for rail to the port and collect an empty for a number of road carriers operating

46 I Summer 2017 I Across Borders in the port precinct who do not have the per annum of grain. This will deliver ability to stage containers. In addition, some 10,000 TEUs of container Banksmeadow is a full service Empty exports for NSW to be railed the short Container Park with a capacity of 3,000 distance to Port Botany on MCS rail, TEU. complementing MCS’s growing rail MCS has big container import business on the reverse MCS has big plans for 2018. In plans for 2018. In leg. conjunction with our joint venture conjunction with partners GrainCorp, we will commence The facility will have the ability to access the operation of Sydney’s frst port grain from the Queensland border to our joint venture precinct based grain packing facility at the victorian border, with the target Cooks river Intermodal for containerised source location being the Murrumbidgee partners GrainCorp, exports. Irrigation Area. This will recapture we will commence substantial freight volumes that currently Located just 4 kilometres by rail from seep north and south to Brisbane and the container ports at Port Botany, MCS the operation of Melbourne respectively back via Port CrIMT is ideally situated to receive Botany. Sydney’s frst port grain by bulk rail, pack containers and dispatch to the port. The facility will This project will moreover provide precinct based provide superior access to the growing signifcant benefts to the international container market for grain exporters shipping lines calling Port Botany by grain packing from NSW and will be directly connected further export uptake as well as reduced facility at Cooks by rail to the GrainCorp NSW country downtime on the containers not having silo network. GrainCorp has some 90 to be transported up country for River Intermodal country silos in the State with a storage packing. capacity of 11 million tonnes servicing for containerised MCS, are proud to be your independent 6,000 NSW country grain growers. family intermodal terminal and multi exports. The ‘state of the art’ Cooks river modal port transport operator. Thank Intermodal container packing facility, you for your continued support as we with twin inverter packers, can receive enter our 45th year of operation stronger and pack in excess of 250,000 tonnes than ever.

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Summer 2017 I Across Borders I47 MEMbER PROFILE

BSM luncheon 2017

By ROBERT FlEMING, BSM Global

We were delighted to welcome While we enjoyed delicious food & cool We now can’t imagine life without so many representatives from beverages overlooking Cockle Bay, it smartphones as they have dramatically was not the view that was the best part banking, insurance, shipping, improved our day-to-day life. So too will of this event. advancing the technology and process government agencies, terminals surrounding supply chain logistics create and information partners to Here are my top fve takeaways from the BSM Global 2017 luncheon - Changing a positive future. our annual luncheon, held on Times, Emerging Trends. I look forward to a time where we refect September 6th at the Maritime Changing Times. on the old days of manual process - Museum. hopefully asking ourselves why we didn’t The event commenced with keynote change sooner, as it has made things so speaker - futurist Mark McCrindle much better - for us, our clients and the sharing his vision for the coming years, whole of the Australian export industry. by highlighting the ubiquitous trend of continuous development. Emerging Trends. He discussed how much our world has The luncheon format enabled us to changed in recent times, using as an hear about forthcoming innovations example the evolution of the mobile in our industry. Of great interest was phone. Blockchain. Blockchain will dramatically change the way the shipping industry I do not miss old mobile phones. Do you operates, however it is still on the remember when text messaging frst horizon ( it is closing in fast however) became a thing? How laborious it was When you to send a simple text message? I think I What is here now is GPS enabled then consider used to take 5 minutes just to spell out container tracking. Just like GPS on our yes... phones has been an absolute game- the broader information that moves across the supply chain, the related parties and how much value is attained when we share data you get a sense of where and how quickly we are going to see changes … MC: Mark McCrindle Panel: My Therese Blank (Country Manager, Maersk); Travis Brooks-Garrett (Director, FTA/Secretariat, APSA); Lisa McAuley (CEO, Export Council of Australia); Gerry Gannon (Head of Trade Finance Product, CBA)

48 I Summer 2017 I Across Borders Robert Fleming, BSM Global changer, so too will it be for the shipping Great minds together create great simple - the exporter is no longer industry. things. globally commercially viable due to non-competitive export costs, then the Innovation rarely occurs solo. That’s why There are over 17 million shipping overall shipping containers leaving our we were delighted to bring together our containers dispersed across the globe, shores full goes down, as so too does esteemed panel to discuss the pressing however the key stakeholders - the everyone’s overall business. exporter awaiting payment, importer issues in our industry. On the converse, if we adapt, or even waiting for his delivery, insurance A big thank you to My Blank from companies, bankers and logistics Maersk, Travis Brooks Garrett from the become global innovators here Down companies - in the vast majority cases Australian Peak Shippers Association, Under - the upside for all of us are immense. have no idea where containers are. Lisa McAuley from the Export council of Australia and Gerry Gannon Bringing everyone together. GPS enabled shipping containers have from Commonwealth Bank for their a positive knock-on efect throughout enthusiasm, interesting insights and For me however, the best take-away the whole supply chain, as they are informative answers to questions from from the luncheon was simply having something that can be implemented the foor. everyone in the room together talking, today. networking, exchanging stories from We look forward to bringing together the “coalface”, and learning more about This technology is a very good example a panel for next years luncheon, and what we each do. of a variety of improvements that are allowing more time for open discussion, available when information is shared as we received a lot of attendee I was involved in more than one across the supply chain – visibility to feedback that the panel session was a conversation that resulted in a greater temperature changes in refer containers highlight of their luncheon. understanding of each other’s day to will impact the quality of the product , day roles, challenges and wins. I think We are all in this together. the clients ability to sell the product , we need more of this in our industry. cost , reputation , insurance , fnancing Change is hard, however the outcome if Working together just has too much , risk management and ultimately we do not embrace what is inevitable is beneft to ignore. proftability. bleaker than the change process. We look forward to an exciting year When you then consider the broader The Australian export industry competes ahead and are thrilled to confrm that information that moves across the on the world stage. If we lag behind we are committed to facilitating this key supply chain, the related parties and - we all lose. As the global shipping initiative on an annual basis. industry begins to make leaps in their how much value is attained when we If you are interested in attending next technology and process, Australia must share data you get a sense of where year’s luncheon, please get in touch with take notice. and how quickly we are going to see Carolyn day from BSM Global - carolyn. changes … If we do not the chain of events is quite [email protected].

Summer 2017 I Across Borders I49 hUMAN RESOURCES

The Counter Ofer Conundrum

By MATTHEW BROWN, Director, Insync Personnel

Now here is a scenario that I’m sure a lot Ask 100 recruiters what’s the one thing you appreciate what they contribute of readers can relate to. they despise the most about what they to your company and the world do, and there’ll probably only be one outside it means a lot too. An employee (let’s call them answer – Counter Ofers… Irreplaceable Alex) hands you their Their Manager resignation and you’re stunned, And you should despise them too. • 37% of workers have a poor shocked, grief stricken and angry all at Did you know that an incredible 80% of opinion of their boss’ performance. once. people who accept a counter ofer still (This is a tough one, as in a lot of Alex is a great worker. You always leave their company after 6 months? instances this can be a challenge to thought they enjoyed being part of your And a MASSIvE 93% of people who rectify). company. I mean, why not? You ofer a accept counter ofers have left the Recognition motivating and inspiring ofce culture, company within 18 months, according solid remuneration and a memorable to a survey conducted by the Wall Street • 49% of the Australian workforce Christmas Party! Journal. said they would leave their current job for one where they are Then you think something along the lines That means for 80% of the people who of, “Uh Oh! Irreplaceable Alex is working recognised for their eforts and accept your counter ofer it’s not just contribution within the workplace on that special project! Alex has been about the money, and whilst the extra (and 93.3% who are recognised exceptional in the role which he has held $$$ may dull their intent and their real regularly, tick the box for job for the last 7 years. I can’t aford to have reasons for leaving, they eventually satisfaction)! him leave”! “How could I fnd anyone to remember why they resigned in the fll that position as well as Alex did”? frst place and for 4 out of 5 of your They didn’t get that promotion Irreplaceable Alex’s, they’ll be gone (Well you could use a recruiter but that’s • 36% of people felt they were not what this article is about) within 6 months and you’re back where you started: even more stunned, overlooked for a promotion and the So you decide to have an earnest shocked, grief stricken and angry all negatives increase if the workplace chat about the state of play in your at once. Left wondering why this has overall feels that the person that got organisation and how much you happened again and these are probably it instead was less deserving genuinely value them, potential career some of the reasons why: Lack of Training paths within the organisation…. and then you ofer them more money. Poor Communication • In instances where training Sometimes a modest amount, • In a survey of 210,000 budgets/opportunities are reduced sometimes a lot, it is never a small employees, less than 50% were 77% of companies report lower amount and they decide to stay. satisfed with the information they productivity received from management And I must be honest here, this is the There’s nowhere to move part of working in recruitment that They aren’t valued • 45% of workers are dissatisfed all recruiters hate most -the dreaded • 66% did have Salary concerns with advancement opportunities counter ofer. The bane of our existence, but 65% also said they don’t feel and 22% of people who don’t see the Kryptonite to our Superman! valued. Fair compensation is options for career development will certainly important, but making sure look elsewhere.

50 I Summer 2017 I Across Borders Career development doesn’t necessarily Lack of Trust the role they play. mean moving UP the org chart, a lack of • 90% of employees rank trust, It’s inevitable that every single company cross training opportunities is a common honesty and fairness as the most will have a rate of employee ‘churn’, complaint amongst candidates seeking valued attributes at work. no matter what you do, some staf will a new opportunity. • 80% say ‘lack of trust’ would always leave. cause them to leave. Too much work However by reviewing your own • Author, Dan Pink cites workplace and recognising those • 39% of employees are Autonomy as one of 3 critical ‘resignation triggers’, you can minimise The Counter Ofer dissatisfed with work/life balance motivators at work. Studies show the risk of having to play the counter the correlation between autonomy ofer game with staf members like • 2/3 employees feel at work and employee discretionary Irreplaceable Alex. overwhelmed with work efort and loyalty; the less freedom you have in your job, the less likely And when your odds of winning are only Conundrum • 80% of people want to work you are to do your best at work and 20% - well where’s the fun it that? fewer hours more likely you are to leave. Majority of statistics sourced from • Good employees tend to attract Employee’s don’t know or connect LocumCo, Roy Morgan, Forbes & a higher workload so it’s important to your purpose RecruitLoop they don’t feel overwhelmed, • 68% of employees believe For further information please visit causing them to leave. businesses aren’t doing enough to www.insyncpersonnel.com.au or create a sense of purpose phone 1300 467 962 One way to look at it is to ask – do you pay your team to work 40-50 hours a Employees today want to feel that what they are contributing to is greater than week or do you pay them to do their job just themselves – that they’re part of a and do it well? Flexibility in this area can team with a goal in mind. remind them go a long way towards retaining staf of what your company is aiming for and

YOUR PARTNER IN TRANSPORT & LOGISTICS RECRUITMENT 1300 INSYNC | www.insyncpersonnel.com.au

Summer 2017 I Across Borders I51 hUMAN RESOURCES

More unfair dismissal cases, and lower success rates for employers.

By ED MAllETT, Managing Director, Employsure

On average, every three and a Unfair dismissal claims are consistently is that it is no diferent to any other half minutes, an unfair dismissal the most common claim year on year. relationship break up. It is industrial According to Ed Mallett Managing divorce.” claim is made against an Director of Employsure, “Unfair dismissal “SMEs are under a lot of pressure. employer. That’s 127 a day and claims has become a growth industry of They’re often swamped and struggling employers are losing 60% of the sorts.” to keep their head above water running claims. “With options available to employees their business. So, it’s hard to keep like unions, and advocacy groups, and across the guidelines, legislation and particularly with the rise of no-win-no-fee requirements that they need to be lawyers, it’s no surprise the employer across. SMEs commonly do what they success rate in unfair dismissal cases believe is fair, not realising that they have are dipping. Lodging an unfair dismissal not followed the Fair Work guidelines.” case is easier than lodging a tax return.” Despite the reason for ending Last fnancial year, the Fair Work employment, employers must frst Commission (FWC) lodged a total ensure they understand and comply with of 33,071 applications with unfair the regulatory guidelines or risk a claim dismissals being the most common for unfair dismissal. application more than double that of any other. According to Ed “It’s critical that the right process in line with the Fair Work “The FWC has not provided the data Act is followed to the letter or employers split between large, medium, and small run the risk of an unfair dismissal claim. businesses, but what we know from If in any doubt, employers should get over 14,000 small and medium sized advice in advance of taking any steps to business clients across Australia is that terminate employment. This is not a risk they typically don’t have access to the restricted to big business. All employers same resources, time, or money to are potentially liable.” manage and address unfair dismissal claims, as larger organisations. Overall, “We hear from employers all the time employer success rates in unfair that it is hard to understand what is dismissal cases is only 40% contrasting actually required. The complexities of to an 86% successful outcome when the Fair Work Act can leave employers employers contact us for assistance.” exposed”. Ed says ending an employment Ed suggests these fve ways to minimise relationship is never easy, both for the the risk of being hit with an unfair employer and the employee: “The truth dismissal claim:

52 I Summer 2017 I Across Borders 1. Have clear descriptions of unacceptable behaviour. Employsure is Australia’s leading workplace relations specialists, bringing Employers need to train staf on good together human resources, compliance specialists, and access to legal resources to help employers succeed by establishing fair and safe conduct and include clear descriptions workplaces for their employees. of unacceptable behaviour in employee handbooks. This can cover every Employsure generously provide support to all Freight & Trade Alliance aspect of employee functions from (FTA) and Australian Peak Shipper Association (APSA) members with absenteeism, sick leave, performance complimentary access to workplace relations expertise via their dedicated and, most importantly, conduct. Employer Advice line – phone 1300 651 415 (quote ErA0017). 2. Don’t keep policies in a drawer. Employsure currently also support many FTA members with tailored solutions for Fair Work compliance including unique workplace documents, When employers have created a proactive approach to workplace disputes and insurance services. workplace policies, it’s important that Managing employees and keeping your workplace safe is a big part cases, and lower success staf know about them. A written or of business success. For a referral to Employsure or testimonials from computer quiz could ensure employees other FTA members, please email [email protected] or visit www. have read and understood the policies. employsure.com.au 3. Consistency is key. All disputes should be dealt with defned code of conduct, employers 5. Get the best advice. consistently. Employers should adhere to their own policies and procedures to are within their rights to schedule a Get expert advice to develop solid the letter, in every case. Consistently disciplinary meeting to clearly outline employee contracts, workplace addressing conduct issues will help staf the employee’s unacceptable behaviour. policies and performance management perceive what is appropriate workplace Following this meeting, a formal, programs to put you in the best behaviour and what is not. position possible before a dispute written warning may be justifed. If the occurs. Employers shouldn’t act hastily 4. Have meetings before the misconduct is repeated or it constitutes but instead use expert guidance to situation gets out of hand. serious misconduct, this could gain knowledge of your rights and If an employee is stepping out of the ultimately justify dismissal. obligations as an employer.

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Chain of Responsibility Essential training for everone in the transport chain

The Chain of Responsibility (CoR) requires that anyone who has control over the transport task must ensure their actions, inaction or demands do not contribute to breaches of Heavy Vehicle National Law. This course provides everyone in the transport chain with a clear understanding PAY & ENROL ONLINE of their responsibilities under CoR and the actions they may take to ensure breaches in heavy vehicle mass, dimension, loading, speed and driver fatigue $137.50 per enrolment laws do not occur. Price includes GST For more information go to: www.compliancenetfta.com.au Call: 02 9957 1878 or email: [email protected] FREIGHT & TRADE ALLIANCE

Freight & Trade Alliance, 68 Brooker Avenue, Beacon Hill, NSW 2100. ABN 59 160 523 384

Summer 2017 I Across Borders I53 INDUSTRy AwARDS

Australian Shipping and Maritime Industry Awards

Freight & Trade Alliance (FTA) was a proud sponsor of the 22nd Australian Shipping and Maritime Industry Awards at the Softel Sydney Wentworth on 16 November 2017.

FTA would like to acknowledge all those who nominated as well Customs Broker of the Year Award as the businesses and individuals that were recipients of the following awards. Winner: Compliant Customs FTA would also like to extend our appreciation to Paragon Media Highly Commended: Commercial Freight and Logistics and Daily Cargo News for hosting this important event that Craig Priest (I.H. Hunter) brings together and showcases the diverse sectors of Australia’s Freight Forwarder of the Year Award international trade. Winner: vISA Global Logistics Liner Trade Award: Australia-South East Asia, sponsored by Fremantle Ports Highly Commended: Customs Agency Services Sadliers Global Logistics Winner: OOCL Highly Commended: MSC Maritime Services Award MOL Winner: Peter van Duyn Liner Trade Award: Australia-North East Asia, sponsored Highly Commended: AMC Search by Port of Brisbane Dean Summers Winner: K LINE Supply Chain Innovation & Technology Award, sponsored Highly Commended: COSCO by MIRRAT Yang Ming Winner: victoria International Container Terminal Liner Trade Award: Australia-North America, sponsored by Port of Melbourne Highly Commended: Maersk Line Conweigh Winner: Hamburg Sud Young Achievement Award, sponsored by NSW Ports Highly Commended: ANL Maersk Line Winner: Alistair Sullivan (Thomas Miller Law Ltd) Liner Trade Award: Australia-NZ/Pacifc Islands/PNG Highly Commended: Nathan Arneil (Henning Harders) Alison Cusack (ANL) Winner: Maersk Line Mitch Hawkins (DP World Australia) Highly Commended: ANL MSC Port or Terminal of the Year Award, sponsored by Svitzer Customer Service Award, sponsored by DP World Winner: Port of Brisbane Australia Highly Commended: Port of Newcastle Winner: CMA CGM Seafarers Welfare Award, sponsored by AMSA Highly Commended: ANL Winner: Sydney Mission to Seafarers Evergreen OOCL Highly Commended: Port of Townsville and Environmental or Safety Award Townsville Mission to Seafarers Winner: Smit Lamnalco Hunterlink Highly Commended: DP World Australia Newsmaker of the Year Award Intermodal Solutions Group Winner: Geof Crowe Excellence in Bulk Logistics or Heavy Lift Handling Chief Executive Ofcer at Port of Newcastle Winner: BBC Chartering Hall of Fame Inductee, sponsored by HFW Highly Commended: Asiaworld Shipping Inducted: David Field

54 I Summer 2017 I Across Borders FTA Table – Anders Dommestrup (Victoria International Container Terminal), Luke Dufy (Containerchain), Paul Zalai (Freight & Trade Alliance - FTA) & Natalia Brooks-Garrett

Michael Pope (MC) & Paul Zalai (Freight Geof Crowe (Port of Newcastle) Scott Walker (VISA Global Logistics) & Trade Alliance - FTA)

Clint Latta (Compliant Customs) Anders Dommestrup (Victoria Roy Cummins (Port of Brisbane) International Container Terminal)

Summer 2017 I Across Borders I55 SPONSORS

The Australian Peak Shippers Association (APSA) and Freight & Trade Alliance (FTA) would like to acknowledge the following sponsors for their ongoing support of the Alliance.

MAJOR SPONSORS

DUAL APSA/FTA SPONSORS

APSA SPONSORS

FTA SPONSORS

To fnd out more about advertising in Across Borders or how to become an APSA / FTA sponsor, please refer to www.FTAlliance.com.au or contact us at [email protected]

56 I Summer 2017 I Across Borders

VICT Webb Dock 2016 Ads REVISED [A4 5mm].pdf 4 29/11/16 1:26 pm

One of the most innovative, sustainable, fully automated terminals in the world.

Introducing VICT at Webb Dock East Melbourne, Australia

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www.vict.com.au