The Western Economic Diversification BC office is looking for manufacturers who can support a major defence procurement for the products listed below. If you are a BC apparel or accessory manufacturer with specific expertise in these products and can support MOQs of ~1000pcs for each garment type, we want to hear from you:
Flight suits
Uniforms for flight crews and CSRs (dress pants, white dress shirts, blazer, dresses, skirts)
Overalls
Class 2 high-vis outerwear (winter wear, rain gear)
Polos, t-shirts, sweatshirts, cargo/non-cargo style work pants
Complete details (ie. designs, materials, price range, timing) are still not available and we are simply collecting expressions of interest before the full RFP becomes available.
Interested parties should email hello@bcapparelandgear.com with the subject: “WED Defence Project”. Please ensure to specify your capabilities and the product category / type where you specialize.
Shipping will need to start to make contingency plans if cases of Covid-19 continue to escalate in China, the world’s most important nation for shipping movements.
The delta variant has broken through the country’s virus defences, which are some of the strictest in the world, and reached nearly half of China’s 32 provinces in just two weeks. While the overall number of infections — more than 360 so far — is still lower than Covid resurgences elsewhere, the wide spread indicates that the variant is moving quickly with many millions of Chinese now in lockdown.
“For freight markets, the implications include delays at ports as authorities screen crews of incoming vessels and a hit to China’s oil demand if widespread lockdowns are imposed,” a report from Braemar ACM pointed out yesterday.
When a Covid-19 outbreak was detected at Yantian Port in late May, operations at the key southern Chinese export hub were slashed by 70% for most of June. Similar disruptions are on the cards in the coming weeks, while shipyards are also likely to see their delivery schedules come under pressure if any wider lockdown measures are taken.
“As long as lockdowns remain confined to China, the impact on freight markets is likely to be muted, especially in the case of wet and dry freight. The container market seems most vulnerable if we see more severe disruptions to manufactured products supply chains,” commented Plamen Natzkoff, senior trade expert at VesselsValue.
On the potential tanker ramifications, Natzkoff said: “An immediate impact of a lockdown in China is reduced population mobility which would have a direct impact on demand for transportation fuels, potentially impacting negatively the tanker market.”
On the possible consequences for the container sector, Alan Murphy, CEO of Danish consultancy Sea-Intelligence, reminded readers of what happened in February 2020 when China first went into lockdown. Carriers responded with a wave of blank sailings.
“Assuming that a strict China lockdown would lead to a scenario as in February 2020, we would expect a drop in production of 15-20% for about a month,” Murphy suggested.
While that at first might not sound too detrimental, after all that is in rough numbers what happens every normal Chinese New Year, 2021 is not a normal year.
“Cargo owners, already stressed beyond sanity from devastatingly high freight rates and absurd surcharges, and with no way to secure neither equipment nor space, would suddenly see their procurement costs sky-rocket in addition to their back-breaking logistics costs,” Murphy predicted, adding that the one possible silver lining for shippers could be that as the production decreases start to wave out to the Chinese ports, pressure would start to ease off on the ocean bottleneck, which could start to bring down freight rates.
The added concern Murphy has is if Chinese ports were not able to run at full capacity, like Yantian earlier this summer.
“For container shipping, which is more than red-hot at the moment, even a brief halt in Chinese exports is likely to ease the crunch a bit logistically so long as a lockdown only closes manufacturing sectors and not ports and terminals,” commented Peter Sand, chief shipping analyst at BIMCO.
Nick Ristic, a dry bulk analyst at Braemar ACM, said the sector would not be as badly affected as it was at the start of the pandemic last year.
“Based on the experience in other countries with prolonged lockdowns, it seems the world has learnt how to keep things running with restrictions in place,” Ristic pointed out.
Of greater concern for Ristic is the state of consumer demand and the underlying economy in China, which is starting to slow down.
“This could take some real steam out of the Chinese economy and manufacturing base. PMIs are already weakening too,” Ristic said.
Factory activity expanded at the slowest pace in 15 months in China last month as new orders dropped. The Caixin/Markit manufacturing purchasing managers’ index (PMI) fell to 50.3 in July from 51.3 in June.
Bulk carrier congestion in China hit a five-year high of 50.5m dwt over the weekend, rising by 24% year-on-year as new restrictions were put in place in ports across the country.
Current queues are 76% above the five-year average according to data from Braemar ACM as Covid-19-related protocols affect all sectors of the dry bulk market, worsening the crew change crisis in the process.
Newly reported positive Covid-19 cases in China have recently forced the country to re-introduce restrictions to curb the spread of the virus.
Most ports in the country are now requiring a nucleic acid test (NAT) for all crew, with vessels forced to remain at anchor until negative results are confirmed.
Many ports in the country are also requiring vessels to quarantine for 14-28 days if they previously berthed in India or performed a crew change within 14 days of arriving in China.
“While it is unclear how long these measures will be in place for, they will likely tighten the dry market in the near-term,” Braemar ACM suggested in a note to clients yesterday.
Ralph Leszczynski, global head of research at Banchero Costa, like most analysts contacted by Splash, was adamant that China would not press ahead with a national lockdown.
“Larger scale lockdowns would be unsustainable economically, so can happen at local level – in a single neighbourhood or city, but not for whole provinces, not to mention nationwide,” Leszczynski said.
China has managed to carry out one of the largest vaccination campaigns this year, with over 60% of the population already vaccinated, and an 80% vaccination threshold likely to be reached by September or October.
“China will certainly try now to contain and eliminate the current outbreak, but if they don’t manage to do that, and it spreads uncontrollably nationwide, I think they are more likely to shift towards more of a living with Covid strategy thanks to vaccination in the autumn, similar to what Singapore has announced recently, rather than shutting down the whole country, which would be unsustainable economically and create discontent,” Leszczynski said.
Mark Williams, who heads up British consultancy Shipping Strategy, concurred with Leszczynski, telling Splash: “More likely than a national lockdown is a series of targeted lockdowns by province or county. If those lockdowns include coastal regions, key ports and logistics centres, then globalised supply chains will become chaotic.”
The state of global container congestion continues to roil supply chains right across the world.
Exclusive data from maritime intelligence service eeSea shows the world’s most congested box spots, ranking all ports by the sum of mainline vessels either in port or waiting. The ratio between in port and waiting is an approximation of the congestion. Hong Kong, for example, has a high waiting ratio of 67%. Oakland, Savannah, Seattle, Vancouver are all above 65%, while Yantian, the scene of a Covid-19 outbreak that hampered productivity throughout June, has done well to clear much of its backlog over the past couple of weeks.
Extreme consumer demand, principally in the US, has combined with Covid-19 shipping and port dislocations all year, creating unprecedented congestion across the globe as well as record freight rates and all-time lows for liner schedule reliability.
Lars Jensen, founder of container consultancy Vespucci Maritime, has estimated that 10% of the world’s shipping capacity has been taken out due to port congestion issues.
Shippers might be paying 332% more per box than they were this time last year, yet they’re having to put up with the worst schedule reliability in the history of the shipping container industry.
In the first five months of 2021, 401 vessel arrivals on the transpacific and 144 on Asia-Europe were over 14 days late, according to data from Sea-Intelligence. Putting these numbers in perspective, the combined 2012 to 2020 total of such late vessel arrivals was 388 on the transpacific and 69 on Asia-Europe.
With prices increasing and schedule reliability still an issue, here are a few key updates from the major carriers relating to congestion surcharges —
Hapag-Lloyd
One of the world’s largest shipping companies, Hapag-Lloyd, informed Value Added Surcharge(VAD), says due to the continuation of extraodinary demand from China and the resulting operational challenges along the transport chain, HPL will charge $4000/20’ and $5000/40’ in destination as VAD effective August 15, 2021.
MSC
MSC have announced that they will be collecting a Congestion surcharge payable as a local charge collected effective September 1, 2021 at destination.
The amount is USD 800/20’ 1000/40’ 1125/hc and 1266/45’ and applicable for all equipment types.
Matson
Matson has announced their third increase to USWC Congestion Surcharge effective August 5, 2021, reflecting a $2,000 OSPF increase.
ZIM
With the consistent congestion in U.S. and Canadian Ports, ZIM will implement Port Surcharge and Destination Delivery Charges effective from August 1, 2021.
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Canada’s reopening plans could be hindered as thousands of border officers gird themselves for possible strike action.
The two unions representing more than 8,500 Canada Border Services Agency employees announced this morning that the majority of their members have given them a strike mandate.
That means they could begin strike action as soon as August 6, mere days before Canada reopens the border to fully vaccinated U.S. residents, said the Public Service Alliance of Canada and the Customs and Immigration Union in a news release.
Many border workers would be deemed essential — but the union said strike action could slow down commercial traffic at the border and ports of entry, hit international mail and parcel deliveries from Canada Post and other major shipping companies, and disrupt the collection of duties and taxes on goods entering Canada.
The unions’ members — who have been without a contract since June 2018 — include border service officers at airports, land entry points, marine ports and commercial ports of entry, inland enforcement officers, intelligence officers, investigators, trade officers, hearings officers and non-uniformed members.
Their essential services agreement permits 2,600 members to take full strike action, while essential workers can take work-to-rule actions in their workplace.
The unions have been fighting primarily for three things: salary parity with other law enforcement workers in Canada; better protections against harassment and discrimination; and a remote work policy for non-uniformed members.
Strict lockdown measures to suppress Vietnam’s worst outbreak of COVID infections since the pandemic began are severely curtailing factory production, especially for electronics, footwear, apparel and textiles, and ocean terminals lack sufficient equipment to export goods. And the situation is likely to get worse, just as importers and exporters enter the traditional peak shipping season for the Halloween and Christmas holidays, logistics companies and analysts say.
The latest hot spot for rising infections is Ho Chi Minh City, where strict COVID quarantines have been in place since July 9. The number of positive cases topped 5,800 on Sunday, the highest level since the start of the pandemic.
Under new rules, manufacturing sites are allowed to stay open only if they have a plan to house and feed workers within the factory compound instead of having them commute back and forth to their homes. Vietnamese authorities also allow companies to transport workers to a collective place of residence, such as a hotel or dormitory. And employers must test workers for COVD-19 every seven days at their own expense.
The new restrictions forced many factories to close, while others that meet conditions for staying open have not been able to get registrations approved by authorities.
Restrictions against public gatherings have been extended until August 1 and likely will also be extended beyond this week for manufacturers.
Several factories in the Saigon Hi-Tech Park were ordered to temporarily shut down July 13 after more than 750 COVID-19 cases were reported there, the Vietnamese newspaper VN Express reported. Affected factories included the Samsung Electronics HCMC CE Complex, which reduced its workforce from 7,000 to 3,000 and was developing plans to isolate employees at its complex. Other companies unable to house all employees on-site, including electronics manufacturer Intel, have reportedly rented hotels nearby and are using daily buses to bring employees in.
The port congestion pandemic has stretched around the globe with ever greater numbers of containerships idling, waiting for berth spaces to open up across five continents.
As of today, there were 328 ships idling in front of ports around the world with 116 ports reporting challenges, such as congestion. Data from last month showed 304 ships idling in front of ports and 101 ports reporting disruption.
As much as 10% of the world’s shipping capacity has been taken out due to port congestion issues
Among key noticeable changes over the past month as the backlog from Yantian in south China rolled out are the doubling of ships waiting outside Asian transhipment giant Singapore as well as the twin ports of Los Angeles and Long Beach, America’s two largest maritime gateways.
Yantian Port was hit by a Covid-19 outbreak in late May resulting in much of the port stopping work for four weeks. Rampant Covid cases have also seen many other port areas come under huge strain in recent weeks.
“If the recent disruption at Yantian Port is to be considered, port congestions, logjams and a higher freight as an outcome could be a recurring theme until 1H22. While the blockage of the Suez Canal is a rare likelihood, the risk that further outbreaks of Covid close to major hub ports remain ever-present, particularly given the prevalence of new viral variants,” consultants Drewry warned in a recent report.
Data published from Clarkson Research Services last Friday shows that the share of total containership capacity in port has increased from an average of 29.2% for the period of 2016 to 19 to 31.8% since the start of 2020 and stood at 33% as of April this year. The extra 0.6m tea or 2.5% of fleet capacity absorbed is equivalent to the entire fleet of Yang Ming, the world’s ninth largest liner.
Through to May this year the time containerships spent waiting on anchor for berths more than doubled since 2019, according to IHS Markit’s port performance data. North America saw the biggest deterioration with vessels spending on average 33 hours on anchor in May 2021 versus an average of just eight hours in May 2019.
The Federal Maritime Commission plans to audit nine of the largest container carriers operating in U.S. markets to find out if they are using their market power to overcharge shippers on detention and demurrage fees.
The Vessel-Operating Common Carrier Audit Program, launched on Monday by FMC Chairman Daniel Maffei, will also “provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services,” according to the agency.
The top nine carriers by market share included in the audit are Maersk, MSC, CMA CGM, COSCO Group, Hapag-Lloyd, ONE, Evergreen, HMM and Yang Ming.
“The Federal Maritime Commission is committed to making certain the law is followed and that shippers do not suffer from unfair disadvantages,” Maffei commented, noting that his audit team will work to enhance dialogue with carriers on supply chain challenges.
“Of course, if the audit team uncovers prohibited activities, the Commission will take appropriate action. Furthermore, the information gathered by the audit process might lead to changes in FMC regulations and industry guidance if warranted,” Maffei said.
The audit program comes just a week after the FMC announced an agreement with the Department of Justice to boost the economic oversight of foreign carriers serving in the U.S. international container trades, following an executive order issued by the White House aimed at reining in what it considers to be excessive market power by the ocean carriers.
The carriers involved in the audit will be analyzed for compliance with FMC regulations as they apply to detention and demurrage practices in the U.S. Each will be audited “irrespective of whether a formal or informal complaint has been filed at the Commission,” FMC stated. “The Commission will work with companies to address their application of the rule and clarify any questions or ambiguities. Information supplied by carriers may be used to establish industry best practices.”
FMC Managing Director Lucille Marvin will lead the audit program, the agency noted, which will be made up initially of current FMC employees. The audit will begin with an information request establishing a database of quarterly reports allowing the Commission to assess how detention and demurrage is administered. Responses will be followed by individual interviews with the carriers.
Aside from detention and demurrage, the audit may include carrier practices related to billing, appeals procedures, penalties assessed and any other restrictive practices, according to the FMC.
Rail lines in the B.C. Interior that provide critical transport links for goods and material shipped in and out of the Port of Vancouver are operational but operating at reduced volume.
Yard utilization is currently at 97% of capacity, but is expected to increase. Currently, average rail dwell is 7 days.
CN and CP rail lines have faced disruptions — shut temporarily or slowed down — as a result of wildfire that destroyed the town of Lytton more than two weeks ago and more recently when a wildfire came close to rail lines. Below is an update on the current rail situation:
CP Railway: CP is running trains through the Thompson Subdivision at reduced speed and length.
CN Railway: CN has removed all embargoes placed previously because of the Lytton fire.
Imports: Mainline between Kamloops and Vancouver is open through Ashcroft. Rail car supply has improved.
Reefers: They will continue to monitor their ramps capacity and look to execute a limited westbound allocation plan for Week 29.
We will continue to monitor the scenario at the Port of Vancouver and provide updates as they become available. Please reach out to ground@carson.ca with any questions.
European Union policy-makers have unveiled their most ambitious plan yet to tackle climate change, aiming to turn green goals into concrete action this decade, and in doing so lead the way for the world’s other big economies.
The European Commission, the EU executive body, set out how the bloc’s 27 countries can meet their collective goal to reduce net greenhouse gas emissions by 55 per cent from 1990 levels by 2030 — a step toward “net zero” emissions by 2050.
This will mean raising the cost of emitting carbon for heating, transport and manufacturing, taxing high-carbon aviation fuel and shipping fuel that have not been taxed before, and charging importers at the border for the carbon emitted in making products such as cement, steel and aluminum abroad. It will consign the internal combustion engine to history.
The “Fit for 55” measures will require approval by member states and the European parliament, a process that could take two years.
They are also likely to face intense lobbying from some industrial sectors, from poorer European member states that want to protect their citizens from price rises, and from more polluting countries facing a costly transition.
The EU produces only eight per cent of global emissions, but hopes its example will elicit ambitious action from the world’s other major economies when they meet in November in Glasgow for the next milestone UN climate conference.
Ships must pay for carbon now, too
Tighter emission limits for cars will in effect end new petrol and diesel car sales in the EU by 2035 — the earliest of the possible dates that had been touted.
An overhaul of the EU Emissions Trading System, the biggest carbon market in the world, will force factories, power plants and airlines to pay more when they emit CO2. Ships will also be added to the ETS, requiring ship owners to pay for their pollution for the first time.
A new EU carbon market will impose CO2 costs on the transport and construction sectors — with some of the revenues put in a fund to curb low-income households’ fuel bills.
The Commission also unveiled its plan for the world’s first carbon border tariff, requiring manufacturers abroad to pay for the CO2 they have produced when they sell goods such as steel and cement into the EU.
Tax on jet fuel
Meanwhile, a tax overhaul will impose an EU-wide tax on polluting aviation fuels, which currently dodge such levies.
EU member states will also be required to build up forests and grasslands — the carbon sinks that keep carbon dioxide out of the atmosphere.
For some EU countries, the package is a chance to cement the EU’s global leadership in fighting climate change, and to be at the forefront of those developing the technologies needed.
Poorer member states are wary of policies that will raise costs for the consumer, while regions that depend on coal-fired power plants and mines want guarantees of more support for a transformation that will cause dislocation and require mass retraining.
