Shipping & Logistics

shippinglogistics The Malta Independent on Sunday 13 October 2019

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OCTOBER 2019

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The BAN ON LIVE SHEEP EXPORTS has just been lifted. Here’s what’s changed The ban on live sheep exports was only ever intended to be temporary. The Australian government enacted the ban earlier this year to prevent sheep from being shipped to the Middle East from the beginning of June through to September 22 – the highest heat stress risk period. ANDREW FISHER reports

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uring this time, sheep are adapted to the cooler temperatures of a southern Australian winter. And for this reason they find it difficult to cope with the sudden increase in temperature and humidity as the transport vessels undertake the two week journey to the Persian Gulf region.

This ban affected any voyages where the vessel would travel through waters in the Arabian Sea north of latitude 11°N at any time – effectively stopping the Middle East sheep trade as the entrance to the Gulf of Aden is at 12°N.

WHY ARE AUSTRALIAN SHEEP SHIPPED TO THE MIDDLE EAST?

It seems outwardly strange to ship live animals (and their feed) across an ocean just for them to be slaughtered for meat shortly after arrival.

But there is a demand for live

Australian sheep in the Middle East, which means it’s economically viable for exporters to ship animals from southern Australia, particularly out of Fremantle, but also from ports including Portland and Adelaide.

Western Australian farmers received an average price of A$117 for each exported sheep during 2018, so the price of each sheep at the other end must be substantively greater.

There are significant animal welfare challenges in successfully live exporting sheep. Part of the problem has been that the location of the greatest concern for animal welfare is the Australian public.

But the Australian public have no consumer power, they’re not the ones buying the sheep.

So, the Australian government has been required to “push” animal welfare requirements down the industry supply pipeline, rather than having these requirements being

Since governmentappointed observers were included on voyages the notifiable mortality threshold on voyages reduced from 2% to 1% of animals. “pulled” through by market demand.

What we do not know is how the economics would change and whether additional market lines would open up for boxed meat – rather than live sheep – if the live trade were to be stopped.

WHY WAS THE BAN PUT IN PLACE FOR THE FIRST TIME IN 2019?

The ban was one of the consequences for the live sheep trade after disturbing video footage was revealed in April 2018. The graphic video showed

sheep suffering and dying due to apparent heat stress on voyages from Australia to the Middle East.

The government immediately commissioned a review into the conditions for the export of sheep to the Middle East during the northern hemisphere summer.

That review made a number of recommendations, which were then implemented by the government, including increases in space allowance for sheep on board and independent auditing of ship ventilation systems.

Government-appointed observers were also included on voyages, and the notifiable mortality threshold reduced from 2% to 1% of animals during a voyage.

A key recommendation was that the regulatory framework should change from minimising mortality from heat stress to, instead, safeguarding animal welfare.

The government then commissioned further reviews to determine how to implement this recommendation, including an independent technical reference group.

This report was released on September 20, and the government has stated it will be used along with other information to determine the regulations for how (or if) live sheep shipments occur during the northern summer of 2020.

ARE THE CHANGES SUFFICIENT?

The live export industry argues they have succeeded in making substantial changes to how it operates since the original footage was revealed in 2018.

Whether these will be sufficient to prevent further revelations of heat stress incidents or other adverse animal welfare outcomes remains to be seen.

Including independent observers on voyages to keep

an eye on animal welfare should increase the transparency of what happens to sheep during live export shipments. Although, there has been criticism of the delay in reporting from this initiative.

The new arrangements in place since 2018 and the temporary ban from June to September are unlikely to satisfy animal welfare advocates who are against live exports. On the other hand, the live export industry argues the sector is important for Australian livelihoods, including supporting sheep farmers.

What’s more, the current coalition government has repeatedly stated its commitment to maintaining a live export industry.

Interestingly, the 2019 federal election was the first time there was a clear policy difference on the issue between the major parties, with the ALP committed to a phase-out of the live export sheep trade.

It will be interesting to watch whether this policy difference will remain after the ALP’s review of its 2019 election policies.

But in terms of what more needs to be done, it’s likely impossible for policy-makers to satisfy all parties in the live export debate.

New overarching standards for the export of livestock from Australia are scheduled to be introduced soon, covering more than just heat stress risk.

However, those who are against the trade in live animals are unlikely to be persuaded to desist in their efforts. A repeated history of damaging incidents and revelations serves as a reminder of what may happen again in the future if the industry does not get to grips with its animal welfare responsibilities.

Andrew Fisher is a Professor at Cattle & Sheep Production Medicine, University of Melbourne

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OCTOBER 2019

BREXIT WON'T HELP SHORTAGE OF LOGISTICS WORKERS AND TRUCK DRIVERS – Freight Transport Association Brexit could exacerbate the worsening shortage of workers in the UK’s logistics industry if the government do not adjust the working criteria for non-UK citizens.

GAVIN VAN MARLE writes

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elegates to the Freight Transport Association’s (FTA) Ready for a No-deal Brexit event in London on Friday heard that, unless the UK government addressed potential problems, employers would face mounting difficulty in hiring staff after Brexit.

Sally Gilson, head of skills at the FTA, said although the government had said it would protect the rights of EU citizens already living and working in the UK after Brexit, she warned that the parameters under which new arrivals can obtain work would likely miss the needs of the logistics industry altogether.

According to FTA research, the some 12% of the UK’s HGV driver workforce, 14% of van drivers and a highly significant 34% of fork-lift truck drivers are non-UK EU nationals.

It is expected that under post-Brexit immigration legislation, non-UK nationals who want to work in the country will have to earn a minimum annual salary of at least £30,000 and be educated to at least level 3, effectively university degree level.

“This completely ignores the reality of the logistics industry – about 90% of logistics workers are educated to level 2 – driving an HGV is a highly skilled job, but not necessarily an academically skilled job. In addition, 82% of the UK’s logistics workers earn under £30,000 a year,” she said.

She also urged EU workers who wanted to continue working in the UK after Brexit to apply for “settled status”.

“The message that EU citizens need to apply to the Home Office for settled status really hasn’t been getting through –

the latest research shows that just 38% of have made the application, with 62% granted and 37% still in the process, although they have been granted ‘pre-settled’ status.”

She added that the UK transport firms still trying to fill the growing driver shortages would find it increasingly hard to attract EU drivers, whether Brexit takes place or not.

“We have already seen quite a number of older EU nationals already leaving the UK, as other countries in the EU also have the same driver shortage crisis – more Poles, for example are leaving, often for Germany, where there is a bigger driver shortage crisis than here.

“People should be under no illusion that there are other countries out there making some very attractive offers to freight drivers,” she said.

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OCTOBER 2019

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POSTAL UNION accepts reform, quashes US WALKOUT THREAT President Donald Trump’s trade adviser hailed a “big deal” approved as a compromise Wednesday that will increase the fees the U.S. Postal Service collects from some foreign counterparts and keep the United States from leaving the United Nations’ postal agency over what was largely a showdown with China.

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eter Navarro was dispatched from Washington with a U.S. delegation to help reform the Universal Postal Union at a time when e-commerce has vastly reshaped the postal business and private, non-postal operators like UPS, DHL, FedEx and others want to snare a larger market share.

The administration had threatened leaving a group the United States helped create in 1874.

The head of the 192-member body, Kenya’s Bishar Hussein, warned a U.S. walkout would “completely shut down” the traditional system of shipping some types of mail. The extraordinary congress, called this week to respond to the U.S. threat, was only the third for a 145-year-old group that calls itself the second-oldest multilateral organization.

UPU members exchanged hugs, handshakes and high-fives after voting by acclamation in favor of the compromise. The deal, which is to be phased-in over the coming years, will allow countries to choose, or “selfdeclare,” the rates their postal operators can recoup from foreign partners.

“It’s a big deal for a couple of reasons: One is the U.S. got immediate selfdeclared rates that saves us a half-abillion dollars. It eliminates market distortions. It creates tens of thousands of jobs for America. It also helps our friends and allies in other nations,” said Navarro, insisting countries like Brazil, Norway and Finland were “getting hammered” under the current system.

The United States will fast-track to “immediate self-declared rates” as of the end of June next year, which is the fastest technically possible, Navarro said. The administration has sought to end a decades-old practice by which the United States in essence subsidizes postal operators from developing countries, insisting that rising rival China in particular has been benefiting unfairly.

The administration’s complaint centered on the reimbursement that the USPS receives for providing final deliveries of “bulky letters and small parcels” sent from abroad – usually ones not weighing more than 2 kilograms (about 4½ pounds). Such mail can include high-value items like mobile phones, memory sticks or pharmaceuticals.

The issue centers on the “last leg” of shipments, once the bulky letters and small parcels leave their country of origin – where the postage is paid – and enter a destination country. That requires postal services in the destination countries to incur costs that they later have to scratch back from the originating country.

Kate Muth, executive director of the International Mailers Advisory Group, which counts companies like eBay, DHL, Amazon, USPS or their affiliates as members, said the upshot of selfdeclared U.S. rates will be higher costs to ship through the postal system.

Navarro claimed a victory for both the United States and the UPU overall — and China joined 34 countries that

helped drive through the final accord.

He said the accord would include payouts of $40 million over five years, a sum more than offset by “anywhere from 300 million to five hundred million dollars in savings and subsidies” elsewhere.

Under the accord, member countries that meet certain requirements – such as that letter and postal volumes exceeded 75,000 metric tons based on 2018 data – can self-declare their rates starting July 1. Smaller, lower-volume countries get “thresholds” to protect them from the impact of “swift reform,” the UPU said in a statement.

In what had shaped up as a test of U.S. diplomatic clout against China’s interest in the status quo, Navarro said: “China is certainly going to pay more for the privilege of shipping to our market.”

“We’ll buy less Chinese stuff and we’ll buy more stuff from other countries, and we’ll make more stuff in America – and the market will be free of distortions,” he said. “We call it a hat trick in hockey.”

The U.S. Chamber of Commerce, which supported the administration in its push, applauded the deal.

“The administration deserves a tremendous amount of credit for their leadership in tackling an antiquated, market distorting global pricing arrangement that for too long has seen the United States footing the bill to deliver the rest of world’s mail,” said Sean Heather, the chamber’s senior vice president for International Regulatory Affairs, in a statement.

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OCTOBER 2019

ALERT TO LOGISTICS and SHIPPING as digital detectives unmask NEW CYBER ATTACK Research shows hackers are targeting transport and shipping companies with a new trojan malware campaign.

ALEX LENNANE reports

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he news comes as the logistics sector is undergoing a digital transformation, potentially increasing its vulnerability to cyber attacks.

Paloalto Networks revealed this week it had identified a “malicious binary, named inetinfo.sys, installed on a system at an organisation within the transport and shipping sector of Kuwait”.

It added: “Through comparative analysis, we identified related activity also targeting Kuwait between July and December 2018…. While there are no direct infrastructure overlaps between the two campaigns, historical analysis shows that the 2018 and 2019 activities are likely related.”

The cyber tools were previously unknown and have raised concerns about vulnerabilities in the transport

sector.

“This report is indicative of recent trends we’re observing with transport and shipping,” said Dave Weinstein, chief security officer at cyber security company Claroty.

“Notwithstanding the attribution question, it’s noteworthy that the actors seem focused on collecting information, either for the purpose of industrial espionage or reconnaissance.

“Both the transport and shipping industries are undergoing a great deal of digital transformation to drive efficiencies, thus opening-up new attack vectors for malicious actors.

“It’s critical for organisations in these sectors to gain visibility into the intersection of their corporate and operational networks, as hackers are exploiting the former to target the latter.”

The malware was discovered between May and June by Paloalto’s Unit 42.

It explained: “The first known attack in this campaign targeted a Kuwait transport and shipping company in which the actors installed a backdoor tool named Hisoka.

“Several custom tools were later downloaded to the system in order to carry out postexploitation activities. All of these tools appear to have been

created by the same developer.

We were able to collect several variations of these tools, including one dating back to July 2018.”

The criminal developer used character names from the anime series Hunter x Hunter.

Paloalto added: “We are tracking this activity very closely, and will continue analysis in order to determine a more solid connection to known threat groups.”

The risk of cyber crime to shipping and logistics was amply demonstrated by last year’s NotPetya attack on Maersk, which cost the shiping group some $300m.

FedEx’s subsidiary TNT was also hit and is now facing legal action by a shareholder who claimed FedEx was not transparent about the costs and effects of the attack, and it “permanently” lost business as a result.

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OCTOBER 2019

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EXPRESS TRAILER Committed To Road Express Trailers remains committed to promoting the importance of more ROAD SAFETY on Malta’s roads. In line with this, the company has just re-confirmed its commitment to two major events namely the Malta Classic 2019 and the forthcoming 22nd edition of the Express Trailers Zurrieq Half Marathon, 10km Run and 10km Walk due on the 10th of November.

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afety at work has become a defining trait at Express Trailers. The corporate culture and tone with regards to safety comes from the very top of the company’s structures, starting from Board level and cascaded with amplified importance down through the Risk Committee and the executive. This tone is a resonance of the respect we have always shown towards our people and our clients,” states Franco Azzopardi, Chairman and CEO of Express Trailers.

Speaking about Express Trailers’ support to road sports, Franco Azzopardi explained how the company’s sponsorship to these events is in line with the intrinsic message that whether we are at the helm of our car, whether we are pedestrians, whether we are on a bicycle, a motorbike, a scooter or simply jogging on the road, we are all responsible for each other’s safety.

THE MALTA CLASSIC 2019

Express Trailers is again supporting this year’s Malta Classic 2019 event.

Besides the logistics support to bring a number of participating cars from abroad via its car transporter, Express Trailers will again this year provide its

orange pick up van which will be the official Safety Car during the Mdina Grand Prix on Saturday 12th and Sunday 13th October.

“Once again, we note the great importance that the Malta Classic organisers are giving to ensuring the highest levels of road safety during this

sought-after event and this is why we have reconfirmed our support,” said Franco Azzopardi.

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OCTOBER 2019

RS Safety

SAFE ROAD RUNNING

This year’s edition of the Express Trailers Żurrieq Half Marathon, 10km Run and 10km Walk will be held on Sunday 10th November.

With almost 1500 participants, this event is the second largest road running event after the Malta Marathon.

“Runners and cyclists remain amongst the most vulnerable on the road and Express Trailers’ support to Żurrieq Wolves Athletic Club for the organisation of their annual half marathon event stemmed from the company’s wish to promote the safety of the more vulnerable road users.”

“We have a heavy presence on Malta’s roads with our trucks and trailers and aalthough we are doing a necessary job by transporting food, pharma and cargo for the local market consumption, at Express Trailers we also acknowledge that our fleet puts a burden on all the other road users, especially the more vulnerable ones

such as runners and cyclists. Therefore, by supporting this growing road race, we are trying to redress this imbalance.”

“We are also pleased with the fact that the organisers of this event have kept investing to ensure the highest levels of safety on the roads during the event. We are happy to note that this year, the organisers have reconfirmed the presence of qualified doctors, three ambulances along the route, all manned with a doctor each, wardens at every corner and an ambulance and a first aid team at the start and finish of the race.”

MORE THAN JUST THE PODIUM

Since Express Trailers started sponsoring this annual event by Żurrieq Wolves Athletic Club, the sponsorship has also helped the Club grow not only through the number of athletes but also in its mission.

“Knowing that today, the club has a Kids Academy and a Youth

Development Program with professional coaches that are helping children and youths adopt a much healthier lifestyle is a source of pride for us. Standing up on the podium is always an achievement that goes celebrated but ultimately, the

message behind our sponsorship is that we are lending support to a Club that is fostering more inclusion, better mentoring and a lifestyle built on a healthy sport ethic. Our sponsorship is a celebration of this achievement.”

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OCTOBER 2019

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What IMO 2020 means for LOGISTICS INVESTORS A looming deadline set to force international shippers to substantially reduce emissions will provide opportunities for logistics investors around the world’s secondary ports.

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n the 1st January 2020, the United Nations International Maritime Organisation (IMO), the regulatory authority for international shipping, will enforce a sulphur cap on the fuel of marine vehicles.

The regulation - IMO 2020 will force ocean carriers to use more expensive, cleaner fuel, or install expensive scrubbers which reduce pollution. Either way, their operating costs will be higher. To offset costs, shipping companies will deploy larger vessels, since an increase in ship size does not mean an equal increase in fuel consumption, says Walter Kemmsies, Economist and

Chief Strategist of JLL’s US Ports, Airports & Global Infrastructure Group.

“There are a lot of 10,000 TEU vessels calling at U.S. ports today and some 14,000 TEU vessels. I would anticipate a shift from the 10,000s to the 14,000-18,000 size.”

Currently, most cargo ships are in the 10,000 - 14,000 TEU (Twenty foot Equivalent Unit corresponding to the size of a standard 20ft shipping container) range, with larger ships ranging from 18,000 to 23,500 TEU. One 20,000 TEU ship does not use as much fuel as two 10,000 TEU vessels.

REPERCUSSIONS FOR LOGISTICS REAL ESTATE

Most ports can accommodate the sheer size of the larger ships, but they might not be so well placed to process the extra cargo the ships carry.

On the water side, most large U.S., European and Asian ports are ready to receive 14,000-plus TEU vessels. US West Coast ports could handle 18,000-plus TEU vessels, while most major European and Asian ports can handle 22,000 TEU vessels.

But, the question is how well they can handle these vessels

on the land side, says Kemmsies.

“Los Angeles and New York already have severe traffic congestion and larger ships dropping off more cargo could result in paralysis. In Europe, the larger ports of Rotterdam and Hamburg, while in Asia, Shanghai and Hong Kong have similar land side issues.”

JLL estimates that ports need 60 million square feet of logistics real estate in order to be able to cope with processing the cargo from 14,000 TEU ships.

More pressure on the busiest ports means nearby ports with the capacity to develop further

logistics infrastructure could win new business, creating opportunities for logistics real estate investment, says Kemmsies, pointing to Seattle, Tacoma and Oakland on the west coast and Savannah, Norfolk and Charleston on the east coast as examples of ports that could benefit.

“Greek, Italian and Southern French ports also have some headroom,” he adds. “Overall, newer and smaller ports which are not competing for waterfront real estate and highway capacity with residential real estate, such as Savannah on the U.S. east coast, are busting through the gates.”

Savannah, in Georgia, is the fastest-growing port in the U.S. and last year announced a US$2.3 billion, 10 year plan to boost capacity. There is more than 6 million square feet of logistics space under development at the port, much of which is speculative, says Chris Tomasulo, JLL Managing Director in Savannah.

“With YTD absorption of over 7 million square feet in a market of 66 million square feet, vacancy rates under 1.5 percent and demand outpacing development, developers are scouring the market for land that can put into production immediately.

EMPOWER YOUR BUSINESS with 3PL SOLUTIONS

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he speed of technological advances, highly competitive industries and economic changes mean that yesterday’s solutions may not work today and could spell even bigger problems for tomorrow.

Large corporations for whom logistics is an integral part of their business are faced with numerous complexities to manage.

Couple this with the intensifying pressure from consumers and the strain on companies to be able to fulfil demand becomes increasingly evident.

What is the answer to the problem?

Outsourcing the full logistics process to a company you can trust.

Offering third-party logistics (3PL) to customers has been in the pipeline for Sullivan Shipping for some time.

John Sullivan, CEO of Sullivan Shipping explains: ‘As a family run entity, it’s always been crucial to our group to stay at the forefront of the industry by investing in services that could be of most benefit to our clients.

Our new 3PL offering enables our clients to put their time, energy and money back into their core competencies.’

3PL IS A CRITICAL BUSINESS DECISION, BUT ONCE IN PLACE THE PROCESS OFFERS A VARIETY OF BENEFITS.

A FULL SPECTRUM SERVICE

SAVE TIME

SAVE MONEY

TAILORED SERVICES

We have the experience and capability to offer the full range of logistic services.

Clients can either opt for a full 3PL service agreement or opt to outsource only those services they require most.

Through combining large cargo volumes, we can negotiate the best possible deals with carriers and service providers.

There’s a high demand on the level of resources typically involved with supply chains. Those are headaches your company no longer has to manage inhouse.

Once there is a full understanding of a client’s business, we work to provide a tailored solution to ensure the shipping process runs efficiently and effectively.

GROWTH OPPORTUNITY

An advantage of working with a 3PL provider like Sullivan Shipping is expanding your supply chain in markets which you might not have considered before.

If you’d like to find out more about the new 3PL service offering from Sullivan Shipping give us a call on +356 222 96 103 or email our Sales Manager Matthew Castagna at mcastagna@sullivanshipping.com.mt.