‘Simultaneous destabilisation’ of supply chain putting Australian ports at risk: report

Sydney, Australia - April 29, 2014: Three trucks cross a bridge, before large cranes moving containers at Port Botany.

A destabilised global container freight supply chain is putting intense pressure on nationwide exporters and importers following a new report from the Australian consumer regulator.

The Container Stevedoring Monitoring Report 2020-21 from the Australian Competition and Consumer Commission (ACCC) found that the surge for demand in containerised cargo and extreme congestion across the global supply chain had caused major disruption and delays.

A number of Australian exporters are struggling to meet their contractual obligations, the ACCC wrote, adding that some large retailers are so concerned that their cargo will not arrive before Christmas that they are buying their own shipping containers and chartering their own vessels.

ACCC Chair Rod Sims said, “International shipping line movements normally run lean and just-in-time, but a surge in demand and COVID-19 outbreaks that have forced numerous port operations to temporarily shut down have caused congestion and delays with a cascading effect across the globe.”

A stevedore told the ACCC that only 10% of vessels arrived in their designated berth windows in 2020-21, which is their lowest rate on record.

“Pre-pandemic, the sector would have likely been able to manage such a surge in containerised demand, but the simultaneous destabilisation of almost every part of the supply chain has left them without any spare capacity and struggling to cope,” Sims added.

©S&P Global Platts

The report also noted that system industrial relations issues and restrictive work practices have further disrupted the supply chain and exacerbated congestion and delays.

Data obtained by the regulator noted that idle hours – the length of time a ship is berthed – almost doubled from 11.9 hours pre-pandemic to 21.2 hours on 2020-21.

“Industrial action on top of pre-existing congestion has unfortunately put enormous strain on our international container ports at a time when they can least cope with it, and in the case of Port Botany, some shipping lines have decided the delays make using the port commercially unviable,” Sims said. 

The ACCC noted that the operation of the global supply chain will eventually be restored – yet Australia risks becoming a less attractive destination for shipping lines unless productivity, workplace relations, and supply chain inefficiencies are addressed.

The report recommended that governments, industry and unions address industrial relations and restrictive work practices, limit privatised ports’ ability to impose excessive rents and charges, and repeal Part X of the Competition and Consumer Act 2010 to facilitate greater competition between shipping lines on Australian trade routes.

Additionally the report argued that public and private infrastructure investments should be made to fix inefficiencies in the supply chain caused by larger ships, lack of rail access to Australian container ports and shortage of space in empty container parks.

A recent study by the World Bank and IHS Markit showed that even before the pandemic disruption, Australian container ports were relatively inefficient and well below international best practice.

The study ranked Australia’s largest container ports, Melbourne and Sydney, in the bottom 15% and 10% respectively, of the 351 global ports in the study.

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