Unfortunately there continues to be a container backlog, induced by industrial action, in Sydney at the moment. That backlog has been aggravated by recent bad weather. It may get worse given the likelihood of new industrial action.
Current status: congestion times and industrial action
Shipping Australia understands that, in Sydney, the current recovery time is now about two to three days at DP World Australia and is about 15 days at Patrick Terminals.
The current industrial cease-fire between the terminals and the union is just that: a cease-fire. There is not, as yet, a complete end to hostilities from the union. DPWA currently has an in-principle agreement for the East Coast ports. Negotiations and drafting are underway to turn that “in-principle agreement” into a done deal.
But note: it is not yet a done deal. Shipping Australia understands that there is not currently an “in-principle” agreement for Fremantle. Patrick Terminals, meanwhile, does not have “in-principle” agreement at all. It is entirely possible that if there is no agreement between the parties then there could be a resumption of industrial activity after 1 December 2020.
More industrial action is on the way
Meanwhile, merely because there is a cease-fire with the container terminal operators does not automatically mean there will be a cessation of hostilities right across – or near – the waterfront.
As reported elsewhere by Shipping Australia today, there is a high likelihood of union industrial action at marine services provider Svitzer. Such industrial action could re-aggravate extreme disruption at the waterfront and in the land-side supply chain
All of this industrial action, disruption and container backlog needs to be worked through before the supply chain can return to normal.
Shipping line action to help reduce the backlog
Shipping Australia has been advised by some members that they are looking into the possibility of carrying out an empties-run to help evacuate some boxes. But there are issues with berth congestion, as noted above.
Meanwhile, shipping lines are also looking at the possibility of getting some boxes on under-utilised capacity that that has been / will shortly be introduced with the re-entry of shipping line Zim back into the Australia-trades.
Competition principles: businesses are free to control their own pricing
Meanwhile, Shipping Australia notes the repeated calls by a variety of third parties that appear to be attempting to direct how shipping lines should organise their container hire charges for containers that have exceeded the free-time.
Businesses must set their own prices for goods and services independently. This includes such matters as pricing, overhead, margins, surcharges and, of course, container hire charges.
Remember: it’s a free market. If any given shipper does not want to accept the product-offer of a given carrier then it has the option of approaching another carrier to do business. There are at least 15 ocean carriers providing services into Australia.
Talk to the carrier
Container hire is a commercial matter between the shipper and the carrier – it makes up part of the carriage contract. Shippers should therefore consider the full cost of transport when choosing a carrier. Lines are in the business of having satisfied customers – if there is a specific exceptional circumstance, talk to the carrier.
Remember: the current capacity-congestion was caused by the recent industrial action. Shipping Australia understands that some lines at least may be willing to waive container hire on late containers if the party liable for the hire approaches the carrier and demonstrates that the containers could not be returned within the free-time.
Other shipping lines may also be willing to listen and make determinations on a case-by-case basis and come to a reasonable arrangement. This is basic free-market stuff.
General economic and liner shipping principles
If shipping lines gave a general extension on free time periods as it would give an incentive to all consignees, not only those in earnest need, to be slow to unpack and return their containers. Containers are an essential part of the supply chain; they need to remain in circulation.
Without containers there is no carriage. The rapid processing, unpacking and return of containers needs to be incentivised, remembering, as always, that the exact manner and way in which this is done (if at all) is decided independently by each carrier.
If a company hires-out a container then it is reasonable to expect the hirer to give it back at the time it has contracted to do so. Ocean shipping lines need containers to carry out their business. Shippers also need containers to be in circulation so their cargo can actually be carried safely.
If a company does not return a container within free-time then the cost to the shipping line is not only the cost of the container it is also opportunity cost of the lost revenue for a sale that could not be made.
By way of analogy, if you hire a car and you do not return it a day late then you would expect to pay an extra day’s hire. If a company hires a container then it is reasonable to expect similar arrangements.
