NOTE: this article was first published as a breaking news on Monday 19 February about events that would then have been in the near future; some of the events in this article may have since taken place. The story also had the headline “Industrial action imminent at Melbourne – tomorrow, Friday, Sunday, next Monday”. On the following day, we changed the headline to “Rolling industrial action at Melbourne”.
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A stoppage of work is due to take place tomorrow, Tuesday 16 February, for a period of four hours at the Victorian International Container Terminal. A 12-hour strike is due on Friday 19 February from 18:00. Back-to-back strikes are due from Sunday 21 February at 06:00 am and will run for 36 hours.
On Monday 22 February, VICT’s control room will be unable to operate cranes unless the operations of each crane is manned by a dedicated quayside supervisor. This is described as “unnecessary” by the terminal operator, which goes on to add that: “these restrictive work practices would impose on VICT’s automated technology workplace organisation favoured by the [Maritime Union of Australia] that is still in place at manned terminals around Australia. VICT’s technology and Safe Working Method Statements allows the safe operation of cranes without dedicated supervisors”.
Indefinite bans on overtime and various other work restrictions have been imposed.
VICT reports that it is assessing its options and will inform terminal users of the implications for trucking and shipping movements shortly.
Attacking a modern, automated container terminal
Tim Vancampen, CEO of VICT, said he was amazed the MUA would even consider this sort of attack while the Victorian economy was already at a standstill owing to its third lock-down.
“VICT accounts for a third of Victoria’s container freight. The union is directly attacking VICT’s unique way of working as a modern, automated terminal. They want to take us back to the past, no matter the cost or the ill-considered timing in the context of the lockdown. This campaign won’t produce the extra jobs, massive pay rises and fewer hours the Union has promised our employees. All it will do is undermine VICT’s competitiveness and threaten the benefits of port automation for Victoria and for the Port of Melbourne. If the MUA was serious about representing VICT employees’ interests it would seek to protect their modern jobs, not jeopardise them,” he said.
Unpicking union arguments
In these situations, the union typically trots out several lines, all of which can be quickly dismissed.
Firstly, they tend to say that they will exempt medical cargo. This is an attempt to make you think that they are reasonable people concerned with your safety. It’s a very misleading argument.
In reality, the vast majority of medical supplies such as vaccines, medicines, medical devices and the like are flown into Australia by air. That’s because they are high-value, low-volume, urgent cargo. Think about it: vaccines and medicines have a very limited shelf-life so they can’t spend weeks at sea in transit. The medical supplies that tend to go by sea container are big bulky, low-value (but nonetheless important) materials such as bandages.
Secondly, so-called “exemptions” for medical or urgent cargo simply don’t work. Medical and / or urgent cargo might only fill part of a container and that container might be at the bottom of a container stack in the middle of the ship. Most of the ship would have to be unloaded to get to that one container. In any event, part-unloading a ship to get an “exempt” box is going to result in days of delay, especially if the ship is just sitting there waiting.
Thirdly, so-called “urgent” cargo. Who can say what is “urgent”? What is urgent today, is not necessarily urgent tomorrow. What is urgent for me is not necessarily what is urgent for you. Some things are simply more urgent than others. And, because of just-in-time logistics, there is a good argument to say that everything is urgent. What is cargo on a ship today is goods for sale on shop shelves tomorrow. We are sure that all the retailers who have cash tied-up in stock would argue their cargo is urgent. Meanwhile, the other transport-related industries – such as trucking, warehousing and other logistics-related businesses would likely also argue that the cargo upon which their livelihoods depend is also urgent.
Sympathy for all those affected
Shipping Australia expresses sympathy particularly for the people of Melbourne and the State of Victoria.
The Port of Melbourne is, without a doubt, the single-most important container-handling port in the State. It handles about three million TEU a year (a “TEU” is one, twenty-foot, box). The port contributes 19,600 jobs and $6 billion of economic benefit to the Victorian economy, according to Port of Melbourne’s 2050 development strategy documents.
About 87% of all fully loaded containers imported into the Port of Melbourne, which will carry goods needed by everyday families such as foodstuffs, clothes, toys, supermarket goods and general retail goods among others, are destined for the city of Melbourne. About 50% of fully loaded export containers handled through the Port originate from outside the city and may contain agricultural produce.
Any disruption to any aspect of the port’s operations can therefore adversely affect everyday Australians who live in and around the city of Melbourne. Local Victorian farmers who want to export their produce could also be affected.
Shipping Australia also would like to express sympathy to importers and exporters of cargo at this difficult time, made even more difficult by this selfish industrial action. At a time when businesses are reeling from the twin COVID and the COVID-induced economic crisis, it is outrageous that businesses should be deliberately hit by uncaring and reckless industrial action.
Shipping Australia also would like to express sympathy to the trucking industry. A substantial volume of trucking is driven by imports and exports and so the trucking industry’s work will be substantially disrupted. Meanwhile, the problems faced by trucking operators in dealing with empty container management can only get worse if these strikes go ahead.
Ocean shipping will be gravely affected
The strikes will severely affect the ocean shipping industry. Ocean shipping is a very expensive business. Current estimates, derived from publicly-available sources, by Shipping Australia for the cost of a day of delay to ships travelling at 21 knots are as follows:
Ship size TEU A$ cost 1 day of delay A$ cost 7 days of delay
2,500 $67,042 $469,294
4,000 $79,788 $558,516
8,500 $124,279 $869,953
Even with the very best goodwill in the world, ocean shipping companies simply cannot absorb such potential losses. Shipping companies are most unlikely to direct their ships to wait outside a port until industrial action is over.
While noting that each individual shipping line makes operational decisions by and for itself, there are several actions that different ocean carriers have been observed to adopt to cope with industrial relations stoppages and seaport congestion. These include ocean carriers opting to skip calling at the congested or affected terminal; delivering cargo to the next port of call; changing port of call rotations and changing sailing schedules among other things.
Inevitable delay and congestion
Ships will inevitably be delayed by industrial action though, probably because it leads to congestion at the affected terminal. Ocean shipping is a just-in-time business. If a ship is delayed in one port, then it will probably miss its scheduled window in the next port and will then be even further delayed. These delays compound until the ship departs its last Australian port. Then it may have to sail at full speed for ten days back to north Asia to regain its schedule.
A ship speeding up a little bit when it is already sailing fast burns up a disproportionately huge amount of fuel for a tiny increase in speed. Likewise, throttling back on the speed can also save a disproportionately large amount of fuel.
There are a wide range of other daily operating costs that a ship incurs every day, even if it is not sailing anywhere. Each day of delay wastes those costs. These include daily crewing costs, provisions, lubricants, stores, hull & machinery insurance, finance costs (very hefty on multi-million dollar ships), protection & indemnity fees and management fees to name a few.
Industrial action just leads to waste upon waste upon waste.
Shipping Australia expresses sympathy, calls for intervention
Shipping Australia CEO Melwyn Noronha commented on the latest waterfront strike threats:
“We would like to express our sympathy for ordinary families, for importers and exporters and for the trucking and logistics industries. All of these Australians are already suffering because of the pandemic and the associated economic crisis.
“Strikes at Australia’s major container terminals serious adversely affect ordinary Australian families. Remember, early last year, people were literally physically fighting in supermarkets over a perceived shortage of toilet paper.
“Our importers and exporters will likely face increased difficulties and delay because of strikes and work bans. They may also face increased costs as they try to arrange workarounds to cope with the strike by, for example, arranging for their shipments to be re-routed. Meanwhile, our logistics industries – which accounts for about 10% of the Australian workforce – will be adversely affected too. Then there’s the adverse affect on our farmers’ ability to sell their products overseas in an effort to recover from years of drought, the recent bushfires and COVID.
“At a time when global and national economies are reeling, at a time when Australians have been forced out of work, at a time when many people are struggling to find the money to keep a roof over their head and food on their plate, it is contemptible that the union is – again – trying to cripple the Australian economy and the ability of Australians to earn a living. And for what? For their own selfish interests.
“The shipping industry will also be gravely impacted too, in the form of delays and costs. This will seriously affect schedules and services.
“It really is time for the Federal Government to recognise the vital importance of the international container trade. Shipping Australia calls for the Federal Government to intervene and to protect Australians from this reckless industrial action”.
