Want to buy a new car? Well you might find it could get real costly, and real difficult, real quick. Want to buy a used car? You might run into difficulties there too.
Buyers of new and used cars, and farming communities, all across Western Australia could potentially be hurt by an ongoing fight between unions and car-stevedores.
Unions and car-stevedores are fighting over the terms and conditions of an Enterprise Bargaining Agreement, a situation that has been going on now for about eleven weeks.
Remember: the fight is between unions and car-stevedores. The ocean shipping companies are innocent third parties in this dispute.
Car carrier vessels have been standing off port in WA waiting to unload for quite some time now and that is causing huge cost issues and massive delays. As has been well reported in the media, car carrier ships have had to skip calling at port and will take their cargoes to another port.
Problems for car carriers
Skipping port adds yet more cost and yet more delay. Lots of car carriers run on “lines”, that is, they have to call at a specific sequence of ports, in a specific order, and to a specific timetable. It’s a bit like a bus or train following a specific route and timetable.
Delays at one port cause ships to fall behind on their timetable. If they fall behind, then they have to start skipping ports if the delay is too bad. They also have to sail faster to hit their next port on time. Sailing faster burns more fuel, and not just a bit more fuel, but a disproportionate amount of fuel too. So increasing speed from, say, 10 knots to 11 knots won’t increase the fuel-burning rate anywhere near as much as increasing speed from, say, 24 knots to 25 knots.
How big a difference does it make? Well, it can make quite a lot of difference.
Fuel (Singapore IFO380) was yesterday priced at US$522 per tonne, whereas in April 2020, it was US$155 per tonne, according to ShipandBunker.com. That’s a 237% increase over that timeframe. So marine fuel is already hugely expensive. If car carriers have to start burning a lot more fuel to get to / from Australia then its likely that the costs of transporting cars to Australia will increase*.
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Problems for car buyers
Increases in costs and delays are going to disadvantage a lot of Australians. So it’s fair to say that the problems caused by the union / car-stevedores fight have the potential affect nearly every Australian.
There are 1.1 million or so new cars sold every year, so new car buyers will certainly be affected. Second hand car buyers will likely be affected too as the second hand car market is about three million cars a year.
If this goes on for any length of time, then new car buyers will be immediately affected. Second hand car buyers won’t be as affected straightaway, but, remember, there’s a cascade effect at work. Buyers of new cars tend to sell their existing car on the second-hand market. Later, those used cars may get sold again and again. If the cost of new cars goes up or there are problems in buying new cars, then its foreseeable that prices will increase in the second hand market. That market could also slow down if the supply of used cars slows down.
Problems for farmers and farming communities
Car carrying vessels are pretty amazing bits of kit. Apart from being sophisticated ships deploying the latest technologies, they’re enormous!
And they’re enormous because, inside, they’re basically giant, floating, multi-storey car parks. If you’ve ever driven up and down a multi-storey car park then you’ve got a great idea of what the inside of a car carrier is like (but, obviously, with less concrete).
Because they have such a big internal space, car carriers don’t just carry cars. They carry all kinds of wheeled cargo, such as trucks, big pieces of industrial machinery (where and when these can be loaded on dollies, bogies, or any kind of wheeled flat-rack) and, of course, farming machinery.
Wheeled farming equipment such as combine harvesters, tractors, produce and grain trailers, loaders, scraper systems, fruit picking systems and wheeled agri-cranes of all kinds are all carried in car carriers. These pieces of equipment are already seriously expensive bits of kit. A quick google reveals that combine harvesters can cost half a million dollars. Prime movers for trucks have a similar price tag.
And just as it is with car markets, so too it is with the farming equipment markets. There is the market for new farming equipment and there is the market for used farming equipment. If the union / car-stevedore fight drags on then we can expect the costs of new and used wheeled farm equipment to escalate too.
This union / car-stevedore fight will likely hurt Australia’s farmers.
Australia is being hurt by this problem – government needs to step in and resolve it
This is a long, drawn out, fight between the unions and the car-stevedores.
- Australian car buyers are innocent third parties, and they will be hurt.
- Australian farmers and farming communities are innocent third parties and they will be hurt.
- Ocean-going shipping companies, which employ Australians and which transport Australian wheeled vehicles of all kinds, are also innocent parties and they are being hurt too.
It’s time for the unions and car-stevedores to do a a deal and settle their dispute. Too many innocent third parties are being hurt.
If they won’t, or cannot, settle, then it’s time for governments to step in. It doesn’t matter whether that’s the Federal Government or the Western Australian Government. They have the ability to intervene in these strikes and, where they are clearly causing such enormous harm to third parties, the courts have the power to bang heads together and stop industrial action.
It’s time to bring this disruption to an end for the benefits of all Australians.
*NOTE: we haven’t specifically discussed these cost-related issues with our members as they don’t discuss commercial issues, such as costs, with us. However, we feel confident in suggesting that if costs generally increase then freight costs will likely increase. That’s been a pattern of shipping markets from time immemorial and it’s something that any interested party can observe from the maritime press, broker reports, analyst reports and market circulars that are continuously published.
