This year’s Container Stevedoring Monitoring Report 2020-21 by the Australian Competition and Consumer Commission exploded with great force yesterday.
The report finds that a surge in demand for containerised cargo and extreme port congestion across the global supply chain have caused major disruptions and delays.
“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,” ACCC Chair Rod Sims said.
“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,” Mr Sims said.
The ACCC added that it believes the operation of the global supply chain will be restored and that freight rates will fall once the pandemic-shocks fall away.
Warning! Less attractive
However the ACCC warned that Australia risks becoming a less attractive destination for shipping lines unless port productivity, workplace relations and supply chain efficiencies are fixed.
The ACCC pointed to the World Bank / I.H.S. Markit report which proved that container ports were relatively inefficient and were below international best practice. Shipping Australia reported in depth on this report, which can be read here.
Meanwhile, the ACCC pointed to the UN Conference on Trade and Development figures which prove that the median in-port time for container ships visiting Australia was excessively long compared with other nations, such as New Zealand.
“Australia needs to take decisive action to remain an attractive destination for global shipping lines,” Mr Sims said.
Workplace workforce warning
Systemic workplace relations issues on the waterfront and restrictive practices have disrupted the supply chain and have exacerbated the crisis, the ACCC found. Congestion at Port Botany has become so bad that some shipping lines are skipping the port entirely, it added.
“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,” Mr Sims said.
The ACCC also found that the Maritime Union of Australia has used industrial action to push for restrictive work practices, including workplace agreements that limit the ability of container terminal operators to push for automation or to even recruit their own workforces. Some collective workplace agreements require 70% of new employees to be chosen from family and friends of existing employees or people chosen by the MUA.
“The long-running labour issues in the container stevedoring industry have resulted in lower productivity and higher costs for Australian cargo owners,” Mr Sims said.
Port regulation is needed
The ACCC also addressed a number of landside issues. It specifically noted that the Stevedores “do not appear to be earning excessive returns” in relation to their landside charges.
In relation to privatisation, the ACCC found that there had been some benefits to the container industry through more dynamic port operations but that there had been dis-benefits too with higher port prices.
“The ACCC has been saying for some time that the current little or no regulation of container ports in Australia is not fit for purpose. Regulation needs to compensate for a lack of competitive pressure on the ports,” the ACCC said.
Shipping Australia welcomes the report
“Shipping Australia welcomes the publication of the ACCC report as it largely validates everything that Shipping Australia has been saying for the last 24 months. We are pleased to see that the ACCC acknowledges that the current supply crisis is really a port-related crisis, especially in the matters of port congestion and industrial relations.
Australian crane rates are of course extremely important, we have ourselves just produced a thought-leadership analysis on this exact subject, but we are very pleased that the ACCC has in the current edition of the report expanded its scope beyond crane rates and into overall port productivity.
“We are also pleased that the ACCC has taken notice of the World Bank / I.H.S. Markit report on comparable port performance. This extremely important report did, for the first time, throw a clear and shining light on the murky world of port performance. It is time for those who are responsible for port governance both to take notice – and to act to improve.
“Meanwhile, we are also pleased to note the ACCC shining a spotlight on waterfront industrial relations and how this has hampered the ongoing development of the Australian economy. Australia continues to be plagued with industrial relations issues and it is long past time for the Federal Government to recognise the essential and vital nature of the waterfront and to take steps to ensure that unions cannot take Australia hostage ever again.
“Shipping Australia also notes the various comments about transparency of charging practices and we would support any call to have clear and transparent charging right across the supply chain and across all modes of transport. Greater transparency in this area by everyone can only be to the benefit of Australia and Australians as a whole.
Finally, we note the comments on the future of Part X of the Australian Competition & Consumer Act, which addresses the ocean shipping liner exemption from certain aspects of competition law. We would like to refer to our public submission to the ACCC of 28 February 2020 that, subject to certain conditions: “Shipping Australia would be in a position to support a recommendation to repeal Part X.”