April 14, 2020

Crunch time for international shipping

International shipping lines play a crucial role in bringing essential goods to Australia and supporting Australia’s economy by taking our export to global markets.  These services are even more important during the current COVID-19 crisis. 

Like many other organisations in the supply chain, shipping companies in all sectors are experiencing cost pressures as overall global trade is in decline. 

In the container shipping sector, there is a clearly a reduction in forward import orders towards the end of this month and thus the likelihood of significantly reduced shipping volumes to Australia occurring after April. 

Shipping Australia expects that reduced demand for imports will force lines to reduce their services in order to survive.  This is likely to impact on the availability of equipment such as food grade and reefer containers for export and on the availability of slots to and plugs for exports. 

This downturn will have an impact on Australian markets, and all organisations in the supply chain. It is time the Government started looking at a subsidy for shipping lines and/or exports and imports, to ensure the continuity of shipping remains viable when the import volumes shrink.

Responding to the challenge

There is already more idle container ship capacity than there was during the Global Financial Crisis and the challenges in international shipping are going to get worse before they start to recover.  It is important for Australia’s future that COVID-19 is not the catalyst for shipping line bankruptcies and forced mergers.  It is important that shipping lines are able to weather this storm and survive to rise again as the emergency passes.  Australia needs to continue to be serviced by regular shipping services though these difficult times, albeit at a reduced frequency. 

Shipping Australia has written to all ports and service providers asking them to consider discounting their charges or at least deferring any planned annual increase while this emergency continues.  We are also calling on Governments to consider subsiding shipping costs for exports and imports so that the continuation of regular shipping services to our trading partners remain viable.

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