Shipping Australia welcomes the Prime Minister’s recent announcement on waterfront industrial relations.
It’s particularly important right now as there’s a dock-side cease-fire that runs out on 10 December.
Australians are looking forward to, and need, a bit of Christmas cheer. It’s just not right that a nation of 26 million could have its Christmas wrecked by industrial action taken by the Maritime Union of Australia (MUA), which only represents a maximum of a few thousand people.
We support and thank the Prime Minister for his vow to to intervene in the waterfront dispute so as to protect Christmas for all Australians. The MUA, should not be allowed to wreck Christmas Day!
What is the union fighting for?
So, what is the union fighting for? Well, we can tell you what they’re not fighting for. They’re not fighting for down-trodden and oppressed wharfies. Waterside workers in Australia get a great deal. The waterfront container terminal operator in the current dispute has offered a pay rise of 2.5 year-on-year and job security with no forced redundancies.
Wharfies in Australia are hardly poor little waifs standing outside in the cold with their little noses pressed up against the glass, watching the well-off tuck into their Christmas dinner. The average wharfie in the current dispute is paid just under AUD$161,000 a year and works about 179 days a year. Some wharfies earn over AUD$185k a year with overtime. That’s puts them in the top 10% of earners in the country.
Far from watching the well-off scoffing their Christmas dinner, the wharfies ARE AMONG the well-off in Australia. Don’t believe us? By way of comparison, a typical Australian office worker earns about AUD$51,000 a year and works 233 days a year.
Yup, the average Australian office worker has to work about 26% more for three times less pay.
Don’t believe the propaganda
Incidentally, we need to do a bit of de-bunking in advance. The MUA is running the line that there is no industrial action in Australia at the moment, which, to be fair, is true. There isn’t any right now.
But’s that only because the waterfront terminal operator forced them into backing down by dragging the union to the Fair Work Commission. Prior to that, there was in fact a long and protracted campaign with industrial action taking place every few days. That campaign caused, and is causing, extreme disruption (more on that below).
Another line we’ve heard (somewhat astonishingly) is that the supply chain can cope with it. What nonsense. The purpose of industrial action is to be disruptive. It’s meant to force the other side to give in.
The consequences of industrial action is that the supply chain becomes snarled up, with costs and delays and problems for everyone. Importers find it difficult to import. Exporters find it difficult to export. Congestion gums up ports. Shipping lines are forced to revise services.
Industrial action causes a supply chain nightmare, as it is indeed supposed to do… because the whole point of taking disruptive industrial action is this: it’s to disrupt. Duh.
Systemic problems
There is clearly a problem with industrial relations on the waterfront as Australia is plagued by ongoing protected industrial action. It seems that as soon as one set of industrial action stops at a set of waterfront terminals, then another set of industrial action starts.
It’s because of the nature of Enterprise Bargaining Agreement. Before an Enterprise Agreement expires, workers (via their union representatives) and the stevedore begin discussions to make a new Enterprise Agreement. As part of that process, the union can take “protected industrial action”. Protected industrial action is “protected” because the union and the employees can’t be sued because of it.
This means industrial action such as strikes, work-to-rule, go-slow campaigns and so on can take place in an attempt to encourage concessions from the employer. Industrial action typically (but not always) takes the form of a series of stoppages ranging from an hour to several days.
Unfortunately, there’s no time limits on any of this and the strikes and negotiations drag on and on and on until the two sides come to a deal.
But the industrial action can drag on so long that, by the time a deal is done and an Enterprise Agreement is concluded, it’s time to begin negotiations for the next one!
Costs and disruptions of industrial action
Letting these disputes drag on and on hurts the Australian economy, which means it hurts everyday Australian families.
The waterfront is vital to the economic health of Australia. Each day, about AUD$552.9 million worth of containerised goods, about 16,000 twenty-foot boxes worth, cross the wharves.
Economists reckon that industrial disruption at the four main container ports of Brisbane, Fremantle, Melbourne and Sydney can lead to a direct loss of about AUD$22.7 million a day to the Australian economy.
Then there’s the multiplier effect.
Some goods are components that are used to make other industrial goods. For instance, think of parts that are used to make machines. Some goods are used to deliver services, for instance, think of stands and equipment used in trade shows. If the wharfs are disrupted then the effects of port delays cascade throughout the economy as lost sales, unexpected costs of transport and storage (as goods may be delivered to alternative ports) and production / productivity losses (e.g. delayed or disrupted manufacturing, delayed trade shows etc).
Meanwhile, exporters can face financial penalties for contract breaches if they can’t get their cargo to the right place at the right time. Extensive industrial action can also lead to exports of some products becoming economic if there are delays.
Consider, also, that about 9.5% to 10% of the Australian workforce of 12 million to 12.5 million people work in some aspect of the logistics sector, which is primarily driven by sea freight. This varies, of course, depending upon how many people are working in logistics vs how many people are working in the workforce at the time. Large swathes of the workers in the wider logistics industry can be adversely affected by extensive industrial action.
How ships are affected by industrial action
Then there’s the cost to the ships themselves. Ships are extraordinarily expensive assets to operate. Ships that call in Australia generally have a capacity of 4,000 boxes (where each box is twenty feet in size) to 6,000 boxes. Ships of those sizes can cost between AUD$228,000 to AUD$297,000 a day to sail on the high seas once all costs (such as fuel) are taken into account. Let’s put that in perspective – those figures are equivalent to about AUD$158 to AUD$206 a MINUTE.
One day of industrial relations induced-delay causes huge costs to shipping companies. Shipping companies simply can’t afford to absorb wasted costs of that magnitude. Now, as far as we are aware and to the best of our knowledge and belief, ocean shipping companies react to such challenges in individual and independent ways. We can’t say how any given shipping company will react in respect of such congestion because we do not discuss it with them
But we can look at past behaviour.
Typically, to cope with industrial relation (which causes localised congestion), shipping companies have typically in the past done one, or some combination of:
- issuing surcharges
- slowing down ships
- omitting port calls
- changing the order of port calls (e.g. instead of “A, B, C”, it’s “B, C, A”)
- changing services so that a given service does not call at the port
- changing the frequency (e.g. weekly to fortnightly; that’s a 50% cut in supply which causes its own problems!)
So we can see that industrial action in Australia can make it difficult, to impossible, to deliver cargo to the right place.
Effects on businesses
When cargo isn’t delivered at the right time / place then the landside logistics supply chain may deform, which can place unusual stresses on workers and employers. If multiple ships and cargo are re-routed to another place (i.e. away from Port A to Port B) then we may have “ship-bunching” when multiple ships arrive at the same terminal at the same time. This can put a lot of stress on local logistics. Terminal-to-inland trucking at that other place may surge pushing up trucking rates. That adds further costs for the importer who has to have the goods trucked back to the correct place. Warehousing and other storage space might fall into short supply. Empty container management becomes difficult for much the same reasons.
Meanwhile, back in the part of the country where the cargo was supposed to go before the industrial action (i.e. back at Port A), a business may have logistics workers standing idle. There may be variety of truckers and warehouse crews standing ready to truck boxes, stuff / unpack containers and generally move goods around in the warehouse.
But if industrial action has caused disruption, they won’t have work to do. Those workers have to be paid nonetheless, so it is a wasted cost that can be quite expensive for employers. Logistics and warehouse wasted time / costs also happen even if the cargo is not re-routed, just delayed i.e. a warehouse crew might be ready to do work on Monday but, because of strikes, the cargo might not turn up until some other time.
A happy balance
All of us who work in Australia owe a lot to the historical actions and, yes, even the militancy, of unions. Thanks to the campaigns of unions in the past, today, all Australians can work reasonable hours, access holiday pay, are protected from being arbitrarily fired, and have a variety of workplace rights.
And for that, we should be truly thankful.
However, the days of Sydney’s Hungry Mile – when waterside workers would tramp around the docks looking for jobs while living in dire poverty – are long gone. Workers, waterside workers especially, are not now being oppressed and they have excellent pay and conditions.
Workers’ rights should be respected. Employers’ rights to run a business should be respected. Every Australian’s right to access a working economy should be respected.
We need a balance.
A good start on balancing rights
The key problem is that extensive protected industrial action can occur over a long time, hurts the economy and innocent Australian families.
One solution, then, is to put disputes on a timetable.
Enterprise bargaining should have short, strict, timeframes.
If the parties cannot agree a new Enterprise Bargain within the designated timeframe then protected industrial action should automatically be terminated and the dispute should move to compulsory public arbitration.
The arbitration should not drag on and there should be an immediate settlement of the disputes.
Another key problem is that Enterprise Bargaining and industrial action can take place at multiple worksites on the waterfront. This disrupts the flow of goods to Australian families and businesses. This holds the whole Australian nation hostage. This needs to stop.
The start and expiry dates for waterfront enterprise bargaining agreements should be staggered so that they cannot all be expired, or be close to expiry, at the same time. That would prevent multiple industrial actions taking place at different waterfront worksites at the same time.
There should also be an absolute prohibition on any industrial action that prevents a stevedore from sub-contracting a ship to another stevedore. In that way, unions can take industrial action against the target terminal – and it will disrupt the target terminal – but it won’t unfairly penalise other parties in the supply chain it won’t hold Australia hostage.
