This piece was written and provided by Paul Cantarella, Trade Colutant and Compliance Specialist at ADM Global.
Just when we thought shipping and supply chains were heading in the right direction and getting back to normal, we now have several issues impacting supply chains once again. The first issue is the crisis in the Red Sea, there are continued attacks from the Houthis in Yemen on commercial shipping wishing to utilise the Suez Canal, this has led to an exodus from the Red Sea by most of the major shipping lines. The rerouting of vessels via the Cape of Good Hope will have a flow on effect which will add weeks, perhaps months, for goods to arrive at Australian ports. This also means that vessels will be at sea longer resulting in more containers on the water for a longer period of time. This inevitably means there will be a shortage of empty containers made available to move your goods, this has already commenced and will escalate the longer the Red Sea issue remains unresolved. Even though the European and British trade lanes are impacted the most, Asian ports will also have delays as volumes increase though major transhipments ports in the region. These shipping schedule amendments will increase throughput to the transhipment ports potentially adding further delays to your cargo.
Of course, with delays and disruptions comes the additional cost. Shipping lines are using more fuel, equipment is tied up for longer periods of time and as demand begins to exceed supply, rates will increase. We are already experiencing surcharges of USD500.00 – USD 1200per container and freight rates will continue to rise as equipment becomes scarcer and demand begins to increase further.
The other issue we have is the dispute between DP World and The Maritime Union of Australia, this has been an issue since October 2023 in the form of ongoing protected industrial action (PIA ). Initially the work bans were manageable, however, the bans and stoppages are now more intense and more regular. There is a serious impact on container deliveries at all DP World sites around Australia with an estimated 50,000 containers being impacted by the industrial action. This is also putting pressure on the remaining stevedores to assist in the delivery of containers. DP World had a meeting with Tony Burke, (Minister for Employment and Workplace Relations) last week and he made it clear there will be no government intervention and that both parties need to continue negotiations as per the Fair Work Commission ruling given prior to Christmas. Industry bodies continue to rally the government and through media channels continue to put pressure on the government to intervene. At the moment the PIA continues to disrupt supply chains around Australia.
In addition to the above, DP World have decided to increase Terminal Access Charges (TACs ) at all their ports by as much as 52%. This has been understandably met with much anger and frustration by port users, however, there is little that can be done about it. This is an ongoing issue with the ACCC monitoring and their lack of action against such fee increases. There is a current Productivity Commission Report that recommends changes to the way these fees are introduced and a restructure of the current system, however, the government have not acted upon any of the recommendations. The new charges will commence on the 1st February 2024.
Please consider the above issues as disruptions to supply chains are inevitable, as usual, plan accordingly and consider that additional charges will apply and these need to be factored into your landed cost calculations.
PAUL CANTARELLA
Trade Consultant and Compliance Specialist
c.paul@admglobal.com.au
(+61) 3 8336 0812
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