Australia’s shipping crisis intensifies amid industrial action disputes

The effects of the global pandemic continue to be felt across global supply chains, with the worsening shipping crisis threatening more delays and disruptions.

Local exporters and importers are facing intense pressure due to delayed shipments and skyrocketing freight rates, which are seen to be exacerbated by disputes over controversial hiring quotas within the Maritime Union of Australia.

The shipping crisis has also led retailers to warn consumers on getting their Christmas shopping done early to receive their goods on time.

However, many of these issues have already existed well before the pandemic, according to a new report by the Australian Competition & Consumer Commission (ACCC).

The analysis reveals that Australian container ports were perceived to be relatively inefficient and “well below” international best practice even before COVID hit, with some shipping lines already withdrawing services from Australia.

Australia’s largest container ports, Melbourne and Sydney, were ranked in the bottom 15 per cent and 10 per cent respectively, of the 351 global ports in a World Bank study.

Also seen as compounding the crisis is the MUA’s push for “restrictive work practices”, which demands that 70 per cent of the workforce to be ‘family and friends’ of existing employees, or people chosen by the MUA.

However, this has led stevedore Patrick Terminals to move to end its enterprise agreement with the union.

“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,” said Rod Sims, chair of ACCC.

The industrial action has even led some shipping lines to decide that Port Botany is commercially unviable.

“The long-running labour issues in the container stevedoring industry have resulted in lower productivity and higher costs for Australian cargo owners,” Sims said.

Ship docking at Port Botany has taken a turn for the worse, with data from the ACCC revealing average idle hours to have almost doubled from 11.9 hours pre-pandemic to 21.2 hours in 2020-21.

Congestion at the port has become so bad that some shipping lines are skipping it entirely.

The report also showed that freight rates on key global trade routes are seven times higher compared to over a year ago. However, even at these rates, shipping lines cannot guarantee on-time delivery.

“The margins of Australian importers and exporters are being squeezed, as they are all around the world, and the current situation is very challenging for businesses that rely on container freight,” Sims said.

The ACCC considers that the operation of the global supply chain will be restored, and freight rates will fall once the shocks caused by the pandemic stop.

However, Australia risks becoming a less attractive destination for shipping lines unless productivity, workplace relations, and supply chain inefficiencies are addressed.