Omicron spike sees inflated landside logistics

The new ‘temporary tariff’ as announced by the Victorian International Container Terminal (VICT) has been introduced to recover ‘extraordinary costs’ as a result of the Omicron outbreak, which will be effective as of 1 February.

Members of the Freight & Trade Alliance/Australia Peak Shippers Association Inc. (FTA/APSA) have noted that whilst the VICT increase is $3.97 (excl GST), they have questioned how some major transport operators have made similar claims yet are charging significantly higher per container surcharges.

The FTA/APSA said there is no doubt that the transport sector, stevedores and other are feeling the pain of the ongoing outbreak.

Like all commercial parties, they have to decide whether they can absorb the cost, or pass it on.

According to the peak body, the ongoing frustration about stevedore practices (and empty container parks) is that they are not passing on the cost in negotiations with their commercial client (shipping lines).

Instead, they are taking the soft option of using the ‘ransom model’ and imposing it on transport operators who have no choice but to pay to get terminal access.

This latest increase also makes a further farce of the Victorian Voluntary Pricing Protocol with VICT failing to maintain the 60 day initial consultation period or the 30 day final notice period for any adjustments to charges.

Serious reform is required and will be addressed in the FTA/APSA’s ongoing engagement with the Victorian Government, the National Transport Commission (NTC) and as a key element of their submission to the Productivity Commission.

FTA Director and APSA Secretariat Paul Zalai said that indefence of major transport operators, they are at least imposing this surcharge on their commercial client who ultimately have the choice whether to pay or find another provider.

“Instead of using this opportunity to gain new business (which they may struggle to service at this time with a shortage of drivers), we will most likely see other transport operators ‘follow the leader’ with similar price increases,” Zalai said.

“FTA/APSA will again bring this matter to the attention of the ACCC to monitor and ensure all parties are complying with Australian competition law,” he said.

“The unfortunate reality is that we will most likely experience inflated landside supply chain costs until operating conditions improve and market forces rectify the situation,” he concluded.

Source: FTA/APSA