While the shipping industry is exhausted by the unpredictable disruptions that COVID-19 has inflicted, Australian freight companies are now dealing with a new round of hurdles.
The Maritime Union of Australia (MUA) has begun a series of work stoppages with Port of Melbourne on strike, and an upcoming strike planned at Sydney International Container Terminals set to cause lengthy delays.
Verus Global’s reaction to port strikes
“Containers are taking double the amount of time to process once they hit our shores, and the impact of the local pressure will affect global markets. The situation is at a critical point with the Christmas end of year peak season only a couple of months away,” explains Meyer.
To add to the frustration, an increasing number of shipping lines are now directing their containers be de-hired directly to nominated stevedore terminals.
This inefficient process has been driven by the lack of capacity at empty container depots in Melbourne, creating a considerable degree of stress on fleet operations to maintain delivery integrity, and additional fees charged.
“The Port of Melbourne strike has pushed container importers pricing up from an already astronomical price due to the global pandemic, to an industry that is very much hurting.”
“The demand is impossible to keep up with, the delays are imminent and will be ongoing, especially with the announcement of a Sydney strike this week,” says Meyer.
Verus Global predicts more port strikes
The industry has been warned to expect further unforecasted and increased fees.
The new restrictions and policies placed on local providers, plus the high freight levels globally, and increase on local charges updated almost daily, importers are unable to retain their original selling prices and will ultimately have to pass on these costs to the customer.
Low cost industries such as packaging are being hit the hardest, with high volume, low margin goods absorbing the on-costs of the unprecedented climate, with no endgame in sight.
Whitegoods and highly sought-after household items during the pandemic, such as furniture, continue to remain strong and in demand. Large appliances now command a spot rate up to 41% of the cargo value, and small appliances command up to 27% of the retail value.
“In the monopoly market of global shipping and with strong alliances, freight rates have become too lucrative to retain previously agreed contract rates on long term deals.”
“If contracts are not renewed, or have been partially slashed, the importer finds themselves paying up to six times as much as they initially forecasted.”
“It’s clear that we are now at a point where an increasing range of cargo owners quite simply will not be able to sustain their business, at the currently high freight rates, and that’s a major issue for the industry,” concludes Meyer.