Port Botany congestion due to a combination of operational events and prolonged waterside worker industrial action has created the ‘perfect storm’ of disruption to New South Wales supply chains, risking product shortages and other implications to the Australian economy according to Freight & Trade Alliance (FTA) and Australian Peak Shippers Association (APSA).
Vessels are now by-passing Port Botany discharging goods interstate and leaving importers to organise and pay massive logistics costs to move freight across state borders back to Sydney. Those with cargo discharged in Sydney are now subject to extensive delays at the port and are facing Sydney congestion surcharges’ from the major international shipping lines.
Once cargo is received, importers are then facing the difficulty of returning the empty containers to a shipping line contracted and nominated depot. With the failure of shipping lines to evacuate surplus empty containers, Sydney’s depots are at capacity with transport operators passing on costs for redirections, waiting times, futile trips and storage of containers.
Further to the local logistics concerns, we are also seeing shortages of the required equipment in some Asian ports to meet export demand to Australia and other destinations.
NSW exporters are faced with a critical reduction in available capacity and irregular services to meet current commercial obligations and seriously jeopardising forward contracts for grain, beef, pork and lamb.
Furthermore, the new surcharges alone add direct costs to primary produce eroding margins and crushing farmers who have seen bumper crops after years of drought.
WHAT IS CAUSING CONGESTION AT PORT BOTANY
Vessel schedule delays at Port Botany of up to 12 days are due to a combination of adverse weather conditions, infrastructure upgrades, industrial action with enterprise agreement discussions continuing at all three Port Botany stevedores;
IMPACT ON BUSINESS
• Four international shipping lines (Mediterranean Shipping Company, CMA CGM ANL, Pacific Asia Express-Mariana Shipping and Hapag Lloyd) have introduced a Sydney Port Congestion Surcharge without consultation and with insufficient lead times negating importers and exporters the ability to factor in ‘landed costs’ in forward contracts;
• Shipping lines have commenced what is expected to be an increase in re-scheduling with vessels by-passing Port Botany – this has the obvious impact of restricting options for New South Wales exporters to reach overseas markets and meet contractual obligations;
• By-pass vessels are discharging containers in Melbourne or Brisbane forcing importers to transport goods to Sydney and return the empty container back to the port of discharge at their own expense;
• More than 30,000 more import containers came in through Port Botany than were exported during May, June and July due to shipping lines minimising the use of ‘sweeper’ vessels to evacuate the surplus empty containers;
• Once import containers are unloaded, the empty container must be dehired (returned) to an empty container park – ECPs are congested due to the imbalance of import versus export containers;
• Extra costs being incurred by transport operators with redirections of empty containers from one ECP to another as each park becomes full are being passed on in the form of new surcharges;
• In many instances these containers are held in transport operator’s yards – these transport yards are also quickly reaching capacity;
• Some shipping lines have now issued notices that they will not be accepting certain types of containers on dehire and asking importers to hold onto them – some other shipping lines have suggested returning empties to Melbourne or Brisbane – however, we have seen only one line offer relief via an extension of “free time” before container detention kicks in.
Globally it has been a challenging year for supply chain management and international trade and the situation at Port Botany feels like it adds insult to injury. As we move into peak shipping season we expect the problems in Sydney will affect more and more importers and exporters so if you have a freight movement challenge we can help with please get in touch with me at firstname.lastname@example.org