The COVID-19 pandemic has destabilised the global container freight supply chain, and delayed shipments and rapidly rising freight rates are putting intense pressure on Australian exporters and importers, a new report from the ACCC reveals.
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The ACCC’s Container Stevedoring Monitoring Report 2020-21, looks at the impact of the current global logistics crisis on Australia’s container trade, as well as the prices, costs, and profits of stevedores at Australia’s international container ports.
It finds that a surge in demand for containerised cargo and extreme congestion across the global supply chain have caused major disruptions and delays.
A number of Australian exporters are struggling to meet their contractual obligations, and some large retailers are so concerned that their cargo will not arrive before Christmas that they are buying their own shipping containers and chartering their own vessels.
“International shipping line movements normally run lean and just-in-time, but a surge in demand and COVID-19 outbreaks that have forced numerous port operations to temporarily shut down have caused congestion and delays with a cascading effect across the globe,†ACCC Chair Rod Sims said.
A stevedore told the ACCC that only 10 per cent of vessels arrived in their designated berth windows in 2020-21, which is their lowest rate on record.
“Pre pandemic, the sector would have likely been able to manage such a surge in containerised demand, but the simultaneous destabilisation of almost every part of the supply chain has left them without any spare capacity and struggling to cope,†Mr Sims said.
The report shows that freight rates on key global trade routes are currently about seven times higher than they were just 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,†Mr 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. ■