DP World Australia is the country's largest terminal operator, handling roughly 3 million TEU annually. Photo credit: Shutterstock.com.
Australian shippers are raising concerns over a planned industrial action by dockworkers employed by DP World slated to begin Friday at the four largest container ports in the country, saying the impact could be felt within hours.
The Dubai-based firm's Australian subsidiary is the country's largest terminal operator, handing about 3 million TEU annually, with CMA CGM of France among its major liner customers.
"Importers [and] exporters start feeling detrimental impacts if delays are extended beyond 12-24 hours, although with advance notice, transport operators can make alternative arrangements," Paul Zalai, director of the Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association, told JOC.com. The FTA represents nearly 100 importers and exporters and shipping related firms, including the Australian Cotton Shippers Association, the Australian Meat Industry Council, Cargill, Kmart Australia, Costco Wholesale Australia, Airbus, Alibaba, Target, and Toshiba.
Containing the impact
Members of the Maritime Union of Australia (MUA) on Friday voted to launch industrial action against DP World Australia starting from March 22. Along with rolling strikes of between one and 24 hours, associated measures include bans on overtime and shift extensions.
The strike is limited to the DP World Australia-operated terminals at Sydney, Melbourne, Brisbane, and Fremantle. But shippers fear the dispute could spread to terminals operated by other companies if cargo owners and container carriers attempt to divert cargo normally handled by DP World to those facilities. In addition to DP World Australia's operations, Hutchison Port Australia, part of Hong Kong's Hutchison Port Holdings, has terminals at Sydney and Brisbane, while Philippines-based International Container Terminal Services Inc. (ICTSI) has a terminal at Melbourne and Patrick Terminals operates facilities in Sydney, Brisbane, and Fremantle.
"We recently witnessed a situation whereby industrial action at Hutchison spread to other stevedoring operations that accepted the working of affected vessels on a sub-contracted basis. What was once a work-around to ensure business continuity may no longer be a viable option," Zalai said, adding that the delays caused by the Hutchison dispute spread "almost immediately" to other facilities when lines switched terminals.
Shippers could also face additional costs, including late fees, even if they are unable to drop off or collect containers.
"When there was industrial action at Melbourne's Victoria International Container Terminal, shipping lines still charged container detention fees for the late return of containers despite the fact it was impossible to drop off or pick up containers from the terminal," Zalai said.
DP World Australia spokesperson Shane Evans said, "Contingencies are in place to minimize customer impacts" of the potential strike, but he declined to comment further on either the strike action or ongoing contract negotiations with MUA.
Underlying issues
The threat of industrial action has been brewing for about six weeks, ever since DP World Australia warned it would strip workers of income protection insurance under a proposed labor agreement that also includes a 2.6 percent pay increase.
"The brutal and immoral DP World decision to remove income protection from the workforce is an incredible act of disrespect and uncaring corporate muscle-flexing designed to pressure workers to accept a bargaining agreement that doesn't deal with our concerns," the union said at the time. "DPW's extraordinary corporate attack coincides with the company becoming majority-owned by multinational operator Dubai Ports World Dubai after Australia's Future Fund sold its quarter share in the container terminal operator. It also follows the appointment of new chief executive Glen Hilton" in January.
Australia's Fair Work Commission approved the union's application to go ahead with industrial action in mid-February, but said the union must give DP World five days' notice of any strike action.
Warren Smith, assistant national secretary for MUA, said the campaign will start with the introduction of a range of work bans and could escalate into a series of strikes that would see dockworkers picketing the terminals.
The MUA-DP World conflict comes as the union is also involved in action against Hutchison Port Holdings at its terminals in Sydney and Brisbane over automation and outsourcing.
FTA's Zalai noted it also comes at a difficult time for cargo owners, as imports have been surging but exports have tumbled amid a severe and sustained drought. "The industrial action also comes at a time when Australian trade has been [in] disarray following the introduction of biosecurity measures" by the Australian Department of Agriculture and Water Resources, he said.
"Adding salt to the wounds is the rapidly escalating and unregulated 'infrastructure surcharges' administered on entities transporting containers to and from terminals, which cascade down the supply chain, resulting in inflated costs to shippers. The introduction of terminal competition has resulted in cheaper rates for shipping lines," Zalai told JOC.com, but he noted that no reduction has been received by shippers in terms of terminal handling charges. "Terminals are making up this difference with the introduction of an 'infrastructure surcharge' administered on transport operators who pass this cost (usually with an additional administration fee) down the supply chain with shipper absorbing increased costs. At minimum, we are now looking for regulation to control and monitor this cost."
Zalai said cargo owners in Australia "trust that DP World can come to terms with their workforce for a fair and quick resolution. Once they have that resolved, perhaps they could also come back to the table to negotiate fair charging regimes with industry."
Contact Keith Wallis at keithwallis@hotmail.com.