Between June and August 2021, Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have been privileged to have direct engagement with The Hon. Dan Tehan (Minister for Trade, Tourism and Investment). Whilst acknowledging the substantial efforts by the Federal Government to liberalise trade, our advocacy has noted the benefits of these reforms have been largely countered by shipping capacity constraints and rapidly increasing costs jeopardising the commercial viability of many Australian exporters and importers.
Correspondence available
HERE and related submissions below:
Proposed Class Exemption for Ocean Liner Shipping [submitted to the ACCC on 28 February 2020];
Inquiry into Vulnerable Supply Chains [submitted to the Productivity Commission on 30 April 2021]; and
Waterfront Protected Industrial Action [submitted to the Attorney-General on 16 July 2021].
FTA and APSA continue engagement with members gaining evidence to support a call to the Federal Government for an independent review of international shipping practices and an assessment on its impacts on Australian commerce.Since the beginning of pandemic, international containerised supply chains have been subject to schedule delays, cancellations, lack of capacity, industrial disputes and monthly (commonly weekly) increases of sea freight charges. While the issues have national implications for importers and exporters of all commodities, FTA / APSA recently conducted focussed research with operational context by examining the per tonne financial impacts on high volume / low value grain exporters from regional NSW.
The case study concentrated on impacts caused by schedule delays/cancellations; lack of capacity (vessel space & equipment); landside logistics; waterfront industrial disputes.
CASE STUDY AVAILABLE HERE (FTA/APSA MEMBER LOGIN REQUIRED)The results show the dire predicament for the sector desperately trying to retain margins and market-share in a highly competitive international commercial environment. Extrapolating these costs across all Australian export producers, it would be reasonable to suggest the sector is paying multi-billion dollars in additional post-pandemic shipping and logistics costs.
COMMENTARY
Despite the adversity faced by exporters, the Australian containerised grain sector has continued to survive this season, primarily due to a northern hemisphere low production season.
Asian buyers have little choice today than to buy from the Australian market as there are limited offers in the world. What is highly concerning is the ongoing viability of the Australian containerised grain sector if/when the world sees a normalised production season.
The sector cannot afford to maintain these inflated supply chain costs to market and compete against Australian bulk shippers or northern hemisphere grain origin offers.
While many factors highlighted in these case studies are out of the control of our Federal Government, at minimum, immediate intervention is required to review competition protections given to foreign owned shipping lines and to introduce regulation to prevent unfair cost impositions on shippers.
We do not want government interfering with price setting as we need internationally owned shipping lines to be incentivised to continue to service Australian trade in a free and open market.
We do however see merit in a review to examine whether shipping line vessel sharing arrangements should be conducted in line with competition laws faced by others in Australian commerce. If the government is sold on the need to give shipping lines continued exemptions from the Competition and Consumer Act, then we will clearly need a federal maritime regulator to oversee proceedings to safeguard the commercial viability of Australian exporters and importers.
Importantly, a critical reform is required for Australian traders to be protected from unfair pricing regimes imposed by shipping line contracted stevedores and empty container parks.
We need these entities to negotiate rates direct with their commercial client shipping lines rather than imposing hundreds of millions of dollars in fees on transport operators held to ransom with no option to pay or are denied access to container collection / dispatch facilities.
We look forward to the prospect of engaging with the Federal Government on a comprehensive review of international shipping and logistics – a necessity to protect against detrimental impacts to Australian business and the broader Australian economy.
Paul Zalai - Director FTA | Secretariat APSA | Director GSF