OMICRON IMPACTS ON LOGISTICS - Safety, new surcharges and the serious threat of container detention penalties

SAFETY

As highlighted in our extensive media coverage last week, the transport sector, stevedores and other supply chain participants are feeling the crippling impacts of the current Omicron outbreak. High absenteeism and extensive testing regimes are adding to workplace pressures and no doubt increasing operational costs. 

Putting costs aside, safety issues now need to receive paramount attention.  

We are hearing that staff are returning from work with 'brain fog' as a common COVID hangover. Many operations are maintaining business continuity with remaining staff who have avoided the virus working over-time to fill the void. It is questionable how long this will be sustainable.  

Of significant concern, last week our industry witnessed a close call with a container collapse and tragically, a casualty with a depot workplace accident. 

Let's hope that all in our sector can commercially survive and keeping freight moving during this incredibly difficult time, importantly in a safe and compliant manner. 

NEW SURCHARGES

The new 'temporary tariff' recently announced by the Victorian International Container Terminal (VICT) has been introduced to recover 'extraordinary costs' and is effective from 1 February 2022. 

Like the stevedore-imposed Terminal Access Charges, this will be administered via the Vehicle Booking System (VBS) and paid by transport companies. 

Members have noted that whilst the VICT increase is $3.97 (excl GST), they have questioned how some major transport operators have made similar claims yet are charging new and significantly higher per container surcharges. 

As per my answer to this same question in a live interview with Ros Childs on ABC News, the cost of COVID-19 related compliance and operations will vary from business to business. Like all commercial parties, they have to decide whether they can absorb the cost, or pass it on, and at what rate. 

The ongoing frustration about stevedore practices (and empty container parks) is that they are NOT passing on the cost in negotiations with their commercial client (shipping lines), instead they are taking the soft option of using the 'ransom model' and imposing it on transport operators who have no choice but to pay to get terminal access. This latest increase also makes a further farce of the Victorian Voluntary Pricing Protocol with VICT failing to maintain the 60 day initial consultation period or the 30 day final notice period for any adjustments to charges. 

Reform is required and will be addressed in our ongoing engagement with the Victorian government, the National Transport Commission (NTC) and will form a key element of our submission to the Productivity Commission. 

What is also of concern is that many transport operators have implemented similar fees in quick succession over the last two weeks and to that end, we commend the Australian Competition and Consumer Commission (ACCC) for initiating investigations. 

Pandemic or not, should any anti-competitive practices or evidence of collusion be identified, we trust the regulator will take strong action. 

CONTAINER DETENTION

While these stevedore and transport operator charges add to the existing shopping list of supply chain surcharges, the real commercial fear over the next few weeks is that international shipping lines, already proudly reporting multi-billion dollar profits, will cash in on detention penalties caused by delays in returning empty containers. 

In particular, we are seeing delays in container releases that are subject to biosecurity measures with many approved arrangement facilities at capacity with limited operational staff to deal with volumes. We have seen a number of cases where there is an inability to obtain BMSB verification inspections for 4-6 weeks. In such scenarios, and to avoid container detention penalties potentially tallying to tens of thousands of dollars, we suggest that members contact Seasonal Pests Policy (SPP@awe.gov.au) and request if they can provide alternative solutions.

We also note that many transport companies have put members on notice that regardless of the reason for any detention, cartage contractors will not accept any responsibility for any cost and charges. 

In the current operating environment there will no doubt be many scenarios whereby the delay in returning empty containers within prescribed timeframes cannot be avoided. We have written to major shipping lines with all refusing our request for a blanket extension of detention free days. Most conceded they will assess the quantum of penalties on a 'case by case' basis. 

We encourage members to take up the offer of shipping lines to raise concerns and to document these scenarios. 

Let's hope we can report a good news story in the weeks ahead of safe, fair and collaborative operational practices during these extreme times.

Paul Zalai - Director FTA | Secretariat APSA | Director GSF