Congestion issues grow at Australian container gateways amid labor dispute

Congestion issues grow at Australian container gateways amid labor dispute

Since May 2021, the Maritime Union of Australia (MUA) has called a series of work stoppages and industrial actions around issues such as bans on overtime, shift extensions, and work upgrades at various ports across Australia. Affected ports so far include Melbourne, Sydney, Brisbane, and Fremantle, resulting in increased waiting times for vessel berthing and related disruptions to container availability and truck servicing in the past two weeks. The MUA has called the strikes as part of negotiations for a new enterprise agreement.

Unionized workers with the MUA have issued over 30 strike notices since early May. Labor availability was reportedly impacted in May and June with reductions of 20 to 50 percent, leading to a decrease in total capacity throughput across all terminals. As seen in Figure 1, vessels are facing delays at ports nationwide, including those in Sydney, Brisbane, Melbourne, and Fremantle. Waiting times in Sydney have increased to 8-10 days for off-window vessels calling at the Patrick Terminal, and 2-3 days for those calling at the DP World Terminal. At other key Australian ports, delays on berthing times have also been noted since the beginning of the strike, such as at the Port of Fremantle (2 days), and the ports of Melbourne and Brisbane (1-2 days).

Figure 1: Delays to vessels due to MUA industrial actions. Source: Everstream Analytics.

Delays and related disruptions are likely to continue as further industrial actions are planned at least until July 15. As seen in Figure 2, further strike notices have been filed at all four locations, starting with an overtime ban in Sydney from June 17 until July 1. Overtime bans have also been announced at Melbourne and Brisbane until June 26 and July 7, respectively. In addition to overtime bans, workers have also announced work stoppages. In Fremantle, a 24-hour work stoppage can be expected from July 1 until July 2. Daily work stoppages are likely to disrupt operations in Sydney and Melbourne where 1-hour and 2-hour work stoppages have been announced per shift until July 15 and July 2, respectively.

Figure 2: Work stoppages announced by MUA. Source: Everstream Analytics.

Work stoppages disrupt operations of Australia’s major ports

Intermittent industrial actions conducted by the MUA at key Australian ports continue to be a pressing issue for importers, exporters, and shipping lines across Australia. The frequent negotiation deadlocks and work stoppages have been ongoing for the past 2.5 years. Being an island nation, the country’s import and export sectors heavily rely on ocean freight to procure materials or components or send them to destination markets. The Port of Melbourne is the country’s largest and most important shipping port, handling over 2.6 million TEU and about 3,000 ships annually. Imports entering the Port of Melbourne include electrical equipment, furniture, perishable goods, paper and newsprint, clothing, machinery, vehicle parts, metal, and rubber. As the main entry hub of Australia, the port also serves as the mainland port for Tasmania, and it is connected by road and rail to South Australia, New South Wales, and Australia’s east coast.

The Port of Sydney, also known as Port Botany is the second busiest container port with three terminals — Patrick, Hutchison, and DP World — as it handles 2.5 million TEU per annum and primarily caters to gas and bulk liquid cargo. The Port of Brisbane located in Queensland State is Australia’s third-largest and handles over 28 million tons of cargo annually while Fremantle, the busiest port in Western Australia State, handles more than 35 million tons of cargo each year. The industrial actions in the middle of last year and in February 2021 led to ocean carriers announcing blank sailings or port rotation changes, disrupting supply chains and causing delays in cargo deliveries.

Surcharges likely as container backlog grows

With global container capacity already constrained due to a sudden increase in demand in shipping, the scheduled port strikes are likely to cause lengthy shipping delays, although shipping lines with port calls to Australia, such as Hapag-Lloyd, CMA CGM, ANL, and Mediterranean Shipping Co., have yet to impose any emergency port congestion surcharges on containers amid the planned strikes. In the event that the congestion surpasses a two-week period, shipping lines may divert to other ports on short notice. Any blank sailings may jeopardize Australia’s export sector amidst the container shortage crisis as empty containers would fail to return to their ports. Precedents indicate that Port Botany experienced a backlog of 90,000 containers following work stoppages in September 2020, as operations at Sydney’s Patrick Terminals were reduced to 50-60 percent of the usual hours. Although the industrial actions ended in October 2020, the residual delays continued for several weeks.  Australia is currently facing a largely imbalanced container trade, i.e., more full containers are entering the country compared to the number of empty containers leaving. The pandemic caused an influx of imports from China to Australia after the demand for face masks, hand sanitizers, and other sanitary products spiked. According to industry reports, there are about 50,000 containers currently stuck in Sydney and Melbourne.

The ports have been facing slow operations amid the intermittent port strikes and vessel quarantine regulations as each Australian states have their own local maritime restrictions amid the continued closed borders at the national and interstate levels. The new COVID-19 lockdown in Greater Sydney has led to fresh border closures by Victoria and Queensland governments, which may exacerbate interstate cargo movement.  

Until the enterprise agreements have been signed and ratified, customers looking to ship into or out of Australia in the coming weeks are advised to liaise closely with local logistics operators as surcharges are likely to be imposed by shipping lines. For customers with export shipments from Australia that are time-critical, consider air-sea solutions by using air freight to the nearest available port to continue with ocean freight as an alternative to shipping goods by air only. 

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