Surplus empty containers will cripple productivity

When most people think of national and international trade, what immediately springs to mind are trucks, trains, ships and planes full of goods manufactured, mined or grown here in Australia, and being sent around the country and around the world for people to consume and enjoy.

Conversely, goods arriving from other nations for us to consume locally because we don’t produce them here is what people imagine when they think of inbound trade – the take-off in online shopping during the COVID-19 pandemic has certainly reinforced to most consumers the value and necessity of international commerce.

So, if you told most Australians that our nation’s second biggest export was empty shipping containers they would be rightly surprised and shocked. COVID-19 has also highlighted this with container parks around the country full of empty containers because of a decline in exports and a corresponding shortage of ships to return them to their countries of origin.

Wharf carriers in the Port of Melbourne are finding it harder to meet their customers obligations in sourcing and returning empty containers with empty container parks because of this trade imbalance, alarming transport operators who are being fined for late returns of import containers and disappointing customers in not supplying the right container type for exports.

The movement of empty containers has become a problem with COVID-19 as countries grapple with unknown demand for many goods and a reshuffle of trading relations. The current trading issues with China has not helped the international trade position of Australia, with many containers not being repositioned overseas from Australia.

This has meant that the dozen or so formal empty container parks in Melbourne are at capacity, with their compatriot shipping lines not repositioning containers back overseas. Additionally, we have been experiencing record levels of imported goods in the past three months that has exacerbated the issue.

Wharf carriers are unable to secure sufficient slots for the de-hire of import containers or the collection of the correct type of empty export containers in the port, leading to empty container parks being unable to cope with the volume because they do not have the space or resources to meet the demand.

Transport companies that are unable to return empty containers within a specified time are fined directly on a daily rate that is non-negotiable. These costs will be passed onto customers who must then pass on to consumers.

However, there are solutions that would alleviate many of the issues.

While waiting for a greater balance in world trade volumes for containerised freight we can acknowledge the issue and vary the current parameters of the process of movement of empty containers.

The VTA’s recommendations include:

• Shipping lines increasing the current import return allowances before late fines from 10 days from day of arrival to 14 days from collection.

• Ensure carriers are recompensed for costs incurred by customers for the additional costs associated with handling, transport and storage of containers at their own premises.

• Ensure shipping companies provide an immediate viable Empty Container Park/Stevedore alternative if the carrier is precluded from transacting at the nominated contractor. That would mean that shipping lines would need to assist each other and work together.

It is not the fault of the wharf carrier that this issue has emerged, but it will be their cost from fines and additional resource that will increase. Additionally, the port supply chain will become more inefficient and reinforce the Port of Melbourne as the most expensive in Australia.

For Melbourne and the whole of Victoria to maintain its reputation as the pre-eminent destination for freight, we must retain our competitiveness because in our global economy, customers and consumers will most often than not conduct their business where it is cheapest and most cost-effective to do so.

The issue will only get worse if is left unaddressed and the VTA will be working closely with stakeholders from the Victorian Government, the Port of Melbourne and the wharf carriers to ensure landside operators are not unfairly penalised for a trade imbalance and a corresponding problem that is well outside their control.

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