Opinion

Give wharf carriers relief from empty container fee

Wharf carriers servicing ports around Australia are no strangers to exorbitant fees and charges that have been creeping into their cost structures for years. 

Rising infrastructure charges levied by the stevedores and storage fees for empty containers by the shipping companies have been eroding already small margins, with the operator left to wear the costs or pass them on through the supply chain.

The latest such fee to eat into operator margins at the wharf is a demurrage charge imposed by shipping yards on transport companies for not returning empty containers to their designated location within 10 days of collection. 

While not new, this charge – starting from approximately $250 a day and increasing depending upon the type of container – has been exacerbated by close contact labour shortages and other Covid restrictions that have prevented wharf carriers from returning empty boxes within 10 days.

The VTA has issued a plea for the shipping lines that impose these costs to extend the period for empties being returned so that wharf carriers can start to clear the backlog as drivers return to work. In a recent letter to freight transport assistant minister Scott Buchholz, we outlined the impact this issue is having on wharf carriers, and of the likelihood that consumers will ultimately pay for the additional costs in the form of higher prices.

The financial impacts are stark: over the next four weeks it is estimated nearly $500,000 per day will be taken out of the port supply chain through empty container return penalties. This will continue until the backlog and blockages are overcome, underscoring the importance of our plea for shipping lines to show some leniency and extend the transport window for empty containers.

While the VTA represents only a small percentage of wharf carriers throughout Australia, our members are some of the country’s biggest container transport companies. This membership has been discussing the issue of demurrage charges for the return of empty containers at some length.

The system of returning empty containers to their respective shipping companies’ empty yard in Melbourne has become more difficult since the shipping lines decided other lines’ containers could not be accepted. 

This issue has recently been exacerbated by Covid restrictions that have wreaked havoc on operators’ workforces. The systems that once worked with a great deal of effort are now becoming blocked and slowed as containers cannot be delivered to customers, and transport yards overflow with full and empty containers.

Operators and their customers are trying to work their way through the backlog and restrictions. But they need some assistance.

The VTA is requesting that the minister’s office investigate this issue with the intention to address the shipping lines if the above claims are proven to be correct. We are requesting the shipping lines extend their empty container return period from 10 to 20 for the next two months only. By providing this concession wharf carriers will be able invest in additional resources to overcome the problem.

This sector of the port supply chain is suffering under the current empty container return parameters, cannot negotiate with the shipping lines and needs assistance from another party that can exert common sense influence.

The consequence of these additional costs is inevitably higher consumer prices. Wharf carriers cannot be expected to wear such crippling and unsustainable penalties and will be forced to pass them through the supply chain to avoid exposing themselves to potentially disastrous financial pressure.

Of course, this can all be avoided if the shipping lines agree to our plea to simply extend the 10-day window for empties being returned.

During the pandemic, shipping lines, stevedores and road and rail freight operators have generally worked remarkably well together to navigate the enormous supply chain pressures that have emerged.

It is indeed encouraging that peak maritime groups have recognised this latest challenge, with Ports Australia suggesting “shipping lines sit down with the businesses calling for this respite to work through their problems.” As an industry group we certainly concur with the need for conversations between shipping lines and wharf carriers to resolve the problem.

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