Market Update | 4 December 2020
The following notice provides an update on the current market situation both in Australia and globally and the heightened difficulty imposed on all aspects of the supply chain.
DELAYS IN BIOSECURITY PROCESSING
The Department of Agriculture, Water and the Environment continues to struggle to manage the increased surge in import volumes resulting in commercially unacceptable delays with processing of entries, inspections and release of containers post treatment.
INDUSTRIAL ACTION
Patrick Terminals has provided no further specific detail other than that they are still in negotiations with the Maritime Union of Australia. We remain hopeful that the parties can settle outstanding claims without any more industrial action and establish their Enterprise Agreement.
We have received feedback from shipping lines that ‘move count’ productivity by stevedores is improving as compared to that experienced during the period of industrial action. This MUST be sustained for the foreseeable future without any further level of Protected Industrial Action. We will keep you updated on any further potential disruptions.
CONTAINER GRIDLOCK EXPECTED AT PORT BOTANY
Over the last 15 months we have had a surplus of import over export containers coming into Port Botany. This is not uncommon and in “normal operational times”, shipping lines will bring in unladen vessels (referred to as ‘sweeper vessels') to evacuate many thousands of empty containers to clear local congestion and for the equipment to be used again back in Asia.
Things became complicated with industrial action during the course of the year at Patrick, DP World and Hutchison Terminals meaning the stevedore servicing of vessels slowed down and schedules were delayed. Adverse weather events prevented container shipping lines deploying sweeper vessels & due to the unavailability of berth windows, the situation was further compounded by capped equipment exchanges leaving vessels sailing open from Australia, instead of utilizing the capacity to evacuate equipment from Australia.
The extent of the container imbalance is estimated to be 75,000 TEU currently sitting in Empty Container Parks and transport operator yards throughout Sydney. If a sweeper vessel averaged 3500 TEU, it would require over 20 dedicated sweepers to clear the backlog. Based on this, it would take 5 months to clear if a sweeper vessel was deployed on a weekly basis, without accounting for additional trade imbalance and assuming terminals could handle the additional tonnage and container exchanges.
The bottom line from transport operators is that without any significant and immediate relief, the glut of empty containers will move Sydney’s container logistics from the current state of “congestion” to one of “gridlock”.
We also experiencing empty container volumes significantly increasing in Melbourne.
IMPACTS ON EXPORTERS
We understand that some vessels between now and Christmas will bring in import containers and will focus on a quick turn-around of moving large numbers of empty containers. While this is an understandable measure to evacuate as many empty containers as possible, it is unclear how well this will serve exporters and what it means in terms of available capacity in the coming months.
Many vessels are bypassing Sydney and those that are serviced are limited by how many export containers they can load with stevedores imposing move count restrictions on shipping lines. While we have an over-supply of empty containers, there are reports of limited availability of serviced Food Quality equipment for use by exporters of agricultural products.
CONTAINER DETENTION CHARGES
The decreased capacity in the Sydney Empty Container Park market is seeing shipping lines advise that they are unable to provide de-hire locations for their empty containers. Transport operators are forced to fulfill many ‘re-directions’, fill their yards (which are now also congested and reaching capacity) and complete multiple lifts to access containers within stacks.
Rubbing salt into the wounds, shipping lines are continuing to charge container detention for ‘late’ dehire (returns) maintaining a stance of responding on a case by case basis as industry still does have the limited ability to dehire on an intermittent basis.
PORT CONGESTION & EQUIPMENT SHORTAGES
Unfortunately it is not only Australian Importers & Exporters that are faced with Port Congestion, Additional Surcharges & Lack of Space / Equipment. This is being experienced right around the globe, with our neighbors in New Zealand also feeling the pinch.
At present, there has been no further indication of when the Port Congestion Surcharge will be revoked. In these extraordinary times, we recommend that you consider the following action steps:
- Request bookings as early as possible to allow our team & offices to source the best available option
- Allow a 1 -2 weeks buffer on the time of arrival when advising clients
- Consider alternative Port’s of Loading / Container Sizes for your order
Throughout this period, the team at KTL Australia will continue to support your requirements to the best of our abilities.
Should you have any further queries regarding any of the points listed above, please contact our knowledgeable team or further details.
