ACCC Warns Freight System is in Crisis

ACCC Warns Freight System is in Crisis

Yesterday (04 November 2021), the Australian Competition and Consumer Commission (ACCC) released its Container Stevedoring Monitoring Report 2020-21, which looks at the impact of the current global logistics crisis on Australia’s container trade, as well as the prices, costs, and profits of stevedores at Australia’s international container ports. The chairman, Rod Sims, is pushing for a change to competition laws, warning that Australia’s freight system is “in crisis”.

The report found delayed shipments and rapidly rising freight rates were putting “intense pressure” on exporters and importers, adding that the prolonged disruption to container supply chains has left Australian businesses increasingly vulnerable.

The commission said that a surge in demand for containerised cargo and extreme congestion across the global supply chain have caused major disruptions and delays. A number of Australian exporters are struggling to meet their contractual obligations, and some large retailers are so concerned that their cargo will not arrive before Christmas that they are buying their own shipping containers and chartering their own vessels.

The ACCC noted that freight rates on key global trade routes were currently around seven times higher than a year ago. Using UNCTAD data for 2019, it said: “The median in-port time for containerships visiting Australia was three times longer than in Japan, twice as long as China and 50% longer than Singapore or New Zealand.”

Last week we posted about the intense media reporting on the global supply chain.

Enhanced competition between stevedores has changed market dynamics. This has become more evident following the entry of Hutchison and VICT, leading to reduced profits and increased investments in equipment and infrastructure. Over the past few years, stevedores have increased their landside charges, but they are not currently making excessive returns.

There have been immediate calls for industry participants to alleviate this “freight crisis.” Some industry observers claim that stevedores and empty container parks are reducing fees to shipping lines and holding transport companies at ransom to pay Terminal Access Charges with no option to pay or are denied access to container collection / dispatch facilities.

The ACCC report recommends that governments, industry and unions address industrial relations and restrictive work practices, limit privatised ports’ ability to impose excessive rents and charges, and repeal Part X of the Competition and Consumer Act 2010 to facilitate greater competition between shipping lines on Australian trade routes.

The reports runs to more than 100 pages and those interested in leafing through it can find a LINK HERE to the full document in PDF format.

Talk to us here at Colless Young for logistics strategies and solutions. As licensed Customs Brokers and International Freight Forwarders, we offer professional service and advice on all your international trade and shipping requirements. Colless Young provides a complete range of import and export logistics services, both air and sea cargo, at all major Australian ports and airports. Call us for updated shipping schedules and freight rates.