Australian Logistics Supply Chain Under Severe Pressure and Rising Costs

January 20, 2022

20-January-2022

Australian Logistics Supply Chain Under Severe Pressure and Rising Costs

Dear Valued Customers & Partners,

We would like to draw your attention to issues currently facing the Australian Supply Chain and the severe pressure it is under right now to meet demand and facilitate service levels. The issue mainly stems from the amount of COVID case numbers currently being experienced on Australia’s East Coast, which is resulting in severe labour shortage, including terminal workers, truck drivers, container unpackers, admin staff and more. Even with changes to close contact isolation rules, a lot of damage has already been done and the issue remains, it will be a case of “it will get worse before it gets better”.

The issue is being covered by various media sources and industry bodies. Here are some links for your reference.

Over the last few days, we have received many notices from transport companies, both contracted and not contracted by SILA, about the introduction of a temporary COVID Levy. Unfortunately, these additional fees will need to be passed on and will be listed on our monthly ancillary tariff with the first being effective 01 Feb. It’s not only transport companies implementing these levies with the Victorian International Container Terminal (VICT) also introducing a COVD Levy siting “Throughout the last two years of the pandemic, VICT has absorbed the cost of additional COVID requirements but due to the latest outbreak and overall increase in costs especially relating to Rapid Antigen Tests, we have no option but to apply a temporary tariff to recover some of the extraordinary costs.” We expect that other terminals will follow suit. The levy will have a ‘knock on’ effect going through the entire supply chain and, we expect that shortly, most of the logistics industry will be charging this levy in some form or another.

Other costs are also rising within the supply chain, either due to COVID, scheduled pricing increases or other economic factors. For example, the price of diesel has risen and remained high over the last few months, Ad Blue Shortages have driven its price up, Terminal Infrastructure Fees are also on the move once again as Terminals have published information that they will, once again, increase these fees. The cost of labour and staff has increased as the labour shortage starts to drive up wages to secure and retain staff; I use this to highlight how many different areas that supply chain costs are increasing and we expect this to continue for some time but this will ultimately result in a base line overall increase or a General Rate Increase (GRI) within the supply chain space.

We will continue to monitor and keep you up to date when further info is received.

Simon Pepper
Managing Director
SILA Global Pty Ltd