2ND UPDATE: Australian Logistics Supply Chain Under Severe Pressure and Rising Costs
22-February-2022
2ND UPDATE: Australian Logistics Supply Chain under Sever pressure and rising costs
We have been sending updates to clients over the last month highlighting the current state of the domestic logistics landscape which are available here and here. There is a level of improvement in some areas, however there continues to be issues within the industry which I will address below.
Detention costs from shipping lines are occurring as transport carriers struggle to return empty containers within free-time due to a number of reasons such as: severe backlog, yard congestion (both at dehire depots and at transport yards), as well as a lack of equipment and a lack of labour to operate the equipment. Unpack times can vary depending the commodity, delivery & dehire locations, and port of arrival. Current turnaround times on unpacks are around 14 days from the date of terminal slot booking.
Once again, we must advise our clients to please request a minimum 14 free days container detention on their bookings not managed by SILA. We will consider detention on a case-by-case basis and will do the best we can to get containers back on time; however customers may need to factor in detention costs, especially on bookings that offer the minimum 7 or 8 days from discharge.
In our previous notices we have indicated that costs have been increasing and this is now to a level that we need to pass on a General Rate Increase (GRI) to commence mid-March. This will be implemented for Victorian (Melbourne) shipments first, however we expect other states to follow suit and will keep you informed.
We have also recently conducted an internal review of the time taken to receive payments vs the credit terms provided, and I am sure it comes as no surprised that receiving full payment of invoices has increased quite significantly over the last 18-24 months and, as a result, we will be viewing how we handle invoicing differently moving forward.
There are 2 cost mechanisms in getting cargo to our clients which are costs paid ‘upfront’, in order to gain release of cargo or load it on a ship, and the second being the costs which occur after arrival (for imports) or before departure (for exports). Costs that require upfront payment include any Customs payments for clearance and payments to shipping lines for delivery orders. Customs charges have been a disbursement type charge for a few years however we will now be including charges paid up front, on our customers behalf, in the disbursement invoice category. The main effect here will surround shipping line port charges and we will provide credit to customers that have credit granted but it will be in line with clients disbursement terms.
There will be no changes to final invoice terms or for customers that require proof of delivery documents for loose deliveries or to those who already have other arrangements in place. We will be reaching out to parties these changes will affect. We also understand that, for some customers, this may cause some initial issues however this change is necessary for SILA Global to maintain the standards of service we strive to provide and we appreciate your understanding.
We will continue to monitor and keep you up to date when further info is received.
Simon Pepper
Managing Director
SILA Global Pty Ltd