DP World Industrial Action Update
Dear Valued Customers & Partners,
Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) continue to be in contact with DP World senior management in terms of thy latest information on the Protected Industrial Action (PIA) impacting their container terminals nationally.
DP World have outlined advice received from the Maritime Union of Australia (MUA) division of the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) in terms of work bans and stoppages associated with the PIA for the period Monday 18 December to Monday 8 January 2024.
Full list of upcoming protected industrial actions HERE
FREIGHT & TRADE ALLIANCE – INDUSTRIAL ACTION AT DP WORLD – DECEMBER STATUS REPORT
The Protected Industrial Action (PIA) that commenced in October 2023 at DP World container terminals in Melbourne, Sydney, Brisbane and Fremantle is having devastating financial impacts on Australian exporters and importers. Impacts are being experienced beyond DP World facilities with other container logistics facilities nationally dealing with additional freight volumes from sub-contracted vessels, limiting the availability of vehicle booking system slots and the allocation of scarce transport assets to manage the landside task.
Recent enterprise agreement negotiations have failed in addressing the impasse and an application to the Fair Work Commission to suspend industrial actions for a cooling off period was dismissed. This suggests that PIA may continue for an extended period well into the New Year.
From an import perspective, delays and costs are jeopardising business viability and are fueling inflationary pressures across our economy.
From an export perspective, while the Federal Government is justifiably proud of achieving trade liberalisation measures and stabilising the trade relationship with China, this counts for little with a failure to have viable operations at our international containerised sea freight gateways.
Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have prepared the following ‘status report’ on the ongoing Protected Industrial Action (PIA) at DP World container terminals nationally providing 1) a summary of operational impacts (based on member feedback), 2) estimated costs, 3) advocacy and 4) related media.
OPERATIONAL IMPACTS
DELAYS – vessel delays nationally are adding 2–5 weeks from original schedule – one of many impacts is risking quality deterioration of perishables with insurance claims spiking;
CAPACITY – delays are reducing capacity affecting ability to serve markets (freight rates likely to increase with supply and demand imbalance, compounded by international shipping redeployment due to Red Sea hostilities);
PLANNING – Importers are often working to set deadlines and now it is impossible to forward plan with certainty;
AIRFREIGHT – increased use of airfreight to meet contractual obligations;
DATA – little reliable source of vessel arrivals and cargo availability data exasperating logistics planning;
PORT BYPASS – some vessels bypassing ports – most shipping lines provide an alternate option to return to destination with a subsequent coastal move (this can generate an additional delay of up to 3 weeks) – alternatively a ‘self move’ requires a ‘change of destination’ request to shipping lines (costs sometimes waived) with additional domestic movement cost to be borne by the cargo owner;
BIOSECURITY – the Department of Agriculture, Fisheries & Forestry (DAFF) requirement to book any import inspections for the period 23 Dec to 02 Jan by yesterday (Tuesday 19 Dec) difficulty when container availability is unknown;
SCHEDULE IMPORTER CLOSURES – angst caused by loss of sales due to delays is now being compounded with imminent import costs over the Christmas and New Year period – scheduled shutdown of importer facilities (many through to 8 Jan 2024);
CONTAINER DETENTION – above will cause additional storage (congestion) and container detention (made worse by the fact over 11 days Friday 22 Dec to Monday 1 Jan 2024, most ECPs are only open 3.5 days : some not open until 8 Jan) – delays in loading export containers (including reefers) are also generating detention charges;
ADMINISTRATION – when receiving container detention invoices, extensive administration to unravel and argue waive or reduction of detention;
CONTAINER STAGING – significant difficulties for transport operators to plan labour over the holiday period – staging large volumes of containers over this period to minimise expensive wharf storage charges requires yard operators to drive heavy container forks (Drivers also want Christmas with their families but transport companies are faced with paying double to encourage workers to come in);
YARD CAPACITY – space is at a premium with facilities ‘bursting at the seams’ – importers are arranging for unpack and storage to return container (not all fork jobs / many taking 6 hour per container unpack) – major unplanned costs and limited capacity via sites to support;
ROLLING – significant volumes of export container waiting at port and rail heads due to limited slots and consecutive voyages being rolled;
RAIL – many exporters from regional centres are now staging movements at port due to “cut and run” approach from shipping lines – cost is jeopardising commercial viability on high volume / low value commodities;
EMPTIES – concern that shipping lines may not evacuate enough empties which will cause congestion problems at ECPs (recently experienced during the height of pandemic) – the contrary concern is if they prioritise empties over exports this will be a major problem too;
EQUIPMENT – Less Food Quality and Reefer availability (delays on imports affect specialised equipment availability for exports);
FUTILE TRIPS – additional costs for “Futile Trips” are being incurred by importers because transport companies are unable to pick up containers in instances despite published container availability;
OVERTIME – overtime has limited benefits as drivers still have CoR – truck queues causing other road hazards and congestion; and
STEVEDORE LIMITATIONS – other stevedores reaching capacity and limiting sub-contracts over Christmas and New Year.
COST
In a mid-November letter from Shipping Australia Limited (SAL) to the Minister for Employment and Workplace Relations, reference was made to modelling by a leading transport economics consultancy estimating direct loss from the DP World PIA being AUD$10.1 million a day.
The disruption and knock-on supply chain impacts has worsened over the last month since the above correspondence was sent. Add to the mix indirect costs such as failure to meet contractual obligations, conservative estimates suggest the overall cost to the Australian economy being AUD$20 million a day.
This estimated cost does not take into account the significant human toll and the testing of relationships between all in the supply chain.
ADVOCACY
On 18 December 2023, FTA / APSA wrote to the Minister for Employment and Workplace Relations and the Minister for Trade and Tourism extending an invitation to a meet with a delegation of FTA / APSA board members and representatives to explain first-hand, the impacts of the PIA on businesses and reputational harm to Australia as a viable trading nation. A preliminary response has been received indicating an interest to convene early in the New Year.
As indicated in recent member updates, FTA, APSA, SAL and the Container Transport Alliance Australia (CTAA) have been leading advocacy for the Victorian Department of Transport and Planning (DTP) to declare a ‘disruption event‘. A further meeting with DTP is scheduled for 11.30am AEDT tomorrow, Friday 22 December 2023.
MEDIA
FTA / APSA continues to lead industry commentaries in mainstream media. This has two primary purposes:
- pressure regulators and all parties involved in the PIA to work together on a resolution to minimise the impact on workers, freight and the nation; and
- increase public awareness and assist members in explaining the cause and impacts of supply disruptions.
The cyber incident at DP World and recent hostilities in the Red Sea have captured the media’s attention during the last 5 weeks. Importantly, while speaking on these matters, FTA / APSA have taken the opportunity to weave in commentaries about the PIA, explaining the compounding effects of the overall operating environment.
19 DEC 2023 : Stock and Land – Red Sea freight blockage has potential to disrupt all supply chains
19 DEC 2023 : Australian Financial Review – Freight, oil climb as Red Sea attacks shut down shipping
17 DEC 2023 : ABC News – UK and US shoot down more Houthi drones in the Red Sea as shipping companies pause operations
15 DEC 2023 : The Guardian – Waterfront operators’ soaring profit margins prompts concerns from competition regulator
14 DEC 2023 : Australian Financial Review – DP World begs for cool off as strikes cause more damage than hack
5 DEC 2023 : WEBINAR FTA / APSA interview with Nicolaj Noes, Executive Vice President Oceania – APAC of DP World
14 NOV 2023 : India Shipping News – DP World gradually restarting operations around its Australian Ports after cyber-attack
13 NOV 2023 : Following our coverage of the DP World cyber incident over the weekend (11 & 12 November 2023) in the Sydney Morning Herald, The Age and the Australian Financial Review, separate FTA / APSA interviews included live on Sky News at 6.45am followed by Ben Fordham on 2GB (Syd), Sammy J on ABC (Melb), James Valentine on ABC (Syd), Loretta Ryan and Joel Spreadborough on ABC (Bne) , Nadia Mitsopoulos on ABC (Per), ABC World Today, SCA Triple M, Australian Financial Review again, Bloomberg News, Libby Price on Country Today, Agence France-Presse, The Australian (Business Review), The Guardian, Jaynie Seal on Sky News , Chris Reason on Channel 7 News and finally, another live interview with Ed Boyd at Sky News in their Sydney studio.
SILA would like to remind our clients that transport companies have communicated that surcharges for weekends, public holidays and after-hours will be applied as they strive to retrieve containers within their allotted free time.
These bans & stoppages continue to significantly impact our services, and we appreciate your understanding and flexibility during this period. Our team is committed to minimising disruptions and ensuring the smoothest operations possible. We will keep you updated on any further developments.
We acknowledge the potential impact of these disruptions; however, please be advised that SILA will not assume liability for any additional charges arising from these industrial actions.
Thank you for your continued trust and partnership and should you have any questions or concerns, kindly reach out to our dedicated team!
SILA Imports – imports@sila.net.au
SILA Exports – exports@sila.net.au
SILA Sales – sales@sila.net.au
T: (+61) 07 3908 1690
SILA Global Pty Ltd