Retailers Face Massive Peak Period Stock Problems, Ports A Major Issue
CE and appliance retailers who leave their peak period ordering till late or are taking a precautionary approach to COVID-19 stock levels, are now facing the real possibility of having no stock at all with shipping container carriers closing their bookings into Australia due to serious issues emerging on Australian docks.
The fight between waterfront unions and container terminal employers in the port of Sydney is going to cause serious delays for CE retailers with some carriers now moving to refuse bookings for shipments of consumer electronics and appliances to the port.
MUA rolling work stoppages are currently under way at Botany terminals operated by Patrick and Hutchison, which, according to Southern Cross Cargo, has worsened the situation at the port because stevedores now cannot sub-contract affected vessels to each other.
Patrick said this week the action had seen terminal production cut by 40%, shipping schedules had slipped dramatically by nine days and delays were worsening by a half-day for every day the action continued.
Yesterday, Danish shipping Company Maersk announced a temporary suspension on Sydney bookings.
It said: “To remove uncertainty for our customers’ supply chain and to assist handling of our vessels calling Sydney, Maersk is taking the difficult decision to temporarily stop acceptance of all new bookings from Asia, Europe, Middle East, Africa and India sub-continent to Sydney, effective immediately.
According to Loadster the supply chain web site DP World last week lodged an application with the Fair Work Commission (FWC) to have the industrial action terminated, arguing it “endangers supply chains for critical products and exports and puts unacceptable pressure on the economy”.
The terminal operator said MUA was demanding 6% annual pay rises for the next four years, and Patrick estimates the full list of claims will cost it around A$40m (US$29.2m) a year.
Patrick CEO Michael Jovicic said: “I’m bewildered that the MUA would try this on during a pandemic, particularly when the average permanent employee is currently paid approximately A$155,000 a year, with top earners receiving more than $200,000.”
Last week, liner lobby group Shipping Australia estimated the cost of a day’s delay for a containership at $25,000 and has filed a statement with the FWC supporting DP World’s application to terminate the “reckless campaign” of industrial action.
Shipping lines have already begun to pass on the extra costs to importers, with four carriers implementing congestion surcharges of around A$300 per ton, including MSC, ANL, Pacific Asia Express and Hapag-Lloyd, with others expected to follow suit.
Paul Zalai, director of the Freight & Trade Alliance (F&TA), called on the FWC to resolve the problem and allow stevedore operations to return to full capacity in the run up to peak season.
He said: “Vessels are now bypassing Port Botany, discharging goods interstate and leaving importers to pay massive logistics costs to organise moving freight back to Sydney.
One PC manufacturer said that the cost of goods could go up due to the problems on the waterfront.
According to CH Robinson, importing from Asia is also at risk due to the inability to export full and empty containers back to Asia, and the company cited research from NSW Ports that shows an imbalance of 30,000 ton between full and empty imports, and full and empty exports between April and June.
“At the same time, there has been a decrease in Australian exports due to Covid-19 staff restrictions, which, combined with the congestion at our ports, have caused chaos for transport operators, with costs set to trickle down the supply chain to Australian consumers,” said CH Robinson vice president of Oceania Andrew Coldrey.
Mr Coldrey added: “This issue has been slowly mounting and has reached a stage where Australian consumers are most likely going to suffer at the checkout.
According to several brands including PC, accessory, and audio distributors and manufacturers Companies are now being hit by the combination of union action and container turnaround.