The Freight Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) say they have called on the federal government to consider eight reforms to ease global supply chain and shipping issues.
The recommendations include a shipping competition review, minimum service levels and notification periods, infrastructure investment, regulation of Terminal Access Charges, regulation of container detention practices, waterfront industrial relations reform, implementation of Biosecurity reform priorities, and extension of the International Freight Assistance Mechanism funding.
The FTA and the APSA are making these recommendations in a bid to meet the all-time-high global demand for shipping containers.
Paul Zalai, the FTA’s Director and the APSA’s secretariat says world leaders need to do more by fostering partnerships between countries, governments and businesses to further strengthen global supply chains.
He adds the shipping lines are the main beneficiaries of the Omicron crisis, and they are reporting multi-billion-dollar profits when traders are struggling to turn a profit.
“Who can blame them?” Paul asks. “Shipping lines servicing our entire container trade are after all commercial, foreign-owned businesses that are profit-driven. What is extremely evident is that Australia’s national interest is very much a secondary consideration.”
The Omicron wave of the COVID-19 pandemic has caused an increase in import cargo, limited shipping capacity and poor operational performance in many key international ports.
It has also resulted in shipping container equipment not being stored on appropriate sites, significant increases in freight rates and surcharges as well as unreliable services.
Australian exporters are fighting over available equipment and are struggling to deliver goods abroad while importers are failing to acquire regular supply, resulting in onshore stockpiling. This is all leading to higher inflation nationwide.
Shipping lines are not agreeing to share vessels which is preventing newcomers from entering the global market and competing in the Australian maritime market.
The FTA and the APSA provided a detailed submission to the Productivity Commission’s independent review. It looked at the long-term structural issues affecting the Australian maritime logistics system’s productivity.
The peak bodies also provided evidence of long-term trends that are adversely impacting Australian exporters’ and importers’ competitiveness. They suggest introducing foreign-owned shipping line surcharges and freight rate increases.
“We are not advocating for the Federal Government to interfere with price setting as we need foreign-owned shipping lines to continue to be incentivised to service Australian trade in a free and open market,” Paul says.
“We do, however, question whether shipping-line-vessel-sharing arrangements should continue to be protected and exempt from competition laws faced by others in Australian commerce.”
The FTA and the APSA also say if foreign-owned shipping lines continue to be exempted, the Australian Competition and Consumer Commission (ACCC) should be required to oversee proceedings to safeguard the commercial viability of Australian traders.
They say if the ACCC does not do this then the Government should establish a federal maritime regulator.
“With less quayside revenue, stevedores and empty container parks have resorted to a ‘ransom model’, forcing transport operators to pay designated fees or be denied access to container collection/dispatch facilities,” Paul says.
“It is not sustainable for our exporters and importers to absorb this additional impost of hundreds of millions of dollars annually whereby they cannot influence service or price,” he adds.
“A well-regulated economy will help Australia to prosper. Australia has world class manufacturers and producers who are supported by skilled customs brokers and freight forwarders ready to take advantage of the opportunities created by free trade agreements and those economies recovering from COVID-19 – these opportunities will not be fully realised while physical access to market and costs of trade are prohibitive.”
For more information on the FTA, click here.
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